Example of How Lead Times are Calculated in Discrete Manufacturing
This topic provides you a detailed illustration of how lead times are calculated for items whose primary work definition has a work method as discrete manufacturing.
The example covers the calculation logic for manufacturing lead times, cumulative total lead times, and cumulative manufacturing lead times for a simple item hierarchy.
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, the total number of days as per the manufacturing calendar is 5 days, with an 8 hour shift for each work day. We are also assuming that the lot size for all items is 1 each.
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. A is made up of B which is a buy item, and C which is a make item. C is again made up of item D which is a buy item.
The following table provides you the sample values of the various user-defined lead times for the two buy items, B and D that we are going to use in this example.
|
Item |
Lot Size |
Processing Lead Time |
Preprocessing Lead Time |
Postprocessing Lead Time |
|---|---|---|---|---|
|
Item B |
1 |
2 |
1 |
1 |
|
Item D |
1 |
0 |
1 |
3 |
The following table provides you the sample values of the various user-defined lead times for the two make items, A and C that we are going to use in this example.
|
Item |
Lot Size |
Preprocessing Lead Time |
Postprocessing Lead Time |
|---|---|---|---|
|
Item A |
1 |
2 |
2 |
|
Item C |
1 |
1 |
2 |
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 C.-
Let's first look at the Work Definition of Item A to determine the lead times:
Operation Sequence
Resource Sequence
Resource
Basis
Usage
Scheduled
Items Assigned
Lead Time Percentage
10
10
RES1
Fixed
8 hours
Yes
Item B
0
20
10
RES2
Variable
8 hours
Yes
Item C
50
-
Lead times are calculated by considering the usage of resources that has the Scheduled flag as Yes.
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Fixed lead time for A: usage of the fixed resource divided by the total shift duration. In this example, that can be calculated as 8/8 = 1 day. The fixed lead time is independent of lot size.
-
Variable lead time for A: (usage of the variable resource divided by the total shift duration)/lot size. In this example, that can be calculated as (8/8)/1 = 1 day/unit.
-
Processing lead time for A: fixed lead time (1) + {variable lead time (1)*lot size (1)} = 2 days.
-
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.
-
Now let's look at the Work Definition of Item C to determine the processing lead time:
Operation Sequence
Resource Sequence
Resource
Basis
Usage
Scheduled
Items Assigned
Lead Time Percentage
10
10
RES1
Fixed
8 hours
Yes
None
0
20
10
RES2
Variable
16 hours
Yes
Item D
33.33
-
Fixed lead time for C: usage of the fixed resource divided by the total shift duration. In this example, that can be calculated as 8/8 = 1 day. The fixed lead time is independent of lot size.
-
Variable lead time for C: (usage of the variable resource divided by the total shift duration)/lot size. In this example, that can be calculated as (16/8)/1 = 2 days/unit.
-
Processing lead time for C: fixed lead time (1) + {variable lead time (2)*lot size (1)} = 3 days.
-
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.
Cumulative Manufacturing Lead Time Calculation
Now let's find out the cumulative manufacturing lead time for both the make items. For calculating the cumulative manufacturing lead times for a make item, here is the calculation logic:Cumulative manufacturing lead time for a make item at any level= processing lead time + Maximum [0, preprocessing lead time, (cumulative manufacturing lead time - offset days)] + postprocessing lead time.
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The application first calculates the cumulative manufacturing lead time for the make item at the lowest level of the hierarchy and then it traverses to higher levels. First let's calculate the cumulative manufacturing lead time for Item C.
For Item C, the processing lead time is 3 days. The maximum would be 1 the preprocessing lead time is 1 and because there is no make item below C in the item hierarchy. The postprocessing lead time is 2 days, as defined by the user. Therefore, the cumulative manufacturing lead time is calculated as 3 + 1 + 2= 6 days.
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For Item A, the processing lead time is 2 days. Item C is the only make item under A and is used in operation 20, which has an lead time percent of 50% causing the offset to be 0.5 * 2 = 1 day. The maximum therefore would be cumulative manufacturing lead time of Item C minus the offset days , which is 6 - 1 = 5 days. The postprocessing lead time is 2 days, as defined by the user. Therefore, the cumulative manufacturing lead time is calculated as 2 + Maximum [0, 2, (6-1)] + 2 = 2 + 5 + 2 = 9 days.
Cumulative Total Lead Time Calculation
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First let's calculate the cumulative total lead time for the buy items B and D using this formula:
Preprocessing lead time + processing lead time + postprocessing lead time.
Here are the lead times for items B and D, defined in their work definitions.
Item
Processing Lead Time
Preprocessing Lead Time
Postprocessing Lead Time
Item B
2
1
1
Item D
0
1
3
For item B, the cumulative total lead time is 2 + 1 + 1 = 4 days.
For item D, the cumulative total lead time is 0 + 1 + 3 = 4 days.
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Now let us calculate the cumulative total lead time for both the make items, A and C. For calculating the cumulative total lead time calculation for a make item, here is the calculation logic:
Cumulative total lead time of a make item at any level = processing lead time + maximum [0, preprocessing lead time, (cumulative total lead time - offset days) for any make or buy component] + postprocessing lead time
For item C, the processing lead time is 3 days. The preprocessing lead time is 1 day, as defined by the user. The number of offset days is 1 because the component D is required at the end of day 1. The cumulative total lead time is 4 days as derived from the cumulative total lead time for the buy item component item D. The postprocessing lead time is 2 days, as defined by the user. Therefore, the cumulative manufacturing lead time is calculated as 3 + Maximum [ 0, 1, (4-1) ] + 2 = 3+3+2 = 8 days.
For item A, the processing lead time is 2 days. The preprocessing lead time is 2 days as defined by the user. The number of offset days is 0 for component B as it's required on the first day itself, and 1 for component C because it's required at the end of day 1. The cumulative total lead time is 4 days as derived from the cumulative total lead time for the item component B, and 7 days as derived from the cumulative total lead time of the item component C. The postprocessing lead time is 2 days, as defined by the user. Therefore, the cumulative manufacturing lead time is calculated as 2 + Maximum [ 0, 2, (4-0), (8-1)] + 2 = 2+7+2 = 11 days.
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Based on all the calculations and derivations, here's a final summary of all the lead time values:
Item
Type
Lot Size
Fixed Lead Time
Variable Lead Time
Processing Lead Time
Preprocessing Lead Time
Postprocessing Lead Time
Cumulative Manufacturing Lead Time
Cumulative Total Lead Time
Item A
Make
1
1
1
2
2
2
9
11
Item B
Buy
1
Not applicable
Not applicable
2
1
1
Not applicable
4
Item C
Make
1
1
2
3
1
2
6
8
Item D
Buy
1
Not applicable
Not applicable
0
1
3
Not applicable
4