Transcript Cut the Lot Size

Cut the Lot Size
What can we do if the bottleneck
has moved outside the plant?
8/27/04
Jonah: Cut the lot size
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The lot size is the amount produced for each
machine setup
What encourages us to use large lot sizes?
What encourages us to use small lot sizes?
Under what circumstances can we cut the lot
size without reducing throughput?
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What encourages us to use
large lot sizes?
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The lot size is the amount produced for
each machine setup
A setup uses time on the constraint
Larger lots cause fewer setups
To maximize throughput select the lot
size as large as possible
One Remedy: Reduce the setup time
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What encourages us to use
small lot sizes?
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Small lots reduce cycle time
WIP is proportional to cycle time
Reducing cycle time reduces inventory
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When can we reduce lot size
without reducing throughput?
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When the setup time is small
When the constraint is outside the
manufacturing process
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(when there are no internal constraints)
Set the lot size as small as possible
while not allowing a non-bottleneck to
become a bottleneck
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Large Lot, High Inventory
Manufacture
1000 units
Operation
A (0.5 hr.)
Inventory
1000
A
800
B (0.1 hr.)
B
600
C (1 hr. )
C
400
B (0.1 hr)
B
200
D (0.75
hr./unit)
D
0
1000
2000
Hours
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Consequences
Operation
Inventory
1000
A
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800
B
600
C
400
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Lot size=1000
Cycle Time=3.4 mo.
Time to complete
=3.4 mo. @720
hrs/mo.
WIP=1000 units
B
200
D
0
1000
2000
Hours
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Small Lot, Low Inventory
Manufacture
1000 units
Operation
Inventory
1000
A
A (0.5 hr.)
800
B
B (0.1 hr.)
600
C
C (1 hr. )
400
B
B (0.1 hr)
D (0.75
hr./unit)
200
D
0
1000
Hours
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Consequences
Operation
Inventory
1000
A
800
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B
600
C
400
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Lot size=200
Cycle Time=0.7 mo.
Time to complete
=1.8 mo. @720
hrs/mo.
WIP=400 units
B
200
D
0
1000
Hours
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Benefits of small lot, low
inventory manufacture
Better quality
control
Faster
response to
engineering
changes
Operation
Smaller
finished
goods
inventory
Better delivery
performance
Inventory
1000
A
Shorter
delivery
quotes
Smaller
manufacturing
investment
Operation
Inventory
1000
A
800
B
800
B
600
C
600
C
400
B
400
B
200
D
200
D
0
1000
Hours
0
1000
2000
Hours
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Summary of The Goal
What Operational
Measures Describe the
Goal?
How do these measures
What Financial
Measures
Describe the Goal
of Making Money?
What is the Goal?
relate to the goal?
How do the
measures
relate to
decisions
made in the
plant?
What do you think should be
the goal?
What do we
do when
management
measures tell the
What do we do
wrong story?
when bottleneck
has moved out of
the plant?
What is the combined
effect of dependent
events and statistical
fluctuations?
What is a bottleneck, and
how do you find it?
How can you increase the
capacity of a bottleneck?
What does it cost to
have a bottleneck idle?
How can we keep
from having the
bottleneck idle?
What are the advantages
of smaller lot sizes?
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