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Line Balancing..

Purpose is to minimize the number


of people and/or machines on an
assembly line that is required to
produce a given number of units

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71

Line Balancing Example


EXAMPLE
Green Grasss plant manager just received marketings latest
forecasts of fertilizer spreader sales for the next year. She
wants its production line to be designed to make 2,400
spreaders per week. The plant will operate 40 hours per week.
a. What should be the lines cycle time or throughput rate per
hour be?
Throughput rate/hr = 2400 / 40 = 60 spreaders/hr
Cycle Time = 1/Throughput rate= 1/60 = 1 minute = 60 seconds

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72

Line balancing Example continued:


Assume that in order to produce the new fertilizer spreader on the
assembly line requires doing the following steps in the order
specified:
Work
Element

Description

Time
(sec)

Immediate
Predecessor(s)

Bolt leg frame to hopper

40

None

Insert impeller shaft

30

Attach axle

50

Attach agitator

40

Attach drive wheel

Attach free wheel

25

Mount lower post

15

Attach controls

20

D, E

Mount nameplate

18

F, G

Total 244

b.What is the total number of stations or machines required?


TM (total machines) = total production time / cycle time = 244/60 = 4.067 or 5
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Draw a Precedence Diagram


SOLUTION
The figure shows the complete diagram. We begin with work
element A, which has no immediate predecessors. Next, we add
elements B and C, for which element A is the only immediate
predecessor. After entering time standards and arrows showing
precedence, we add elements D and E,
and so on. The diagram simplifies
D
H
interpretation. Work element F,
40
B
for example, can be done
20
E
30
anywhere on the line after
element C is completed.
6
A
However, element I must
F
40
C
await completion of
25
elements F and G.
50
I

Precedence Diagram for


Assembling the Big Broadcaster
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Allocating work or activities to


stations or machines
The goal is to cluster the work elements into
workstations so that
1.

The number of workstations required is minimized

2.

The precedence and cycle-time requirements are not


violated

The work content for each station is equal (or


nearly so, but less than) the cycle time for the line
Trial-and-error can be used but commercial
software packages are also available

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

75

Finding a Solution
The minimum number of workstations is 5 and the
cycle time is 60 seconds, so Figure 5 represents
an optimal solution to the problem
D
B

30

20

A
40

40

F
C

25

50

I
G

18

15
Firtilizer Precedence Diagram Solution
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

76

Calculating Line Efficiency


c. Now calculate the efficiency measures of a five-station
solution:
t
244
= 81.3%
Efficiency = nc (100) =
5(60)
Balance delay (%) = 100 Efficiency = 100% - 81.3% = 18.7%

Idle time = nc t = 5(60) 244 = 56 seconds

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

77

A Line Process
The desired output rate is matched to the
staffing or production plan
Line Cycle Time is the maximum time
allowed for work at each station is
1
c= r
where
c = cycle time in hours
r = desired output rate

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

78

A Line Process
The theoretical minimum number of
stations is
t
TM = c
where
t =
total time required to
assemble each unit

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

79

A Line Process
Idle time, efficiency, and balance delay
Idle time = nc t
where
n=

number of stations

t
Efficiency (%) = nc (100)
Balance delay (%) = 100 Efficiency

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

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Solved Problem 2
A company is setting up an assembly line to produce 192 units
per 8-hour shift. The following table identifies the work
elements, times, and immediate predecessors:
Work Element

Time (sec)

40

80

30

25

20

F
G
H

15
120
145

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Immediate Predecessor(s)
None
A
D, E, F
B
B
B
A
G

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Solved Problem 2
a. What is the desired cycle time (in seconds)?
b. What is the theoretical minimum number of stations?
c. Use trial and error to work out a solution, and show your
solution on a precedence diagram.
d. What are the efficiency and balance delay of the solution
found?
SOLUTION
a. Substituting in the cycle-time formula, we get
8 hours
1
c = r = 192 units (3,600 sec/hr) = 150 sec/unit

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

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Solved Problem 2
b. The sum of the work-element times is 720 seconds, so
t
TM = c =

720 sec/unit
150 sec/unit-station

= 4.8

or 5 stations

which may not be achievable.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

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Solved Problem 2
c. The precedence diagram is shown in Figure 7.6. Each row in
the following table shows work elements assigned to each
of the five workstations in the proposed solution.
D
25

Immediate
Predecessor(s)

None

D, E, F

80

20

30

C, I

A
40

Work
Element

15

115

120
H

145

130

Figure 7.6 Precedence Diagram


Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

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Solved Problem 2

D
25
B

80

20

30

40

Candidate(s)

Choice

Work-Element
Time (sec)

15

G
120

Station

115

Cumulative
Time (sec)

