Question

Currently, in Littlefield, jobs arrive at 12 per day and you have (just) enough capacity at each station (i.e., the departure rate is also 12 per day). If you want to change to a contract that promises a throughput time of at most 0.25 days to reap the full profits, then what should you set your WIP Limit as

Answer 1

Answer:

The WIP limit is 0.50 days.

Step-by-step explanation:

The Computation of WIP limits:

to begin with, it is required to compute the process and procedure efficiency which will be computed as follows:

Value Added Time = 12 days (arriving time)

Non-Value-Added Time = 12 days (departure time)

Efficiency = Value Added / (Value Added + Non-Value Added)

                = 12 / (12+12)

                = 12 / 24

               = 0.50 or 50%

the most obligatory throughput time will be 0.25 days to realize the profits

WIP limit = Throughput time / Efficiency  

               = 0.25 / 50%

               = 0.50 days.

The WIP limit is 0.50 days.