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Operations Management Just-in-Time and Lean Production Systems Chapter 16 PowerPoint PPT Presentation

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Operations Management Just-in-Time and Lean Production Systems Chapter 16. Outline. Just-In-Time and Lean Production. Role of inventory. Just-In-Time components. Suppliers. Layout. Scheduling. Quality. Lean Production. Just-in-Time and Lean Production. Just-In-Time - PowerPoint PPT Presentation

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Operations Management Just-in-Time and Lean Production Systems Chapter 16

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Operations management just in time and lean production systems chapter 16 l.jpg

Operations ManagementJust-in-Time and Lean Production SystemsChapter 16

Outline l.jpg


  • Just-In-Time and Lean Production.

  • Role of inventory.

  • Just-In-Time components.

    • Suppliers.

    • Layout.

    • Scheduling.

    • Quality.

  • Lean Production.

Just in time and lean production l.jpg

Just-in-Time and Lean Production

  • Just-In-Time

    • Management philosophy of continuous problem solving.

    • Internal focus on production scheduling, inventory, layout, quality, suppliers, etc.

    • Produce “just-in-time”, only to meet actual demand.

  • Lean Production

    • Extension of Just-In-Time to eliminate waste (“fat”).

    • External focus on satisfying the customer.

    • Originated in Japan; Popularized by Toyota; now used globally.

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Why is Production Difficult?

  • Demand is uncertain and variable.

  • Same equipment/people are used to make a variety of products, and switching products takes time.

  • Things go wrong:

    • Materials are defective.

    • Deliveries are variable (late).

    • Equipment fails, people make mistakes, etc.

    • Production documents are incorrect.

One solution inventory l.jpg

One Solution: Inventory

  • Use inventory to:

    • Match supply with varying demand.

    • Allow production of a variety of products on the same equipment.

    • Overcome defective materials, late deliveries, equipment failures, mistakes, etc.

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“Traditional” Production

  • Forecast demand.

  • Produce in large lots (to reduce expensive setups).

  • PUSH product to customer.

  • Large lot sizes mean:

    • Large work-in-process inventories.

    • Large final product inventories.

    • Slow response to changes and defects.

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“Just-in-Time” Production

  • Produce in small lots to replenish stock actually sold.

  • Sales PULL product (and parts) through plant.

    • Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed.

  • Small lot sizes mean:

    • Small work-in-process inventories.

    • Small final product inventories.

    • Quick response to changes and defects.

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Push versus Pull

  • Push system: Material is pushed (according to forecasts) downstream (along assembly line, to warehouses, etc.).

  • Pull system: Material is pulled (by sales to customers) downstream (along assembly line, to warehouses, etc.) just as it is needed.

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Just-In-Time is Not Easy

  • Just-in-time requires identifying and solving problems that create inventory.

    • Reduce setup costs to switch products.

    • Eliminate all waste: Defective materials, late deliveries, equipment failures, mistakes, etc.

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Types of Waste

  • Overproduction.

  • Waiting.

  • Transportation.

  • Inefficient processing.

  • Inventory.

  • Unnecessary motion.

  • Product defects.

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What Does Just-in-Time Do?

  • Reduces waste and improves quality.

    • Waste = Anything not adding value to the product.

  • Exposes problems caused by variability.

    • Variability in demand, deliveries, materials, equipment, etc.

  • Streamlines production by reducing inventory.

    • Reduces delays and increases throughput.

  • Benefits:

    • Reduced cost and/or increased profit.

    • Faster response to the customer.

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Just-in-TimeSuccess Factors


Employee Empowerment





Preventive Maintenance


Inventory l.jpg


  • JIT objective: Eliminate inventory.

    • Hold minimum inventory to keep system running.

  • JIT requires:

    • Small lot sizes.

    • Low setup times.

    • Just-in-time deliveries.

    • Deliveries direct to point of use (not stockroom).

