Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

13.3.2 Calculating the Manufacturing Lead Time

Intended learning outcomes: Identify definitions for the elements of operation time. Present the lead time formula and the start date as a function of completion date. Differentiate between manufacturing lead time, cycle time and throughput time.



Let us assume that there is a production order with n operations. They are numbered throughout with the numerator i, where 1 i n. The following abbreviations stand for the elements of manufacturing lead time introduced in Section 13.1 (generally measured in industrial units, i.e., hundredths of hours):

Fig. 13.3.2.1       Definitions for the elements of operation time.

In practice, we distinguish between two different values for ADMPORDBEG and ADMPORDEND: that which takes the possibilities mentioned in Figure 13.3.2.1 into account and that which does not.

For a sequence of operations as the order of the operations, the lead time for an order (abbreviated by LTI) is equal to the sum of all operation times, inter­operation times, and administrative times, as the formula given in Figure 13.3.2.2 expresses:

Fig. 13.3.2.2       Lead time formula (first version).

LTI corresponds to the lead time for a product with lot size LOTSIZE. The lead time will vary if the lot size is different. If we sum up the elements according to the formula in Figure 13.3.2.3, the result is LTI as a linear function of lot size, as shown in Figure 13.3.2.4.

Fig. 13.3.2.3       Partial sums for the lead time formula.

Fig. 13.3.2.4       Lead time formula (second version).

You can save as data the partial sums from the lead time formula as attributes of the product. They can then be recalculated following each modification of the routing sheet by summing up all the values for the individual operations.

This procedure is the most efficient way to recalculate the lead time for a production order of any particular order quantity. Instead of having to read the operations, you need only refer to the product data. For a rapid calculation of secondary requirements, you can now calculate lead time simply according to the formula in Figure 13.3.2.4 and plan all reservations for components on the basis of the start date for the order as in Figure 13.3.2.5:

Fig. 13.3.2.5       Start date as a function of completion date.

In a directed network of operations as the order of the operations, the lead time for the order is the sum of the operations along the critical, that is, the longest, path. In some cases, this is dependent on lot size. Thus, the partial sums of the lead time formula are relevant for a particular lot size interval. This upper, or lower, limit of the lot size for a simplified calculation of lead time must be part of the product data.

Also, the meaning of the following terms is similar to manufacturing lead time, even though their formal definition differs:

  • Cycle time: This is the time between completion of two discrete units of production. For example, the cycle time of motors assembled at a rate of 120 per hour would be 30 seconds (cf. [APIC16]). Cycle time is an important variable in connection with single-item-oriented line production, particularly with control via production rates.[note 1305]
  • Throughput time (sometimes also called “cycle time”): In materials management, throughput time refers to the length of time from when a material enters a production facility until it exits (cf. [APIC16]). Throughput time plays a role in connection with logistic operating curves and the expected value of wait time in the context of production controlling (see Section 13.2.4).



Course section 13.3: Subsections and their intended learning outcomes

  • 13.3 Scheduling of Orders and Scheduling Algorithms

    Intended learning outcomes: Describe the manufacturing calendar and the calculation of the manufacturing lead time. Differentiate between Backward Scheduling and Forward Scheduling. Explain network planning, central point scheduling, the lead-time stretching factor, and probable scheduling. Present scheduling of process trains.

  • 13.3.1 The Manufacturing Calendar, or Shop Calendar

    Intended learning outcomes: Present characteristics of the manufacturing calendar, or shop calendar. Explain an example of a manufacturing calendar.

  • 13.3.2 Calculating the Manufacturing Lead Time

    Intended learning outcomes: Identify definitions for the elements of operation time. Present the lead time formula and the start date as a function of completion date. Differentiate between manufacturing lead time, cycle time and throughput time.

  • 13.3.3 Backward Scheduling and Forward Scheduling

    Intended learning outcomes: Produce an overview on lead time scheduling. Explain forward scheduling and backward scheduling. Describe a simple algorithm for backward scheduling.

  • 13.3.4 Network Planning and CPM — Critical Path Method

    Intended learning outcomes: Explain network planning and the critical path method (CPM). Present an example of a scheduled network. Describe a network algorithm for backward scheduling.

  • 13.3.5 Central Point Scheduling

    Intended learning outcomes: Explain central point scheduling. Describe several possible solutions in a directed network of operations.

  • 13.3.6 The Lead-Time-Stretching Factor and Probable Scheduling

    Intended learning outcomes: Produce an overview on order urgency and slack time. Differentiate between forward, backward, and probable scheduling. Explain the role of the lead-time-stretching factor in probable scheduling. Describe the equation for recalculation of lead-time-stretching factor.

  • 13.3.7 Scheduling Process Trains

    Intended learning outcomes: Differentiate between reverse flow scheduling, forward flow scheduling, and mixed flow scheduling.