Lean Systems SLIDES Krajewski - OM11ge - C06

Designing Lean
Systems
Chapter 6
Copyright ©2016 Pearson Education, Limited. 6-1

What is a Lean System?
Lean Systems
Operations systems that

maximize the value
added by each of a
company’s activities by
removing waste and
delays from them.

Continuous Improvement Using a
Lean Systems Approach
• Just-in-time (JIT) philosophy
– The belief that waste can be eliminated by
cutting unnecessary capacity or inventory and
removing non-value-added activities in
operations.

Eight Types of Waste or Muda
1. Overproduction 5. Motion
2. Inappropriate
Processing 6. Inventory
3. Waiting 7. Defects
4. Transportation 8. Underutilization of
Employees
Table 6.1

Continuous Improvement
with Lean Systems
Figure 6.1

Supply Chain Considerations
in Lean Systems
• Close Supplier Ties
• Small Lot Sizes

– Single-digit setup

Process Considerations
in Lean Systems
Pull Method of Workflow (LEAN)
A method in which customer demand activates the

production of the service or item.
Push Method of Workflow (NOT LEAN)
A method in which production of the item begins in

advance of customer needs.

in Lean Systems
• Quality at the Source
– Jidoka
• Automatically stopping the process when something is
wrong and then fixing the problems on the line itself as
they occur.
– Poka-Yoke
• Mistake-proofing methods aimed at designing fail-safe
systems that minimize human error.

in Lean Systems
• Uniform Workstation Loads
– Takt time
– Heijunka
– Mixed-model assembly
• Standardized Components and Work

Methods

in Lean Systems
• Flexible Workforce
• Automation
• 5S
• Total Preventative
Maintenance

5S
Table 6.2

Toyota Production System
• All work must be completely specified as to

content, sequence, timing, and outcome.
• All customer-supplier connections should be
direct and unambiguous.
• All pathways should be simple and direct.
• All improvements should be made under the
guidance of a teacher using the scientific
method.
House of Toyota
Figure 6.3

One-Worker, Multiple Machines
Figure 6.4

Group Technology
Jumbled Flows
without GT
Lines Flows with 3

GT cells
Figure 6.5

What is a Value Stream Mapping?
Value Stream Mapping
A widely used
qualitative lean tool
aimed at eliminating
waste or muda.
Figure 6.6

VSM Icons
Figure 6.7

VSM Metrics
• Takt Time
– Daily Availability/Daily Demand
• Cycle Time
• Setup Time
• Per Unit Processing Time
– Cycle Time + Setup Time
• Capacity
– Availability/Time at bottleneck

Example 6.1
• Jensen Bearings, Inc makes two types of retainers
that are packaged and shipped in returnable trays
with 40 retainers in each tray. The operations data
is on the following slides.
a. Create a VSM for Jensen Bearings
b. What is the takt time?
c. What is the lead time at each cell?
d. What is the total processing time?
e. What is the capacity?

Example 6.1
Table 6.3

Example 6.1
Table 6.3

Example 6.1
a.
Figure 6.8

Example 6.1
b. Daily Demand
[(1,000 + 2,200) pieces /week]/5 days =
640 pieces per day
Daily Availability
(7 hours/day) x (3,600 seconds per hour) =
25,200 seconds per day
Takt Time = Daily availability/Daily Demand =

25,200/640 =
39.375 seconds per piece

Example 6.1
c. Production Lead time = Inventory/Daily Demand
Raw Material Lead Time - 5 days

WIP between Press and Pierce/Form =
(2,250/640) = 3.5 days
WIP between Pierce/Form and Finish/Grind =

(3,350/640) = 5.2 days
WIP between Finish/Grind and Shipping=

(1,475/640) = 2.3 days
Total Production Lead Time =

(5 + 3.5 + 5.2 + 2.3) = 16 days
d. Total Processing Time = Sum of the Cycle Times

(12 + 34 + 35) = 81 seconds
Example 6.1
e.
Pierce and Form is the bottleneck
Capacity = 25,200/38.5 = 654 units/day

Application 6.1
• Gilman Inc. makes vending machines. The operations
data is on the following slides.
a. What is the cell’s current inventory level?


Application 6.1
Overall Average demand: 200/day
Process Batch size: 20
Attributes Number of shifts per day: 2
Availability: 8 hours per shift with a 45-
minute break
Customer One shipment of 1,000 units each week

Shipments
Information All communications with the customer are
Flow electronic
There is a weekly order release to Cutting
All material is pushed
Application 6.1
Processing Cut Cycle time = 160 seconds
Step 1 Setup time = 3 minutes
Up time = 100%
Operators = 1
WIP = 600 units (Before Cut)
Processing Grind Cycle time = 120 seconds
Step 2 Setup time = 1 minute
Up time = 99%
Operators = 1
WIP = 800 units (Before Grind)
Processing Bend Cycle time = 240 seconds
Step 3 Setup time = none
Up time = 100%
Operators = 1
WIP = 400 units (Before Bend)
WIP = 600 units (After Bend)
Application 6.1
a. Current Inventory Level
(600 + 800 + 400 + 600) = 2400 units
b. Daily Demand
200 units per day
Daily Availability
(8 hours/day x 60 min) – 45 minutes = 435 min
435 min x 2 shifts/day=
870 minutes per day
Takt Time = Daily availability/Daily Demand = 870/200 =

