Professional Documents
Culture Documents
Receive Goods
Where is the bottleneck? What is the cycle time? What is the throughput rate?
If there are 15 orders coming in an 8 hr day, what would each stations utilization rate be?
Yes
No
Inform Purchasing
No
Accept? (2)
Yes
Goods 4 pick up
72
Example: Receiving goods to warehouse What is the throughput time for good items? Detailed view
What is the capacity of each station? Receive Goods Where is the bottleneck? What is the cycle time? What is the throughput rate? Inspect Goods (30) Quality Check (45) Goods 4 pick up
Yes
Match order? (10)
Yes
Accept? (2)
No
Inform Purchasing
No
If we get 15 orders in an 8 hr day, what would the utilization rate be for each station?
73
74
Chapter 3: Problem 2
T3-a (14) T2 (13) T3-b (10) T3-c (11) T5 (15) T6 (22) T4 (18) T7 (10)
Type A
T1 (12)
Type A or B?
Type B
a. For Type A customers, step T2 can process (60/13) = 4.62 customers per hour. T3 has three work stations and a capacity of (60/14) + (60/10) + (60/11) = 15.74 customer per hour. Step T4 can process (60/18) = 3.33 customers per hour. The bottleneck for type A customers is the step with the highest processing time per customer, T4.
75
Chapter 3: Problem 2
T3-a (14) T2 (13) T3-b (10) T3-c (11) T5 (15) T6 (22) T4 (18) T7 (10)
Type A
T1 (12)
Type A or B?
Type B
b. The bottleneck for Type B customers is T6 since it has the longest processing time per customer. The capacity for Type B customers is (60/22) = 2.73 customers per hour. Thus the average capacity is 0.3(3.33) + 0.7(2.73) = 2.9 customers per hour. This of course also the expected throughput rate of the entire process (Theoretically of course since we cant have partial customers)..
76
Chapter 3: Problem 2
T3-a (14) T2 (13) T3-b (10) T3-c (11) T5 (15) T6 (22) T4 (18) T7 (10)
Type A
T1 (12)
Type A or B?
Type B
c.
Type A customers would wait before T2 and T4 because the activities immediately preceding them have a higher rate of output. Type B customers would wait before T5 and T6 because of the same reasons. This assumes that new customers are always arriving.
77
A1 (5)
A2 (6)
Standard or Deluxe
A8 (10)
Deluxe
A5 (5)
A6 (20)
A7 (12)
78
79
7 10
7 11
7 12
END 1 DISCHARGE
PRESCRIBE MEDS NO WAIT REGISTER VITAL SIGNS WAIT MED EXAM MORE TESTS ? YES ER CARE HOSP ADMIT END BLOOD WORK XRAY, OTHERS WAIT
SERIOUS AILMENT ? NO 1
END
DISCHARGE REG PRESCRIBE MEDS NO CHECK VITAL SIGNS MED EXAM MORE TESTS YES PERFORM TESTS WAIT
EVALUATE RESULTS
NO
IDEAL ER SCENARIO!
END
1. 2.
The focus is on balancing flow, not on balancing capacity. Maximizing output and efficiency of every resource will not maximize the throughput of the entire system. An hour lost at a bottleneck or constrained resource is an hour lost for the whole system. An hour saved at a non-constrained resource does not necessarily make the whole system more productive.
7 16
3.
4.
Inventory is needed only in front of the bottlenecks to prevent them from sitting idle, and in front of assembly and shipping points to protect customer schedules. Building inventories elsewhere should be avoided. Work should be released into the system only as frequently as the bottlenecks need it. Bottleneck flows should be equal to the market demand. Pacing everything to the slowest resource minimizes inventory and operating expenses.
5.
7 17
6.
Activation of non-bottleneck resources cannot increase throughput, nor promote better performance on financial measures. Every capital investment must be viewed from the perspective of its global impact on overall throughput (T), inventory (I), and operating expense (OE).
7.
7 18
Description
Relationship to Financial Measures A decrease in I leads to an increase in net profit, ROI, and cash flow An increase in T leads to an increase in net profit, ROI, and cash flows A decrease in OE leads to an increase in net profit, ROI, and cash flows An increase in U at the bottleneck leads to an increase in net profit, ROI, and cash flows
All the money invested in the system in purchasing things that it intends to sell Rate at which system generates money through sales All the money the system spends to turn inventory into throughput The degree to which equipment, space, or labor is currently being used, and is measured as the ratio of average output rate to maximum capacity, expressed as a %
Throughput (T)
7 19
Identifying the Bottleneck MultiMulti-Product Multi-stations MultiEXAMPLE Diablo Electronics manufactures four unique products (A, B, C, and D) that are fabricated and assembled in five different workstations (V, W, X, Y, and Z) using a small batch process. Each workstation is staffed by a worker who is dedicated to work a single shift per day at an assigned workstation. Batch setup times have been reduced to such an extent that they can be considered negligible. Figure 7.2 is a flowchart of the manufacturing process. Diablo can make and sell up to the limit of its demand per week, and no penalties are incurred for not being able to meet all the demand. Which of the five workstations (V, W, X, Y, or Z) has the highest utilization, and thus serves as the bottleneck for Diablo Electronics?
