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JIT and LEAN Operation; Chapter6 Department of Business Administration FALL 20 10 2011 Chapter 6 : JIT and LEAN OPERATIONS

JIT and LEAN Operation; Chapter6

Outline: What You Will Learn . . .

 Explain what is meant by the term lean operations system.  List each of the goals of JIT and explain its importance.  List and briefly describe the building blocks of JIT.  List the benefits of the JIT system.  Outline the considerations important in converting a traditional mode of operations to a JIT system.  List some of the obstacles that might be encountered when converting to a JIT system.

JIT and LEAN Operation; Chapter6

JIT vs. Lean

 Over the past couple of years, Just-in-Time (JIT) is a system and idea that has gradually seen wide acceptance within the business and manufacturing community.

 As the competition heats up between companies, and the pressures from Asian manufacturers’ continuous cultural improvements take their toll on manufacturers, many firms are forced to seek more innovative methods to reduce costs and cope with the competition.

JIT and LEAN Operation; Chapter6

JIT vs. Lean

 The two could also ‘play’ perfectly well together, and there are many advantages of using both methodologies concurrently. 

The aim of JIT at this point, is to explicitly highlight all the problems in the process

. Lean will focus on eliminating the problems pertaining to the process (system) in order to increase production.

  The fundamental component of JIT, is the elimination of waste while adding value.

JIT’s role is to explicitly highlight process problems, while Lean aims at eliminating the problems.

 Lean can be used to achieve JIT, as the two employ almost the same set of tools, for example, kanban and error proofing.

 Although both methodologies can be used to eliminate waste, JIT alone cannot achieve this, hence the transformation to Lean.

JIT and LEAN Operation; Chapter6

JIT/Lean Production

    

Just-in-time (JIT)

needed.

: The term JIT (a highly coordinated processing system) is used to refer to an operations system in which goods are moved through the system, and services are delivered with precise timing so that they are performed at each step of the process just as they are Initially, the term JIT referred to the movement of materials, parts and semifinished goods within a production system. Over time, the scope of JIT broadened and the term became associated with lean productions.

JIT is a disciplined approach to improving overall productivity and eliminating waste. It provides for the cost-effective production and delivery of only the necessary quantity of parts at the right quality, at the rigth time and place while using a minimum amount of facilities, equipment, materials and human resources.

JIT is dependent on the balance between the supplier’s flexibility and the user’s flexibility. It is accomplished through the application of elements which require total employee involvement and teamwork.

A key philosophy of JIT is simplification.

JIT and LEAN Operation; Chapter6

JIT/Lean Production



Lean: A

highly coordinated system that uses minimal resources and procedures high-quality goods or services.

Lean operation depends on having high-quality processes in place. Quality is an integral part of lean operation, without high process quality, lean operation cannot exist.

 Lean productions began as lean manufacturing in the mid 1990. It was developed by the Japanese automobile manufacturer-Toyota.

The development in Japan was influenced by the limited resources available at the time.

 Not surprisingly, the Japanese were very sensitive to waste and inefficiency. Widespread interest in lean manufacturing occurred after the book about automobile production, The Machine That Changed the World by Womack, Jones and Roos was published in 1991.

JIT and LEAN Operation; Chapter6

JIT/Lean Production



In the famous book, Toyata’s focus was on the elimination of all waste from every aspect of the process. Waste was defined as anything that interfered with or did not add value to the process of producing automobiles.

 In the mid 1980s GM operated a plant using lean manufacturing concept and they adopted lean method succesfully. However GM closed the plant in 1982 because of its low productivity and high absenteeism.

 A few year later the plant was reopened as a joint venture of Toyota and GM. In 1985, they improved quality and productivity by negliging absenteeism.

JIT and LEAN Operation; Chapter6

JIT/Lean Production

 As other North American companies attempted to adopt the lean approach, they began to realize that in order to be successful, they need to make major organizational and caltural changes.

 They also recognized that mass production which emphasizes the efficency of individual operations and leads to unbalanced system and large inventories, was outmoded.

 Instead, they discovered that lean methods involve demand based operations, flexible operations with rapid changeover capability, effective worker behaviours, and continous improvement efforts.

JIT and LEAN Operation; Chapter6 The Toyota Approach

         Many of the methods that are common to lean operations were developed as part of Japanese car maker Toyota’s approach to manufacturing. Some of the term used by the company are as follows: Muda: Waste and inefficiency Keban: A manual system that signals the need for parts or materials.

