Just-In-Time (JIT) Motivation JIT Philosophy JIT Procedure - PowerPoint PPT Presentation

Just-In-Time (JIT) • Motivation • JIT Philosophy • JIT Procedure – Toyota Kanban Systems • MRP vs. JIT • Summary • Reading: Page 678 – 707

Learning Objectives • Understand the philosophy of Just-In- Time (JIT) • Learn the working procedure of JIT • Know the differences between the two production-control systems, MRP (the push system) and JIT (the pull system)

Inventory Models Revisited • EOQ model: 2 KD = Cycle stock = EOQ h • Reorder point system: σ z L Safety stock = β d • What if K and σ d are large?

Inventory & Process Improvement • Short-term responses: – Large order size (large production batch) – More safety stock (just in case) • Long-term (JIT) responses: – Reduce setup cost K – Reduce variability σ d – Reduce lead-time

Inventory Masks Problems large volume of capital Marketing risk excessive inventory low forecasting accuracy low product quality low productivity long leadtime … … Reduced inventories reveal problems Excessive inventory masks problems (rocks becomes visible) (water covers rocks)

History of JIT • Origin of JIT: The idea and the practice of Just-in-time (JIT) were initiated in 1970’s at Toyota, the leading automobile manufacturer of Japan • Characteristics of Manufacturing Environment in Japan – Limited working space – Closeness to suppliers and consumers – Small economy scale – Relatively uniform taste of consumers – Eastern culture (well organized, system-oriented, etc.) ⇒ Improving productivity and reducing inventory become necessary and possible

The Concept of JIT • JIT (lean operations): an operations system in which materials are moved through the system and services are delivered with precise timing so that they are delivered at each step of the process just as they are needed

Goals of JIT • Eliminate disruptions • Make the system flexible • Eliminate waste, especially excess inventory

Other aspects of JIT • Less worker specialization • Autonomation • Worker cooperation • Quality circles • Integrated production

Benefit of Small Lot Size • Demand variation Mode Old Monthly New Monthly Daily A 600 600 60 B 200 600 60 C 800 400 40 D 200 200 20 E 300 300 30 F 300 300 30 2,400 for half month . Assume 400C changed to 400B at the middle of the month • Of the 24 units, we can sequence as follows A A A A A A B B C C C C C C C C D D E E E F F F or A C A E C F B C A C D A E F C B C A D C F E A C ? Which is better?

Environments Suited to JIT • JIT is only one mechanism of production control. It should not be viewed as an all-purpose solution for all manufacturing systems. Characteristics of environments that are well suited to the JIT idea should include – Discrete parts produced in highly repetitive manner – Fairly smooth demand pattern throughout the time horizon – Small product line diversity – Setup time/costs can be greatly reduced – High worker flexibility – Closeness with suppliers – High level of quality management

Toyota Kanban System • The Kanban system is a manual realization of the JIT idea • Two Kanban systems are often used in practice: 1) One-card Kanban system (only production cards) is suitable for the situation where workstations are close 2) Two-card Kanban system (both production and move cards) is suitable when workstations are not close • The production of cards is authorized only with available production cards. So is the movement of the parts in the two-card system • The number of parts associated with a workstation is limited by the number of cards associated with that workstation

One-Card Kanban System Work- 1: demand occurs Workstation station ⇐ Inventory buffer Card box Production card Part

One-Card Kanban System 2: one part meets demand, Work- Workstation releasing production card station ⇐ Inventory buffer Card box Production card Part

One-Card Kanban System 3: production is authorized Work- Workstation station Inventory buffer Card box Production card Part

One-Card Kanban System Work- Workstation 4: production is completed station Inventory buffer Card box Production card Part

Two-Card Kanban System 1: demand occurs ⇐ Workstation Inventory Inventory buffer 1 buffer 2 Move-card box Production-card box Move card Part Production card

Two-Card Kanban System 2: one part meets demand, Workstation releasing move card ⇐ Inventory Inventory buffer 1 buffer 2 Move-card box Production-card box Move card Part Production card

Two-Card Kanban System 3: movement is authorized, releasing production card Workstation Inventory Inventory buffer 1 buffer 2 Move-card box Production-card box Move card Part Production card

Two-Card Kanban System 4: movement is completed Workstation Inventory Inventory buffer 1 buffer 2 Move-card box Production-card box Move card Part Production card

Two-Card Kanban System 5: production is authorized Workstation Inventory Inventory buffer 1 buffer 2 Move-card box Production-card box Move card Part Production card

Two-Card Kanban System 6: production is completed Workstation Inventory Inventory buffer 1 buffer 2 Move-card box Production-card box Move card Part Production card

Kanban Formula DT(1+X) N = C N = Total number of containers D = Planned usage rate of using work center T = Average waiting time for replenishment of parts plus average production time for a container of parts X = Policy variable set by management - possible inefficiency in the system C = Capacity of a standard container

Example Suppose the usage at a work center is 300 parts per day, and a standard container holds 25 parts. It takes an average of 0.12 day from the time a withdraw Kanban is issued until a full container is received. Compute the Kanban cards needed if the efficiency factor is X=0.2. Solution: D=300/day, T=0.12 day, C=25 parts per day, X=0.2 ⇒ N= 300(0.12)(1+0.2) / 25 = 1.728 ≈ 2.

MRP VS. JIT Production System MRP JIT • Developed first in Japan • Developed first in US • Authorization-constrained • Schedule-based • “Pull” system • “Push” system • Does not need computers, • Often computer-based, may be simple to understand complicated • Often with decentralized • Typically with centralized control control

Push & Pull Production Systems Push sytem (MRP) Schedule Demand ⇐ 1 2 3 Pull system (JIT) Demand ⇐ 1 2 3 workstation Inventory material flow information flow

Centralized & Decentralized Control Cenralized control Central control 1 2 3 Decentralized control 1 2 3

Summary • JIT is another basic philosophy of production control and is “pull” system • JIT is less complex than MRP, but it works well only in certain environments • The Kanban system is a manual realization of the JIT idea • There are significant differences between MRP and JIT

Review Problems • Page 709, Problems 1, 2, 3.