unit iii - prod. mgt

7/28/2019 Unit III - Prod. Mgt.

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Unit - III

Semester - II


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Planning and execution of the activities that use

workers, energy, information, and equipment to

convert raw materials into finished products

Delivering products with the desired functions,

aesthetics, and quality to the customers at right time

and with minimum cost

MAPCON Technologies is the supplier of the Best Maintenance ManagementSoftware and Preventative Maintenance Software for industry & facilities.


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Production Activity and Information Flows

Fabrication

Plant

AssemblyPlant

Distribution

Center

Retailer

Forecasting

Strategic Planning

Aggregate Production

Planning

Disaggregation

Production Scheduling

Shop Floor Control

Administrative Functions

(Purchasing, Payroll,

Finance, Accounting)

Marketing

Product Design

Process Planning

Manufacturing Support

(Facilities Planning,

Tool Management,

Quality Control,

Maintenance)

a) Product Flow b) Decision Hierarchy c) Support Functions

Raw Material

Customer

Finished

Products

Production-planning decisions typically made in a hierarchical manner:


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Production System Decision HierarchyInputs Process Outputs Length of

Planning

Horizon

Long Range Economic Forecasts Financial Choices

StrategicPlanning

Operating Facilities Product Line (Families)

Technologies

Years

Processing

Technologies/Efficiency

Medium Range Product

Family Forecasts

Machine Schedules

Aggregate

Production

Planning

Production Level

Workforce Level

Family Inventories

Months

Production Levels

Workforce Levels

Current Inventory Status

Changeover Times and Costs

Item Forecasts

Disaggregation Master Production

Schedule (MPS) - Final

Assembly by item

Item Inventories

Weeks

Bill of Materials

Process Plans

Production

Scheduling

Job Priorities

Order Releases

Machine Schedules

Days-Shift

Labor Status

Machine Status

Job Priorities

Order Releases

Machine Schedules

Shop Floor

Control

Machine Priorities

Job Status

Labor Reporting

Material Handling Tasks

Load/Prices/Unload

Authorization

Real Time

Minutes


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HighProfitability

Low

Costs

Low Unit

Costs

High

Throughput

Less

Variability

High

Utilization

Low

Inventory

Quality

Product

High

Sales

Many

products

Fast

Response

More

Variability

High

Inventory

Low

Utilization

Short

Cycle Times

High Customer

Service

Production Objectives

Throughput is the movement of inputs and outputs through a production process


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A typical aggregated plan states the level of major product families to be produced monthly

over the next year

Workforce levels,

Overtime levels,

Inventory levels

Objective:Generate a long-term production plan that establishes a rough product mix,anticipates bottlenecks, and is consistent with capacity and workforce plans.

Issues:

Aggregation: product families and time periods must be set appropriately for the

environment.

Coordination: AP is the link between the high level functions of

forecasting/capacity planning and intermediate level functions of MRP, inventory

control, and scheduling.

Anticipating Execution: AP is virtually always done deterministically, while

production is carried out in a stochastic environment.


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There are four basic types of production systems:

1. Process

2. Product

3. Cellular

4. Fixed positions

Layout Goals

Use space efficiently

Efficient personnel movement

Maximum equipment utilization

Convenient / safe work environment

Simplify repair / maintenance

Smooth flow of work


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Products, Processes, and Layouts

Make-to-stock

standardized

commodities

Continuous

process industries

repetitive mfg

Product Layout

Assemble-to-order

modular

Hybrid, FMS,

CAM, CIMCellular Layout

Job-Shop(Intermittent) Process Layout

Engineer-to-order

one-of-kind

Special Project Fixed Position

PRODUCTS PROCESSES LAYOUTS

Make-to-Ordercustom

low volume,

low variety

low volume,

high variety

low volume,

medium variety

high volume,

low variety


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Product Process Matrix

Process Type High variety Low variety

Job Shop Appliance repairEmergency room

Batch Commercial bakeryClassroom Lecture

Repetitive Automotive assemblyAutomatic carwash

Continuous

(flow)