This applies both to delivery to the factory as well as delivery to each workstation.

Pull system: Replacing materials or parts based on demand, produce only what is needed.

Heijunka: variations in production volume lead to waste. The workload must be leveled-workload leveling.

Kaizen: Continious improvement of the system.

Jidoka: Quality at the source and to make workers aware of quality.

Poka-yoke: Safeguard built into a process to reduce the possibility of errors.

Team concept: Use small teams of workers for process improvement .

JIT and LEAN Operation; Chapter6

JIT Philosophy

 The JIT Philosophy was pioneered by the Japanees engineers Ohno and Shingo at Toyata Motor company in the mid 1970s as a response to the world wide oil crisis in the dacade.

 Japan is a small country with minimal resources and large population as well as the destruction of second world war. They only use their own human capital.

   This brings the cornerstones of the Toyota Production System.

Their intention was to develop a process that could economically produce a wide variety of automobiles in small volumes.

 The Toyota company has also achieved both concepts economies of scale and economies of scope.

The company can easily compete on service as well as cost, quality, dependability, flexibility and time MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Goal of JIT

 The goal of JIT is to produce only the necessary item in the necessary quantity at the necessary time.

 Achieving such goal can radically increase the responsiveness of a company to the demands of its customers and improve its ability to compete on cost, quality, dependability, flexibility and time  The ultimate goal of JIT is a balanced system.

 This is one that achieves a smooth, rapid flow of materials through the system.

 The idea is to make the process time as short as possible by using resources in the best possible way MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Goal of JIT

 The degree to which the overall goal is achieved depends on how well certain supporting goals are achieved. Those are as follows:  Eliminate disruptions  Make the system flexible  Eliminate waste, especially excess inventory  Reduce setup time and lead time  Minimize inventory MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Sources of Waste

 On the JIT philosophy, wastes include the following concepts:  Overproduction  Waiting time  Unnecessary transporting  Inventory storage  Scrap  Inefficient work methods  Product defects MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

The Goals and Building Blocks of Lean System

Ultimate Goal A balanced rapid flow Supporting Goals Eliminate disruptions Make the system flexible Eliminate waste Product Design Process Design Personnel Elements Manufactur ing Planning Building Blocks

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Kaizen Philosophy

 Waste is the enemy  Improvement should be done gradually and continuously   Everyone should be involved Built on a cheap strategy  Can be applied anywhere  Supported by a visual system  Focuses attention where value is created  Process oriented  Stresses main effort of improvement should come from new thinking and work style  The essence of organizational learning is to learn while doing MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Big vs. Little JIT

 Big JIT – broad focus  Vendor relations  Human relations  Technology management  Materials and inventory management  Little JIT – narrow focus  Scheduling materials  Scheduling services of production MGMT 405, POM, 2010/11. Lec Notes

JIT Building Blocks

 Product design  Process design  Personnel/organizational elements  Manufacturing planning and control

JIT and LEAN Operation; Chapter6

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Product Design

 Standard parts  Workers have fewer parts to deal with and traning times and cost are reduced  Modular design  This greatly reduce the number of parts to deal with, simplifying assembly, purchasing, handling, training so on.

 Highly capable production systems  Quality must be embedded in goods and processes, otherwise poor quality can create major disruptions.

 Concurrent engineering  Engineering changes can be very disruptive to smooth operation. Practices can subtantially reduce these disruptions.

MGMT 405, POM, 2010/11. Lec Notes

Process Design

 Small lot sizes  Setup time reduction  Manufacturing cells  Limited work in process  Quality improvement  Production flexibility  Balanced system  Little inventory storage

JIT and LEAN Operation; Chapter6

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Process Design

 Small lot sizes  Small lot size in both production process and deliveries from suppliers yield a number of benefits that enable JIT system to operate effectively. Benefits of Small Lot Sizes are as follows:

Reduces inventory Less rework Less storage space Problems are more apparent Increases product flexibility Easier to balance operations

MGMT 405, POM, 2010/11. Lec Notes

Process Design

JIT and LEAN Operation; Chapter6

 Setup time reduction  In JIT system, it is a necessary step to have a smooth proceess and quality product. Worker are trained to da their own setups.

 Manufacturing cells  The cell are highly specialized and efficient production center. The important benefits of this cell are reduced changeover times, highly utilization of equipment.

