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JUST IN TIME PRODUCTION SYSTEMS:Operational Benefits, Kanban Formula

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Production and Operations Management ­MGT613
VU
Lesson 37
JUST IN TIME PRODUCTION SYSTEMS
We have progressed our discussion on Lean Production Systems and Just In Time Systems and we will
now focus our attention upon Lean Systems in Services, Operational Benefits associated with JIT. We
will also note some of the common Implementation Issues along which the Organizational face while
implementing JIT. We also need to know what single Kanban System is and solve some examples.
Characteristics of Lean Systems: Just-in-Time
Continuous Improvement with the help of Lean Systems is possible if Operations Managers are able
to focus on some of the common characteristics of Lean Systems, which include:
1.
Pull method of materials flow
2.
Consistently high quality
3.
Small lot sizes
4.
Uniform workstation loads
5.
Standardized components and work methods
6.
Close supplier ties
7.
Flexible workforce
8.
Line flows
9.
Maintenance
10.
Automated production
11.
Preventive maintenance
The figure below of a ship sailing through waters is a great representation of an organization
carrying its business with hidden rocks (barriers) like scrap, unreliable suppliers and capacity
imbalance, carrying the threat of sinking the ship. With proper and effective lean production system
philosophy in place, this can be avoided and organization can continue to sail through smooth and
calm waters.
Unreliable
Capacity
Scrap
suppliers
imbalance
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Production and Operations Management ­MGT613
VU
Lean Systems in Services
1.
Consistently high quality
2.
Uniform facility loads
3.
Standardized work methods
4.
Close supplier ties
5.
Flexible workforce
6.
Automation
7.
Preventive maintenance
8.
Pull method of materials flow
9.
Line flows
Operational Benefits
1.
Reduce space requirements
2.
Reduce inventory investment
3.
Reduce lead times
4.
Increase labour productivity
5.
Increase equipment utilization
6.
Reduce paperwork and simple planning systems
7.
Valid priorities for scheduling
8.
Workforce participation
9.
Increase product quality
Implemental Issues
1. Organizational considerations
a. Human cost of JIT systems
b. Cooperation and trust
c. Reward systems and labour classifications
2. Process considerations
3. Inventory and scheduling
a. MPS stability
b. Setups
c. Purchasing and logistics
Kanban Production Control System
Kanban: Card or other device that communicates demand for work or materials from the preceding
station.
Kanban is the Japanese word meaning "signal" or "visible record".
Paperless production control system.
Authority to pull, or produce comes from a downstream process.
Kanbans also govern the assembly or Parts' movement authorization
Kanban Formula
We can mathematically construct the Kanban Formula, If we designate the following alphabets
N = Total number of containers ( Or Kanban Cards)
D = Planned usage rate of using work center
T = Average waiting time for replenishment of parts
plus average production time for a
container of parts
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Production and Operations Management ­MGT613
VU
X = Policy variable set by management
- possible inefficiency in the system often called Alpha
C = Capacity of a standard container
DT(1+X)
N
=
C
Often the same formula above is used with the following parameters in mind
N= # cards
D= usage
T = wait + process time
X = efficiency rating
C = bin capacity
Example
A company in Gujranwala is making rubber tyres and tubes. The operations manager has just
completed his MBA from VU and has observed the that factory has inefficient machine group. He
records that the daily demand for 21" tube is 1000 units. The average waiting time for a container of
the same part is 0.5 day. The processing time for the tyre tube container is 0.25 day. A container can
hold 500 units, currently there are 20 containers for this item.
Calculate
1. What is the value of policy variable ALPHA?
2. What is the total planned inventory (work in process and finished goods) for the tyre tube?
3. Suppose that the policy variable Alpha is 0, how many containers would be needed? what is
the effect of policy variable in this problem?
Solution
The given data is
d is 1000 units, w bar = 0.5 day.
P bar= 0.25 day. K= 500 units and Alpha is to be calculated.
We use the equation and substitute values
d( w + p )( 1 +α )
k=
c
Then with 20 containers in the system and since each container can hold 500 units, the total planned
inventory is 20 (500)= 10,000 units
If Alpha is 0 then on substituting values we have
1000(0.5 +0.25 )( 1 + α )
500 =
20
(1 + a )=500 X 20 / 1000 (0.75)
(1 + a )=10,000/750=13.33
a =12.33
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Production and Operations Management ­MGT613
VU
Then with 20 containers in the system and since each container can hold 500 units, the total
planned inventory is 20 ( 500)= 10,000 units
If Alpha is 0 then on substituting values we have
1000(0.5 +0.25 )( 1 + 0 )
k=
500
1000(0.75 )( 1 )
k=
500
K= 750/500= 1.5 or more correctly 2 containers.