Oil refinery

Water purification

Dimension Job Shop Batch Repetitive Continuous

Job variety Very High Moderate Low Very low

Process flexibility Very High Moderate Low Very low

Unit cost Very High Moderate Low Very low

Volume of output Very low Low High Very high


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Layout: the configuration of departments, work centers, and equipment,Whose design involves particular emphasis on movement of work (customers or

materials) through the system

Importance of layout Requires substantial investments of money and effort Involves long-term commitments Has significant impact on cost and efficiency of short-term operations

Layout


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The Need for Layout Design

Changes in

Environmental or other

legal requirements

Changes in volume of output or mix

of products

Changes in methods

and equipment

Morale problems

Inefficient operations

For Example:High Cost

Bottlenecks

Changes in the design

of products or services

The introduction of newproducts or services

Accidents

Safety hazards


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Types of Layouts

1. Product / Line Layout

Layout that uses standardized processing operations to achieve smooth, rapid, high-

volume flow. Eg. Auto plants, cafeterias

2. Process / Functional Layout

Layout that can handle varied processing requirements.

Eg. Tool and die shops, university departments

3. Fixed Position / Location LayoutLayout in which the product or project remains stationary, and workers, materials, and

equipment are moved as needed. Example: buildings, dams, power plants

4. Group Layouts / Cellular Layout

5. Combination / Hybrid Layout

It is a combination of product & process layout with an emphasis on eitherExample: hospital: process and fixed position.

1. Manufacturing Units

Plant Layout can be classified into Three Categories.1.Manufacturing Unit

2. Traders

3. Service Establishments


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Types of Layouts 1. Product / Line layout

Advantages

High volume

Low unit cost Low labor skill needed

Low material handling

High efficiency and utilization

Simple routing and scheduling

Simple to track and control

Disadvantages

Lacks flexibility

Volume, design, mix

Boring for labor Low motivation

Low worker enrichment

Can not accommodate partial shut

downs/breakdowns

Individual incentive plans are not possible

Product layout sets up production equipment along a product-flow line, and the work

in process moves along this line past workstations.

Efficiently produces large numbers of similar items.


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A U-Shaped Production Line

Advantage: more compact, increased communication facilitating team work, minimize the material handling

Types of Layouts 1. Product / Line layout


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Process layout groups machinery and equipment according to their functions.

Facilitates production of a variety of nonstandard items in relatively small batches.

Examples: Supermarkets, job-shops, hospitals

Types of Layouts 2. Process / Functional layout

Requirements:1. List of departments: Shape requirements2. Projection of work flows: One way vs. two way: Packaging and final assembly.3. Distance between locations: One way vs. two way: Conveyors, Elevators.4. Amount of money to be invested5. List of special considerations: Technical, Environmental requirements

Designing Process Layouts


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Process Layout - work travels to dedicated process centers

Milling

Assembly

& TestGrinding

Drilling Plating

Types of Layouts 2. Process / Functional layout

Advantages of processlayout Better utilization of

machines can result;consequently, fewermachines are required. A high degree of

flexibility exists relative toequipment or manpowerallocation for specifictasks. Comparatively low

investment in machinesis required. The diversity of tasks

offers a more interestingand satisfying occupationfor the operator. Specialized supervision is

possible.

Disadvantages of process layout Since longer flow lines usually result, material

handling is more expensive. Production planning and control systems are

more involved. Total production time is usually longer. Comparatively large amounts of in-process

inventory result. Space and capital tied up by work in process. Because of diversity of the jobs in specialized

departments, higher grades of skills are required.