I
130

145

Idle Time
(c= 150 sec)

S1

S2
S3
S4
S5

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7 15

Solved Problem 2

D
25
B

80

20

30

40

15

G
H

120

Station

Candidate(s)

Choice

Work-Element
Time (sec)

115

I
130

145

Cumulative
Time (sec)

Idle Time
(c= 150 sec)

40

40

110

80

120

30

D, E, F

25

145

E, F, G

120

120

30

E, F

20

140

10

S3

F, H

145

145

S4

F, I

130

130

20

15

145

30

30

120

115

145

S1

S2

S5

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Solved Problem 2
d. Calculating the efficiency, we get

Efficiency (%) =

720 sec/unit
t
nc (100) = 5(150 sec/unit)

= 96%
Thus, the balance delay is only 4 percent (10096).

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

7 17

In class - Example
A plant manager needs a design for an assembly line to assembly
a new product that is being introduced. The time requirements and
immediate
predecessors for the
work elements are
as follows:

Work Element

Time (sec)

12

60

36

24

38

C, D

72

B, E

14

72

35

G, H

60

12

F, J

Total =
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Immediate
Predecessor

435
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In class - Example
Draw a precedence diagram, complete I, F, J, and K

Work
Element

Time (sec)

Immediate
Predecessor

12

60

36

24

38

C, D

72

B, E

14

72

35

G, H

60

12

F, J

Total =

435

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

B
F

E
J

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In class - Example
If the desired output rate is 30 units per hour, what are the cycle
time and theoretical minimum?
1
c= r =

1
(3600) = 120 sec/unit
30

t
435
TM = c =
= 3.6
120

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

or 4 stations

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In class - Example
Suppose that we are fortunate enough to find a solution with
just four stations. What is the idle time per unit, efficiency, and
the balance delay for this solution?
Idle time = nc t = 4(120) 435 = 45 seconds
Efficiency (%) =

435
t
nc (100) = 480 (100) = 90.6%

Balance delay (%) = 100 Efficiency = 100 90.6 = 9.4%

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

7 21

In class - Example
Using trial and error, one possible solution is shown below.

Station

Work
Elements
Assigned

Cumulative Time

Idle Time
(c = 120)

1
2
3
4
5

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

7 22

In class - Example
Using trial and error, one possible solution is shown below.

Station

Work
Elements
Assigned

Cumulative Time

H, C, A

120

B, D, G

98

22

E, F

110

10

I, J, K

107

13

Idle Time
(c = 120)

A fifth station is not needed

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

7 23

Managerial Considerations
Pacing is the movement of product from
one station to the next
Behavioral factors such as absenteeism,
turnover, and grievances can increase after
installing production lines
The number of models produced
complicates scheduling and necessitates
good communication
Cycle times are dependent on the desired
output rate
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

7 24

Inventory
Management & the
Economic Order
Quantity (EOQ)
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Lecture today
Why is inventory so bad?
Why hold inventory?
Where to hold inventory?
What are types of inventory to keep?
What are the inventory costs?
How much inventory to keep?
When to order & how much to order?
What do I need to know to make those
decisions?
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Inventory Management

Inventory management is the planning and


controlling of inventories in order to meet the
competitive priorities of the organization.
Inventory management requires information
about expected demands, amounts on hand and
amounts on order for every item stocked at all
locations.

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Inventory Basics

Inventory is created when the receipt of


materials, parts, or finished goods
exceeds their disbursement.
Inventory is depleted when their
disbursement exceeds their receipt.
An inventory managers job is to balance
the advantages and disadvantages of
both low and high inventories.

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Inventory Costs
Cost of capital
Obsolescence
Storage
Insurance
Taxes
Security
Theft
Damage
Locating
Measurement
Management & Labor

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Why hold Inventory?


Customer Sales & Service: Avoid Retail
stock outs and thus customer goodwill
(Retailing)
Seasonal sales (Xmas trees)
Take advantage of quantity discounts
Balance process flow time
Uncertainty in supply and demand
Lead Time
Speculative inventory (wine, gold)

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Inventory at WAL-MART
Making sure the shelves are stocked with tens of
thousands of items at their 5,379 stores in 10 countries is
no small matter for inventory managers at Wal-Mart.
Knowing what is in stock, in what quantity, and where it is
being held, is critical to effective inventory management.
With inventories in excess of $29 billion, Wal-Mart is
aware of the benefits from improved inventory
management.
They know that effective inventory management must
include the entire supply chain.
The firm is implementing radio frequency identification
(RFID) technology in its supply chain.

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Macro Inventory Decisions

Where do we hold inventory?

