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For example, consider a system with six machines adding value to material. Machines
1-4 produce 1000 items an hour, machine 5 produces 800 items per hour and machine
6 produces 1100 items an hour. The system is constrained to operate at no more than
800 items per hour. If machines 1-4 operate at 1000 items per hour, a large work in
process (WIP) supply of material accumulates at machine 5.
The Theory of Constraints requires the operation manager, in the example above, to
work at improving machine 5. The manager could seek outside sources to assist in
converting products coming off of machines 1-4. These machines could run at 1000
200
Lesson Nine - Set up, Bottlenecks and Lot Sizings
units per hour and the extra 1600 units (200 units times eight hours a day) sent to
another site for processing. The manager could install a second machine 5 thus giving
item capacity of 1600 items per hour at that location. The entire system constraint is
1000 items per hour because of the speed of machines 1-4. A cost benefit analysis
requires you to weigh the cost of a second machine 5 to the benefit of producing 200
more items per hour.
Lotsizings
Economic Order Quantity models work with manufacturing as well. Manufacturing
replaces the order cost with setup cost. American manufacturing, for the past four
decades, looked toward bigger and bigger lots to reduce the impact of setup.
The new paradigm looks toward reducing the setup to reduce the lot sizes. Flexible
manufacturing requires small lot sizes for effectiveness. I use a demonstration in the
classroom to demonstrate the advantages in small lot sizes. While it is a contrived
classroom experience, it demonstrates the concepts of JIT, TQM philosophy.
The demonstration selects seven students as participants: three manufacturing
students, a trucker for transportation, a salesperson, a customer and an accountant.
Our product consists of a piece of corrugated cardboard sandwiched between two
pieces of white index paper with two colored circles on each side. There are three
colors available -- red, green and black. The circles appear in different locations on the
three varieties. The three manufacturing people operate in separate areas of the plant
(we separate the work tables for effect). Each of the three perform a different task. The
first collates the three components together and groups them in designated lot sizes,
the second tapes the three together into a single piece, and the third colors the circles
on both sides using a template.
The simulation presumes a marketing demand forecast of 50% black, 25% green and
25% red for product mix. We start the first round of the simulation with a lot size of 8.
We must make 8 red, then 8 green and then 8 black. But since the marketing forecast
shows a 2:1:1 ratio, we agree to manufacture a sequence of 8 black, 8 red, 8 black, 8
green, etc. This allows the correct manufacturing supply to meet demand.
The simulation allows the customer to purchase from the salesman from a set time
interval. The customer randomly selects a color from an envelope of colored paper
(which has the same 2:1:1 ratio of color). Stock outs cost the firm money, WIP costs the
firm money and sold goods generate profits.
While I won't tell you the results of the simulation, since it is an in-class exercise, the
effects are dramatic. By carefully planning production, increasing customer contact,
and cross-training employees we significantly increase production and sales, lower
WIP, lower stock outs and increase profits, all the while improving the quality of
worklife with fewer employees. The released employees go to work in other parts of
the company where expansion calls for more personnel.
The American manager is so geared to see people working frantically and large
amounts of product coming off a production line that the concept of producing less is
unfathomable to most. We must change our own managerial mindset before we try to
change the minds of our employees.
201
Total Quality Management
Lesson Ten - Project Management
Objectives
After this lesson, the reader should be able to:
" explain the value of PERT and GANTT charts to the project manager
" create a PERT or GANTT chart given the operation steps
Key Terms
PERT
GANTT
matrix management
Project Management
Project management differs from assembly line manufacturing in that there is a
definite beginning and end to each project. Projects vary in scope from a three day job-
shop environment such as a small printing company or appliance repair to a ship yard
building a nuclear carrier. Typically, we think of project managers dealing with long
projects. But, many project environments are short term. Students attending classes
participate in project management. A class is a classic project with a definite
beginning, end, and milestones.
Project management requires:
" the ability to see the big picture
" an appreciation of detail
" an appreciation for budgets and accounting constraints
" an ability to see how this project impacts future projects
" an ability to see the end of the project and welcome
the conclusion with open arms
" an ability to talk with several internal and external
publics at the same time
Traits of project mangers:
" flexibility and adaptability
" preference for significant initiative and leadership
" aggressiveness, confidence, persuasiveness, verbal
fluency
" ambition, activity, forcefulness
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