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Product or Process Make your pick

A

B

A

B


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Workers

Inventory

Storage space

Material handling

Aisles

Scheduling

Layout decision

Goal

Advantage

l Limited skills

l Low in-process, high

finished goods

l Small

l Fixed path (conveyor)

l Narrow

l Line balancing (Easier)

l In-line, U-type

l Equalize work at eachstation

l Efficiency

Process

Comparison of Product and Process Layouts

l High skills

l High in-process, low

finished goods

l Large

l Variable path (forklift)

l Wide

l Dynamic (More difficult)

l Functional

l Minimize material handlingcost

l Flexibility

Product


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A fixed-position layout places the product in one spot, and workers, materials, and

equipment come to it.

Types of Layouts 3. Fixed-Position / Location Layout

Fixed Position Layout

e.g. Shipbuilding


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Advantages:

Material movement is reduced.

Promotes job enlargement by allowing

individuals or teams to perform the whole

job.

Continuity of operations and responsibility

results from team.

Highly flexible; can accommodate changes

in product design, product mix, and

production volume.

Independence of production centers allows

scheduling to achieve minimum total

production time.

Limitations:

Increased movement ofpersonnel and equipment.

Equipment duplication may

occur.

Higher skill requirements for

personnel.

General supervision required.

Cumbersome and costly

positioning of material and

machinery.

Low equipment utilization.



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In cellular manufacturing layout the

arrangement of a facility so thatequipment Used to make similar parts

or families of parts is grouped together

The group of equipment is

called cell

The arrangement of cells is

called a cellular Layout

1

5

2

4

3

1

Cell 1211 3 Cell 3

Cell 2 Cell 4

Types of Layouts 4. Group / Cellular Layout

A Group of Parts


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Types of Layouts 4. Group / Cellular Layout

Advantages of group layout: Increased machine utilization.

Team attitude and job enlargement

tend to occur.

Compromise between product layout

and process layout, with associated

advantages.

Supports the use of general purpose

equipment.

Shorter travel distances and smoother

flow lines than for process layout.

Limitations of group layout: General supervision required.

Higher skill levels required of employees

than for product layout.

Compromise between product and processlayout, with associated disadvantages.

Depends on balanced material flow through

the cell; otherwise, buffers and work-in-

process storage are required.

Lower machine utilization than for process

layout.


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The application of the principles of product layout, process layout or fixed location

layout in their strict meanings is difficult to come across. A combination of the

product and process layouts, with an emphasis on either, is noticed in mostindustrial establishments. Plants are never laid out either pure form. It is possible to

have both types of layout in an efficiency combined form if the products

manufactured are somewhat similar and not complex.

Types of Layouts 5. Combined / Hybrid Layout

F.P= Forging Press

G.C= Gear Cutting Machine

H.T=Heat Treatment FurnaceG.G=Gear Grinding Machine
http://2.bp.blogspot.com/_YI-kuBJKufE/TH4_1Xs44uI/AAAAAAAAATc/QNvYzDv1uwc/s1600/Layout1.jpg


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Product Volume and Variety

Product

Layouts

Fixed

PositionLayouts Mixed Layouts Process Layouts

Quantity

Number of Different Products

Cellular


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Customer-oriented layout arranges facilities to enhance the interactions between

customers and a service.

Types of Layouts 6. Customer Oriented Layout

Service organizations

must decide

appropriate layouts for

their productionprocesses. Banks,

libraries and

universities use a form

of process layouts but

high-interactionprocesses in the service

industry are commonly

called customer-

oriented layouts.


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A Flow Line for Production or Service

Used for Repetitive or Continuous Processing

Raw

materials

or customer

Finished

itemStation

2

Station

3

Station

4

Material

and/or

labor

Station

1

Material

and/or

labor

Material

and/or

labor

Material

and/or

labor

Types of Layouts 7. Service Layouts

Warehouse and storage layouts

Issue: Frequency of orders

Retail layouts

Issue: Traffic patterns and traffic flowsOffice layouts

Issue: Information transfer, openness


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Facility layoutProcess terminology

Cycle time: Average time between completions of successive units.

Bottleneck: Factor that limits production. Slowest operating componentin the productionline.

