PRODUCTION SCHEDULING AT DIFFERENT LEVELS A hot production order is released to the shop floor even though there is more

than enough work to keep production busy. Required raw material for the new order needs to be expedited; an in-process order, not due until next month, used all that was on hand. Started last week to keep production busy, the in-process order is currently sitting idle in WIP inventory. To assure on time delivery to the customer, the new order will require ten to twelve hour workdays and probably weekend work, much more overtime than is budgeted. Unpredictable customer demand coupled with internal production problems, and producing to a strict build-to-order schedule, leads to the problems listed and frustration along the entire supply chain including, ultimately, the customer Level production defined In lean production parlance, level production is called Heijunka. It is defined as leveling of production by both volume and product mix; taking the total volume of orders for a period and leveling them so the same amount and mix are made daily (best case), or during each identified scheduling period. It is the base on which you reduce inventories in a supply chain and build a flow and pull production system. Benefits A change from a strict build-to-order and/or large batch production scheduling system to a level production system is difficult, but has a high pay-off. Below are some of the benefits of converting to a level production system. 1. Flexibility make what the customer wants, when they want it 2. Reduced risk of unsold and expired product 3. Balanced use of production resources 4. Smoothed demand and flow of parts throughout the factorys entire supply chain 5. The ability to standardize production and work. 6. Eliminates or minimizes expediting, checking, rework, and delays 7. Minimizes finished goods, WIP, and raw material inventories 8. Scheduling is easier 9. Problems become easier to identify

Implementing level production Because it is more difficult, many companies fail to implement a level and balanced lean flow of work in their production system, and if they do, a significant number lack the discipline to maintain it. Instead most companies focus their efforts on what, in the Toyota Production System (TPS), is coined as muda; eliminating waste on non-value added operations. They do this primarily because waste is easy to identify and eliminate. But in the Toyota system of lean production, this is only one of three efforts that must be taken to make lean production successful. In Toyotas system one must also eliminate mura, or unevenness in the production schedule; and muri, or overburden of equipment and people. Waste, or muda, is the non-value added activities in a supply chain. These wasteful activities include:

Overproduction Producing when there are no orders. Waiting Waiting for an automated machine; for tools, supplies or the next processing step; or simply not having work due to stock-outs, delays, downtime, and capacity bottlenecks. Unnecessary transport Unnecessary or lengthy movement of material Over processing Unneeded or inefficient processing; higher than necessary quality Excess inventory Excess raw material, WIP and finished goods Unnecessary movement Wasted employee motion Defects Production of defective parts These wasteful activities can lead to long and erratic cycle and lead times, excess inventory, and extra movement and wait times; all which influence a companys ability to create level production. 1. Establish finished goods safety stock levels Although seemingly counter-intuitive, establishing appropriate safety-stock at the finished goods level is important in assuring customer demand can be met and that level production is achievable. The safety stock levels provide insurance against swings in customer demand and product deliveries. They are based on average customer demand, demand variation, production lead time, product cycle time, and the reliability of your production system. The inventory buffer should provide an on time delivery percentage exceeding ninety-nine percent. Continuous

improvement projects focusing on decreasing lead times, product cycle times, demand variability, or increasing production system reliability lead to reduction of safety stock levels. 2. Develop batch sizes The batch sizes and cycle times chosen depend on set-up times, average demand rate/ period, defect percentage, average processing time per unit, and other factors that may be specific to an individual company (e.g., case quantities, pallet quantities, etc.). 3. Establish Maximum WIP levels In a typical factory, WIP is held at strategic points along the production supply chain to assure continuity of flow through the factory. It provides a dampening effect on production variability caused by equipment downtime, material shortages, quality issues and other internal problems. The size of WIP directly contributes to product processing time. Because of this effect, WIP must not be allowed to increase to a point where calculated lead times, and batch sizes are affected. To maintain a level schedule maximum WIP levels must be fixed and adhered to.