 Limited work in process  Quality improvement  Production flexibility   Balanced system Distributing the workload evenly among the workstations or achieve a rapid flow of work through the system. The time needed for work assigned to each workstations. This also is refered as work shift).

takt time

(it is for  Little inventory storage MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Setup time-Example

 A furniture’s production analyst determined that a 2 hour production cycles would be acceptable between two departments. Further, he concluded that a set-up time that would accommodate the 2-hour cycles time should be achieved.

Finally, following data and procedure to

set-up time

analytically; he developed

determine optimum annual demand

the is 400000 units, number of work days/year is 250 days,

production rate

is 4000 units/day,

daily quantity order

is desired as 400 unit,

holding cost

is 20 MU,

daily demand

basis of is 1600 day per hour, and

setting up equipment the cost

is 30 MU.

on hourly MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Setup time-Answer



( 1  2

(

d DP

)) 

S S S



2 (

( 1  (



)) ( 400 2 2

)( 20 )( 1  ( 1600 / 4000 ))  2 .

2 ( 400000 )  2 .

40 / 30  0 .

hours or

4 .

8 min

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Takt time-Example



Takt time

is the cycle time needed to match customer demand for final product.

 Question: Given the following information: total time per shift is 480 minutes per day and there are two shifts per day. There are also two 20 minute rest breaks and a 30 minutes lunch break per shift.

Daily demand are reported as 80 units.

 Required: compute the takt time.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Takt time-Answer

 First, let us compute net time available per shift: -Total time is 480 mins Rest breaks -40 mins Lunch -30 mins total is 410 mins per shift  Second, let us compute net time available per day: - 410 mins per shift x 2 shifts/day=820 mins per day  Third, let us compute the takt time: - Takt time= (net time available per day)/Daily demand = 820/80 = 10.25 minutes per cycle MGMT 405, POM, 2010/11. Lec Notes © Stevenson, McGraw Hill, 2007- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.

JIT and LEAN Operation; Chapter6

Single-Minute Exchange  Shigeo Shingo made a very significant contribution to lean operation with the development of the system called SMED.

 Single-minute exchange of die (SMED): A system for reducing changeover time.

 Categorize changeover activities   Internal – activities that can only be done while machine is stopped External – activities that do not require stopping the machine  A simple approach to achieve quick changeover is to convert as many internal acctivities as possible to external activities then streamline the remaining internal activities.

 The principles of the SMED system can be applied to any changeover operation.

 In 1982 at Toyota the changeover time for machine was reduced from 100 minutes to 3 minutes.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Guidelines for increasing Production Flexibility  Reduce downtime by reducing changeover time  Use preventive maintenance to reduce breakdowns  Cross-train workers to help clear bottlenecks  Use many small units of capacity  Use off-line buffers  Reserve capacity for important customers MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Quality Improvement

 The occurence of quality defects during the process can distrup the orderly flow of work. It focuses on finding and eliminating the causes of problems to make non-stop processes.

 Autonomation  Automatic detection of defects during production  Jidoka  Japanese term for autonomation. It can be used with machines or manual operation.

 The first mechanism is for detecting defects  The second mechanism for stop production to correct the cause of the defects.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Personnel/Organizational Elements  Workers as assets  Cross-trained workers  Continuous improvement  Cost accounting  Leadership/project management MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Personnel/Organizational Elements  Workers as assets: A fundamental tenet (or principle) of the JIT philosophy. Well trained and motivated workers are heart of a JIT system.

  Cross-trained workers To perform several parts of process and operate a variety of machines. This shows system flexibility cause workers are able to help each other when bottlenecks occur or a coworker absent.

  Continuous improvement JIT workers receive extensive training in statistical process control, quality improvement and problem solving. Compared to workers in tradational systems, JIT workers have greater responsibility to keep quality at the best level for the sake of continuous improvement.

 Problem solving is a cornerstone of any JIT system and when occur during production must be dealt with quickly. Some companies in Japan use a light system to signal problems and such a system is called

andon

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Personnel/Organizational Elements  Cost accounting  Another feature of some JIT system is the method of allocating overhead, however tradational methods sometimes distort overhead allocation because they allocate it on the basis of direct labor hours  One alternative method of allocating overhead is activity based costing which is designed to more closely reflect the actual amount of overhead consumed by particular job or activity.