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Work in process inventory level(hides problems)

Unreliable Vendors

Capacity Imbalances


Lowering Inventory Reduces Waste

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Reducing inventory revealsproblems so they can be solved.


Unreliable Vendors

Capacity Imbalances


Lowering Inventory Reduces Waste

Large lot sizes large inventory l.jpg

Inventory Level

Average inventory = (Lot size)/2

Lot Size 200

Average inventory = 100


Large Lot Sizes = Large Inventory

To lower inventory reduce lot size l.jpg

Average inventory = 40

Lot Size 80

To Lower Inventory, Reduce Lot Size

Inventory Level

Average inventory = (Lot size)/2

Lot Size 200


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EPQ Minimizes Total Costs


Total Cost

Holding Cost

Setup Cost

Lot Size

Optimal Lot Size

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Setup Cost

Reducing Setup Costs Reduces Lot Size and Total Cost!


Total Cost

Holding Cost

Original optimal lot size

New optimal lot size

Lot Size

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Steps to Reduce Setup Time

  • Separate setup into preparation (while machine is running) and actual setup (while machine is stopped).

    • Do as much as possible while the machine is running.

  • Move material closer and improve material handling.

  • Standardize and improve tooling.

Suppliers l.jpg


  • JIT objective: Frequent on-time deliveries of small lots of high quality.

  • Buyer and supplier form JIT partnerships to eliminate:

    • Unnecessary activities.

    • In-plant inventory.

    • In-transit inventory.

Layout l.jpg


  • JIT objective: Reduce movement of people and material.

  • JIT requires:

    • Delivery directly to work areas – not to stockroom.

    • Short distances to ensure on-time deliveries.

    • Little space for inventory.

    • Flexibility: Moveable or changeable machines.

Scheduling l.jpg


  • JIT objective: Simple system to pull product through plant in small lots.

  • JIT requires:

    • Communicating schedules to suppliers.

    • “Level” schedules: production each day equals demand.

    • Freezing part of schedule nearest due date.

    • Small lots.

    • Kanban techniques.

Kanban l.jpg


  • Japanese word for card.

    • Authorizes production from downstream operations.

    • ‘Pulls’ material through plant.

  • May be a card, flag, verbal signal etc.

  • Used often with fixed-size containers.

    • Add/remove containers to change production rate.

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Kanban Signals “Pull” Material Through the Process

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Preventive Maintenance (PM)

  • JIT objective: Prevent failure.

    • Cleanliness and simplicity are keys.

    • Maintain equipment so it does not break.

  • JIT requires:

    • Scheduled & daily preventive maintenance.

    • Operator performs preventive maintenance.

    • Operator knows machine and is responsible for product quality.

Quality l.jpg


  • JIT exposes quality problems by reducing inventory.

  • JIT limits number of defects produced with small lots.

  • JIT requires TQM.

    • Statistical process control.

    • Worker involvement & empowerment.

    • Immediate feedback.

Lean production l.jpg

Lean Production

  • Use JIT to eliminate virtually all inventory.

  • Eliminate all but value-added activities.

  • Build systems to help employees produce a perfect part every time.

  • Reduce space requirements.

  • Develop partnerships with suppliers.

  • Educate suppliers and workers.

  • Enrich jobs.

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JIT/Lean Production Partnerships

  • To achieve frequent deliveries of high quality small-lot quantities:

    • Use few suppliers, each with a larger share of business and longer-term contracts.

      • Helps ensure quality and reliability.

    • Prefer nearby suppliers for reliable scheduling.

      • Example: 4 deliveries each day, 2 hours apart.

    • Suppliers encouraged to extend JIT to their suppliers.

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Just-In-Time and Japan

  • Area of Japan = 144,000 square miles.

    • California = 158,000 square miles

    • Missouri = 70,000 square miles

  • Population of Japan is about 1/2 of USA.

  • Japan is islands (80% mountainous).

  • Land is expensive.

  • Facilities are not far apart.

  • Natural resources are limited.

  • Minimizing waste is crucial.

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