Purchased parts
$2
Purchased parts
$3
Purchased parts
Raw materials
$6
Purchased parts
Flowchart for Products A, B, C, and D Overhead Costs: $8,500; Labor Costs: $18/hr (8hrs/day; 40 hrs/week)
These calculations show that workstation X is the bottleneck, because the aggregate work load at X exceeds the available capacity of 2,400 minutes per week.
When ordered from highest to lowest, the contribution margin per unit sequence of these products is B, A, C, D.
The best product mix according to this traditional approach is then 60 A, 80 B, 40 C, and 100 D.
Manufacturing the product mix of 60 A, 80 B, 40 C, and 100 D will yield a profit of $1,560 per week.
When ordered from highest to lowest contribution margin/ minute at the bottleneck, the manufacturing sequence of these products is D, C, A, B, which is reverse of the earlier order. Product D is scheduled first because it does not consume any resources at the bottleneck.
The best product mix according to this bottleneck based approach is then 60 A, 70 B, 80 C, and 100 D.
Manufacturing the product mix of 60 A, 70 B, 80 C, and 100 D will yield a profit of $2,490 per week.
In class - Example
ONeill Enterprises manufactures three unique products (A, B, C) that are fabricated and assembled in four different workstations (W, X, Y, Z) using a small batch process. Each of the products visits every one of the four workstations, though not necessarily in the same order. Batch setup times are negligible. A flowchart of the manufacturing process is shown below. ONeill can make and sell up to the limit of its demand per week, and there are no penalties for not being able to meet all the demand. Each workstation is staffed by a worker dedicated to work on that workstation alone, and is paid $12 per hour. Variable overhead costs are $8000/week. The plant operates one 8-hour shift per day, or 40 hours/week. Which of the four workstations W, X, Y, or Z has the highest total workload, and thus serves as the bottleneck for ONeill Enterprises?
In class - Example
Flowchart for Products A, B, and C
Product A Step 1 at workstation W (10 min) Step 2 at workstation Y (15 min) Step 3 at workstation X (9 min) Finish with step 4 at workstation Z (16 min) Product: A Price: $90/unit Demand: 65 units/wk
$7
Raw materials
$6
Purchased part
Product B
$9
Raw materials
$5
Purchased part
Product C
$10
Raw materials
$5
Purchased part
Flowchart for Products A, B, and C Overhead Costs: $8,000; Labor Costs: $12/hr (as much as worker works)
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.
In class - Example
Work Station W X Y Z Load from Product A Load from Product B Load from Product C Total Load (minutes)
In class - Example
Work Station W X Y Z Load from Product A (65x10)= 650 (65v9)= 585 (65v15)= 975 (65v16)= 1040 Load from Product B (70v10)= 700 (70v12)= 840 (70x10)= 700 (70v13)= 910 Load from Product C (80v12)= 960 (80v10)= 800 (80x5)= 400 (80v10)= 800 Total Load (minutes) 2310 2225 2075 2750
These calculations show that workstation Z is the bottleneck, because the aggregate work load at Z exceeds the available capacity of 2400 minutes per week.
In class - Example
The senior management at ONeill Enterprises wants to improve the profitability of the firm by accepting the right set of orders. Currently, decisions are made to accept as much of the highest contribution margin product as possible (up to the limit of its demand), followed by the next highest contribution margin product, and so on until no more capacity is available. Since the firm cannot satisfy all the demand, the product mix must be chosen carefully. Jane Hathaway, the newly hired production supervisor, is knowledgeable about the theory of constraints and bottleneck based scheduling. She believes that profitability can indeed be approved if bottleneck resources were exploited to determine the product mix. What is the change in profits if instead of the traditional method that ONeill has used thus far; a bottleneck based approach advocated by Jane is used instead for selecting the product mix?
In class - Example
SOLUTION Decision rule 1: Traditional method - Select the best product mix according to the highest overall profit margin of each product. Step 1: Calculate the profit margin per unit of each product as shown below
A Price Raw Material & Purchased Parts Labor = Contribution Profit Margin B C
In class - Example
SOLUTION Decision rule 1: Traditional method - Select the best product mix according to the highest overall profit margin of each product. Step 1: Calculate the profit margin per unit of each product as shown below
A Price Raw Material & Purchased Parts Labor = Contribution Profit Margin $90.00 13.00 10.00 $67.00 B $85.00 14.00 9.00 $62.00 C $80.00 15.00 7.40 $57.60
When ordering from highest to lowest, the profit margin per unit order of these products is ABC.
