1. LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF LECTURE 25 1

2. Summary of last Session Chapter: JIT and Lean Operations  Global Company Profile: Toyota Motor Corporation  Just-in-Time, the Toyota Production System, and Lean Operations  Eliminate Waste  Remove Variability  Improve Throughput

3. Summary of last Session (Contd.)  Just-in-Time  JIT Partnerships  Concerns of Suppliers  JIT Layout  Distance Reduction  Increased Flexibility  Impact on Employees  Reduced Space and Inventory

4. Summary of last Session (Contd.)  JIT Inventory  Reduce Variability  Reduce Inventory  Reduce Lot Sizes  Reduce Setup Costs  JIT Scheduling  Level Schedules

5.  JIT Schedulling  Kanban  Toyota Production System  Lean Operations Agenda for this Session 5

6. Agenda for this Session (Contd.) CHAPTER : Maintenance and Reliability Operations  Global Company Profile: Orlando Utilities Commission  The Strategic Importance of Maintenance and Reliability  Reliability  Improving Individual Components  Providing Redundancy 6

7. Agenda for this Session (Contd.)  Maintenance  Implementing Preventive Maintenance  Increasing Repair Capabilities 7

8. JIT Scheduling  Schedules must be communicated inside and outside the organization  Level schedules  Process frequent small batches  Freezing the schedule helps stability  Kanban  Signals used in a pull system 8

9. Table 16.3 Better scheduling improves performance JIT Scheduling Tactics Communicate schedules to suppliers Make level schedules Freeze part of the schedule Perform to schedule Seek one-piece-make and one-piece move Eliminate waste Produce in small lots Use kanbans Make each operation produce a perfect part JIT Scheduling 9

10. Level Schedules  Process frequent small batches rather than a few large batches  Make and move small lots so the level schedule is economical  “Jelly bean” scheduling  Freezing the schedule closest to the due dates can improve performance 10

11. Scheduling Small Lots ABCAAABBBBBC JIT Level Material-Use Approach ACAAABBBBBCCBBBBAA Large-Lot Approach Time Figure 16.7 11

12. Kanban  Kanban is the Japanese word for card  The card is an authorization for the next container of material to be produced  A sequence of kanbans pulls material through the process  Many different sorts of signals are used, but the system is still called a kanban 12

13. Kanban 1.User removes a standard sized container 2.Signal is seen by the producing department as authorization to replenish Part numbers mark location Signal marker on boxes Figure 16.8 13

14. Kanban Figure 16.9 Work cell Raw Material Supplier Kanban Purchased Parts Supplier Sub- assembly Ship Kanban Kanban Kanban Kanban Finished goods Customer order Final assembly Kanban 14

15. More Kanban  When the producer and user are not in visual contact, a card can be used  When the producer and user are in visual contact, a light or flag or empty spot on the floor may be adequate  Since several components may be required, several different kanban techniques may be employed 15

16. More Kanban  Usually each card controls a specific quantity or parts  Multiple card systems may be used if there are several components or different lot sizes  In an MRP system, the schedule can be thought of as a build authorization and the kanban a type of pull system that initiates actual production 16

17. The Number of Kanban Cards or Containers  Need to know the lead time needed to produce a container of parts  Need to know the amount of safety stock needed Number of kanbans (containers) Demand during Safety lead time+stock Size of container = 17

18. Number of Kanbans Example Daily demand=500 cakes Production lead time=2 days (Wait time + Material handling time + Processing time) Safety stock=1/2 day Container size=250 cakes Demand during lead time = 2 days x 500 cakes = 1,000 Number of kanbans = = 5 1,000 + 250 250 18

19. Advantages of Kanban  Allow only limited amount of faulty or delayed material  Problems are immediately evident  Puts downward pressure on bad aspects of inventory  Standardized containers reduce weight, disposal costs, wasted space, and labor 19

20. Quality  Strong relationship  JIT cuts the cost of obtaining good quality because JIT exposes poor quality  Because lead times are shorter, quality problems are exposed sooner  Better quality means fewer buffers and allows simpler JIT systems to be used 20

21. Toyota Production System  Continuous improvement  Build an organizational culture and value system that stresses improvement of all processes  Part of everyone’s job  Respect for people  People are treated as knowledge workers  Engage mental and physical capabilities  Empower employees 21

22. Toyota Production System  Standard work practice  Work shall be completely specified as to content, sequence, timing, and outcome  Internal and external customer-supplier connection are direct  Product and service flows must be simple and direct  Any improvement must be made in accordance with the scientific method at the lowest possible level of the organization 22

23. Lean Operations  Different from JIT in that it is externally focused on the customer  Starts with understanding what the customer wants  Optimize the entire process from the customer’s perspective 23

24. Building a Lean Organization  Transitioning to a lean system can be difficult  Lean systems tend to have the following attributes  Use JIT techniques  Build systems that help employees produce perfect parts  Reduce space requirements 24

25. Building a Lean Organization  Develop partnerships with suppliers  Educate suppliers  Eliminate all but value-added activities  Develop employees  Make jobs challenging  Build worker flexibility 25

26. JIT in Services  The JIT techniques used in manufacturing are used in services  Suppliers  Layouts  Inventory  Scheduling 26

