Unit III - Prod. Mgt.
Transcript of 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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Types of Layouts 3. Fixed-Position / Location Layout
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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.
Types of Layouts 3. Fixed-Position / Location Layout
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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
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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
Information Flow for Various Production Systems
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Information Flow for Various Production Systems
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
http://ilogistics.wordpress.com/2010/03/24/just-in-time-vs-old-techniques/http://ilogistics.wordpress.com/2010/03/24/just-in-time-vs-old-techniques/http://ilogistics.wordpress.com/2010/03/24/just-in-time-vs-old-techniques/http://ilogistics.wordpress.com/2010/03/24/just-in-time-vs-old-techniques/ -
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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