Quality Parts Company provides gizmos to a nearby computer manufacturer. The company manufactures two different models of gizmos, with production runs ranging from 100 to 300 units. Please refer to Exhibit 12.11 for the production flow of models X and Y. For Model Z, the first step is milling, but it follows the same flow as X and Y. Each skid can hold up to 20 gizmos at a time. Please see Exhibit 12.12 for approximate times per unit for each operation number and equipment setup times. The computer company’s demand for gizmos ranges from 125 to 175 per month, equally distributed between X, Y, and Z. To ensure a constant buffer stock, subassembly builds up inventory at the start of each month. Raw materials and purchased parts for subassemblies each make up 40 percent of the manufacturing cost of a gizmo.
Quality Parts Company sources parts from about 80 vendors, with two categories of parts available. These parts are delivered randomly and there are 40 different part numbers for gizmos. The scrap rates at each operation are approximately 10 percent, inventory turnover occurs twice a year, employees are paid based on a day rate, the annual employee turnover rate is 25 percent, and the net profit from operations remains steady at 5 percent per year. Maintenance is performed as needed.
The manager of Quality Parts Company is considering implementing an automated ordering system to better manage inventories and ensure consistent supply. She believes that by keeping the skids filled, workers will be motivated to work efficiently. Additionally, she plans to hire three inspectors to improve the quality control process and considers setting up a rework line for faster repairs. While the utilization of most equipment and labor is high, she is concerned about the milling machine’s idle time. The manager has also requested the industrial engineering department to explore the possibility of using high-rise shelving for storing parts produced by the machine.
- Which of the changes being considered by the manager of Quality Parts Company are counter to the lean philosophy?
- Make recommendations for lean improvements in such areas as scheduling, layout, kanban, task groupings, and inventory. Use quantitative data as much as possible; state necessary assumptions.
Sketch the operation of a pull system for running
Quality Parts Company’s current system.
- Outline a plan for introducing lean at Quality Parts Company.