For an assembly line, the production rate was 4 pieces per hour and the average processing time was 60 minutes. The WIP inventory was calculated. Now, the production rate is kept the same, and the average processing time is brought down by 30 percent.As a result of this change in the processing time, the WIP inventory

Answer :

Solution :

Given,

Processing time, P.T1 = 60 min = 1 hour

Production rate = 4/hr = 4 units per hour

Second case :

Production rate = 4/hour

But processing time reduced by 30%

∴ New processing time, P.T2 = (0.7 × 1) hour

New Production per hour = 4 × 0.7 = 2.8 units.

Thus, Work in progress has been reduced and decrease in

$WIP=\frac{4-2.8}{4}\times 100=30\mathrm{\%}$