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OPERATiONS
Presented By:
Group 7
1 2 4
Main assembly complex Supplier
3 11
buildings
surround
main
10
assembly
complex
9
8
14
13
12
Just-In-Time, TPS, and
Lean Operations
• JIT - continuous and forced problem solving
via a focus on throughput and reduced
inventory
• TPS -continuous improvement, respect for
people, and standard work practices
• Lean production - supplies the customer
with exact wants when the customer wants
it without waste
Just In Time
Good production systems require that
managers address three issues that are
pervasive and fundamental to operations
management: eliminate waste, remove
variability, and improve throughput
Three Elements of JIT
Eliminate Waste
Raw Final
Material Customer
Assembly
Supplier
PUSH
Raw
Final
Material Customer
Assembly
Supplier
PULL
Information Flow
Material Flow
Remove Variability
• JIT systems require managers to
reduce variability caused by both
internal and external factors
• Variability is any deviation from the
optimum process
• Inventory hides variability
• Less variability results in less waste
Inventory is Evil
Sources of Variability
• Reduce •Reduce
Setup Variability
Costs
4 1
3 2
• Reduce • Reduce
Lot Size Inventory
•Inventory hides variability &
problems
•Analogy with the lake full of
rocks
Water:
Inventory Flow
Inventory level
Process
Scrap downtime
Rocks:
Problems Setup Quality
time problems
Late deliveries
•Uncovering of the “rocks”
•Reveals problems,
variability
•Management clears the
lake
Inventory
level
Process
Scrap downtime
Setup Quality
time problems Problems
revealed
Late deliveries
No problems No inventory
Inventory
level
No scrap Quality
problems
Setup removed
time
reduced Process
Late downtime
deliveries removed
•Key to JIT:
“Good product in small lot
sizes”
•Reduces Inventory Costs
Q1 When average order size = 200
average inventory is 100
200 –
Inventory
Time
Lowering the order size Increases the Order size Decreases Inventory
•Ideal Situation
•Lot Sizes of ONE pulled from ONE process to the
next
•But, unrealistic
•Small lot sizes possible but Single lot size not
feasible
•Two necessary changes:
•Improve Material Handling
•Reduce Setup time
Lot Size Example: Crate Furniture Inc.
D = Annual demand = 400,000 units
d = Daily demand = 400,000/250 = 1,600 per day
p = Daily production rate = 4,000 units
Q = EOQ desired = 400
H = Holding cost = $20 per unit
S = Setup cost (to be determined)
2DS 2DS
Q= Q2 =
H(1 - d/p) H(1 - d/p)
T1
Setup cost curves (S1, S2)
T2
S1
S2
Lot size
• Setup Costs highly
correlated with Setup time
• Better Scheduling
1 • Supports JIT
5 • Reduces work-in-process
JIT Scheduling: Example Ford Motor Company
Ford communicates its Schedule describes:
Style and color of
schedules to bumper the bumper for
Polycon Industries each vehicle
Level
Schedules
Kanban
1. Level Schedules: Jelly Bean Scheduling
• Technique processes frequent small batches
• Many “always changing” small lots
JIT Level Material-Use Approach
A A B B B C A A B B B C
Large-Lot Approach
A A A A A A B B B B B B B B B C C C
Time
Freezing
• Not allowing changes
• Improves the performance
• The portion closest to the due dates
• Allows
– Production system to function
– Schedule to be met
2. Kanban: Only when ready
1. User removes a
standard sized
container
2. Signal is seen by the
producing
department as
authorization to
replenish
Signal marker on
boxes
Part numbers
mark location
Figure 16.8
© 2011 Pearson Education, Inc. publishing as Prentice Hall
Kanban
Ship
Purchased Sub-
Parts Kanban
assembly
Supplier
Number of Kanban Cards or Containers
• 1st – Set the size of each container
– Need to know the lead time needed to produce a
container of parts
– Need to know the amount of Safety Stock needed
• 2nd – Calculate no of Kanbans
Example: No of Kanban: Hobbs Bakery
Better quality
means fewer JIT improves
buffers=Easier-to quality
use JIT system
JIT Quality Tactics
Use statistical process control
Empower employees
Build fail-safe methods (poka-yoke,
checklists, etc.)
Expose poor quality with small lot
JIT
Provide immediate feedback
Table 16.4
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Toyota Production System
• Continuous improvement
• Build an organizational culture and value system
that stresses improvement of all processes
• Part of everyone’s job
• Respect for people
• People are treated as
knowledge workers
• Engage mental and
physical capabilities
• Empower employees
Toyota Production System
• Standard work practice
• Work shall be completely specified as to
content, sequence, timing, and outcome
• Internal and external customer-supplier
connection are direct
• Product and service flows must be simple and
direct
• Any improvement must be made in
accordance with the scientific method at the
lowest possible level of the organization
Lean Operations
Group 7