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: 520964875 Subject: Advance Production And Operation Management Subject code: OM 0013 Operation Management
Assignment Set-2 Q1.Take an example of any product or service industry and explain the factors considered while taking the decision on plant location. Ans. The geographical location of the plant contributes a lot to the success of any chemical business venture .Utmost care and judgment is required for selecting the plant site, and many different factors must be considered while selecting the plant site. The plant site should be ideally located where the cost of production and distribution can be at a minimum level .Also there has to be a good scope for plant expansion and a conducive environment, safe living conditions for easy plant operation.But other factors, such as safe living conditions for plant personnel as well as the surrounding community are also important. Selection of plant location for establishing a chemical industry By Prashantkumar Kudli Shrinivas
The geographical location of the plant contributes a lot to the success of any chemical business venture .Utmost care and judgment is required for selecting the plant site, and many different factors must be considered while selecting the plant site.
The plant site should be ideally located where the cost of production and distribution can be at a minimum level .Also there has to be a good scope for plant expansion and a conducive environment, safe living conditions for easy plant operation.But other factors, such as safe living conditions for plant personnel as well as the surrounding community are also important.
The major factors in the selection of chemical plant sites are (1)raw materials, (2) markets, (3) energy supply, (4)climate, (5) transportation facilities, and (6)water supply. For a preliminary survey, the first four factors should be considered. On the basis of raw materials availability, market survey, energy supply, and climate, acceptable locations can usually be reduced to one or two general geographical regions.
In the second step, the effects of transportation facilities and water supply are taken into account. This permits reduction of the possible plant location to few general target areas. These areas can be reduced further by considering all the factors that have an influence on plant location.
As a third step, a detailed analysis of the remaining sites can be made. Exact data on items such as freight rates, labor conditions, tax rates, price of land, and general local conditions can be obtained. The various sites can be inspected and appraised on the basis of all the factors influencing the final decision. The final decision on selecting the plant site should take into consideration all the factors that can affect the ultimate success of the overall plant operation.
The choice of the final site should be based on a detailed survey of various geographical areas, and ultimately, on the advantages and disadvantages of available real estate. An initial outline regarding the plant location should be obtained before a design project reaches the detailed estimate stage, and a firm
location should be established upon completion of the detailed estimate design The factors that must be evaluated in a plant location study indicate the need for a vast amount of information.
The following factors should be considered in selecting a plant site:
1. Raw materials availability 2. Energy availability 3. Meteorological data 4. Market study 5. Transportation facilities 6. Water supply 7. Waste disposal 8. Labor supply 9. Taxation and legal restrictions 10. Site characteristics 11. Safety and Environmental measures 12. Community factors
1. Raw materials availability: The source of raw materials is one of the most important factors influencing the selection of a plant site .This is particularly true if large number of raw materials source permits considerable reduction in transport and storage charges. Attention should be given to the purchased price of the raw materials, distance from the source of the supply, freight or transportation expenses, availability and reliability of supply ,purity of the raw materials, and storage requirements. 2. Energy availability: Power and steam requirements are high in most of the chemical plants, and fuel is ordinarily required to supply these utilities .Power and fuel can be combined as one major factor in the choice of a plant site.If the plant requires large quantities of coal or oil, location near a source of fuel supply may be essential for economic operation. The local cost of power can help determine whether power should be purchased or self generated. 3. Meteorological data: If the plant is located in a cold climate, costs may be increased by the necessity for construction of protective shelters around the process equipment, and special cooling towers or air-conditioning equipment may be required if the prevailing temperatures are high. Excessive humidity or extremes of hot or cold weather can have serious effect on the economic operation of the plant, and these factors should be examined when selecting a site. 4. Market study:
The location of markets or distribution centers affects the cost of product distribution and the time required for shipping .Proximity to the major markets is an important consideration in the selection of a plant site ,because the buyer usually finds it advantageous to purchase from near by sources. It should be noted that markets are needed for by products as well as for major final products.