4. Build the schedule A significant amount of discipline is needed to assure that only what is needed is produced. Building unneeded products or having excessive part shortages, machine downtime, quality issues, or people destabilizes the entire supply chain. Constant schedule changes create a whip effect on upstream processes and suppliers and an endless cycle of part shortages, expediting, and inventory increases. 5. Continuous Improvement A stabilized production system is the benefit of the initial application of leveling your production. Its important to continue improving the production system by working on the variables that can affect it. Inventories can be reduced, lead and cycle times decreased, customer service improved and ultimately, costs can be reduced if a systematic improvement program is in place. Improvement programs focused on eliminating muda, mura, and muri as described above, will lead to further improvements.

INVENTORY MANAGEMENT
An inventory management system is one of the most profitable ways to combine the computers power and the tools of management science. Such a combination can give management an entirely new and powerful arm in implementing its objectives effectively.

A representative inventory management system

It may be helpful, before getting involved in the separate parts of an inventory management system, to have a general idea of how the parts might work together in a typical system. The reader should not expect to fully understand the relationships and frequencies just yet, but will find it easier to gain perspective by seeing the final framework now and referring back to it from time to time. The total system is made up of three basic subsystems: ordering, forecasting and reviewing. Balancing the costs of operating each subsystem against the sensitivity of the expected results leads us to specify a different frequency of use for each subsystem. The ordering subsystem considers the order quantity, or how much to order, balancing the cost factors relevant to ordering strategy to find the minimum-cost strategy for each item. As we shall see in the section entitled "Order Quantity", it is usually not worthwhile to recalculate order quantities more than once or twice a year. The pertinent cost factors are the cost of purchasing, the cost of maintaining inventory, the effective unit cost, and the sales rate. The forecasting subsystem has to do with the order point, or when to order. To know when to order, we must have some idea of how fast an item is going to be used up, so we forecast each item's usage rate. In order to recognize changes in usage patterns, we forecast relatively frequently, a monthly or semimonthly interval being most common. These forecasts are used to set order points, taking the cost of lost sales and the cost of maintaining inventory into account. The reviewing subsystem is the least complex mathematically, closely paralleling the action of a buyer as he reviews either ledger cards or a stock status report. The order point set by the forecasting subsystem is compared with the available stock to determine whether stock is sufficiently low to order now. If it is not, no further action is indicated. If it is, the reviewing subsystem looks up the order quantity computed by the ordering subsystem. This quantity is then sent to the buyer for his approval. Reviewing should be done frequently because of the constant depletion of stock and the attendant possibility of reaching order point. It is not uncommon to check an item's status after every issue, though weekly and biweekly review is often encountered as well. A Guide to Item Classification The listing desired as the first tool for inventory analysis is particularly easy to prepare if the company has its inventory records in machine-readable form. The item records are arranged

and listed in descending sequence by annual dollar sales rates. For purposes of illustration, let us use a hypothetical wholesaler, Sureship Wholesale, Inc. The company has one warehouse, which stocks 10,988 items, and had sales last year of $33,047,690. Excerpts from their distribution-byvalue list are shown in Figure. To prepare the list, the data processing manager was given the following instructions: Calculate dollar annual sales for each item in inventory by multiplying the unit cost times the number of units sold in a year. (Cost dollars are used in order to be comparable with inventory figures which are usually expressed in that measurement.) Sort all items by dollar annual sales in descending sequence. Print a list from these ranked items. Include as much indicative information as possible, such as description, unit selling price, product class, etc. As a minimum, print the item number, the annual units sold, the unit cost and the annual dollar sales. Starting at the top of the list, compute a runningtotal item-by-item of the item (or card) count, the dollar sales and inventory value (if available). The tenth item on the list would therefore have the figure" 10" in the cumulative item count column and the sum of the annual dollar sales for the first ten items in the cumulative dollar sales column. Compute and print for each item the cumulative percentages for the item (or card) count and cumulative dollar sales. These percentages are required only for a few selected items and may be easily computed by hand, if necessary. The Standard Ratio The standard ratio is a measure of how extreme the few-items, many-dollars relationship is. For example, in some inventories 2% of the items can account for 80 or 90% of the sales, while in others the same 2% of the top items yield only 10% of the sales. The standard ratio for the first, most extreme case would be high relatively - a number like 20 or 25. For the second case, the number would be low, relatively - 2 or 3. Knowledge of the value of the standard ratio makes the inventory estimates described in the previous section possible hence it is well worth knowing. Inventory Curve Figure shows graphically the effects we have discovered in our trial-and-error experimentation. The graph illustrates two facts that we have observed:

As we order more frequently (in smaller quantities), we incur increased purchasing costs. As we purchase more frequently (in smaller quantities), our maintenance cost decreases because the cycle stock is less.