Capacity: Measure of output per unit time when fully busy. (typically measured asreciprocal of cycle time)

Capacity utilization: Measure of how much output is achieved with respect to the totalcapacity available.

Throughput time: Time taken to complete a process from arrival to exit. Sum ofcriticalpath operations plus waiting time in queue.

Product layout and work allocation problem

Standard services can be divided into inflexible sequence of steps that all customer

have to go through. Resembles manufacturing assembly line.

The job requiring most time per customer is the bottleneck.

A well-balanced line would have all jobs of nearly equal duration.

Grouping of activities (operations) should focus on line-balancing and avoiding

bottlenecks.

Additional stations at the bottleneck could also be considered.


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Symptoms of Poor LayoutA good layout results in

Comfort,

Convenience,

Safety,

Efficiency,

Compactness And

Finally In Profits To The Organization

A poor layout results in

Congestion,

Wastes,

Frustration,

Inefficiency And

Finally A Lower Profit Or A Loss To An

Organization

1. Process Chart

i. Operations process chartii. Flow process chart

2. Process Flow Diagrams

3. Machine Data cards

4. Visualization of layout

i. Two dimensional plan or

template

ii. Three dimensional plan or

machine models

Plant Layout Tools & Techniques


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How much to order of each material when orders areplaced with either outside suppliers or productiondepartments within organizations

When to place the orders

The overall objective of inventory management is toachieve satisfactory levels of customer service while

keeping inventory costs within reasonable bounds byanswering these two questions .


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Return To Vendor


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Independent Demand

A

B(4) C(2)

D(2) E(1) D(3) F(2)

Dependent Demand

Independent demand is uncertain.

Dependent demand is certain.

Independent demand finished goods,

items that are ready to be sold

E.g. a computer

Dependent demand components of

finished products

E.g. parts that make up the

computer

I D fi i i d D i i


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Inventory Definitions and Decisions Batch or order size, Q

Batch size is the number of units released to the shop floor to be produced

Reorder point, r

Specifies the timing for placing a new order

Inventory Position

Inventory Position = Inventory On Hand + On OrderBackorders

Units on order

Have been ordered but not yet arrived

Backorders

Items promised to customers but not yet shipped

I n v e n t o r y Tu r n o v e r

The ratio of annual cost of goods sold to average inventory investment.

It indicates how many times a year the inventory is sold.

Higher the ratio, the better, because it implies more efficient use of resources.

Higher the profit margin and longer the manufacturing lead time, the lower the

inventory turns.

Example: Supermarkets (low profit margins) have a fairly high turnover rate

T f I t


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Types of Inventory1. Raw Materials

Essential to the production process Often kept in large quantities on site

2. Finished Goods

Completed products awaiting shipment to customers3. Work-in-Process (WIP)

Batches of semi finished products currently inproduction

Batches of parts from time of release until finishedgoods status

4. Pipeline Goods in transit between facilities Raw materials being delivered to the plant Finished goods being shipped to warehouse or

customer5. Replacement parts, tools, & supplies6. Goods-in-transit to warehouses or customers


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The Inventory Cycle

Profile of Inventory Level Over Time

Quantity

on hand

Q

Receive

order

Place

orderReceive

orderPlace

order

Receive

order

Lead time

Reorder

point

Usage

rate

Time


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Functions of Inventory

To meet anticipated demand

To smooth productionrequirements

To protect against stock-outs

To help hedge against price

increases

To permit operations

To take advantage of quantitydiscounts

Objective of Inventory Control

Level of customer service

Costs of ordering and carrying

inventory

1. Periodic System

Physical count of items made at

periodic intervals

2. Perpetual Inventory System

that keeps track of removals

from inventory continuously,

thus monitoring current levels of

each item

3. Two-Bin System

Two containers of inventory;

reorder when the first is

empty

4. Universal Bar Code

Bar code printed on a label that

has information about the item to

which it is attached

Inventory Counting Systems


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Effective Inventory Management