5. Transportation facilities: Water, railroads, and highways are common means of transportation used by major industrial concerns. The kind and quantity of products and raw materials determine the most suitable type of transportation facilities. Careful attention should be given to local freight rates and existing railroad lines. The proximity to railroad centers and the possibility of canal, river, lake or ocean transport must be considered. Motor trucking facilities are widely used and can serve as a useful supplement to rail and water facilities. If possible, the plant site should have access to all three types of transportation and, certainly, at least two types should be available. There is usually a need for convenient air and rail transportation facilities between the plant and the company head quarters, and effective transportation facilities for the plant personnel are necessary. 6. Water supply: The process industries use large quantities of water for cooling, washing, steam generation, and as a raw material in process.Hence,the plant must be located where a dependable supply of water is available. A large river or lake is preferable, although deep wells or artesian wells may be satisfactory if the amount of water required is not too great. The level of the existing water table can be checked by consulting the state geological survey ,and information on the constancy of the water table and the year round capacity of local rivers or lakes should be obtained .If the water supply shows seasonal fluctuations, it may be desirable to construct a reservoir or to drill several standby wells. The temperature, mineral content, silt or sand content, bacteriological content, and cost for supply and purification must also be considered when choosing the water supply. 7. Waste disposal: In recent years, many legal restrictions have been placed on the methods for disposing of waste materials from the process industries. The site selected for a plant should have adequate capacity and facilities for correct waste disposal. In choosing a plant site, the permissible tolerance levels for various methods of waste disposal should be considered carefully, and attention should be given to potential requirements for additional waste-treatment facilities. 8. Labor supply: The type and supply of labor available in the vicinity of a proposed plant site must be examined .Consideration should be given to prevailing pay scales ,restrictions on number of hours worked per week, competing industries that can cause dissatisfaction or high turnover rates among the workers, and variations in the skill and productivity of the workers. 9. Taxation and legal restrictions: State and local tax rates on property income, unemployment insurance, and similar items vary from one location to another.Similarly,local regulations on zoning, building codes, nuisance aspects, and transportation facilities can have a
major influence on the final choice of a plant site. In fact, zoning difficulties and obtaining the many required permits can often be much more important in terms of cost and time delays than many of the factors discussed in the preceding sections. 10. Site characteristics: The characteristics of the land at a proposed plant site should be examined carefully. The topography of land and the soil structure must be considered, since either or both may have a pronounced effect on construction costs. The cost of the land is important, as well as local building costs and living conditions. Future changes may make it desirable or necessary to expand the plant facilities.Therefore, even though no immediate expansion is planned, a new plant should be constructed at a location where additional space is available. 11. Safety and Environmental measures: Many industrial plants are located along rivers or near large bodies of water, and there are risks of flood or hurricane damage. Before selecting a plant site, the regional history of natural events of this type should be examined and the consequences of such occurrences considered. Protection from losses by fire is another important factor for selecting a plant location. In case of a major fire, assistance from the fire departments should be available. Fire hazards in the surrounding area of plant site must not be overlooked.
12. Community factors: The nature and facilities of a community can have an effect on the location of the plant. If minimum number of facilities for satisfactory living of plant personnel do not exist, it becomes a burden for the plant to subsidize such facilities. Cultural facilities of the community are important to sound growth.Facilities such as religious centers, libraries, schools, civic theatres, concert associations, and other similar groups do much to make a community progressive. The efficiency, character, and history of both state and local governments should be evaluated. The existence of low taxes is not in itself a favorable situation unless the community is already well developed and relatively free of debt. Q2. Explain briefly the current trends in Operation Management. Ans. Recent Trends In OM Organizations must improve their products as well as productivity to retain their market share. The long-term success of an organization requires investments in technology because new technologies can improve efficiency and productivity. In this chapter, we discussed how organizations can benefit from automation. Some of the recent technological developments in the field of operations management, which include computer-aided design (CAD), direct and indirect computer-aided manufacturing (CAM), flexible manufacturing system (FMS), and computer integrated manufacturing (CIM) were discussed in the chapter. Computer Aided Design (CAD) is used for designing products and processes on a computer terminal. Computer systems assist in the creation, modification, analysis and optimization of a design. In Computer Aided Manufacturing (CAM), computers are used either directly to control the processing equipment, or indirectly to support manufacturing operations.
Automated machines usually perform a variety of operations, depending on the instructions received from the computer with respect to the sequence and operational specifications of a process. FMS is a form of flexible automation in which several machine tools are linked to the materials-handling system. A central computer controls all aspects of the system. CIM refers to a computer application that connects various computerized systems into a single multi-functional system. Another development in the field of technology is artificial intelligence (AI). AI enables computers to exhibit some of the characteristics of human intelligence, like the capacity for learning, understanding language, reasoning and problem solving. EDI is a system, wherein standardized forms of electronic documents are transferred between two computer systems. Customers and suppliers or departments within the same organization can share and transmit information electronically in real time using EDI.
