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? and to acplish these things at minimum cost”. 6 JIT Synonyms ? IBM Continuous Flow Manufacturing ? HP Stockless Production Repetitive Manufacturing System ? GE Management by Sight ? Motorola Short Cycle Manufacturing ? Japanese The Toyota System ? Boeing Lean Manufacturing 7 APICS Definition of Lean Manufacturing “A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves: ? … identifying and eliminating nonvalueadding activities, ? … employing teams of multiskilled workers, ? … using highly flexible, automated machines” 8 TimeBased Competition ? It is no longer good enough for firms to be highquality and lowcost producers. ? To succeed today, they must also be first in getting products and services to the customer fast. ? To pete in this new environment, the ordertodelivery cycle must be drastically reduced. ? JIT is the weapon of choice today in reducing the elapsed time of this cycle. 9 OrdertoDelivery Cycle Distri bution and Customer Service Custo mer Places Order Order Entry Engi neering Design Sched uling Manufacturing Lead Times Purchasing Lead Times Manufacturing Cumulative Lead Time OrdertoDelivery Cycle 10 Traditional View of Manufacturing ? A key objective was to fully utilize production capacity so that more products were produced with fewer workers and machines. ? This thinking led to large queues of inprocess inventory waiting at work centers. ? Large queues meant workers and machines never had to wait for product to work on, so capacity utilization was high and production costs were low. ? This resulted in products spending most of their time in manufacturing just waiting, an arrangement that is unacceptable in today’s timebased petition. 11 JIT Manufacturing Philosophy ? The main objective of JIT manufacturing is to reduce manufacturing lead times. ? This is primarily achieved by drastic reductions in workinprocess (WIP). ? 100% capacity utilization is not the predominant objective. ? The result is a smooth, uninterrupted flow of small lots of products throughout production. 12 Capacity Utilization 10 20 30 40 50 60 70 80 90 100 30 10 20 % Capacity Utilization 60 Production Lead Times (days) 40 50 Traditional Manufacturing JIT Manufacturing 13 Increasing Production Capacity Reduces Manufacturing Lead Times ? Only slight increases in production capacities can lead to: ? Significant reduction of manufacturing lead times ? Significant reduction of workinprocess inventory ? Queuing theory can be used to analyze waitingline production problems 14 ? We know from queuing theory (Chapter 9) that the average time in the system (manufacturing lead time) is: ? If we have an average lead time in mind, we can solve for the required production rate: Necessary Production Capacity 1()st ??? ?1st????15 WorkinProcess Inventory ? We also know from queuing theory that the average number of jobs in the system (workinprocess inventory) is: ()sn ?????16 Example: Necessary Production Capacity A production manager believes reducing the firm’s ma