In class - Example
Step 2: Allocate resources W, X, Y, and Z to the products in the order decided in step 1. Satisfy each demand until the bottleneck resource (workstation Z) is encountered. Subtract minutes away from 2400 minutes available for each week at each stage.
Work Center W X Y Z Starting After 65 A After 70 B Can Only Make 45 C
In class - Example
Step 2: Allocate resources W, X, Y, and Z to the products in the order decided in step 1. Satisfy each demand until the bottleneck resource (workstation Z) is encountered. Subtract minutes away from 2400 minutes available for each week at each stage.
Work Center W X Y Z Starting 2400 2400 2400 2400 After 65 A 1750 1815 1425 1360 After 70 B 1050 975 725 450 Can Only Make 45 C 510 525 500 0
In class - Example
Step 3: Compute profitability for the selected product mix.
In class - Example
Step 3: Compute profitability for the selected product mix.
Profits Revenue Materials Overhead Labor Profit $15400 $2500 $8000 $1920 $2980
In class - Example
Decision rule 2: Bottleneck-based approach - Select the best product mix according to the dollar contribution per minute of processing time at the bottleneck workstation Z. This rule would take advantage of the principles outlined in the theory of constraints and get the most dollar benefit from the bottleneck. Step 1: Calculate the contribution/minute of processing time at bottleneck workstation Z:
Product A Contribution Margin Time at Bottleneck Contribution Margin per minute Product B Product C
In class - Example
Decision rule 2: Bottleneck-based approach - Select the best product mix according to the dollar contribution per minute of processing time at the bottleneck workstation Z. This rule would take advantage of the principles outlined in the theory of constraints and get the most dollar benefit from the bottleneck. Step 1: Calculate the contribution/minute of processing time at bottleneck workstation Z:
Product A Contribution Margin Time at Bottleneck Contribution Margin per minute $67.00 16 minutes 4.19 Product B $62.00 13 minutes 4.77 Product C $57.60 10 minutes 5.76
When ordering from highest to lowest contribution margin/minute at the bottleneck, the manufacturing sequence of these products is CBA, which is reverse of the traditional method order.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.
In class - Example
Step 2: Allocate resources W, X, Y, and Z to the products in the order decided in step 1. Satisfy each demand until the bottleneck resource (workstation Z) is encountered. Subtract minutes away from 2400 minutes available for each week at each stage.
Work Center W X Y Z Starting After 80 C After 70 B Can Only Make 43 A
In class - Example
Step 2: Allocate resources W, X, Y, and Z to the products in the order decided in step 1. Satisfy each demand until the bottleneck resource (workstation Z) is encountered. Subtract minutes away from 2400 minutes available for each week at each stage.
Work Center W X Y Z Starting 2400 2400 2400 2400 After 80 C 1440 1600 2000 1600 After 70 B 740 760 1300 690 Can Only Make 43 A 310 373 655 2
In class - Example
Step 3: Compute profitability for the selected product mix. The new profitability figures are shown below based on the new production quantities of 43A, 70B, and 80C.
Profits Revenue Materials Overhead Labor Profit
In class - Example
Step 3: Compute profitability for the selected product mix. The new profitability figures are shown below based on the new production quantities of 43A, 70B, and 80C.