Imagine you are a manager of ABC company manufacturing 4 wheelers.Write a small briefing to management regarding what is benchmarking, why they should benchmark and what can they benchmark. Benchmarking:-
Benchmarking is the process of determining who is the very best, who sets the standard, and what that standard is. In baseball, you could argue that seven c onsecutive World Series Championships made the New York Yankees the benchmark. If we were to benchmark "world conquest", what objective measure would we use to compare Julius Caesar to Adolph Hitler; Gengis Khan to Napoleon? Which of them was the epitome, and why? We do the same thing in business. Who is the best sales organization? The most responsive customer service department? The leanest manufacturing operation? And how do we quantify that standard? Why Should I Benchmark If you don't know what the standard is you cannot compare yourself against it. If a customer asks "What is the MTBF on your widget?" it is not enough to know that your Mean Time Between Failures is 120 hours on your standard widget and 150 for your deluxe widget. You also have to know where your competitors stand. If the company against whom you are competing for this order has a MTBF of 100 hours you are probably okay. However, if their MTBF is 10,000 hours who do you think will get the order?
Its SAFE Fleet program has been in place for over 10 years and provides a worldwide standard framework for subsidiary companies to work to based on six key objectives:
· Senior management support, to ensure safe driving is part of the work culture in the organization, through leadership, monitoring and improvement, training and ongoing engagement. · Field management support and involvement. · Motivation, recognition and awareness for safe driving. · Team performance. Local Safe Fleet teams are responsible for implementing measures like training new drivers, reducing cases of high-risk driving and hiring field safety coordinators. · Driver development including orientation, home study and behind the wheel training. · Health and safety. Despite different cultures, languages, barriers and challenges across the world, SAFE Fleet has reduced injuries, accidents per million miles (APMM) and percentage of vehicles involved in incidents. The company attributes its success to the many practical actions that emerged from its objectives and policies, including: · Detailed quantification of value of employee road safety in direct and indirect costs of human and asset damage. · Development of global standards, policies, procedures and processes. · Strong involvement by executive and senior management and tireless work by operating company Champions. · Setting clear targets for road safety performance, supported by standardised global KPI reporting and monitoring of APMM and other indicators. In the EMEA region a target has been set to reduce the APMM figure to 6.00 by 2010. · Regular communications to help drivers avoid or minimise the impact of risky situations. · A high-risk driver early detection system to identify drivers with the potential to drive unsafely. · Sharing its best practices, including collision and incident reporting guidelines and definitions, which have been adopted by many other organisations. · Leadership of pan-European fleet safety benchmark initiative and involvement in www.fleetsafety.net, to exchange cross-company best practices and experiences. · Actively taking a leading role in external initiatives such as the European Road Safety Charter, WHO / UN fleet safety program and industry conferences. · Constantly exploring innovative tools and technologies, including Virtual Risk Manager®, to identify risks in a proactive way and contribute to further decreases in APMM. · Engaging drivers to take the road safety message home to their families and friends. These initiatives have led to the following quantifiable road safety improvements 1997 to 2007: · Worldwide APMM reduced from 8.7 to 5.3. EMEA reduced from 12.6 to 6.6. · WW % of fleet in an accident reduced from 18.2 to 11.6. EMEA reduced from 27.9 to 15.6. · EMEA total vehicle related lost work day cases reduced from 19 to 3. Zurich Global Corporate is a leader in motor fleet insurance, which works closely with customers to help them understand and manage their risks, thus allowing them to operate more efficiently. This approach is the result of many years' experience combined with products which offer flexibility and a distinctive, innovative, risk-led philosophy tailored to anticipate the challenges faced by customers. Zurich works with customers to better manage the many different aspects of motor fleet risk and has been a key player in the fleet safety benchmarking
project, including: · Attending project meetings. · Providing data and insight regarding its own motor fleet. · Supporting the publication of the Fleet Safety Benchmarking project report. · Encouraging fleet clients to participate in the benchmarking program. · Undertaking fleet audits and driver risk assessments to help clients benchmark their fleet safety both internally and externally. · Zurich Risk Engineering global Centre of Excellence developing sophisticated, but easy to use, fleet risk grading tools for fleet benchmarking.
