Manufacturing cycle time in the MikesBikes Advanced Business Simulation is the length of time from when an order is received to when it leaves the factory. It is often measured in weeks and indicates the responsiveness of the production process.
While simply holding finished goods stocks allow rapid fulfillment of a customer’s order, it requires financing (money tied up in stock). Long manufacturing cycle times mean less responsiveness to changes in demand patterns. For example if a competing product takes the market share. Hence, reducing manufacturing cycle time is desirable where possible. This will usually mean manufacturing in small batch sizes. However, small batch sizes mean frequent setups. As such, setup times must be reduced when adopting small batch sizes.
Other contributors to the length of the cycle times are:
- Number of products
- Complexity of products being produced by the firm
- Factory capacity
A rough rule of thumb is that production cycle time will increase in proportion to increases in batch size, number of products or product complexity. On the other hand, it will decrease in proportion to any increases in factory capacity.