LINE BALANCING IN CAPASITIVE PLANNING

Line Balancing (LB) is a classic, well-researched Operations Research (OR) optimization problem of significant industrial importance. It is one of those problems where domain expertise does not help very much: whatever the number of years spent solving it, one is each time facing an intractable problem with an astronomic number of possible solutions and no real guidance on how to solve it in the best way, unless one postulates that the old way is the best way. Here we explain an apparent paradox: although many algorithms have been proposed in the past, and despite the problems practical importance, just one commercially available LB software currently appears to be available for application in industries such as automotive. We speculate that this may be due to a misalignment between the academic LB problem addressed by OR, and the actual problem faced by the industry. OR Definitions of LB The classic OR definition of the line balancing problem, dubbed SALBP (Simple Assembly Line Balancing Problem) by Becker and Scholl (2004), goes as follows. Given a set of tasks of various durations, a set of precedence constraints among the tasks, and a set of workstations, assign each task to exactly one workstation in such a way that no precedence constraint is violated and the assignment is optimal. The optimality criterion gives rise to two variants of the problem: either a cycle time is given that cannot be exceeded by the sum of durations of all tasks assigned to any workstation and the number of workstations is to be minimized, or the number of workstations is fixed and the line cycle time, equal to the largest sum of durations of task assigned to a workstation, is to be minimized. Ergonomic Constraints (Operator Positions) Workstation level A major difficulty in assembly of large products is that they are too bulky to be moved (elevated, rotated) easily. They are therefore kept in a given position during the whole stay in the workstation, i.e. for all the operations the workstation has been assigned. On the other hand, the large size of the products makes it impossible to carry out certain operations unless the product is positioned in a certain way. For instance, in order to mount the

exhaust system on a car, the car must be elevated - otherwise the operator would have to crawl under the car, making the operation extremely inefficient and tiring. Also, there are situations where the access to the product is limited. For example, a workstation can perform operations taking place on the left or the right of the car, but not both. In other situations, the working position is imposed from the outset. For instance, when the conveyor is close to a wall on the right side in a workstation, the workstation can only be assigned operations that take place on the left side of the car. Operator level

As we have observed in section 3.6 above, there are often several operators working on a large product at the same time. There are, however, certain restrictions that are typically imposed on the operations assigned to a workstation and their scheduling within the workstation, in order to avoid counterproductive clashes among operators. First, it is usually forbidden to have two operators working at the same time in the same spot on the product. For example, during the time an operator is fixing the interior rear-view mirror in a car, it is usually forbidden to have another operator fixing the audio player, because both operators would occupy the cabin of the car at the same time, and there is not enough space in the cabin for both of them. Second, the line manager often seeks to avoid unproductive travel of operators from one spot on the product to another, as it significantly reduces the efficiency of the workstation and hence of the whole line. This means that an operator can be fixed to a given spot on the product (say front-left) and can only perform operations that take place there. Additional complexity

According to our experience, any software aiming to solve line balancing in automotive and related industries must support the ergonomic constraints described above. Indeed, a solution where, for instance, the exhaust system should be mounted at the same workstation as the sunroof, is simply infeasible, as the car cannot be elevated both in the high and the low position at the same time. A solution where the left floodlight should be mounted at the same time as the left front blinker is probably infeasible as well, because the two operators would be occupying each others workspace.

Stages in Line Balancing Inherent Equipment Balancing Queuing for equipment balancing Inventory in a queued system Surplus machine capacity Surplus people capacity Queuing for people balance Floating balance Circulation balance

We have identified a number of aspects of the line balancing problem that are vital in industries such as automotive, yet that have been either neglected in the OR work on the problem, or handled separately from each other. According to our experience, a line balancing tool applicable in those industries must be able to handle all of them simultaneously. That gives rise to an extremely complex optimization problem. The complexity of the problem, and the need to solve it quickly, may explain why there appears to be just one commercially available software for solving it, namely OptiLine by Optimal Design.

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