Quality Parts Company supplies gizmos for a computer manufacturer located a few
ID: 455521 • Letter: Q
Question
Quality Parts Company supplies gizmos for a computer manufacturer located a few miles away. The company produces three different models of gizmos (X, Y, and Z) in production runs ranging from 100 to 300 units.
Model Z requires milling as its first step, but otherwise follows the same flow pattern as X and Y. Skids can hold up to 20 gizmos at a time. Demand for gizmos from the computer company ranges between 125 and 175 per month, equally among X, Y, and Z. Subassembly builds up inventory early in the month to make certain that a buffer stock is always available. Raw materials and purchased parts for subassemblies each constitute 40 percent of the manufacturing cost of a gizmo. Both categories of parts are multiple-sourced from about 80 vendors and are delivered at random times. (Gizmos have 40 different part numbers.)
Scrap rates are about 10 percent at each operation, inventory turns twice yearly, employees are paid on a day rate, employee turnover is 25 percent per year, and net profit from operations is steady at 5 percent per year. Maintenance is performed as needed.
The manager of Quality Parts Company has been contemplating installing an automated ordering system to help control inventories and to “keep the skids filled.” (She feels that two days of inventory in front of a workstation motivates the worker to produce at top speed.) She is also planning to add three inspectors to clean up the quality problem. Further, she is thinking about setting up a rework line to speed repairs. Although she is pleased with the high utilization of most of her equipment and labor, she is concerned about the idle time of the milling machine. Finally, she has asked the industrial engineering department to look into high-rise shelving to store parts coming off machine 4.
a. Identify the current practices at Quality Parts Company that are not consistent with lean thinking?
b. Please identify the changes considered by the manager of Quality Parts Company that are counter to the lean philosophy?
Explanation / Answer
Ans:- a.
Lean Manufacturing/Production was introduced by Toyota Motor Corporation in the beginning of 20th century. It is also often known as JIT (just-in-time) manufacturing/production, which means that materials arrive just as they are needed in the production process. More than a tool or a technique, JIT/Lean Production signifies a philosophy that includes every aspect of the process, from design to after-sales of a product. The philosophy is to develop a system that functions properly with minimal levels of inventories, minimal waste, minimal space and minimal transactions.
The current practices at Quality Parts Company that are not consistent with lean thinking are as follows:
(1) Large lot sizes in the range of 100 to 300 units. In a lean production system, the lot sizes are small (often one-tenth of a day’s production is a lot size) to reduce Cycle Inventory. Here lot sizes should preferably be less than 50 (10% of 125-175 units of demand per month given here).
(2) A buffer stock is kept available throughout the month. In a lean production system, one should usually avoid keeping a buffer stock as much as possible and order materials only when customer orders come.
(3) Parts are multiple-sourced from about 80 vendors, which is quite high. In a lean production system, one should source parts from a few reliable vendors (maybe 4 or 5).
(4) Remedial Maintenance (since maintenance is performed as needed) is being carried out which is in violation of lean thinking. In a lean production system, Preventive Maintenance is carried out to ensure that production flows are not disrupted by downtime or malfunctioning equipment.
Ans:-b.
The changes considered by the manager of Quality Parts Company that are counter to the lean philosophy are as under:
(1) The manager is planning to keep two days of inventory in front of a workstation, which is too high an inventory with respect to a lean system. In a lean production system, inventory should be minimum; here the manager can think of keeping only half a day’s inventory.
(2) The manager is planning to add three inspectors to clean up the quality problem. But in a lean production system, quality control is responsibility of every person in the organization (total quality control) and there need not be a separate quality control department. Moreover quality is built into the process and quality is not identified by inspection.
(3) The manager is planning to have high-rise shelving to store parts coming off machine 4. This is again indicative of storing large amounts of inventory. But in a lean production system, inventory should be at a minimal level. So the manager can decide to reduce utilization of machine 4, such that fewer parts come out of it.