What is Productivity?

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Lean Production and the Just-in-Time Philosophy
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Lean Production

• Elimination of All Waste Waste is Anything that
  Does Not Add Value to Product.
• Continuous Improvement of Productivity

3
Seven Sources of Waste (Toyota)

• Process Minimize Scrap, Lot Sizes, Costs
• Methods Minimize Wasted Motions Effort
• Movement Minimize Moving Storing Parts
• Defects Eliminate
• Wait Time Minimize
• Overproduction Eliminate
• Inventory Eliminate or Reduce

4
Additional Ways to Eliminate Waste

• Limited Product Range
• Standardization of Components
• Poke-Yoke (Fail Safe)
• Kaizen
• Takt Time
• Value Stream Mapping

5
Just-In-Time (JIT) Is Pursuit of

• Zero Inventories
• Zero Transactions
• Zero Disturbances Routine Execution of
  Schedule
• Total Quality Management (TQM)

6
How Does JIT Minimize Inventories?

• 1. Lot-Size Stocks Allows Routine Batching of
  Orders and Quantity Discounts
• JIT Reduces Set Up and Order Costs by Automation,
  Group Technology, Contracts.
• Lot Sizes and Inventory Are Reduced.
• Vendor Contracts Allow Firm to Receive Quantity
  Discounts without Inventory.

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How Does JIT Minimize Inventories?

• Lot-Size Stocks
• Suppose Demand 5, Holding Cost 2, and
  Set Up 5
• Lot Size Holding Set Up Total
  1 1.00 25.00 26.00 5 5.00 5.00
  10.00 10 10.00 2.50 12.50
• Q 5 and Cost 10.00

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How Does JIT Minimize Inventories?

• Lot-Size Stocks
• Suppose Demand 5, Holding Cost 2, and
  Set Up .20
• Lot Size Holding Set Up Total
  1 1.00 1.00 2.00 5 5.00 0.20
  5.20 10 10.00 0.10 10.10
• Q 1 and Cost 2.00

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How Does JIT Minimize Inventories?

• 2. Safety (Buffer) Stocks Extra Inventory Set
  Aside for Uncertain Demand or Problems.
• JIT Advocates Customer Contracts.
• JIT Seeks to Eliminate Problems through
  Redundancy and Flexible Work Force.

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How Does JIT Minimize Inventories?

• 3. Anticipation (Seasonal) Stocks Allows
  Anticipation of Seasonal Surges in Demand.
• JIT Advocates Chase Production Planning
  Strategy.
• JIT Reduces Change in Production Costs (Setup,
  Hiring, Changeover).

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How Does JIT Minimize Inventories?

• 4. Transportation Stocks Inventory in Transit
  from One Point to Another.
• JIT Advocates Reduced Distances between Transit
  Points.

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JIT and Product Design

• Quality at the Source
• Standard and Modular Parts
• Reducing Real Levels Bill of Materials
• Design for Cellular Manufacturing

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Work Cell Example
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Work Cell Example

15
JIT and Process Design

• Setup Time Reduction Job Shops Become More Like
  Assembly Lines.
• Production Flexibility
• Cellular Manufacturing
• Process Inventory and Throughput Time Reduction

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JIT and Job Design

• Skilled and Motivated Work Force
• Continual Learning and Improvement
• Cross Training
• Worker Flexibility
• Surge Capacity Must Be Available

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JIT Ratio Analysis

• Lead Time to Work Content Production
  Lead Time / Work Content ? 5
• Process Speed to Sales Rate (Takt Time)
  Process Speed / Sales Rate or Use ? 5
• Pieces to Work Stations or Operators Number of
  Pieces / Number of Stations ? 5

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Kanban Systems

• Single-Card
• One Card per Item, Lot, or Container
• Cards in Rack Imply Production on Part
• Cards Indicating Assemble Part Can Be Used to
  Trigger Ordering More Parts

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Kanban Systems

• Two-Card
• First Card Is Transport or Withdrawal or
  Conveyance Card Placed in Stock of Exiting
  Part, Authorizes Replacement
• Second Card Is Production Card Placed in Work
  Center Box to Authorize Production

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Kanban Systems
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Use of Two-Card Kanban
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Kanban Systems

• Each Container Only One Kanban
• No Partials Each Container Filled, Empty, or
  Being Filled or Empty
• Production or Movement Must be Authorized by
  Kanban

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Number of Kanban Containers

• N DT(1X)/C
• N Number of Containers (or Cards)
• D Demand or Usage Rate
• T Mean Waiting or Lead Time for Part
  Replenishment Mean Production Time Using
  Parts
• X Inefficiency (1- Efficiency) (0 is Best)
• C Capacity of Standard Container

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Number of Kanban Containers

• Example
• D 100 Parts per Hour
• T 90 Minutes (1.5 Hours)
• X 0.1
• C 84 Parts
• N (100)(1.5)(1.1)/84 1.96 2

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