I talked previously about job cost estimating setup time. The four areas that were spoken about where staging time, setup time, transit time and tear down time. Each one of these 4 processes actually would add costs to an estimate. Lag time does not add costs to an actual estimate under most circumstances.
When there are dependencies between operations, delays in handling, transportation, transmission or thinking time, etc. between operation steps we refer to this as lag time. Lag time does not usually add costs to a operation step because there is no activity actually being performed except for taking up space on the manufacturing shop floor. If there were large lag times you may consider putting a dollar value on the floor space but this may be overkill during the quoting and estimating process.
On the other hand lag time is a critical factor during scheduling of a job shop. This lag time is critical in ERP/MRP systems in order to properly handle dependencies between operation steps. The objective is to minimize the time a job is sitting idle with no work being performed. Reducing cycle time by decreasing the queue time between manufacturing steps is a basic principle of lean manufacturing to reduce work in process inventory.
Quoting and Estimating is not an area where lag time is usually considered because there are direct costs that could be attributed. As prepare your estimate keep in mind lag time because it will be used in scheduling the job shop.
MIE Solutions products including MIE QuoteIt and MIE Trak both can help a job shops quoting and estimating process more accurate.