Deck 7: Lean Operations: Process Synchronization and Improvement

Question 1

A supplier of Toyota is planning to implement Heijunka. Toyota has recommended that the supplier cut the batch sizes from the current level of 50 down to 10. In order to achieve this, the supplier should reduce setup costs by a factor of
• 5
• 25
• √5
• Reducing setup costs has no relationship with batch size

Answer 1

To reduce EOQ by a factor of 5, we need to reduce set up cost by a factor of 25

Question 2

Indicate which of the following statements is (are) correct

A) A functional layout is preferred to a cell layout when a large variety of products is to be produced with very uncertain demand for each product.
B) A cell layout is preferred to a functional layout when a large variety of products is to be produced with very uncertain demand for each product.
C) A functional layout is preferred to a cell layout when a small variety of products is to be produced with stable demand for each product.
D) A cell layout is always preferred to a functional layout.
E) A functional layout is always preferred to a cell layout.

Answer 2

A functional layout is preferred to a cell layout when a large variety of products is to be produced with very uncertain demand for each product.

Question 3

Tower Automotive, a major manufacturer of auto parts based in Michigan, has just learnt about the Toyota production system and wants to implement JIT. Traditionally there has been no control on the amount of work in process inventory between stages (it has been known to exceed 500 parts between some stages). Following Shonberger's zero inventories advice, Tower Automotive is considering as a first step to limit the amount of work in process inventory between stages to a maximum of 5 parts. What, if any, impact will this have on the output rate from the factory in the short term?

Answer 3

Arbitrarily reducing inventories may result in high changeover costs and/or equipment idleness due to starvation. They should reduce inventories gradually, ironing out process imperfections. They must work on reducing setup times and changeover costs (which will reduce EOQ) and reducing variability (which will reduce the need for safety stocks). The goal is to improve the system, not just reduce inventories for its own sake.

Question 4

Company ABC manufactures widgets using a two--stage system in which there is one machine in the first stage and 3 identical machines in the second stage. The machine in the first stage can produce at an average rate of 5 jobs per shift. Each machine in the second stage can produce at an average rate of 2.5 jobs per shift. Each product has to be first processed on the first machine and then on one of the three second stage machines. The demand for widgets is 5 jobs/shift. Recently a Japanese company entered the market and ABC faces severe competition. The CEO of ABC has heard about the Japanese approach to operations and after visits to several facilities in Japan concludes that the key to Japanese cost and time competitiveness is zero inventories. Based on the data supplied by the accountant, the CEO acts as follows:
• He observes that there is excess capacity in the second stage. The first stage produces at 5 jobs/shift and the second stage at 7.5 jobs per shift. To reduce costs, he disposes off one machine in the second stage.
• He dictates that no inventories be carried in the shop floor.
You are hired as a consultant. Preliminary data collection shows that the first machine produces at the rate of 8 jobs per shift 50% of the time and 2 jobs per shift the other 50%; similarly, each machine in the second stage produces at 4 jobs/shift 50% of the time and 1 job/shift the other 50%.
a. What is the effect of CEO's decisions on the output rate of widgets at ABC? Is it less than, equal to, or greater than 5 jobs per shift? Why?
b. How would you approach this problem and achieve the JIT ideal of zero inventories with existing resources. You realize that you cannot make the machines completely reliable overnight.

Question 5

The lock box operation at NBD bank involves three stages. Envelopes arrive from the post office every half hour in batches of 30. In the first stage the envelopes are automatically opened at a rate of 60 per hour. In the second stage the contents (deposit slips) are scanned and printed. This optical character recognition machine is capable of processing 60 deposit slips per hour. In the final third stage, deposit confirmation records are inserted into envelopes at a rate of 60 records per hour, to be mailed to customers. Between each stage the contents of envelopes are moved in batches of 30.

-A suggested "process improvement" at NBD calls for movement between stages in batches of 15 rather than 30. As a result the cycle time taken to process each batch of 30 envelopes coming from the post office is expected to

A) Remain unchanged.
B) Decrease by 10 minutes.
C) Decrease by 15 minutes.
D) Decrease by 20 minutes.
E) Decrease by 30 minutes.

Question 6

The lock box operation at NBD bank involves three stages. Envelopes arrive from the post office every half hour in batches of 30. In the first stage the envelopes are automatically opened at a rate of 60 per hour. In the second stage the contents (deposit slips) are scanned and printed. This optical character recognition machine is capable of processing 60 deposit slips per hour. In the final third stage, deposit confirmation records are inserted into envelopes at a rate of 60 records per hour, to be mailed to customers. Between each stage the contents of envelopes are moved in batches of 30.

-Another suggested "process improvement" calls for increasing the processing rate at each station from 60/min to 90/min, leaving the rest as in the original process. What, if any, impact would you expect on the time to process each batch of 30 from the post office?

A) No change.
B) Decrease by 10 minutes.
C) Decrease by 15 minutes.
D) Decrease by 20 minutes.
E) Decrease by 30 minutes.

Question 7

The pop-group Hootie & The Operations Fish came out with a smash hit, singing about Lover's Beer. As a result, in two weeks customer demand for Lover's Beer increased from 4 crates of beer per week to 8 crates per week (and remained at 8 crates per week during the next 30 weeks). Lead times in the supply chain are large and stages only communicate with each other through the orders they place.
(a) What will be the main effect observed in the supply chain?
(b) List two key actions that need to be taken in order to avoid this effect.

Question 8

In Reengineering Work-Don't Automate, Obliterate, Michael Hammer advances "organize around outcomes, not task" as a major `principle' of reengineering.
a. What do they mean by this suggestion?
b. Give two major benefits that result from this principle?
c. What is the major disadvantage of this principle?

Question 9

Kellogg's admissions staff has embarked on a re-engineering project. Inspired by Hammer and Champy's Reengineering the Corporation, they are considering empowering each admissions employee so that each employee will handle an entire application. That is, each employee will receive the application package, enter all administrative data in the computer data base, read all essays and make an application decision (accept, ask a second opinion, put on waiting list, reject). This contrasts to the current process where employees are dedicated to either data entry or reading and deciding which are done sequentially. If this new process vision were implemented, Kellogg can expect

-total theoretical cycle time to process an application to

A) decrease
B) remain the same
C) increase

Question 10

Kellogg's admissions staff has embarked on a re-engineering project. Inspired by Hammer and Champy's Reengineering the Corporation, they are considering empowering each admissions employee so that each employee will handle an entire application. That is, each employee will receive the application package, enter all administrative data in the computer data base, read all essays and make an application decision (accept, ask a second opinion, put on waiting list, reject). This contrasts to the current process where employees are dedicated to either data entry or reading and deciding which are done sequentially. If this new process vision were implemented, Kellogg can expect

-total actual cycle time to process an application to

A) decrease
B) remain the same
C) increase

Question 11

List three causes of the bullwhip effect in a supply chain. For each cause identify one countermeasure that can be used to dampen the bullwhip effect.

Question 12

Why do shortages lead to increased fluctuation in orders? What can a firm do to counter this phenomenon?