A system to keep track of

inventory A reliable forecast of demand

Knowledge of lead times

Reasonable estimates of

1. Holding costs

2. Ordering costs

3. Shortage costs

A classification system

Key Inventory Terms

1. Lead time: time interval between

ordering and receiving the order

2. Holding (carrying) costs: cost to

carry an item in inventory for a

length of time, usually a year

3. Ordering costs: costs of ordering

and receiving inventory

4. Shortage costs: costs when demand

exceeds supply

E i O d Q i M d l


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Economic order quantity (EOQ) model

The order size that minimizes total annual cost

Economic production model

Quantity discount model

Assumptions of EOQ Model

Only one product is involved

Annual demand requirements known

Demand is even throughout the year

Lead time does not vary

Each order is received in a single delivery

Inventory Level = 0 when new order just arrived

There are no quantity discounts

Economic Order Quantity Models

EPQ: Inventory Profile


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EPQ: Inventory Profile

Q

Q*

Imax

Production

and usage

Production

and usage

Production

and usage

Usage

only

Usage

only

Cumulative

production

Amount

on hand

Time 12-43

Assumptions

Only one product is involved

Annual demand requirements are known

Usage rate is constant

Usage occurs continually, but production occurs periodically

The production rate is constant

Lead time does not vary

There are no quantity discounts

The Role of Inventory


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The Role of Inventory

Inventory consists of physical items moving through the production system

Originates with shipment of raw material and parts from the supplier

Ends with delivery of the finished products to the customer

Costs of storing inventory accounts for a substantial proportion of

manufacturing cost

Often 20% or more

Optimal level of inventory

Allows production operations to continue smoothly

A common control measure is Inventory Turnover

Inventory Costs and Tradeoffs

Holding inventory is costly. In constructing economic models for choosing the

optimal levels of inventory, trade of the costs caused by:

1. Ordering or set up of machines

2. Investing and storing the goods

3. Shortages (not having inventory available when needed)

O d i C t


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Ordering Costs

A fixed ordering cost can be associated

with each replenishment when parts

are ordered from suppliers

Identifying the need to order

Execute the order

Prepare the paperwork

Place the order

Delivery cost fixed component

Receiving inspection

Transportation to place of use

Storage

Setup Costs

For parts produced in-house, we must: Check status of raw material

Possibly place an order

Create route sheets with instructions

for each stage of the production

process Store routing data in a database

Check routing data for compatibility

with shop status and engineering

changes

Make routing instructions with raw

material

Deliver to production workers

Machine set up

I t C i C t


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Inventory Carrying Costs Carrying inventory incurs a variety of

costs

Space heated and cooled

Move inventory occasionally

because it blocks access to other

goods

Construct and maintain

information system to track

location Pay taxes based on value

Insurance costs

Some will be lost, damaged, or

perished

Cost of capital invested ininventory

Shortage Costs

When customer demands an out of

stock item

May decide to wait for delivery -

backorders

May cancel the order lost sales

May look elsewhere next time lost

customer

May pay expedite charges Within the plant, if material is

unavailable to start production

Work center may lack work

Schedule may have to be modified

Completion of products may bedelayed

Result in late deliveries or lost sales


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Inventory Control

1. Perpetual inventory2. Vendor-managed

inventory

Just-in-Time Systems

Improving profits and

return on investment by

minimizing costs and

eliminating waste

through cutting

inventory on hand.

Materials Requirement

Planning Computer-based

production planning

system by which a firm

can ensure that it has the

correct materials for

production.


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I f i Fl f V i P d i S


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Information Flow for Various Production Systems

I I

Order Entry

Raw

MaterialI

a. Materials Requirements Planning (MRP)

Raw

Material

b. Just-In-Time (KANBAN)

IProcessorInformation Flow

Material FlowFinite Capacity

Inventory Buffer

Infinite Capacity

Inventory Buffer



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I

Limit on

Total

Inventory

Raw

MaterialI

c. Constant Work-In-Process (CONWIP)

Raw

Material

d. Hybrid CONWIP-KANBAN

IProcessorInformation Flow

Material FlowFinite Capacity

Inventory Buffer

Infinite Capacity

Inventory Buffer

Material Requirement Planning


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Sequencing and Scheduling

Objective: develop a plan to guide the release of work into the system and

coordination with needed resources (e.g., machines, staffing, materials).