4.35 minutes per unit

Application 6.1
Raw Material Lead Time - (600/200) = 3 days

WIP between Cut and Grind =
(800/200)= 4 days
WIP between Grind and Bend =
(400/200) = 2 days
Finished Goods Lead Time after Bend =
(600/200) = 3 days
Total Production Lead Time = (3 + 4 + 2 + 3) = 12 days

Application 6.1
(160 + 120 + 240) = 520 seconds
e. Bending is the bottleneck

Availability at Bending = 870 min/day
Time at bottleneck = (240 + 0)/240 sec/unit = 4 min/unit
Capacity = 870/4 = 217.5 units/day

What is a Kanban?
Kanban
A Japanese word
meaning “card” or
“visible record” that
refers to cards used to
control the flow of
production through a
factory

The Kanban System
Receiving post Storage
Kanban card for
product 1 area
Kanban card for
product 2
Empty containers
Assembly line 1
O2
Fabrication
cell
O1 O3
Assembly line 2
Full containers
O2
Figure 6.9

The Kanban System
Receiving post Storage
Kanban card for
product 1 area
Kanban card for
product 2
Empty containers
Assembly line 1
O2
Fabrication
cell
O1 O3
Assembly line 2
Full containers
O2
Figure 6.9

The Kanban System
Receiving post Kanban card for Storage
product 1 area
Kanban card for
product 2
Empty containers
Assembly line 1
O2
Fabrication
cell
O1 O3
Assembly line 2
Full containers
O2
Figure 6.9

The Kanban System
product 1 area
Kanban card for
product 2
Empty containers
Assembly line 1
O2
Fabrication
cell
O1 O3
Assembly line 2
Full containers
O2
Figure 6.9

The Kanban System
product 1 area
Kanban card for
product 2
Empty containers
Assembly line 1
O2
Fabrication
cell
O1 O3
Assembly line 2
Full containers
O2
Figure 6.9

The Kanban System
product 1 area
Kanban card for
product 2
Empty containers
Assembly line 1
O2
Fabrication
cell
O1 O3
Assembly line 2
Full containers
O2
Figure 6.9

The Kanban System
Receiving post
Kanban card for Storage
product 1 area
Kanban card for
product 2
Empty containers
Assembly line 1
O2
Fabrication
cell
O1 O3
Assembly line 2
Full containers
O2
Figure 6.9

General Operating Rules
1. Each container must have a card.
2. Assembly always withdraws from fabrication
(pull system).
3. Containers cannot be moved without a kanban.
4. Containers should contain the same number of
parts.
5. Only good parts are passed along.
6. Production should not exceed authorization.

Determining the
Number of Containers
• Two determinations
– Number of units to be held by each container
– Number of containers
– Little’s Law
• Average work-in-process inventory equals the
average demand rate multiplied by the average
time a unit spends in the manufacturing process

Determining the
Number of Containers
Work in Process (WIP) =
(average demand rate)  (average time a container spends
in the manufacturing process) + safety stock
WIP = kc where
k = number of containers
ഥ (𝒘
kc = 𝒅 ഥ )(1 + α)
ഥ +𝒑 d = expected daily demand for the part
w = average waiting time
p = average processing time
ഥ𝒘
𝒅( ഥ )(1 + α)
ഥ+𝒑 c = number of units in each container
k= α = policy variable
c

Example 6.2
• The Westerville Auto Parts Company produces rocker-arm
assemblies
• A container of parts spends 0.02 day in processing and
0.08 day in materials handling and waiting
• Daily demand for the part is 2,000 units
• Safety stock equivalent of 10 percent of inventory
a. If each container contains 22 parts, how many containers

should be authorized?
b. Suppose that a proposal to revise the plant layout would
cut materials handling and waiting time per container to
0.06 day. How many containers would be needed?
Example 6.2
if
d = 2,000 units/day, b. Figure 8.10 from OM
p = 0.02 day, Explorer shows that with
α = 0.10, reduced waiting time, the
w = 0.082 day, and number of containers
c = 2,000 units drops to 8.
2,000(0.08 + 0.02)(1.10)
k=
22
220
= = 10 containers
22
Figure 6.10

Application 6.2
Item B52R has an average daily demand of 1,000 units. The
average waiting time per container of parts (which holds 100
units) is 0.5 day. The processing time per container is 0.1 day.
If the policy variable is set at 10 percent, how many
containers are required?
ഥ (𝒘
𝒅 ഥ+𝒑 ഥ )(1 + α)
k=
c
1,000(0.5 + 0.1)(1 + 0.1)
=
100
= 6.6, or 7 containers

Other Kanban Signals
• Container System
– Using the container itself as a signal device.
– Works well with containers specifically designed for
parts.
• Containerless System
– Using visual means in lieu of containers as a signal
device.
– Examples: a painted square on a workbench = one
unit.