27. CHAPTER : MAINTENANCE AND RELIABILITY OPERATIONS 27

28. Orlando Utilities Commission  Maintenance of power generating plants  Every year each plant is taken off-line for 1-3 weeks maintenance  Every three years each plant is taken off-line for 6-8 weeks for complete overhaul and turbine inspection  Each overhaul has 1,800 tasks and requires 72,000 labor hours  OUC performs over 12,000 maintenance tasks each year 28

29. Orlando Utilities Commission  Every day a plant is down costs OUC $110,000  Unexpected outages cost between $350,000 and $600,000 per day  Preventive maintenance discovered a cracked rotor blade which could have destroyed a $27 million piece of equipment 29

30. Strategic Importance of Maintenance and Reliability  Failure has far reaching effects on a firm’s  Operation  Reputation  Profitability  Dissatisfied customers  Idle employees  Profits becoming losses  Reduced value of investment in plant and equipment 30

31. Maintenance and Reliability  The objective of maintenance and reliability is to maintain the capability of the system while controlling costs  Maintenance is all activities involved in keeping a system’s equipment in working order  Reliability is the probability that a machine will function properly for a specified time 31

32. Important Tactics  Reliability 1.Improving individual components 2.Providing redundancy  Maintenance 1.Implementing or improving preventive maintenance 2.Increasing repair capability or speed 32

33. Maintenance Strategy Employee Involvement Information sharing Skill training Reward system Employee empowerment Maintenance and Reliability Procedures Clean and lubricate Monitor and adjust Make minor repair Keep computerized records Results Reduced inventory Improved quality Improved capacity Reputation for quality Continuous improvement Reduced variability Figure 17.1 33

34. Reliability Improving individual components R s = R 1 x R 2 x R 3 x … x R n whereR 1 = reliability of component 1 R 2 = reliability of component 2 and so on 34

35. Overall System Reliability Reliability of the system (percent) Average reliability of each component (percent) ||||||||| 10099989796 100 100 – 80 80 – 60 60 – 40 40 – 20 20 – 0 0 – n = 10 n = 1 n = 50 n = 100 n = 200 n = 300 n = 400 Figure 17.2 35

36. RsRsRsRs R3R3R3R3.99 R2R2R2R2.80 Reliability Example R1R1R1R1.90 Reliability of the process is R s = R 1 x R 2 x R 3 =.90 x.80 x.99 =.713 or 71.3% 36

37. Product Failure Rate (FR) Basic unit of measure for reliability FR(%) = x 100% Number of failures Number of units tested FR(N) = Number of failures Number of unit-hours of operating time Mean time between failures MTBF = 1 FR(N) 37

38. Failure Rate Example 20 air conditioning units designed for use in NASA space shuttles operated for 1,000 hours One failed after 200 hours and one after 600 hours FR(%) = (100%) = 10% 220 FR(N) = =.000106 failure/unit hr 2 20,000 - 1,200 MTBF = = 9,434 hrs 1.000106 38

39. Failure Rate Example 20 air conditioning units designed for use in NASA space shuttles operated for 1,000 hours One failed after 200 hours and one after 600 hours FR(%) = (100%) = 10% 220 FR(N) = =.000106 failure/unit hr 2 20,000 - 1,200 MTBF = = 9,434 hr 1.000106 Failure rate per trip FR = FR(N)(24 hrs)(6 days/trip) FR = (.000106)(24)(6) FR =.153 failures per trip 39

40. Providing Redundancy Provide backup components to increase reliability +x Probability of first component working Probability of needing second component Probability of second component working (.8)+(.8)x (1 -.8) =.8 +.16 =.96 40

41. Redundancy Example A redundant process is installed to support the earlier example where R s =.713 R1R1R1R1 0.90 R2R2R2R2 0.80 R3R3R3R3 0.99 = [.9 +.9(1 -.9)] x [.8 +.8(1 -.8)] x.99 = [.9 + (.9)(.1)] x [.8 + (.8)(.2)] x.99 =.99 x.96 x.99 =.94 Reliability has increased from.713 to.94 41

42. Maintenance  Two types of maintenance  Preventive maintenance – routine inspection and servicing to keep facilities in good repair  Breakdown maintenance – emergency or priority repairs on failed equipment 42

43. Implementing Preventive Maintenance  Need to know when a system requires service or is likely to fail  High initial failure rates are known as infant mortality  Once a product settles in, MTBF generally follows a normal distribution  Good reporting and record keeping can aid the decision on when preventive maintenance should be performed 43

44. Computerized Maintenance System Figure 17.3 Output Reports Inventory and purchasing reports Equipment parts list Equipment history reports Cost analysis (Actual vs. standard) Work orders –Preventive maintenance –Scheduled downtime –Emergency maintenance Data entry –Work requests –Purchase requests –Time reporting –Contract work Data Files Personnel data with skills, wages, etc. Equipment file with parts list Maintenance and work order schedule Inventory of spare parts Repair history file 44

45.  JIT Schedulling  Kanban  Toyota Production System  Lean Operations Summary of the Session 45

46. Summary of the Session (Contd.) CHAPTER : Maintenance and Reliability Operations  Global Company Profile: Orlando Utilities Commission  The Strategic Importance of Maintenance and Reliability  Reliability  Improving Individual Components  Providing Redundancy 46

47. Summary of the Session (Contd.)  Maintenance  Implementing Preventive Maintenance  Increasing Repair Capabilities 47

48. THANK YOU 48