Methods:

Sequencing: Gives order of releases but not times.

Scheduling:

Gives detailed release times.

Objective: Determine all purchase and production components needed to

satisfy the aggregate/disaggregate plan.

Issues:

Bill of Materials: Determines components, quantities and lead times.

Inventory Management: Must be coordinated with inventory.

Material Requirement Planning

KANBAN control


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KANBAN control Kanban control uses the levels of

buffer inventories in the system

to regulate production. When a

buffer reaches its preset

maximum level, the upstream

machine is told to stop producing

that part type. This is often

implemented by circulating cards,

the kanbans, between a machineand the downstream buffer.

The machine must have a card before

it can start an operation. It can then

pick raw materials out of its upstream

(or input) buffer, perform the

operation, attach the card to the

finished part, and put it in the

downstream (or output) buffer.

Kanban controlensures that parts

are not made except in response

to a demand.

CONWIP Control


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CONWIP Control

CONWIP stands for Constant Work-In-Process.

a control strategy that limits the total number of parts allowed into the system

at the same time. Once the parts are released, they are processed as quickly as

possible until they fill up the last buffer as finished goods.

Once the consumer removes a part from the finished goods inventory, the first

machine in the chain is authorized to load another part.

Like KANBAN, the CONWIP system only responds to actual demands, so it is

still a ``pull'' type system.

This occurs because any part released to the system will move to finished

goods. New parts will not be released if the finished goods buffer is full.

CONWIP control. Movement of parts

shown in blue, circulation of release

authorizations in green.

JIT/Lean Production


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JIT/Lean Production Just-in-time (JIT): A highly coordinated processing system in which goods move

through the system, and services are performed, just as they are needed,

JIT lean production

JIT pull (demand) system

The ultimate goal of JIT is a balanced system.Achieves a smooth, rapid flow of materials

through the system

Goal of JIT

Big JIT broad focus

Vendor relations Human relations Technology management Materials and inventory management

Little JIT narrow focus Scheduling materials

Scheduling services of production

Big vs. Little JIT


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Original Equipment

Manufacturer


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Just in time vs Old techniques
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Just in time vs Old techniques

The most famous stock Management

System called Just in Time, where the

company tries not to hold stocks but

to minimize them.

The main role about the issue of

distribution played by intermediaries,

who are the link between

manufacturer and consumer.

Basically the company has to store

only what needed. The Japanese say

that the warehouse fits those

products we do not need and those

who look into their warehouse in

home theyll find out too many

useless items.

In the Inventory Management system

belongs the system is theJust in Time

and the system ofJust in Case.

S JIT G l d B ildi Bl k
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Summary JIT Goals and Building Blocks

ProductDesign

ProcessDesign

PersonnelElements

ManufacturingPlanning

Eliminate disruptions

Make the system flexible Eliminate waste

A

balanced

rapid flow

UltimateGoal

Supporting

Goals

BuildingBlocks

Di hi & F ll


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Dispatching

Manager instructs each department on what work to do and the time allowed

for its completion.

Dispatching & Follow-up

Follow-Up

Employees and their supervisors spot problems in theproduction process and determine needed changes.


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The control of the production of wealth is the control of human life itself.

Hilaire Belloc
http://www.goodreads.com/author/show/4025.Hilaire_Bellochttp://www.goodreads.com/author/show/4025.Hilaire_Bellochttp://www.goodreads.com/author/show/4025.Hilaire_Bellochttp://www.goodreads.com/author/show/4025.Hilaire_Belloc

unit iii - prod. mgt

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