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Lean Systems: Principles of TPS/Lean

This document discusses principles of lean systems and lot sizing. It covers topics like elimination of waste, small batch production, pull production, setup reduction, economic order quantity models, and their disadvantages. Traditional lot sizing methods like lot-for-lot, economic manufacturing quantity, and economic order quantity are explained. The document emphasizes that small lot sizes and setup reduction are key principles of just-in-time production systems.

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Kathiravan Rajendran
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89 views8 pages

Lean Systems: Principles of TPS/Lean

This document discusses principles of lean systems and lot sizing. It covers topics like elimination of waste, small batch production, pull production, setup reduction, economic order quantity models, and their disadvantages. Traditional lot sizing methods like lot-for-lot, economic manufacturing quantity, and economic order quantity are explained. The document emphasizes that small lot sizes and setup reduction are key principles of just-in-time production systems.

Uploaded by

Kathiravan Rajendran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PGP23

Term V

Lean Systems

Session 17 and 18

Dr. G. Anand
Associate Professor
QM & OM Area
IIM Kozhikode
[email protected]

Principles of TPS/Lean
• Elimination of waste or Value Addition
• Simplification
• Visual Control
• Employee empowerment or Respect for
humanity/people
• Variation reduction
• Pull or Just in Time Production
• Continuous improvement
• Etc.
Fourth Tenet : Establish Pull

Small Lot Production


(Chapter 6)

Lot Sizing
• A lot is a batch of something.
It is a quantity of items
purchased, produced or
transported.

• Determining the right lot size is


called as lot sizing, which
depends on factors such as
time, cost and demand.

• Lot size has a major impact


on cost, overall production
throughput, lead time,
manufacturing flexibility and
product quality.
– It also impacts manufacturing wastes
Photograph obtained from:
http://www.contractlyo.com/wp-content/themes/ContractLyo/images/loading-freeze-dryer.jpg such as inventory, wasting time and
transportation.
What are the costs associated
with Lot Size?

Lot sizing and setup reduction


• Small batch production and delivery is a
principal feature of JIT manufacturing.
• Set up cost is constant:
– If S is large, the lot size should be large; if S is
small lot size can be small
– Traditionally S has been large.
• S is not constant:
– In JIT, explicit goal is to reduce S to zero if
possible.
– As the cost of activities like setup, ordering and
handling of materials is made smaller, production
and procurement in small lots is easier to justify,
even in high demand situations.
Understanding Traditional Lot
Sizing – A Recap

Mechanisms of lot sizing


• Lot-for-lot (LFL):
– The size of the lot or batch corresponds
exactly to the amount required (ordered or
forecasted) during a particular time period.
– LFL also works well whether the demand is
independent (customer or market driven) or
dependent (demand for an item is generated
internal to the production system).
P Model

Q Model
Mechanisms – contd.
• Economic Manufacturing Quantity
– Since the items are manufactured unit-by-
unit at the production rate p, the inventory
will gradually grow as the completed items
are moved into finished inventory.
– To account for this gradual increase, EOQ
is modified as EMQ.

2 DS
Q  EMQ 
H [1  ( D / p )]

– Where p = production rate

Disadvantages of EOQ
EOQ Based Methods-Discussion
• No industry has continuous, fixed demand. If the fluctuations in
demand are large, EOQ-derived lot sizes based on average demand
will result in either excess inventory or stockouts.

• Another problem with EOQ models is accurately determining the


holding and setup costs and to keep them current

• While determining the true carrying costs, it fails to account the


detrimental effect of inventory on production quality and lead time.

• EOQ models do not distinguish bottleneck from nonbottleneck


operations
– If the operation is a bottleneck (i.e., scheduled work exceeds work
capacity), the effect of the setup is equivalent to the cost of all
throughput lost as a result of the operation being idled.
– If the operation is a nonbottleneck, the effect of the setup on throughput
is zero because the operation has excess capacity anyway.

Basics of Small Lot Sizing


Terminologies in lot sizing
• Production or Process batch:
– Quantity of items manufactured as the result of a
single setup
• Purchase or Order quantity:
– Quantity of materials purchased from a supplier from
a single order
• Transfer batch:
– A lot moved or transferred from one operation or work
station to another.
• Delivery quantity:
– A lot shipped between supplier and customer
• http://www.youtube.com/watch?v=EWjRGOHnD2U

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