 Leadership/project management  Another feature of JIT relates to leadership. Managers are expected to be leaders and facilitiors, not order givers.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Manufacturing Planning and Control  Level loading  Pull systems  Visual systems  Close vendor relationships  Reduced transaction processing  Preventive maintenance MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Manufacturing Planning and Control   Level loading: JIT systems place a strong emphasis on achieving stable level daily schedules. At the end, the master production schedule is developed to provide level capacity.

A level of production schedule requires smooth production. When a company produces different products or product model, it is desirable to produce in small lots and spread the production of different product throughout the day to achieve smooth production.

   While this approach will allow for maximum smoothness, it will generally not be practical due to excessive setup cost.

Under these circumtances,

mix-model sequencing

is advised.

approach This begins with daily production requirements of each product or model.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Mix model-Example



Mixed model:

Four issues should be taken into account.

    Which sequence to use How many times (i.e., cycle) the sequence should be repeated daily How many units of each model to produce in each time Setup time or cost is important in chosing the sequences ABC-AB or AC or BC  Question: Suppose a department produces three models in the following table: A, B and C with the daily requirements; 10,15 and 5.

 Required: Determine a production plan for these three models using the sequence A-B-C: MGMT 405, POM, 2010/11. Lec Notes

Model Daily Quantity A 7 B 16 C 5 34

JIT and LEAN Operation; Chapter6 Mix model-Answer



Mixed model:

Four issues should be taken into account.

  Which sequence to use How many times (i.e., cycle) the sequence should be repeated daily  How many units of each model to produce in each time  Setup time or cost is important in chosing the sequences ABC-AB or AC or BC

Model A B C Daily Quantity 7 16 5 Units per cycle 7/5=1.4

16/5=3.2

5/5=1 Cycle Pattern Extra Unit(s) 1 AB(3)C 2 A(2)B(3)C A 3 AB(4)C B 4 A(2)B(3)C A 5 AB(3)C

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Mix model-Answer

 If requirement for model A had been 8 units a day instead of 7, the manager might decide to use the following pattern:

Cycle Pattern Extra Unit(s) 1 A(2)B(3)C A 2 AB(3)C 3 A(2)B(4) C AB 4 AB(3)C 5 A(2)B(3)C A

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Mix model-Example2

    

Mixed model:

Four issues should be taken into account.

Which sequence to use How many times (i.e., cycle) the sequence should be repeated daily How many units of each model to produce in each time Setup time or cost is important in chosing the sequences ABC-AB or AC or BC  Question: Suppose a department produces four models as can be seen in the following table. The department operates five days a week.

 Required: Determine the number of per day and the production quantity per cycle for this set of products.

MGMT 405, POM, 2010/11. Lec Notes

Product A B C Weekly Quantity 20 40 30 D 15 37

Product A B C D Cycle JIT and LEAN Operation; Chapter6 Mix model-Answer2 Weekly Quantity 20 40 30 15 Daily Unit per cycle 20/5=4 40/5=8 30/5=6 15/5=3 Units Short (3 cycles) 1 2 1 2 3 Pattern A B(3) C (2) D A B(3)C (2) D A(2)B(2) C(2) D Extra Unit(s) B B A

 There are several posibilities in producing all four products in the three cycles. One possible way is dispalyed above.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Pull/Push Systems

 The the terms pull and push are used to describe two different systems for moving work through a production process.



Pull system

: System for moving work where a workstation pulls output from the preceding station as needed. (e.g. Kanban). When it is needed, the output is pulled by customer demand or the master schedule.



Push system

: In tradational production environments, this one is used. When work is finished at a workstation, the output is pushed to the next station (System for moving work where output is pushed to the next station as it is completed).

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Kanban Production Control System-Visual system 

Kanban

: Card or other device that communicates demand for work or materials from the preceding station.

 Kanban is the Japanese word meaning “signal” or “visible record”  When a worker needs materials work from the proceeding station, s/he uses a Kanban card.

 Paperless production control system  Authority to pull, or produce comes from a downstream process.

 Production Kanban (p-kanban):Signal the needs to produce parts  Conveyance Kanban (C-kanban):signal the needs to deliver parts to next work center.

How to use such card-Kanban Formula

JIT and LEAN Operation; Chapter6 N = Total number of containers D = Planned usage rate of using work center T = Average waiting time for replenishment of parts plus average production time for a container of parts X = Policy variable set by management - possible inefficiency in the system C = Capacity of a standard container

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Kanban-Example 1

 Question: Usage at a work center is 300 parts per day and a standard container holds 25 parts. It takes an average of 0.12 day for a container to complete a circuit from time a kanban card is received until the container is returned empty.

