PRODUCTION AND OPERATIONS MANAGEMENT

Chelliah Sriskandarajah

University of Texas at Dallas

JUST-IN-TIME PRODUCTION SYSTEMS Repetitive production system in which processing and movement of materials and goods occur just as they are needed, usually in small batches. Goal is to design a balanced system that achieves a smooth, rapid ow of materials through the system. Main goal : Cost reduction 1. Eliminate disruptions. 2. Make the system exible. 3. Reduce setup times and lead times. 4. Minimize inventory. 5. Eliminate waste.

Basic idea : It completely eliminates unnecessary elements (waste) in the production system for the purpose of cost reduction. To produce the kind of units needed, at the time needed, and in the quantities needed. With the realization of this concept unnecessary intermediate and nished product inventories would be eliminated. Main goal : Cost reduction

Overproduction is waste: 1. Excessive production resources. 2. Overproduction. 3. Excessive inventory. 4.Unnecessary capital investment.

Sub goals : 1. Quantity control, which enables the system to adapt to daily and monthly uctuations in demand in terms of quantities and variety. 2. Quality assurance, which assures that each process will supply only good units to subsequent processes. 3. Respect-for-humanity which must be cultivated while the system utilizes the human resource to attain its cost objectives.

A continuous ow of production or adapting to demand changes in quantities and variety is created by achieving two key concepts : Just-in-time Autonomation Just-in-time basically means to produce the necessary units in the necessary quantities at the necessary time. Autonomation (Jidoka) may be loosely interpreted as autonomous defects control.

Production system include Flexible Workforce : this means varying the number of workers to demand changes. Creative Thinking or Inventive Ideas : this is to capitalizing on worker suggestions.

To realize these four concepts, Toyota has established the following systems and method: 1. Kanban system to maintain Just-in-time production. 2. Production smoothing method to adapt to demand changes. 3. Shortening of setup time for reducing the production lead time. 4. Standardization of operations to attain line balancing. 5. Machine layout and the multi-function worker for the exible work force concept.

6. Improvement activities by small groups and the suggestion system to reduce the work force and increase the workers morale. 7. Visual control system to achieve the Autonomation concept. 8. Functional management system to promote company-wide quality control.

Kanban System is the way to manage the Just-in-Time production method. i.e., the Kanban System is an information system to harmoniously control the production quantities in every process. In order to realize Just-in-time production system, various prerequisites of this system need to be implemented perfectly (i.e., design of processes, standardization of operations and smoothing of production, etc.). A Kanban is usually a tag-like card.

Two kinds are mainly used: 1. Withdrawal Kanban. 2. Production-ordering Kanban.

Steps involved in using the two Kanbans. A withdrawal Kanban details the quantity which the subsequent process should withdraw. A production ordering Kanban shows the quantity which the preceding process must produce.

Littles Law:

W IP = P roduction RateT hroughput T ime P roduction Rate = X T hroughput T ime = T W IP = N = XT

X per time

N +1
-

X per time
-

1 X

2 X

3 X

Figure 1:

N 1 X

T =

N X

Measuring Kanban Two ways to measure the performance of a manufacturing process : 1. Flow-through-time (or Throughput Time) is the amount of time it takes one unit to pass through the entire process, from start to nish (on average). 2. Work-in-process (WIP)

Example: A Kanban system uses 20 work stations and a lot size of 5. The average WIP is nearly 100 units. If the cycle time is 2 minutes per unit, the throughput time will be around 200 minutes.

Example: The process for making component Z for a company involves ve work stations. The cycle time is 3 minutes per unit for every work station. This means that a kanban card will be returned from any particular work station to the previous work station every (3 lot size) minutes (on average). Case 1 : Lotsize = 10, Average W IP = 5 10 = 50 units T hroughput T ime = 5103 = 150 minutes Case 2 : Lotsize = 2, Average W IP = 5 2 = 10 units T hroughput T ime = 5 2 3 = 30 minutes

Fine-tuning Production Lets consider the ne-tuning of production by using a Kanban. An engine manufacturing process must produce 100 engines per day. The subsequent process requests 5 engine/onetime by lot withdrawal Kanban. These lots are then picked up 20 times per day.

If the need occurs to decrease all process by 10 % as a ne-tuning procedure of production planning, the nal process in this example has lo withdraw engines 18 times per day. (i.e., 90 units/day) the remaining hours for 10 units of production will be rested by stopping this process. if the need occurs to increase production quantities by 10 %: The nal process must withdraw the engines 22 times per day with the Kanban. Then the preceding process has to produce 110 units, and the additional 10 units would be covered by overtime.

Smoothing of Production Purpose : To minimize slack time in regards to manpower, equipment and works in process. Production rule: withdraw the necessary goods at the necessary time in the necessary quantities. Under such rule, if the subsequent process withdraws parts in a uctuating manner in regards to time or quantity, then the preceding processes should prepare as much inventory, equipment, and manpower as needed to adapt to the peak; in the variance of quantities demanded. The variance of the quantities withdrawn by each subsequent process may become larger further back to preceding processes.

ln order to prevent such large variance in all production lines, including the external subcontracted companies, an eort must be made to minimize the uctuation of production in the nal assembly line. Idea of production smoothing : Produce products in Minimum lot sizes (small lot sizes) to minimizes the variance in the consumption of various quantities of raw materials, parts, subassemblies in the production system. That is to maintain a constant rate of consumption. To promote smoothed production corresponding to such a variety of products, it is necessary to have general-purpose or exible machines.