Organizational Considerations
• The Human Costs of Lean Systems
• Cooperation and Trust
• Reward Systems and Labor Classification

• Inventory and Scheduling
– Schedule Stability
– Setups
– Purchasing and Logistics

Solved Problem 1
• Metcalf, Inc makes brackets for two major
automotive customers. The operations data is on
the following slides.
a. Create a VSM for Metcalf Bearings


Solved Problem 1
Table 6.4

Solved Problem 1
Figure 6.11

Solved Problem 1
b. Daily Demand
2,700 units per day
Daily Availability
(7.5 hours/day) x (3,600 seconds per hour) x (2 shifts/day)=
54,000 seconds per day
Takt Time = Daily availability/Daily Demand =

54,000/2,700 =
20 seconds per unit
Solved Problem 1
Raw Material Lead Time – (4,000/2,700) = 1.48 days

WIP between Forming and Drilling =
(5,000/2,700)= 1.85 days
WIP between Drilling and Grinding =
(2,000/2,700) = .74 day
WIP between Grinding and Packaging=
(1,600/2,700) = .59 day
Finished Goods Lead Time before Shipping =
(15,700/2,700) = 5.81 days
Total Production Lead Time =
(1.48 + 1.85 + .74 + .59 + 5.81) = 10.47 days
Solved Problem 1
(11 + 10 + 17 + 15) = 53 seconds
e.
Grinding is the bottleneck

Capacity = 54,000/17 = 3,176 units/day

Solved Problem 2
A company using a kanban system has an inefficient machine
group. For example, the daily demand for part L105A is 3,000
units. The average waiting time for a container of parts is 0.8
day. The processing time for a container of L105A is 0.2 day,
and a container holds 270 units. Currently, 20 containers are
used for this item.
a. What is the value of the policy variable, α?
b. What is the total planned inventory (work-in-process and
finished goods) for item L105A?
c. Suppose that the policy variable, α, was 0. How many
containers would be needed now? What is the effect of
the policy variable in this example?

Solved Problem 2
a. We use the equation for the number of containers and then
solve for α:
ഥ (𝒘
𝒅 ഥ+𝒑ഥ )(1 + α)
k=
c
3,000(0.8 + 0.2)(1 + α)
20 =
270
20(270)
(1 + α) = = 1.8
3,000(0.8 + 0.2)
α = 1.8 – 1 = 0.8
Solved Problem 2
b. With 20 containers in the system and each container
holding 270 units, the total planned inventory is
20(270) = 5,400 units
c. If α = 0 3,000(0.8 + 0.2)(1 + 0)
k=
270
= 11.11, or 12 containers

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Designing Lean

Copyright ©2016 Pearson Education, Limited. 6-1

Operations systems that

Copyright ©2016 Pearson Education, Limited. 6-2

Copyright ©2016 Pearson Education, Limited. 6-3

Copyright ©2016 Pearson Education, Limited. 6-4

Copyright ©2016 Pearson Education, Limited. 6-5

• Close Supplier Ties

• Small Lot Sizes

Copyright ©2016 Pearson Education, Limited. 6-6

A method in which customer demand activates the

Push Method of Workflow (NOT LEAN)

A method in which production of the item begins in

Copyright ©2016 Pearson Education, Limited. 6-7

Copyright ©2016 Pearson Education, Limited. 6-8

• Standardized Components and Work

Copyright ©2016 Pearson Education, Limited. 6-9

Copyright ©2016 Pearson Education, Limited. 6-10

Copyright ©2016 Pearson Education, Limited. 6-11

• All work must be completely specified as to

Copyright ©2016 Pearson Education, Limited. 6-13

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Lines Flows with 3

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Takt Time = Daily availability/Daily Demand =

Copyright ©2016 Pearson Education, Limited. 6-23

Raw Material Lead Time - 5 days

WIP between Pierce/Form and Finish/Grind =

WIP between Finish/Grind and Shipping=

Total Production Lead Time =

d. Total Processing Time = Sum of the Cycle Times

Pierce and Form is the bottleneck

Capacity = 25,200/38.5 = 654 units/day

Copyright ©2016 Pearson Education, Limited. 6-25

a. What is the cell’s current inventory level?

Copyright ©2016 Pearson Education, Limited. 6-26

Customer One shipment of 1,000 units each week

200 units per day

Takt Time = Daily availability/Daily Demand = 870/200 =

Copyright ©2016 Pearson Education, Limited. 6-29

c. Production Lead time = Inventory/Daily Demand

Raw Material Lead Time - (600/200) = 3 days

Copyright ©2016 Pearson Education, Limited. 6-30

e. Bending is the bottleneck

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