test #2 Flashcards
8 types of waste that must be eliminated to implement lean systems
- overproduction
- inappropriate processing
- waiting
- transportation
- motion
- inventory
- defects
- underutilization of employees
example of overproduction
making an item before it’s needed
example of inappropriate processing
use simpler machines, etc.
example of transportation
excessive movement
example of inventory
JIT will decrease in safety stock and WIP inventory
lean production
operations systems that try to maximize the value added by each of a company’s activities by removing waste delays from them
what is the goal of lean production
to maximize the value added by each of a company’s activities by removing waste delays from them
JIT
the belief is that waste can be eliminated by cutting unnecessary capacity or inventory and removing non value added activities in operations (only produced when needed)
pull method
method in which customer demand activates the production = LEAN
push method
method in which production of the item begins in advance of customer needs = NOT LEAN
5 S Elements of Lean Production
- sort
- straighten
- shine
- standardize
- sustain
sort
separate needed items from unneeded items (including tools, parts, materials, and paperwork), and discard the unneeded
straighten
- neatly arrange what’s left, with a place for everything and everything in its place
- organize the work area so that it’s easy to find what’s needed
shine
clean and wash the work area to make it shine
standardize
- establish schedules and methods of performing the cleaning and sorting
- formalize the cleanliness that results from regularly doing the first 3 S practices so that perpetual cleanliness and a state of readiness are maintained
sustain
- create discipline to perform the first 4 S practices, whereby everyone understands, obeys, and practices the rules when in the plant
- implement mechanisms to sustain the gains by involving people and recognizing them through a performance measurement system
boat
you/company/organization
rocks
- unseen problems
1. scrap
2. unreliable suppliers: encourage local suppliers
3. capacity imbalance
water
inventory
objective of “boat, rocks, and water”
- to periodically stress the system and focusing on problem areas
- adversity builds strength
- once you lower the levels of inventory (water), it exposes all of the problems (rocks)
work breakdown structure
a statement of all work that has to be completed
activity
the smallest unit of work effort consuming both time and resources that the project manager can schedule and control
moving average
- average demands to forecast next period
- only used when there are no trends in the data
weighted moving average
- each historical demand in the average can have its own weight
- this is best for trends
- if you want your weighted moving average to be more responsive, you change the weights
exponential smoothing
- calculates the average of a time series by implicitly giving recent demands more weight than earlier demands
- requires: last periods forecast, demand for this period, and smoothing parameter
- larger “a” values result in more responsive changes
- smaller “a” values result in more stable forecasts
pressures to decrease inventories
-shrinkage
shrinkage
- pilferage
- obsolescence
- deterioration
pilferage
theft of inventory by customers or employees
obsolescence
inventory cannot be sold or used at full value due to model changes, engineering modifications, or unexpectedly low demand
deterioration
physical spoilage or damage
pressures to increase inventories
- customer service
- ordering cost
- setup cost
- labor and equipment utilization
- transportation cost
- payment to suppliers
customer service
prevents stockouts and backorder
stockouts
an order that cannot be satisfied, resulting in loss of sale
backorder
an order that cannot be filled when promised or demanded
ordering cost
cost of preparing a purchase order for a supplier of a production order for manufacturing
setup cost
cost involved in changing over a machine or workspace to produce a different item
ABC analysis: Class A
20% of items account for 80% of value
ABC analysis: Class B
about 30%
ABC analysis: Class C
50% of items account for 5% or so of value
5 assumptions of EOQ
- demand rate is constant and known with certainty
- no constraints are placed on the side of each lot
- only two relevant costs are the inventory holding cost and the fixed cost per lot for ordering or setup
- decisions for one item can be made independently of decisions for other items
- the lead time is constant and known with certainty
independent
uncertain
when not to use the EOQ
- make to order strategy
- order size is constrained
make to order strategy
customer says wants entire order delivered at once
order size is constrained
don’t have room or not enough trucks for delivery, etc.
when to modify the EOQ
- quantity discounts
- replenishment not instantaneous
quantity discounts
can get good discount for ordering large amounts
when to use the EOQ
- make to stock strategy with relatively stable demand
- carrying and setup costs are known and relatively stable
