Mini-Cases • Chapter 15 1
Mini-Cases
Chapter 15: just-in-time and theory of constraints
Southern Gear Company
The Southern Gear Company manufactures transmissions and speed reducers used in various farm machinery and industrial equipment. The company has been working on implementing MRP for the past three years, but has not achieved the success for which it had hoped. It is now Monday morning as we join the company's executive committee during its weekly meeting.
Barry Renter (vice-president of manufacturing): Look, I know we haven't achieved the results with MRP that we had expected. But I think that's because we haven't been able to bring inventory under control. We still don't have more than 90 percent accuracy in our inventory records, and that's meant that we've run out of parts when the MRP said we should have had enough. That's why I think JIT can help us. It's a way to eliminate the need to maintain accurate inventory records.
Dave Ashley (vice-president of marketing): But Barry, how can we possibly go to JIT when our customer orders jump all over the place? You know as well as I do that one problem we've had in implementing MRP is freezing the master schedule. Our customers just expect us to meet their every whim, and they expect to be able to change their orders at the last minute. I just don't think we can achieve the level schedule that I understand JIT requires.
Al Simone (president and CEO): Dave's got a point, Barry. I think one of our strong points has been that we're willing to respond quickly to customer demand even though we haven't always been able to do so because of parts shortages. But in any case, with twenty different products and 200 possible variations of those products, I think we're forced to stick with MRP. We're getting some significant offshore competition that's offering lower prices than we are. I'm not sure I want to scrap a million-dollar MRP system to try JIT.
Barry: I don't think we have to scrap MRP. All I'm suggesting is that we continue using MRP for planning, but implement some aspects of JIT such as the kanban system. I also think we could benefit from going to group technology. I've been looking at the bills of materials and routings. Even though we produce 200 different possible end items, we make those from only fifty different main parts, and many of those parts follow the same processing sequence. Part of our problem in controlling inventory has been tracking it through those long queues in the job shop. Group technology could simplify things for us.
1. Based on the information given, would JIT be appropriate for Southern Gear?
2. Could JIT help to alleviate the problem of not being able to satisfy customer orders on short notice?
3. Is Barry Renter right in suggesting that MRP can be used in conjunction with JIT? If so, what would be the function of MRP?
4. What additional information would you like to have before making a decision?
5. What step should Southern Gear undertake first if it decides to use JIT?
Steel Office Products-JIT
Steel Office Products makes four different types of steel filing cabinets: a three-drawer letter size, a five-drawer letter size, a three-drawer legal size, and a five-drawer legal size. The company currently uses the layout shown in the first illustration below to make these products. However, plans are under way to switch to JIT production.
Each filing cabinet is assembled from three basic parts: cabinet, the drawers, and the guides the drawers slide on, as shown in the second illustration below. All cabinets use the same guides. Both letter-size cabinets use the same drawers, as do both legal-size cabinets. However, each product has its own cabinet.
The guides (two per drawer) have rollers (two per guide) for the drawers to slide on. These rollers are purchased from an outside supplier, but all other component parts are made internally, using sheet steel that is bought from a supplier. The sequence of processing operations for each part is listed below. There is no difference in times between legal-size and letter-size or between three-drawer and five-drawer cabinets, but a setup must be performed each time they switch from one to the other. The following tables show the operation sequence and the processing time for each part in minutes per unit.
[GPW1]
CABINETOperation /
Setup
/Run
Shear / 5 / .5Press / 60 / 1
Weld / 20 / 3
Paint / 45 / 3
DRAWER
Operation /
Setup
/Run
Shear / 3 / .4Press / 50 / .8
Weld / 10 / 2
Paint / 45 / 1
GUIDES
Operation /
Setup
/Run
Shear / 2 / .3Press / 20 / .5
Assemble / 5 / 2
The plant operates five days per week, eight hours per day, and expects to continue doing so. Weekly demand for the products is fairly constant at an average rate of eighty five-drawer letter-size units, fifty three-drawer letter-size units, forty five-drawer legal-size units, and thirty three-drawer legal- size units.
1. What mixed-model sequence should be used?
2. What would the cycle time be for each product?
3. Based on these cycle times, will there be any problems with the processing times shown above? If so, what changes must be made?
4. Suggest a possible rearrangement of the plant to facilitate flow.
5. Can you identify any other changes that should be made to help implement JIT?
Steel Office Products––Theory of Constraints
The data for Steel Office Products have been presented in the preceding mini-case. However, suppose the company decides that instead of implementing JIT, it will use TOC.
1. Draw a diagram depicting the manufacturing process for the filing cabinets in a manner similar to Exhibit 15.14. (Hint: The diagram will have three "legs," one for each component.) Be sure to show the subassembly operation for the guides.
2. Based on information about demand, the number of drawers and guides needed for each product, and processing times, determine whether any process or processes are bottlenecks.
3. If you were to include buffers, where would you locate them?
4. Suppose the company has just one person assembling guides and that person works forty hours per week. Profit per unit for each product is as shown below:
• Five-drawer letter size: $50/unit
• Three-drawer letter size: $40/unit
• Five-drawer legal size: $60/unit
• Three-drawer legal size: $50/unit
How much of each product should be produced to exploit the constraint?
5. What would be some ways to elevate the constraint?
Vonderembse and White • Operations Managment
[GPW1]I know the original text had these tables aligned left, but I think they look better centered. I can go either way if it makes a difference to you.