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?

Question

Quizplus · Accepted Answer

The Answer is 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.

Tower Automotive, a Major Manufacturer of Auto Parts Based in Michigan