LEAN MANUFACTURING | Philosophy of waste reduction and continuous improvement | Goals of Lean production: balanced

system; smooth rapid flow of materials; make systems flexible; eliminate waste; continuous improvement (Kaizen) | Sources of
waste: Overproduction; Over processing; product defects; unnecessary transportation; unnecessary inventory; inefficient work
methods; Waiting time; employee underutilization | Kaizen; improvement should be done gradually and continuously; Everyone
should be involved; doesn’t require great sums of money; can be applied anywhere; lean by doing; rely on observation, data and
scientific thinking | Process design: Balanced system; Flexible system; small lot sizes; setup time reduction; cellular layout;
process quality; Standardized processes; little inventory | Takt time: maximum time allowed at each workstation to complete its set
of tasks on a unit; total shift time – nonproductive time = net time available per shift; net time per shift x number of shifts = net time
available per day; Takt time = net available time / daily demand | Production flexibility: reduce changeover (= set up) time; many
small machines vs. Few large machines; use safety stocks; keep some idle capacity | Single-minute exchange of die (SMED): A
system for reducing changeover time | Process Quality improvement: prevent defects: SPC to control the process; Six-sigma to
reduce variability | Poka-yoke: any mechanism that helps an equipment operator avoid mistakes; purpose is to eliminate product
defects by preventing, correcting, or drawing attention to human errors as they occur | Jidoka: Quality at the source; avoid passing
defective products to following workstation and stop and fix the problem | Andon: System of lights used at each workstation to
signal problems or slowdowns | Little inventory: suppliers deliver directly to production floor; Ship completed units as soon as they
are ready; small production lot sizes (low WIP inventory) | Level loading (heijunka): determine due times for each unit of each
model; 1/2n, 3/2n, 5/2n where n is daily demand | pull system: system for moving work where workstation pulls output from the
preceding station (Kanban); based on consumer demand; Push system: based on MRP plan | Kanban: card that communicates
demand for work or materials; word for “signal”; N = DT(1+X) / C; N = total kanbans; D = avg. Usage rate; T = Avg. Lead time for
replenishment of one container; X = policy variable; C = capacity of a standard container | 5 S’: Sort; Set in order: Shine:
Standardize; Sustain | Forms of Waste: Correction; Overproduction (worst form of waste); Material; Motion (movement around the
workplace); Waiting; Inventory; Processing (thinking and looking around is waste, have it all in one place) | DEMAND
FORECASTING | An estimate of demand over a future time period | Forecasting Answers: How much money do I need to run an
operation; How big of a facility do I need; How many should I order for the upcoming season; How many employees should I
schedule; How much inventory should I buy | 3 uses for forecasts: Design the system; Use of the system; Schedule the system |
Features to forecasts: Rarely perfect; more accurate for groups vs. individuals; accuracy decreases as time horizon increases |
Elements of a good forecast: Reliable, Meaningful, Cost Effective, Useful time horizon (timely), Simple to understand & use,
Accurate and in writing | Steps in a Forecast: Determine the purpose; Establish time horizon; Gather and analyze historical data;
Select forecasting technique; prepare the forecast; monitor it | Judgemental approach: Non-quantitative analysis of subjective
inputs; “soft” information (human factors, experiences, etc.) | Judgemental Methods: Executive opinions; Sales force opinions;
Consumer Surveys; Historical Analogies; Expert opinions | Quantitative approach: “Hard” Data (historical data); Time series
model; Associative models (create equations relevant to data) | Naive Methods: Next period = Last period; low cost; low accuracy;
simple to understand | Averaging methods: Moving Avg. = Avg. of previous number of periods / number of periods; Weighted
moving Avg. average = same but multiply each number from the period by a weight; ex. 40(0.4) + 35(0.3) + 30(0.2) + 25(0.1) =
answer | As compared to a simple moving average, the weighted moving average is more reactive of the recent changes: TRUE | A
moving avg. forecast tends to be more responsive to changes in the data series when more data points are included in the avg.:
FALSE | Seasonal Variations: regularly repeating wavelike movements in series values that can be tied to recurring events,
weather, or a calendar | Additive or Multiplicative model: Quantity added to the avg. or trend; or proportion * avg. or trend |
Seasonal Relative (index): Equals proportion of average or trend for a season in the multiplicative model; index of 1.2 = 20%
above avg. | Depersonalization: Remove seasonal component to more clearly see other components; divide by seasonal relative |
Re-seasonalizaion: Adjust to forecast for seasonal component; multiply by seasonal relative | Quarterly Relatives: Q1 = 1.20, Q2
= 1.10, Q3 = 0.75, Q4 = 0.95 | Trend Equation: yt = 124 + 7.5t (t = quarter 15); y15 = 236.5 | Predict Demand: Quarter 2 where
t15 = 2; F15 = 236.4 x 1.10 (this is Q2) = 260.15 | Choosing a Forecasting Technique: No single one works in every situation;
two most important factors are Cost & Accuracy | Factor and length: Frequency; daily, weekly (short term), monthly, quarterly
(Medium term), Annual ( long term); Degree of management involvement; low (ST), Moderate (MT), High (LT); Cost per forecast;
Low (ST), Moderate (MT), High (LT) | INVENTORY MANAGEMENT | What is inventory: Stock of items for use or sale in future;
how many units to order, when to order | Independent demand: Demand is unknown and needs to be forecasted; Examples; retail
items, finished goods, supplies and parts, some raw materials | Dependent demand: Manufactured parts; demand is certain |
Importance of Inventory: Typically a company has half of its current assets in inventory; major source of revenue for retailers and
wholesalers; service companies don’t carry as much inventory, they DO carry inventory of supplies / equipment | Functions of
inventory: Wait while in transit, protects against stock-outs, Takes advantage of quantity discounts, Smooth production
requirements
Decouples operations, meets above avg. demand | Objectives of inventory mgmt: achieves satisfactory levels of customer
service while minimizing inventory costs (fill rate); Costs of ordering and holding inventory (inventory turnover) | Essentials of
inventory mgmt: Inventory control system; inventory tracking tools; Demand forecasting and lead time information; Inventory
costs; The A-B-C classifications | Inventory tracking tools: Bar code; Radio Frequency Identification (RFID) | Demand
Forecasting and Lead time information: Purchase lead time; time interval between ordering and receiving the order;
manufacturing lead time = the time it will take for a batch of a part/product to be manufactured; Point of Scale (POS) System;
Software for electronically recording actual sales at the time and location of sale | Inventory Costs: Holding (carrying) Costs; cost
to carry an item in inventory; Ordering costs; costs of placing an order (not including purchasing price) receiving it and paying for it;
Setup costs; Time spent preparing equipment by changing tools, adjusting machines, etc.; Shortage costs; Costs when demand
exceeds supply, often unrealized profit per unit, loss of goodwill | ABC Classification System: Classifying inventory according to
some measure of importance; A - Very important, B - Moderately important, C - Least important | Annual Dollar Value: Cost of unit
x Number of units per year