Example of Calculation of Process Manufacturing Lead Times

This topic provides you a detailed illustration of how lead times are calculated for for items whose primary work definition has a work method as process manufacturing.

The example covers the calculation logic for manufacturing lead times. The cumulative total lead times and cumulative manufacturing lead times follows the same logic as the example for discrete manufacturing.

For brief descriptions on the various types of lead times used in manufacturing, take a look at the topic Concepts Related to Lead Times Used in Manufacturing: Explained.

In this example, we are taking a simple item hierarchy of two levels for calculation purposes. The top-level at the hierarchy is item A which is a make item and the primary output of the work definition. A1 is a co-product yielded from the same work definition. A is made up of C, which is a buy item, and B, which is a make item. In the work definition of B, B is the primary output item and B1 is a by-product. B is made up of items D and E, both of which are buy items.

Manufacturing Lead Time Calculation

In this item hierarchy, there are two make items for which we need to calculate their manufacturing lead times: A and B. We will copy the calculated manufacturing lead times to the co-product and by-product: A1 and B1. For item A, the primary UOM is drums, where 1 drum = 10 Liters and for item A1, the primary UOM is Dz. For items B and B1, the primary UOM is Liters.

1. Let's first look at the work definition of Item A. The standard batch size of the work definition is 100 Ga, in which 70 Liters of item A and 30 Ea of item A1 are expected to be yielded.

   Operation Sequence	Output Items	Input Items	Resource Usage	Lead Time Percentage
   10	N/A	N/A	Resource: RES 1 Basis type: Fixed Usage: 1 UOM: Days	0
   20	Item: A1 Quantity: 30 UOM: Ea	Item: B Quantity: 50 UOM: Liters	Resource: RES 2 Basis type: Variable Usage: 1 UOM: Days	33
   30	Item: A Quantity: 70 UOM: Liters	Item: C Quantity: 50 UOM: Ea	Resource: RES 3 Basis type: Variable Usage: 1 UOM: Days	66

2. Fixed lead time for A: The fixed lead time is independent of lot size. In this example, it is 1 day.

3. Variable lead time for A: Since the basis type is variable, it takes 1+1 = 2 days to manufacture 70 Liters of A, which is 7 drums (as 1 drum = 10 Liters), the variable lead time is 2/7 = 0.2857 days/drum.

4. Lot size for A: The lot size for process manufacturing items is determined from the primary work definition. In this example, the primary work definition yields 70 Liters of item A. However since the primary UOM is drums, the lot size is updated as 7 drums.

5. Processing lead time for A: fixed lead time (1) + {variable lead time (0.2857)*lot size (7)} = 3 days.

6. The lead time percentage is calculated as the offset percentage value of the start of a given operation to the total manufacturing lead time for all the operations of the work definition. The calculated values are shown in the table.

7. Let us now calculate the manufacturing lead time of the co-product A1.

8. Fixed lead time A1: The fixed lead time is copied over from A, which is 1 day.

9. Variable lead time for A1: The variable lead time of 2 days is copied over to and restated considering the primary unit of measure of item A1. The primary work definition is expected to yield 30 Ea, which when restated in primary UOM is 2.5 Dz (1 Dz = 12 Ea). So the variable lead time is 2/2.5 = 0.8 days/Ea.

10. Lot size for A1: The lot size for process manufacturing items is determined from the primary work definition. In this example, the primary work definition yields 30 Ea of item A1. However since the primary UOM is Dz, the lot size is updated as 2.5 Dz..

11. Processing lead time for A1: The processing lead time is copied from A, which is 3 days

12. Now, let us look at the work definition of item B to determine the processing lead time:

    Operation Sequence	Output Items	Input Items	Resource Usage	Lead Time Percentage
    10	Item: B1 Quantity: 40 UOM: Liters	Item: D Quantity: 80 UOM: Liters	Resource: RES 1 Basis type: Fixed Usage: 2 UOM: Days	0
    20	N/A	N/A	Resource: RES 2 Basis type: Variable Usage: 1 UOM: Days	40
    30	Item: B Quantity: 60 UOM: Liters	Item: E Quantity: 20 UOM: Liters	Resource: RES 3 Basis type: Variable Usage: 2 UOM: Days	60

13. Fixed lead time for B: The fixed lead time is independent of lot size. In this example, it is 2 days.

14. Variable lead time for B: Since the basis type is variable, it takes 2+1 = 3 days to manufacture 60 Liters of B, the variable lead time is 3/60 = 0.05 days/Liter.

15. Lot size for B: The lot size for process manufacturing items is determined from the primary work definition. In this example, the primary work definition yields 60 Liters of item B.

16. Processing lead time for B: fixed lead time (2) + {variable lead time (0.05)*lot size (60)} = 5 days.

17. The lead time percentage is calculated as the offset percentage value of the start of a given operation to the total manufacturing lead time for all the operations of the work definition. The calculated values are shown in the table.

18. Let us now calculate the manufacturing lead time of the by-product B1.

19. Fixed lead time B1: The fixed lead time is copied over from A, which is 2 days.

20. Variable lead time for B1: The variable lead time of 3 days is copied over to and stated in the primary unit of measure of item B1. The primary work definition is expected to yield 40 Liters, So, the variable lead time is 3/40 = 0..075 days/Liter.

21. Lot size for B1: The lot size for process manufacturing items is determined from the primary work definition. In this example, the primary work definition yields 40 Liters of item B1.

22. Processing lead time for B1: The processing lead time is copied from B, which is 5 days