Manufacturers and suppliers


warehouses and distribution centers
retailers

Types of Inventory to keep?

raw materials
WIP
finished goods
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Micro Inventory Decisions


When to order items?
How much of each item to order?
How much safety stock to keep?
Objective: minimize overall cost of keeping
inventory!

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Relevant Costs in an Inventory System


Procurement costs
Ordering

cost (administrative, inspection,


transportation etc.)

Holding costs
Maintenance

and Handling

Taxes
Obsolescence

Stock-outs costs
Lost

sales (Customer goodwill)

Backorders

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Relevant information to any inventory


decision

Knowing how much demand there is


Knowing if this demand is fairly constant or
varies
Knowing what is in stock
Knowing where they exist in the supply chain
Knowing how long it will take to replenish
Knowing where it is going to be replenished from
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Frequently used inventory terms

Inventory lot size


Replenishment Lead time
Stock out
Reorder Point
Safety stock

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Knowing which Items are Critical

Thousands of items are held in inventory


by a typical organization, but only a
small % of them deserves managements
closest attention and tightest control.
ABC analysis: The process of dividing
items into three classes, according to
their dollar usage, so that managers can
focus on items that have the highest
dollar value.
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ABC Analysis
100
90

Percentage of dollar value

Class C

Class B

80 Class A
70
60
50
40
30
20
10
0
10

20

30

40

50

60

70

80

90 100

Percentage of items
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Economic Order Quantity (EOQ)


Economic Order Quantity (EOQ) is the
lot size that minimizes total annual
inventory holding and ordering costs.
Assumptions of EOQ
1.
2.
3.
4.
5.

The demand rate is constant and known with


certainty.
There are no constraints on lot size.
The only relevant costs are holding costs
and ordering/setup costs.
Decisions for items can be made
independently of other items.
Lead time is constant and known with
certainty.
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Cycle-Inventory Levels

On-hand inventory (units)

Receive
order

Inventory depletion
(demand rate)

Average
cycle
inventory

1 cycle

Time
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Total Annual Cycle-Inventory Costs

Annual cost (dollars)

Q = lot size; C = total annual cycle-inventory cost


H = holding cost per unit; D = annual demand
S = ordering or setup costs per lot
Q
D
Total cost =
( H) +
( S)
2
Q

Holding cost =

Ordering cost =

Q
( H)
2

D
( S)
Q

Lot Size (Q)


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Costing out a Lot Sizing Policy


Museum of Natural History Gift Shop:
Bird feeder sales are 18 units per week, and the
supplier charges $60 per unit. The cost of placing an
order (S) with the supplier is $45.
Annual holding cost (H) is 25% of a feeders value,
based on operations 52 weeks per year.
Management chose a 390-unit lot size (Q) so that new
orders could be placed less frequently.
What is the annual cycle-inventory cost (C) of the
current policy of using a 390-unit lot size?

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Costing out a Lot Sizing Policy


Museum of Natural History Gift Shop:
What is the annual cycle-inventory cost (C) of the
current policy of using a 390-unit lot size?
D = (18 /week)(52 weeks) = 936 units

C=

H = 0.25 ($60/unit) = $15

Q
D
936
390
(H) +
(S) =
(15) +
(45)
2
Q
390
2

C = $2925 + $108 = $3033

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Lot Sizing at the Museum


of Natural History Gift Shop
Current
cost

Annual cost (dollars)

3000

Total cost
2000

Holding cost
1000

Ordering cost

Lowest
0
cost
|
50

Best Q (EOQ)

|
100

|
150

|
200

|
250

Lot Size (Q)

|
300

|
350

|
400

Current
Q

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Computing the EOQ


Bird Feeders:
EOQ =

2DS
H

D = 936 units
H = $15
S = $45
C=

Q
D
(H) +
(S)
2
Q

D = annual demand
S = ordering or setup costs per lot
H = holding costs per unit
EOQ =

C=

2(936)45 = 74.94 or 75 units


15
75
936
(15) +
(45)
2
75

C = $1,124.10
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Time Between Orders


Time between orders (TBO) is the average
elapsed time between receiving (or placing)
replenishment orders of Q units for a particular
lot size.
TBOEOQ =

EOQ
D

For the birdfeeder example, using an EOQ of 75


EOQ
units. TBOEOQ = D = 75/936 = 0.080 year
TBOEOQ = (75/936)(12) = 0.96 months
TBOEOQ = (75/936)(52) = 4.17 weeks
TBOEOQ = (75/936)(365) = 29.25 days
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In Class Example

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In Class Example

7 51

In Class Example (continued)

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In Class Example
continued

7 53

Understanding the Effect of Changes


What happens if there is a change in the
Demand Rate (D)?
What happens if the Setup Costs (S)
changes?
What happens if the holding Costs (H)
change?
What happens if there are errors in
estimating D, H, and S?

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