A Modification of Goldratt

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A Modification ofGoldratts Simulation
This simulation is a modification of a simulation
in Chapter 14 of The Goal by Eliyahu
Goldratt published by North River Press, 1992 By
the way, I highly recommend to you this novel
about a plant managers quest to improve
operations at his plant to prevent its closure.
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Learning Objectives
Introduce the concept of Simulation.
Understand the impact that Variance has on
process flow, and then understand how to manage
this impact.
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Overview
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One Work Station
What if there is just ONE Workstation?
What is the Work Stations capacity (i.e., the
average output of Finished Goods per period)?
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Line 1 (Base Case)
What is your prediction of the average output of
Finished Goods?
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Initializing the Simulation
Appoint one member of the team to be the teams
Accountant. The Accountant will enter data on
the Recording Form.
Place the initial inventory into each WIP
location.
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The Steps of One Periodin the Simulation
Step 1 The person working at WS 1 rolls a die
(or flips a coin) to determine the capacity of
WS 1. From the unlimited supply of Raw
Materials, move to WIP 1?2 a quantity equal to
the capacity of WS 1. On the Recording Form,
enter the quantity moved.
Step 2 The person working at WS 2 rolls a die
(or flips a coin) to determine the capacity of
WS 2. From WIP 1?2, move to WIP 2?3 a
quantity equal to the minimum of the inventory in
WIP 1?2 and the capacity of WS 2. On the
Recording Form, enter both the quantity moved by
WS 1 and the remaining inventory in WIP 1?2.
Steps 3, 4, 5, 6 For WS 3, WS 4, WS 5,
WS 6, proceed as in Step 2, until WS 6 has
moved units to Finished Goods. Begin the next
period by returning to Step 1.
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Summary of Your Simulations of Line 1
Go to Excel Workbook
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Summary of My Simulations ofLine 1 (Base Case)
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Improvements
How can we increase the Line 1s average capacity
(i.e., output of Finished Goods)?

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Lines 1, 2, 3
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Summary of Your Simulations of Lines 1, 2, 3
Go to Excel Workbook
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Summary of My Simulations of Lines 1, 2, 3
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1000 Work Stations?
For the Base Case, suppose that, instead of only
6 Work Stations, there are 1000 Work
Stations. What do you predict about the
processs capacity?
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Conclusions
When a process has components whose capacities
vary from period to period, it is a mistake to
compute the processs capacity using only the
averages of the components capacities.
Instead of averaging out, the variations in the
components capacities propagate through the
process in a successively negative manner and
result in the processs capacity being
significantly less than the components average
capacities.
Although increasing WIP will increase the
processs capacity, a better alternative is to
decrease the variances in the capacities of the
processs components.