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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

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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.

Why is production difficult l.jpg
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.

Just in time production l.jpg
“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.

Types of waste l.jpg
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

Lowering inventory reduces waste15 l.jpg

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

Reducing setup costs reduces lot size and total cost l.jpg

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

Steps to reduce setup time l.jpg
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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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.