OTM 300 Exam #1

Utility
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Terms in this set (73)
Utility
a measure of the customer preference for a product or service
Consumption utility
a measure of how much you like a service, ignoring the effects of price and its inconvenience
Price
the cost of owning a product or receiving the service. Included expenses such as shipping and financing etc.
Inconvenience
the reduction in utility that results from the effort of obtaining the product or service
Process
A set of activities that take a collection of inputs, perform some work or activities with those inputs, and then yield a set of outputs
Process Flow Diagram
A graphical way to describe the process. It uses boxes to depict resources, arrows to depict flows, and triangles to depict inventory location
Flow unit
basic unit that moves through a process and can be used to describe all activities of that process (generally defined in terms of output)
Process metric
something we can measure that informs us about the performance and capability of a process
Inventory
The number of flow units within a process (ex: dollars, kilograms, people)
Flow rate
the rate at which flow units travel through a process (flow units per amount of time)
Flow timethe time a flow unit spends in a process, from start to finish (typical units include minutes, hours, days, weeks, months, or years)Little's LawInventory = flow rate x flow time OR avg inventory = avg flow rate x avg flow timeStable processLong-run average inflow and outflow rates are equal. Where average inflow (product) is equal to average outflow (demand)Lean processmodeled after the Toyota Production System; a tool used to streamline and standardize processesKey to lean processreduce unexpected variability in the process through constant experimentation and improvement7 forms of waste in the process1. overproduction 2. waiting time 3. material movement 4. inventory 5. overprocessing 6. worker movement 7. defective productsFour principles of Toyota Production SystemPhilosophy, processes, people/partners, problem solvingPhilosophy (4ps of Toyota)A long-term approach that favors quality and capabilities over short-term financial goalsProcesses (4ps of Toyota)Continuous process flows that match supply with demand, aiming to reduce wastage of flow time and capacityPeople and partners (4ps of Toyota)Respectful interactions with employees and partners emphasizing skill development and growthProblem-solving (4ps of Toyota)On-going improvement of the operations leveraging the experience of the front-line employeesNon-value added workThose operations that do not add value in the eyes of the customer but must be done under the current conditions of the process in order to complete a unit (ex: worker moving from one machine to the next)Value-added workThose operations valued by the customer because they are absolutely required to transform the flow unit from its inputs to being the output the customer wants (ex: serving a customer)Just-in-time flowProduce in the amounts needed, when needed, and where needed using a single-unit of flowHow single-unit flow exposes and reduces waste1. Less inventory 2. Shorter response time to demand (shorter flow times) - by little's law 3. Faster feedback 4. Simpler and more flexible staffing 5. Shorter processing timesPull SystemThe resource furthest downstream (closest to the market) is paced by market demand. In addition to its own production, it also relays the demand information to the next station upstream, thus ensuring that the upstream resource also is paced by demand.Kanban-based pullThe upstream resource replenishes what demand has withdrawn from the downstream resourceMake-to-order pullRefers to the release of work into a system only when a customer order has been received for that unit.Kanban cards are also calledWork-authorization formsMain advantage of the kanban system is thatThere can never be more inventory between resources than what is authorized by the kanban cards.Kanban system should be used forproducts or parts that are 1) processed in high volume and limited variety 2) required in a short lead time, so it makes economic sense to have a limited number of them 3) costs and efforts related to storing the components are lowMake-to-order system should be used forproducts or parts that are 1) processed in high volume and limited variety 2) customers are willing to wait for the order 3) it is expensive or difficult to store the unitsDetect-stop-alert (jdoka)Detecting quality problems, stopping the process, and alerting the operatorRoot-cause analysis (kaizen)Through analyzing the root cause on the shop floorAvoid recurrence (foolproofing: poka-yoke)Avoiding recurrence of the problem by implementing improvementsGo to the source and observe (genchi genbutsu)Problem solving that emphasizes going to the front line yourself, collecting data, and analyzing this data instead of using personal opinions or management superiorityBenefits of Successful Lean Production Implementation1. Streamlined flow of materials from raw materials to the final customer 2. Reduced investment in inventories' 3. Decreased cash-to-cash cycle 4. More predictable / better controlled processes 5. Reduced levels of product defects 6. More reliable suppliers 7. Improved responsiveness to changing markets and customer requirementsKimberly Clark Circle of LoveStandard work, visual management, problem solve, leader standard workCapacity of a single resource1/processing timeProcess capacity measuresThe maximum flow rate a process can achieveDemand rate measuresThe number of flow units that customers want per unit of timeFlow rate of a single resourceMinimum (demand rate or process capacity)Capacity-constraineddemand > process capacity and flow rate = process capacity. Utilization = 1 at the bottleneckDemand-constrainedprocess capacity > demand and flow rate = demand rate. Utilization cannot be 1 at the bottleneckUtilization measuresThe ratio between the flow rate (how fast the process is currently operating) and the capacity (how fast the process could be operating if there was sufficient demand)UtilizationFlow rate/capacityCycle time1/flow rateIf demand decreases in a process..utilization decreases, flow rate increasesTime it takes to make Q unitscycle time X QCost of direct laborwages per unit of time / flow rateLabor contentSum of the processing times involving laborAverage labor utilizationlabor content / (cycle time)(number of employees)Total idle timeCycle time x number of employees - labor contentHow many ___ should we expect to produce in an 8 hour shifttime available (in correct units) / capacity (in same units). this is for a single unit - need to multiply by batches if applicable.Takt timeAvailable time / required quantityTarget manpowerLabor content / takt timeLine balancingOff-loading the bottleneck strategy. Reassigning activities to resources that have a higher capacityAutomating some of the activities that consume time at the bottleneck does what to the processOff-loads the bottleneck by reducing the processing timeHow can you increase the capacity of a processBy off-loading the bottleneck through outsourcing of activities (i.e. getting an outside resource to do the work for you)Capacity of integrate workNumber of works / labor contentIntegrate work assumes:1. processing times remain constant 2. there is no interference among workers as they go about their tasksDemand matrixGoldratt's Rules of Production Scheduling1. An hour lost at the bottleneck is an hour lost for the system 2. An hour saved at the non-bottleneck is a mirage 3. Bottlenecks govern flow rate and inventory in the processImplied utilizationResource's total demand / Resource's capacityImplied utilization tells usThe mismatch between what could flow through the resource (demand) and what the resource can provide (capacity)Calculating daily flow rate in a multi-flow unit process for capacity-constrainedflow rates =PRODUCT (not resource) demand rate / highest implied utilizationCalculating daily flow rate in a multi-flow unit process for demand-constrainedflow rates = demand rates for all productsReducing batch sizedecreases capacityYou should ignore set-up time when computing implied utilization for each resource. True or falseTrue. Set-up times are not utilized timeTarget capacity for capacity-constrained process= flow rateTarget capacity for demand-constrained process= demand rateCapacity for a resource with set-up time1. time / batch (setup time*# of product types) + (batch size*processing time) 2. batches / hr (above/total avail units) 3. units/hr: (above * how much you produce each time)When calculating maximum inventory or average inventory (i.e. average number of ___ between resources) remember to convert from daily flow rate toflow rate / units (minutes, seconds, etc. whatever the processing times are in)