Q4. What is Rapid Prototyping? Explain how concept time to market can be drastically reduced using this technique. Ans. Introduction Rapid Prototyping (RP) can be defined as a group of techniques used to quickly fabricate a scale model of a part or assembly using three-dimensional computer aided design (CAD) data. What is commonly considered to be the first RP technique, Stereolithography, was developed by 3D Systems of Valencia, CA, USA. The company was founded in 1986, and since then, a number of different RP techniques have become available. Rapid Prototyping has also been referred to as solid free-form manufacturing, computer automated manufacturing, and layered manufacturing. RP has obvious use as a vehicle for visualization. In addition, RP models can be used for testing, such as when an airfoil shape is put into a wind tunnel. RP models can be used to create male models for tooling, such as silicone rubber molds and investment casts. In some cases, the RP part can be the final part, but typically the RP material is not strong or accurate enough. When the RP material is suitable, highly convoluted shapes (including parts nested within parts) can be produced because of the nature of RP. There is a multitude of experimental RP methodologies either in development or used by small groups of individuals. This section will focus on RP techniques that are currently commercially available, including Stereolithography (SLA), Selective Laser Sintering (SLS®), Laminated Object Manufacturing (LOM), Fused Deposition Modeling (FDM), Solid Ground Curing (SGC), and Ink Jet printing techniques.
Rapid Prototyping improves product development by enabling better communication in a concurrent engineering environment. The basic methodology for all current rapid prototyping techniques can be summarized as follows: 1. 2. 3. A CAD model is constructed, then converted to STL format. The resolution can be set to minimize stair stepping. The RP machine processes the .STL file by creating sliced layers of the model. The first layer of the physical model is created. The model is then lowered by the thickness of the next layer, and the process is repeated until completion of the model. The model and any supports are removed. The surface of the model is then finished and cleaned.
Timberland is a cultural icon, a dream brand. The nickname ³Timbs´ is name-checked on dozens of hip-hop lyrics, and one of the genre¶s best-selling producers, Timbaland, is named after the company¶s footwear. On the corporate side, Timberland¶s commitment to social responsibility is respected and emulated worldwide. Hand Craft Meets Digital Timberland has made the transition to its new last production process in just over two years by implementing DSSP, a collection of technology components that enables users to quickly create accurate digital models of complex physical objects. DSSP is used by manufacturers worldwide to capture a part with a 3-D scanner, reconstruct the measurement data (point clouds) into highly accurate polygon or NURBS surfaces, and use the resulting digital model for applications such as product design, tool and mold design and verification, customized manufacturing, recreating legacy parts, engineering analysis, digital archiving and computer-aided inspection. Design conceptualization can be done in minutes by making changes to the 3-D model. In cases where a physical prototype is needed, Timberland sends the Geomagic data to a Z Corp. rapid prototyping system, which can produce a realistic physical model for design and engineering review in three or four hours. DSSP is a vehicle for exploring the type of eclectic designs and customization that defines brands in today¶s consumer market. At the back end of the process is archiving, formerly a process involving a lot of manual labor and physical space to store and retrieve hundreds of historical lasts. Now, Timberland transfers the Geomagic 3-D models of lasts to an electronic library managed using 3Shape software.
Q5. What is aBusiness Process? Explain with an explain as to why a Business process is to be modelled. Ans. A business process or business method is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities. There are three types of business processes: 1. Management processes, the processes that govern the operation of a system. Typical management processes include "Corporate Governance" and "Strategic Management". 2. Operational processes, processes that constitute the core business and create the primary value stream. Typical operational processes are Purchasing, Manufacturing, Advertising and Marketing, and Sales. 3. Supporting processes, which support the core processes. Examples include Accounting, Recruitment, Call center, Technical support. A business process begins with a mission objective and ends with achievement of the business objective. Process-oriented organizations break down the barriers of structural departments and try to avoid functional silos. A business process can be decomposed into several sub-processes, which have their own attributes, but also contribute to achieving the goal of the super-process. The analysis of
business processes typically includes the mapping of processes and sub-processes down to activity level. Business Processes are designed to add value for the customer and should not include unnecessary activities. The outcome of a well designed business process is increased effectiveness (value for the customer) and increased efficiency (less costs for the company). Business Processes can be modeled through a large number of methods and techniques. For instance, the Business Process Modeling Notation is a Business Process Modeling technique that can be used for drawing business processes in a workflow. Information why a Business Process is to be modelled. Business processes must include up-to-date and accurate Information reports to ensure effective action. An example of this is the availability of purchase order status reports for supplier delivery follow-up as described in the section on effectiveness above. There are numerous examples of this in every possible business process. Another example from production is the process of analysis of line rejections occurring on the shop floor. This process should include systematic periodical analysis of rejections by reason, and present the results in a suitable information report that pinpoints the major reasons, and trends in these reasons, for management to take corrective actions to control rejections and keep them within acceptable limits. Such a process of analysis and summarisation of line rejection events is clearly superior to a process which merely inquires into each individual rejection as it occurs. Business process owners and operatives should realise that process improvement often occurs with introduction of appropriate transaction, operational, highlight, exception or M.I.S. reports, provided these are consciously used for day-to-day or periodical decisionmaking. With this understanding would hopefully come the willingness to invest time and other resources in business process improvement by introduction of useful and relevant reporting systems. Purpose of business process modelling A Business Process Model diagram is a tool - a means to an end, not a performance outcome in its own right. The final output is improvement in the way that the business process works. The focus of the improvements is on 'value added' actions that make the customer service and experience better, and on reducing wasted time and effort. There are two main different types of Business Process Models:
y the 'as is' or baseline model (the current situation) y and the 'to be' model (the intended new situation)
which are used to analyse, test, implement and improve the process. The aim of modelling is to illustrate a complete process, enabling managers, consultants and staff to improve the flow and streamline the process.
