Chapter 17: Problem 2

\text { How can cycle time reduction reduce raw materials, WIP, and FGI? }

Short Answer

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Answer: Reduction of cycle time leads to a decrease in raw materials, WIP, and FGI inventory levels because it allows companies to use resources more efficiently, minimize inventory holding costs, and reduce waste. As the manufacturing process is completed faster, less raw materials inventory is needed, fewer partially completed products accumulate in WIP, and finished goods spend less time in inventory before being shipped to customers.

Step by step solution

Define Cycle Time, Raw Materials, WIP, and FGI

Cycle time is the time it takes for a part or product to go through a specific manufacturing process or entire production cycle. Raw materials are the basic components used to create a finished product. Work in Progress (WIP) refers to the materials and partially finished products that are still in the production process. Finally, Finished Goods Inventory (FGI) includes completed products waiting to be shipped to customers.

Explain the Relationship between Cycle Time and Inventory Levels

There is a direct relationship between the length of cycle time and the amount of inventory held at various stages (raw materials, WIP, and FGI). The longer the cycle time, the more inventory is needed to maintain production levels, which results in higher costs to the company.

Describe How Reducing Cycle Time Affects Raw Materials Inventory

Reducing cycle time means that the manufacturing process can be completed in a shorter period. This decrease in time allows for materials to be used more efficiently and at a faster rate. Consequently, companies require less raw materials inventory on hand and can achieve cost savings.

Explain the Impact of Cycle Time Reduction on WIP Inventory

When cycle time is reduced, the amount of time products spend in progress also decreases. This means that fewer partially completed products will be waiting to be worked on. As a result, WIP inventory levels decrease, and companies can reduce the resources needed to manage and store these items.

Discuss the Effect of Shorter Cycle Times on Finished Goods Inventory

Reducing cycle time speeds up the production process and allows completed products to be shipped to customers more quickly. This shortens the amount of time that finished goods need to be stored in inventory, reducing inventory holding costs and the potential for obsolescence. In conclusion, reducing cycle time has a positive impact on raw materials, WIP, and FGI inventory levels by allowing companies to use resources more efficiently, minimize inventory holding costs, and reduce waste.

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\text { How can cycle time reduction reduce raw materials, WIP, and FGI? }

Short Answer

Step by step solution

Define Cycle Time, Raw Materials, WIP, and FGI

Explain the Relationship between Cycle Time and Inventory Levels

Describe How Reducing Cycle Time Affects Raw Materials Inventory

Explain the Impact of Cycle Time Reduction on WIP Inventory

Discuss the Effect of Shorter Cycle Times on Finished Goods Inventory

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