 Required: Compute the number of Kanban cards (containers) needed if X=0.20.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Kanban-Answer 1 N = Total number of containers=?

D = Planned usage rate of using work center=300 parts/day T = Average waiting time for replenishment of parts plus average production time for a container of parts=0.12 day X = Policy variable set by management - possible inefficiency in the system=0.20

C = Capacity of a standard container=25 parts/container



( 1 

)

 ( 300 ) ( 0 .

12 ) ( 1  0 .

20 ) 25  1 .

728

almost two containers

 Rounding up will cause the system to be looser and rounding down will cause the system to be tighter. Usually rounding up is preferable.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Kanban-Example 2

 Question: Usage at a workstation is 100 parts per hour and a standard container holds 84 parts. It takes an average of 90 minutes for a container to complete a cycle (move, wait, empty, return, fill) from time a kanban card is received. An inefficiency factor of 0.10 is being currently used.

 Required: Determine the number of containers needed if the scenario is abovementioned.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Kanban-Answer 2 N = Total number of containers=?

D = Planned usage rate of using work center=100 parts/day T = Average waiting time for replenishment of parts plus average production time for a container of parts=90mins or 1.5 hours X = Policy variable set by management - possible inefficiency in the system=0.10

C = Capacity of a standard container=84 parts/container



( 1 

)

 ( 100 ) ( 1 .

5 ) ( 1  0 .

10 ) 84  1 .

almost two containers

 Rounding up will cause the system to be looser and rounding down will cause the system to be tighter. Usually rounding up is preferable.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6 Limited Work in Process-WIP=Cycle x Arrival Rate

 Benefits

in controling the amount of work in progress in a production system

 Lower carrying costs  Increased flexibility  Aids scheduling  Saves cost of rework and scrap  Two general approaches

to conrol WIP

 Kanban – focuses on individual work stations  Constant work in process (CONWIP) – focuses on the system as a whole   Close Vendor relationship JIT system typically have close relationship with vendors who are expected to provide frequent small deliveries of high-quality goods.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

   Reduced Transaction Processing Tradational manufacturing system often have many built in transactions that do not add value. It is also well known as

‘the hidden factory’

JIT system cut transaction costs by reducing the number and frequency of transactions (i.e., production floor-storeroom).

The transactions can be classified: (bar coding system reduce transactions and increase accuracy).

logistical Balancing Quality Change MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Preventive Maintenance and Housekeeping    1.

Preventative maintenance

: Maintaining equipment in good condition and replacing parts that have a tendency to fail before they actually fail.

Housekeeping

: Maintaining a workplace that is clean and free of unnecessary materials.

Housekeeping Five S’s to make the workplace effective: Sort Straighten Sweep Standardize Self-discipline MGMT 405, POM, 2010/11. Lec Notes

Comparison of JIT and Traditional

Factor Traditional JIT JIT and LEAN Operation; Chapter6

Inventory Deliveries Lot sizes Setup; runs Vendors Workers Much to offset forecast errors, late deliveries Few, large Minimal necessary to operate Many, small Large Few, long runs Long-term relationships are unusual Necessary to do the work Small Many, short runs Partners Assets MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Transitioning to a JIT System Planing a successful Conversion  Get top management commitment  Decide which parts need most effort  Obtain support of workers  Start by trying to reduce setup times  Gradually convert operations  Convert suppliers to JIT  Prepare for obstacles MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Obstacles to Conversion

 Management may not be committed  Workers/management may not be cooperative  Difficult to change company culture  Suppliers may resist  Why?

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Suppliers May Resist JIT

 Unwilling to commit resources  Uneasy about long-term commitments  Frequent, small deliveries may be difficult  Burden of quality control shifts to supplier  Frequent engineering changes may cause JIT changes MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

JIT in Services

 The basic goal of the demand flow technology in the service organization is to provide optimum response to the customer with the highest quality service and lowest possible cost.

 Eliminate disruptions  Make system flexible  Reduce setup and lead times  Eliminate waste  Minimize WIP  Simplify the process MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

JIT II

 JIT II: a supplier representative works right in the company’s plant, making sure there is an appropriate supply on hand.

MGMT 405, POM, 2010/11. Lec Notes

JIT and LEAN Operation; Chapter6

Thanks

MGMT 405, POM, 2010/11. Lec Notes