1. UNBALANCED LOADS Bain AND Boon To Inventory Management

2. The Classic Unbalanced Load Usually, when you want one of these:

3. You have to buy it in this unit lot size: The typical 8 hot dog package!

4. AND if you would like to have it served in a bun with the usual condiments,

5. You would need to buy the buns in lots of: TEN!?!?!

6. Or an even bigger lot of: TWELVE BUNS!?!?! For 1 hot dog?????

7. Doing the math shows that to balance the loads involved would require: 5 packages of hot dogs = 40 hot dogs + 4 packages of 10 buns = 40 buns OR 3 packages of hot dogs = 24 hot dogs + 2 packages of 12 buns = 24 buns Not exactly always feasible or desirable – not to mention costly and wasteful!

8. Machined Parts Connections The same situation exists with machined parts and / or products as well as with most any manufactured items. The following slides use a flow-through machined part process as an example.

9. Machined Parts Relationship: In working with machined parts or products, the same situation becomes an every day occurrence as raw parts come in to the machining area and go out as completed parts. Many different lot sizes come into play in order to allow for proper processing. All of these lot sizes are good for the area in which they are worked but not always good for the last or next work station in their travel to completed part!

10. WARNING!!!!! Not all parts in a machining area are equal in lot sizes, processing procedures or in part demands! In the interest of both time and explanations, the parts and situations used here are NOT specific nor intended to be.

11. Raw parts arrive in house in crate lots: This is not only our first lot quantity but our first part number also – each area will receive a part number & lot quantity for the machines in area.

12. A typical crate lot will have ~1400 parts inside: While these are all the same part number, the quantity to be worked may need to change to allow for a “sensible” production run size in Machine Area #1.

13. These crate lots will be worked in the Machine Area #1 in quantities that will be made equal to a HALF FURNACE LOT or roughly 700 pieces BUT this will require scheduling efforts to reach the desirable number of parts for a FULL FURNACE LOT AND to get a desirable Area #1 Lot Run quantity which bests uses the equipment!

14. Post-Area #1 parts are collected in baskets-- In our example = 140 pieces per basket These items now have their own part number and have completed a work order – they will get a new work order to track their progress through the process.

15. These parts again need to be re-packaged in Area #2 in order to meet all of the requirements of getting a full lot into the furnaces ---- OH, remember that a single Area #2 Lot is NOT a desirable Area #1 Lot!!! This quantity situation repeats throughout all of the process areas! Each new area receiving parts gets a new computer work order number AND matching shop floor control order to process. Lot sizes for parts in our example currently reflect the one lot size that should / can not change – the AREA #2 LOT quantity!

16. A Half Area #2 Lot post-furnace work, about 700 parts Another part number and another completed work order – building up lot numbers.

17. Yes, the Area #2 Lot must also be repackaged! This time, the parts are lot sized for Area # 3. Sorry, but those clean neat racks need to stay in Area #2! These bins work better out here on the work floor by Area #3 for all concerned!

18. Lot Sizing Information Break: Each re-sizing of the product lot allows the different work areas to properly process the parts and move them efficiently in the Machining work area. All lot sizes play important roles in the work processes! Area #1 Lot Area #2 Lot Area #3 Lot

19. After Area #3, the parts are again put into baskets: this time prior to Area #4 in “flexible” quantities. Yet ANOTHER part number and ANOTHER work order assigned here to help the area track the part builds. “FLEXIBLE”? The Area #4 Lot requires no set amount of parts to get the best return for the work that is performed. This allows for speedy response to needs if necessary!!

20. After Area #4, the parts are re-racked then sent to Area #5 prior to final packaging. Note: Some Pictures Repeat To Ease In Flow! Area #5 parts also get their own part number. New work orders also.

21. After Area #5, the parts are cleaned, treated and racked prior to packing out for warehousing. While this LOOKS like another lot size, IT ISN’T! By this time, the parts have been in 6 different lot sizes across 5 different work areas. Just 1 to go!

22. Finally, the parts are “packed out” for the Warehouse – and receive their final lot size of 780 pieces. This is the final part number on the final work order, which is how the part travels to its NHA, or Next Higher Assembly; to Machining Area THAT is the Customer!

23. The BAIN Part of the Equation: Multiple lot sizes across the work floor for the different processing equipment areas Multiple associated part numbers in the same “family” part group with own lot size Multiple work orders to control in unequal multiples of lot sizes if necessary Overlap of lots area to area during processes NOT ALL AREAS RUN AT SAME SPEED!!

24. The BOON of the Equation Multiple lot sizes allow for best use of each sections processing equipment Flexibility with shifting priorities achieved Movement of parts made in safe, consistent manageable quantities Work order builds can be done in “lots” of smaller bites instead of large CHUNKS “Guesswork” in quantities & time to build GONE for everyone involved!

25. Hot Dogs to Final Parts? It means… You may have to do “lots” to satisfy your Customers’ hunger!

26. “LOTS” OF QUESTIONS??