The outcomes of a business process modelling project are essentially:
y value for the customer, and y reduced costs for the company,
Leading to increased profits. Other secondary consequences arising from successful Business Process Modelling can be increased competitive advantage, market growth, and better staff morale and retention. There are no absolute rules for the scope or extent of a Business Process Model in terms of departments and activities covered. Before committing lots of resources to Business Process Modelling proper consideration should be given to the usefulness and focus of the exercise - ask the questions:
y Does the modelling have the potential to produce gains that will justify the time and
y Will the modelling be structured so that people will understand the outputs (not too big
and complex as to be self-defeating)?
y Do people understand why we are doing it, and "what's in it for them"?
As with other management tools, there is no point producing a fantastically complex model that no-one can understand or use, just as it is a bit daft to spend hundreds of hours analysing anything which is of relatively minor significance. Business Process Modelling is a powerful methodology when directed towards operations which can benefit from improvement, and when people involved are on-board and supportive. Example - BPM added value An example could be the actions involved in processing a customer order from an internet-based mail order company.
y Starting with a customer placing an order (the customer need) y send IT-based information to the warehouse y stock picking y packing and recording y sending the appropriate IT-based information to the distribution hub y sending IT-based information to the accounts department y generation of an invoice y allocation and organisation of shipment for the vehicle drivers y delivery of the item and invoicing (the customer need fulfilled).
This is a simple 'high-level' example. In practice each part or sub-process (for example, stock-picking) may require a 'low-level' BPM of its own. Please note that: Added value for internal customers, notably staff, does not have to be financial, as is commonly imagined by many top business executives. Consider Maslow, Herzberg, McGregor, and Adams and what these concepts teach about motivation and reward, and attrition. Business Process Modelling has enormous potential to address many of the critical demotivators among staff (e.g., poor working relationships, confused structure, failure, etc) and also many strong motivators (e.g., the quality of work itself, recognition, advancement, new responsibilities, etc). But it needs thinking about or it won't happen Think beyond merely adding value for external customers, and optimising efficiency and profit - make a special effort to look for added value for staff too, and then the BPM methodology will work on a much more effective level. Q6. Explain the seven types of wastes w.r.t. just in time. Explain what is Kanban and its types. Ans. The seven types of wastes w.r.t. just in time are under below: 1. Defects The simplest form of waste is components or products that do not meet the specification. We all know about the Japanese scaring us with their target of single-figure reject rates when we realised that they measured in parts per million and that 1% defects gave a figure of 10,000. Of course, the key point of Japanese quality achievement came with the switch from Quality Control to Quality Assurance - efforts devoted to getting the process right, rather than inspecting the results. 2. Over-Production A key element of JIT was making only the quantity required of any component or product. This challenged the Western premise of the Economic Order Quantity (EOQ) which was built on acceptance of fixed ordering costs, built around set-up times, and thus the need to spread these fixed costs over large batches. Another Japanese guru who contributed to this change is Shigeo Shingo who led Toyota's move from long set-ups to Single Minute Exchange of Die (or SMED). 3. Waiting Time not being used effectively is a waste - we are incurring the cost of wages and all the fixed costs of rent, rates, lighting and heating so we should use every minute of every day productively. Ohno looked at the reasons for machines or operators being underutilised and set about addressing them all. Thus we have learnt about preventive maintenance and the creation of flow through our factories with the emphasis on takt time, the rate at which a component or product moves to the next stage. 4. Transporting Items being moved incur a cost, if it is only the energy needed to initiate the movement such as the electricity absorbed by a fork lift truck. Of course, movement brings another cost, which is less visible but more significant. Managing a factory with operations spread apart is much more difficult than when the subsequent stages are adjacent to one another. This can be seen as the primary driver behind cellular manufacturing (though