An advantage of smoothed production responding to product variety is that the system can adapt smoothly to the variations in customer demand by gradually changing the frequency of lots without altering the lot size in each process, or ne-tuning of production by Kanban. The reduction in lead time will require the shortening of setup time for minimizing the lot size.

MULTIPLE PRODUCTS Minimal product set (MPS): Daily production of three type Cars, A, B, C 300 cars of type A 250 cars of type B 200 cars of type C The smallest ratio that satises the demand : 6 cars of type A 5 cars of type B 4 cars of type C

The possible sequences: AAAAAAAA BBBBBBBBB CCCCCCCCC..... ABCBACABACABACB.........

Example 1: Demand: 10,000 Coronas per month 20 working days per month Working hours : 8 hours per day. Monthly Demand of Car Type: 5000 Sedans 2500 Hardtops 2500 Wagons

Daily Demand: 250 Sedans per day 125 Hardtops per day 125 Wagon per day One day : one 8 hrs shift = 480 mins. Production rate: 500 units per 480 mins. Unit cycle time = 480/500 = 0.96 min = 57.5 seconds.

Cycle time for Sedans = 480/250 = 1 min 55 sec. Cycle time for Hardtops = 480/125 = 3 min 50 sec. Cycle time for Wagon = 480/125 = 3 min 50 sec. Considering, options, colors, etc., 3,000 to 4,000 kinds of Coronas are actually being produced.

A Car B Car C Car D Car E Car

Monthly Demand Daily Demand Cycle Time 4800 240 2 2400 120 4 1200 60 8 600 30 16 600 30 16 9600 480 1 Table 1: Example 2

Method of Smoothing Production Example 2:

Setup Time Reduction Setup time at pressing department, Toyota: 1945 to 1954 : 2 or 3 hrs 1955-1964 : 15 mins 1970 : 3 mins. In order to shorten the setup time. it is important to neatly prepare in advance the necessary jigs, tools, the next die and materials, and remove the detached die and jigs after the new die is settled and the machine begins to operate. Convert Internal setup to External setup.

Inventory Theory and Lot Sizing : D = demand rate (units per year) S = setup cost (dollars per setup) C = unit cost (dollars per unit) r = inventory carrying charge (dollars per dollar of inventory per year) H = rC inventory carrying charge (dollars per unit of inventory per year) Lot size = Q Q= 2DS H

2DS p Q= H pu p = production rate (units per year)

Design of process: Layout: Cellular Layouts Multi-process holding: one operator handles several processes in a cell. Multi function worker: cell environment require workers with multiple skills.

Standardization of jobs:
N ecessary output per day = N ecessary output per month operating days per month

operating hours per day cycle time = necessary output per day Kanban is not the only information to be given to each process. A Kanban is a type of production dispatching information during the months in question, whereas the daily quantity and cycle time information are given in advance to prepare the master production schedule through out the factory. Standard operations routine indicates the sequence of operations that should be taken by a worker in multiple processes of the department.

Autonomation: Andon electric light board Visual control system Yellow light on the Andon delay in a workstation Red light on Andon some problem in a workstation or machine (Autonomous check reveals something unusual in a process).

Improvement Activities: QC -Circle Each worker has the chance to make suggestions and propose improvements via a small group called a QC circle. Such a suggestion-making process allows for improvement in quality control by adapting standard operations routine to changes in cycle time; in quality assurance, by preventing recurrence of defective works and machines; and, lastly in respect-for-humanity, by allowing each worker to participate in the production process.

Today Toyota produces well over 200,000 units per month. ln 1952, it took ten employees one month to produce one truck. In 1961, Toyotas monthly production was 10,000 units. (10,000 employees, it meant that every month one employee produced one passenger car.) In the last couple of years. the monthly production ranged from 230,000 to 250,000 units (employees, 45,000). This means that each employee is credited with making ve passenger cars each month. For many years, they have thought about and improved their manufacturing method. that is what they call today the Toyota Production System.

Summary :

The basic purpose of the JIT system is to increase prots by reducing costs.

That is - by completely eliminating waste such as excessive stocks, workforce.

To achieve cost reduction, production must promptly and exibly adapt to changes in market demand without having wasteful slacks (such an ideal can be accomplished by the concept of Just-intime.

Summary :

Production must be smoothed to level the quantities and variety in the withdrawals of parts by the nal assembly line.

Such smoothing will require the reduction of the production lead time, since various parts must be produced promptly each day (small lot).

Continuous improvement - Kaizen Total employee involvement In one year, Canon employee generated over 900,000 suggestions. 78 suggestions/employee Canon - 13 th Rank In Toyota, 5 million suggestions. Over 100 suggestions /employee Rank 1. $ 1 improvement per suggestion per year.

Reference
Production/Operations Management by William J. Stevenson, Seventh Edition, Irwin/McGraw-Hill, 2002. Toyota Production System by Monden, Yasuhiro, Industrial Engineering and Management Press, Norcross, GA, 1984.