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

2. 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.

7. How Does JIT Minimize Inventories? Lot-Size Stocks Suppose Demand = 5, Holding Cost = $2, and Set Up = $5 Lot SizeHoldingSet Up Total 1$1.00$25.00$26.00 5* 5.00 5.00 10.00 1010.00 2.50 12.50 Q* = 5 and Cost = $10.00

8. How Does JIT Minimize Inventories? Lot-Size Stocks Suppose Demand = 5, Holding Cost = $2, and Set Up = $.20 Lot SizeHoldingSet Up Total 1*$1.00$1.00$2.00 5 5.00 0.20 5.20 1010.00 0.10 10.10 Q* = 1 and Cost = $2.00

9. 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.

10. 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).

11. How Does JIT Minimize Inventories? 4. Transportation Stocks – Inventory in Transit from One Point to Another. JIT Advocates Reduced Distances between Transit Points.

12. JIT and Product Design JIT and Product Design Quality at the Source Standard and Modular Parts Reducing “Real” Levels – Bill of Materials Design for Cellular Manufacturing

13. Work Cell Example Work Cell Example

14. Work Cell Example

15. JIT and Process Design JIT and Process Design Setup Time Reduction – Job Shops Become More Like Assembly Lines. Production Flexibility Cellular Manufacturing Process Inventory and Throughput Time Reduction

16. JIT and Job Design JIT and Job Design Skilled and Motivated Work Force Continual Learning and Improvement Cross Training Worker Flexibility Surge Capacity Must Be Available

17. JIT Ratio Analysis 1. Lead Time to Work Content Production Lead Time / Work Content  5 2. Process Speed to Sales Rate (Takt Time) Process Speed / Sales Rate or Use  5 3. Pieces to Work Stations or Operators Number of Pieces / Number of Stations  5

18. 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

19. 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

20. Kanban Systems

21. Use of Two-Card Kanban

22. 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

23. Number of Kanban Containers Number of Kanban Containers N = DT(1+X)/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

24. Number of Kanban Containers 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