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Throughput Time

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Throughput Time

Throughput time is the time required to convert raw materials into finished goods. This also applies to the processing of raw materials into a component or sub-assembly. the time is accounted right from when it first enters manufacturing until it exits manufacturing.

Throughput time includes the following:

  • Processing time: Time required to transform raw materials into finished goods.
  • Inspection time: Time required to inspect raw materials, work-in-process (WIP), and finished goods at different stages of production process.
  • Move time: Time spent to move items in and out of the manufacturing area and between workstations in the production area.
  • Queue time: Waiting time prior to the processing, inspection & moving activities.
  • Throughput time mainly focuses on reducing for a manufacturing process to complete. The amount of throughput flowing through a system can be increased and thus increase profitability. 

      Throughput = Net sales - Totally Variable Expenses

      Throughput Time = Process Time + Move Time + Inspection Time + Queue Time

(Part of Education Series: Operations Management)
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