1. JIT and Lean Operations Characteristics of Lean Systems: Just-in-Time  Pull method of materials flow  Consistently high quality  Small lot sizes  Uniform workstation loads  Standardized components and work methods  Close supplier ties  Flexible workforce  Line flows  Maintenance  Automated production  Preventive maintenance

2. JIT and Lean Operations Figure 13.2 Scrap Unreliable suppliers Capacity imbalance Continuous Improvement with Lean Systems

3. JIT and Lean Operations Lean Systems in Services  Consistently high quality  Uniform facility loads  Standardized work methods  Close supplier ties  Flexible workforce  Automation  Preventive maintenance  Pull method of materials flow  Line flows

4. JIT and Lean Operations Operational Benefits  Reduce space requirements  Reduce inventory investment  Reduce lead times  Increase labor productivity  Increase equipment utilization  Reduce paperwork and simple planning systems  Valid priorities for scheduling  Workforce participation  Increase product quality

5. JIT and Lean Operations Implementation Issues  Organizational considerations Human cost of JIT systems Human cost of JIT systems Cooperation and trust Cooperation and trust Reward systems and labor classifications Reward systems and labor classifications  Process considerations  Inventory and scheduling MPS stability MPS stability Setups Setups Purchasing and logistics Purchasing and logistics

6. JIT and Lean Operations Kanban Production Control System  Kanban : Card or other device that communicates demand for work or materials from the preceding station.  Kanban is the Japanese word meaning “signal” or “visible record”.  Paperless production control system.  Authority to pull, or produce comes. from a downstream process.

7. JIT and Lean Operations Kanban Formula N = Total number of containers D = Planned usage rate of using work center T = Average waiting time for replenishment of parts plus average production time for a container of parts X = Policy variable set by management - possible inefficiency in the system often called Alpha C = Capacity of a standard container N= DT(1+X) C

8. JIT and Lean Operations Kanbans  Parts’ movement authorization N= # cards D= usage T = wait + process time X = efficiency rating C = bin capacity

9. JIT and Lean Operations Example  A company in Gujranwala is making rubber tyres and tubes. The operations manager has just completed his MBA from VU and has observed the that factory has inefficient machine group. He records that the daily demand for 21” tube is 1000 units. The average waiting time for a container of the same part is 0.5 day. The processing time for the tyre tube container is 0.25 day. A container can hold 500 units, currently there are 20 containers for this item.

10. JIT and Lean Operations Example  Calculate What is the value of policy variable ALPHA?What is the value of policy variable ALPHA? What is the total planned inventory ( work in process and finished goods) for the tyre tube?What is the total planned inventory ( work in process and finished goods) for the tyre tube? Suppose that the policy variable Alpha is 0, how many containers would be needed? what is the effect of policy variable in this problem?Suppose that the policy variable Alpha is 0, how many containers would be needed? what is the effect of policy variable in this problem?

11. JIT and Lean Operations Solution  We use the equation and substitute values k = d( w + p )( 1 +  ) c  Where d is 1000 units, w bar = 0.5 day.  P bar= 0.25 day. K= 500 units and Alpha is to be calculated.

12. JIT and Lean Operations Solution  We use the equation and substitute values 500 = 1000(0.5 +0.25 )( 1 +  ) 20  (1 + a )=500 X 20 / 1000 (0.75)  (1 + a )=10,000/750=13.33  a =12.33

13. JIT and Lean Operations Solution  Then with 20 containers in the system and since each container can hold 500 units, the total planned inventory is 20 ( 500)= 10,000 units  If Alpha is 0 then on substituting values we have k = 1000(0.5 +0.25 )( 1 + 0 ) 500 k = 1000(0.75 )( 1 ) 500 K= 750/500= 1.5 or more correctly 2 containers.

14. JIT and Lean Operations Single-Card Kanban System KANBAN Part Number:1234567Z Location:Aisle 5 Bin 47 Lot Quantity:6 Supplier:WS 83 Customer:WS 116 Each container must have a card. Each container must have a card. Assembly always withdraws from fabrication (pull system). Assembly always withdraws from fabrication (pull system). Containers cannot be moved without a kanban. Containers cannot be moved without a kanban. Containers should contain the same number of parts. Containers should contain the same number of parts. Only good parts are passed along. Only good parts are passed along. Production should not exceed authorization. Production should not exceed authorization.