Incentives can be used to encourage operational managers to reduce manufacturing
cycle time or to increase velocity, thus improving delivery performance. A natural
way to accomplish this objective is to tie product costs to cycle time and reward operational
managers for reducing product costs. For example, in a JIT firm, cell conversion
costs can be assigned to products on the basis of the time that it takes a product
to move through the cell. Using the theoretical productive time available for a period
(in minutes), a value-added standard cost per minute can be computed