Single-Card Kanban System
1.
Each container must have a card.
2.
Assembly always withdraws from fabrication (pull system).
3.
Containers cannot be moved without a kanban.
4.
Containers should contain the same number of parts.
5.
Only good parts are passed along.
6.
Production should not exceed authorization.
Summary
Organizations use different methods and means to signal the need for material replenishment and
production, in this lecture we studied the effective kanban system and learnt how a single card Kanban,
JIT System can be used to control production flow.
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Table of Contents:
  1. INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT
  2. INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT:Decision Making
  3. INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT:Strategy
  4. INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT:Service Delivery System
  5. INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT:Productivity
  6. INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT:The Decision Process
  7. INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT:Demand Management
  8. Roadmap to the Lecture:Fundamental Types of Forecasts, Finer Classification of Forecasts
  9. Time Series Forecasts:Techniques for Averaging, Simple Moving Average Solution
  10. The formula for the moving average is:Exponential Smoothing Model, Common Nonlinear Trends
  11. The formula for the moving average is:Major factors in design strategy
  12. The formula for the moving average is:Standardization, Mass Customization
  13. The formula for the moving average is:DESIGN STRATEGIES
  14. The formula for the moving average is:Measuring Reliability, AVAILABILITY
  15. The formula for the moving average is:Learning Objectives, Capacity Planning
  16. The formula for the moving average is:Efficiency and Utilization, Evaluating Alternatives
  17. The formula for the moving average is:Evaluating Alternatives, Financial Analysis
  18. PROCESS SELECTION:Types of Operation, Intermittent Processing
  19. PROCESS SELECTION:Basic Layout Types, Advantages of Product Layout
  20. PROCESS SELECTION:Cellular Layouts, Facilities Layouts, Importance of Layout Decisions
  21. DESIGN OF WORK SYSTEMS:Job Design, Specialization, Methods Analysis
  22. LOCATION PLANNING AND ANALYSIS:MANAGING GLOBAL OPERATIONS, Regional Factors
  23. MANAGEMENT OF QUALITY:Dimensions of Quality, Examples of Service Quality
  24. SERVICE QUALITY:Moments of Truth, Perceived Service Quality, Service Gap Analysis
  25. TOTAL QUALITY MANAGEMENT:Determinants of Quality, Responsibility for Quality
  26. TQM QUALITY:Six Sigma Team, PROCESS IMPROVEMENT
  27. QUALITY CONTROL & QUALITY ASSURANCE:INSPECTION, Control Chart
  28. ACCEPTANCE SAMPLING:CHOOSING A PLAN, CONSUMER’S AND PRODUCER’S RISK
  29. AGGREGATE PLANNING:Demand and Capacity Options
  30. AGGREGATE PLANNING:Aggregate Planning Relationships, Master Scheduling
  31. INVENTORY MANAGEMENT:Objective of Inventory Control, Inventory Counting Systems
  32. INVENTORY MANAGEMENT:ABC Classification System, Cycle Counting
  33. INVENTORY MANAGEMENT:Economic Production Quantity Assumptions
  34. INVENTORY MANAGEMENT:Independent and Dependent Demand
  35. INVENTORY MANAGEMENT:Capacity Planning, Manufacturing Resource Planning
  36. JUST IN TIME PRODUCTION SYSTEMS:Organizational and Operational Strategies
  37. JUST IN TIME PRODUCTION SYSTEMS:Operational Benefits, Kanban Formula
  38. JUST IN TIME PRODUCTION SYSTEMS:Secondary Goals, Tiered Supplier Network
  39. SUPPLY CHAIN MANAGEMENT:Logistics, Distribution Requirements Planning
  40. SUPPLY CHAIN MANAGEMENT:Supply Chain Benefits and Drawbacks
  41. SCHEDULING:High-Volume Systems, Load Chart, Hungarian Method
  42. SEQUENCING:Assumptions to Priority Rules, Scheduling Service Operations
  43. PROJECT MANAGEMENT:Project Life Cycle, Work Breakdown Structure
  44. PROJECT MANAGEMENT:Computing Algorithm, Project Crashing, Risk Management
  45. Waiting Lines:Queuing Analysis, System Characteristics, Priority Model