some would point out that Group Technology is very similar and came from Sweden, rather than from the Orient). 5. Movement On a related note, people spending time moving around the plant is equally wasteful. The time a machine operator or fitter wastes walking to the toolroom or the stores for a fixture or a component could be far better utilised if our plant layout and housekeeping were geared around having everything that is required close to hand. 6. Inappropriate Processing The most obvious example of inappropriate processing from my own experience relates to surface finishes that required components to be moved to grinders for completion, when in fact such finishes served no purpose. A basic principle of the TPS is doing only what is appropriate. 7. Inventory The element that Western industry immediately focused upon when confronted with JIT was the cost reduction available from holding less inventory. The fact that the initial factfinding trips to Japan took place when interest rates were at breathtakingly high levels (my own mortgage was at 15%) perhaps contributed to our failing to see the other costs that Ohno had considered in his own interpretation. We now know that stock hides problems and that problems are pearls in that finding a problem is a good thing - now we can solve it, which we couldn't until it came to light! Kanban Systems This article describes the 8 types of Kanban system available and what you need to do to choose, design, implement, and operate Kanban systems, size buffer stocks (the number of Kanbans), choose containers and signalling mechanisms. It shows the need to integrate the system with your planning systems. It includes the impact on people, accounting, materials handling systems and some important do's and don'ts. This type of system belongs to a category of materials management systems called "pull" systems. (See Materials Management & Stock Control.)
Types of Kanban Systems You may previously have thought that there was only one, or maybe two types of Kanban system! In fact there are 6 main types, (plus two significant variants), (excluding 2 bin & 3 bin systems) and here they are:
One card systems
In the above diagram: A signal is sent back from the consuming process to supplying process (or supplier). This is a signal: a. To send some more (a transfer batch), via a buffer stock. b. To produce some more (a process batch), at the supplying work centre. NB. Empty containers acting as a signal are a potential hazard as any empty container is a signal to fill it. Also occasionally containers have been known to go missing! Usually, for these reasons, the signal is separated from the container. Input / Output Control Kanban (Two variants) Sometimes called the ConWip (constant work in process) system, this type imposes input / output control, where the signal travels directly from the end of a line or section to the preceding section or raw material stores. In this case the supply chain is treated as one unit rather than a series of linked operations. So, as one transfer batch is completed (output) another is launched on the first operation (input), thus ensuring that work in process cannot build up. However there are some special considerations required in the operation of the system, to avoid hidden capacity problems, which are not so clearly visible when this method is used. We have used adaptations of this system to manage workflow and capacity rather than materials in a number of environments including job shop & clerical / technical process environments. Kanban Accumulator In this method Kanban signals are allowed to accumulate at the supplying work centre until the production batch size is reached. In this case buffers can be depleted or exhausted depending on the accumulation rules. Also because buffers can be exhausted, slightly higher mixes can be accommodated.
Dual Card System (2 Card System) (Two variants) First used by Toyota, there are in fact now two types of two card system. The first method separates the replenishment (send some) signal, which is produced from the Kanban system, from the "produce" signal, which is produced by a scheduling system such as MRP. The purpose of each of the cards is as follows:
y The scheduling system says which job is next. y The Kanban says make it now. (I need some.)
The second variant of this method generates the second card (after authorisation) as a result of one or more replenishment requests in a similar way to Kanban accumulators above. These methods can deal with higher mixes. They can also deal with larger batch sizes, caused by long changeovers, where scheduling is necessary, although you should be trying to reduce batch sizes (See Previous Technique: T019 Avoiding set ups and Reducing Changeover Times). In this case the buffer is depleted, and can be exhausted. In addition a longer planning system such as MRP1 (See "Levels of Planning & Control") is also necessary to that the system is durable. Kanban systems operate at level 3 in this model. Variable Quantity (fixed frequency) System In some situations it is more convenient to replenish items used, by fixed frequency deliveries (or collections), rather than respond to fixed quantity replenishment requests. This method forms the basis of supplier "top up at point of use" systems, where a supplier visiting your point of use will top up stocks to a predefined maximum level. We have also used this method as the mechanism to drive "replacement systems" for maintaining stocks of critical spares items or maintaining "van stock" for on-the-road service engineers.
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