Profits Revenue Materials Overhead Labor Profit $16220 $2739 $8000 $1920 $3561
A Line Process
Line Balancing
Assignment of work to stations in a line so as to achieve the desired output rate with the smallest number of workstations Achieving the goal is similar to the theory of constraints but it differs in how it addresses bottlenecks
A Line Process
The desired output rate is matched to the staffing or production plan Cycle time is the maximum time allowed for work at each station is
1 c= r where c = cycle time in hours r = desired output rate
A Line Process
The theoretical minimum number of stations is
7t TM = c where 7t = total time required to assemble each unit
A Line Process
Idle time, efficiency, and balance delay
Idle time = nc 7t where n = number of stations 7t Efficiency (%) = nc (100) Balance delay (%) = 100 Efficiency
Precedence Diagram
EXAMPLE Green Grass, Inc., a manufacturer of lawn and garden equipment, is designing an assembly line to produce a new fertilizer spreader, the Big Broadcaster. Using the following information on the production process, construct a precedence diagram for the Big Broadcaster. Time Immediate Work Description
Element A B C D E F G H I (sec) Predecessor(s) None A A B B C C D, E F, G Bolt leg frame to hopper Insert impeller shaft Attach axle Attach agitator Attach drive wheel Attach free wheel Mount lower post Attach controls Mount nameplate 40 30 50 40 6 25 15 20 18 Total 244
Precedence Diagram
SOLUTION Figure 4 shows the complete diagram. We begin with work element A, which has no immediate predecessors. Next, we add elements B and C, for which element A is the only immediate predecessor. After entering time standards and arrows showing precedence, we add elements D and E, and so on. The diagram simplifies D interpretation. Work element F, H 40 B for example, can be done 20 anywhere on the line after E 30 element C is completed. 6 A However, element I must F 40 await completion of C 25 elements F and G. 50
I G Figure 4 Precedence Diagram for Assembling the Big Broadcaster 15 18
Finding a Solution
The goal is to cluster the work elements into workstations so that
1. The number of workstations required is minimized 2. The precedence and cycle-time requirements are not violated
The work content for each station is equal (or nearly so, but less than) the cycle time for the line Trial-and-error can be used but commercial software packages are also available
Finding a Solution
The theoretical minimum number of workstations is 5 and the cycle time is 60 seconds, so Figure 5 represents an optimal solution to the problem
D B 30 A 40 C 50 G 15 Figure 5 Big Broadcaster Precedence Diagram Solution
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.
40 E 6
H 20
F 25 I 18
In class - Example
A plant manager needs a design for an assembly line to assembly a new product that is being introduced. The time requirements and immediate Immediate Work Element Time (sec) Predecessor predecessors for the A 12 work elements are B 60 A as follows:
C D E F G H I J K Total = 36 24 38 72 14 72 35 60 12 435 G, H I F, J C, D B, E
In class - Example
Draw a precedence diagram, complete I, F, J, and K
Work Element A B C D E F G H I J K
Time (sec) 12 60 36 24 38 72 14 72 35 60 12
Immediate Predecessor A
A B F D E J K
C
C, D B, E
G, H I F, J
Total =
435
In class - Example
If the desired output rate is 30 units per hour, what are the cycle time and theoretical minimum?
1 c= r =
or 4 stations
In class - Example
Suppose that we are fortunate enough to find a solution with just four stations. What is the idle time per unit, efficiency, and the balance delay for this solution? Idle time = nc 7t = 4(120) 435 = 45 seconds Efficiency (%) = 7t 435 nc (100) = 480 (100) = 90.6%
In class - Example
Using trial and error, one possible solution is shown below.
Work Elements Assigned
Station 1 2 3 4 5
Cumulative Time
In class - Example
Using trial and error, one possible solution is shown below.
Work Elements Assigned H, C, A B, D, G E, F I, J, K
Station 1 2 3 4 5
Managerial Considerations
Pacing is the movement of product from one station to the next Behavioral factors such as absenteeism, turnover, and grievances can increase after installing production lines The number of models produced complicates scheduling and necessitates good communication Cycle times are dependent on the desired output rate
Solved Problem 2
A company is setting up an assembly line to produce 192 units per 8-hour shift. The following table identifies the work elements, times, and immediate predecessors:
Work Element A B C D E F G H I J Time (sec) 40 80 30 25 20 15 120 145 130 115 Total 720 Immediate Predecessor(s) None A D, E, F B B B A G H C, I
Solved Problem 2
a. What is the desired cycle time (in seconds)? b. What is the theoretical minimum number of stations? c. Use trial and error to work out a solution, and show your solution on a precedence diagram. d. What are the efficiency and balance delay of the solution found? SOLUTION a. Substituting in the cycle-time formula, we get 1 8 hours (3,600 sec/hr) = 150 sec/unit c= r = 192 units
Solved Problem 2
b. The sum of the work-element times is 720 seconds, so
7t TM = c =
= 4.8
or 5 stations
Solved Problem 2
c. The precedence diagram is shown in Figure 7.6. Each row in the following table shows work elements assigned to each of the five workstations in the proposed solution.
Work Element Immediate Predecessor(s) None A D, E, F B B B A G H C, I
A B C D E F G H I J
E 20 F 15
C 30 J 115
I 130
Solved Problem 2
B 80 A 40 G 120
Station S1
Candidate(s)
Choice
S2 S3 S4 S5
Solved Problem 2
B 80 A 40 G 120
Station S1
Candidate(s) A B D, E, F
Choice A B D G E H I F C J
Cumulative Time (sec) 40 120 145 120 140 145 130 145 30 145
S2 S3 S4 S5
E, F, G E, F F, H F, I F C J
Solved Problem 2
d. Calculating the efficiency, we get
Efficiency (%) =