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Basic Factory Dynamics

Physics should be explained as simply as possible,


but no simpler.
Albert Einstein

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

HAL Case
Large Panel Line: produces unpopulated printed circuit boards
Line runs 24 hr/day
Recent Performance:

throughput = 1,100 panels per day (45.8 panels/hr)


WIP = 37,000 panels
CT = 34 days (816 hr)
customer service = 75% on-time delivery

How is HAL doing?


What data do we need to decide?
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

HAL - Large Panel Line Processes


Lamination: press copper and prepreg into core blanks
Machining: trim cores to size
Circuitize: etch circuitry into copper
Optical Test and Repair: scan panels optically for defects
Drilling: holes to provide connections between layers
Copper Plate: deposits copper in holes to establish connections
Procoat: apply plastic coating to protect boards
Sizing: cut panels into boards
End of Line Test: final electrical test
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

HAL Case - Science?


External Benchmarking
but other plants may not be comparable

Internal Benchmarking
capacity data: what is utilization?
but this ignores WIP effects

Need relationships between WIP, TH, CT, service!

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

Definitions
Workstations: a collection of one or more identical machines.
Parts: a component, sub-assembly, or an assembly that moves through the
workstations.

End Items: parts sold directly to customers; relationship to constituent parts


defined in bill of material.

Consumables: bits, chemicals, gasses, etc., used in process but do not


become part of the product that is sold.

Routing: sequence of workstations needed to make a part.


Order: request from customer.
Job: transfer quantity on the line.
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

Definitions (cont.)
Throughput (TH): for a line, throughput is the average quantity of good
(non-defective) parts produced per unit time.

Work in Process (WIP): inventory between the start and endpoints of


a product routing.

Raw Material Inventory (RMI): material stocked at beginning of


routing.

Crib and Finished Goods Inventory (FGI): crib inventory


is material held in a stockpoint at the end of a routing; FGI is material held in
inventory prior to shipping to the customer.

Cycle Time (CT): time between release of the job at the beginning of the
routing until it reaches an inventory point at the end of the routing.
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

Factory Physics
Definition: A manufacturing system is a network of processes
through which parts flow and whose purpose is to generate profit
now and in the future.

Structure: Plant is made up of routings (lines), which in turn are made


up of processes.

Focus: Factory Physics is concerned with the network and flows at the
routing (line) level.

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

Parameters
Descriptors of a Line:
1) Bottleneck Rate (rb): Rate (parts/unit time or jobs/unit time) of the
process center having the highest long-term utilization.

2) Raw Process Time (T0): Sum of the long-term average process


times of each station in the line.

3) Congestion Coefficient ( ): A unitless measure of congestion.


Zero variability case,

= 0.

Practical worst case,

= 1.

Worst possible case,

= W0.

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

Note: we wont use quantitatively,


but point it out to recognize that lines
with same rb and T0 can behave very
differently.

http://factory-physics.com

Parameters (cont.)
Relationship:
Critical WIP (W0): WIP level in which a line having no congestion
would achieve maximum throughput (i.e., rb) with minimum cycle time
(i.e., T0).

W0 = rb T0

http://factory-physics.com

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

The Penny Fab


Characteristics:

Four identical tools in series.


Each takes 2 hours per piece (penny).
No variability.
CONWIP job releases.

Parameters:
rb

0.5 pennies/hour

T0

W0

8 hours
0.5 8 = 4 pennies

0 (no variability, best case conditions)

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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The Penny Fab

WIP
1
2
3
4
5
6
7
8
9

TH

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

CT

TH x CT

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http://factory-physics.com

TH vs. WIP: Best Case

Throughput (Jobs/hr)

.5
.4
.3
.2
.1
0
0

10

12

14

WIP (Jobs)

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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CT vs. WIP: Best Case

Cycle time (Hours)

20
16
12
8
4
0
0

10

12

14

WIP (Jobs)
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Best Case Performance


Best Case Law: The minimum cycle time (CTbest) for a given WIP
level, w, is given by
if w W0
T0 ,
CTbest =
w / rb , otherwise.

The maximum throughput (THbest) for a given WIP level, w is


given by,
w / T0 , if w W0
TH best =
otherwise.
rb ,

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Best Case Performance (cont.)


Example: For Penny Fab, rb = 0.5 and T0 = 8, so W0 = 0.5 8 = 4,
if w 4
8,
CTbest =
2w, otherwise.

w / 8 , if w 4
TH best =
0.5, otherwise.

which are exactly the curves we plotted.

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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A Manufacturing Law
Little's Law: The fundamental relation between WIP, CT, and
TH over the long-term is:
WIP = TH CT
units =

units
hrs
hr

Examples:
Checking WIP levels in cash flow analysis.
Measure of cycle time (e.g., what is cycle time for an automobile?)
FGI and planned inventory.

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Penny Fab Two

2 hr
5 hr

3 hr

10 hr

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

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http://factory-physics.com

Penny Fab Two


Station
Number
1

Number of
Machines
1

Process
Time
2 hr

5 hr

j/hr

10 hr

j/hr

3 hr

j/hr

rb =

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

T0 =

http://factory-physics.com

Station
Rate
j/hr

W0 =

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Worst Case
Observation: The Best Case yields the minimum cycle time and
maximum throughput for each WIP level.

Question: What conditions would cause the maximum cycle time and
minimum throughput?

Experiment:
set average process times same as Best Case (so rb and T0 unchanged)
follow a marked job through system
imagine marked job experiences maximum queueing

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Worst Case Penny Fab

Time = 0 hours

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Worst Case Penny Fab

Time = 8 hours

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Worst Case Penny Fab

Time = 16 hours

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Worst Case Penny Fab

Time = 24 hours

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

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http://factory-physics.com

Worst Case Penny Fab

Time = 32 hours

Note:
CT = 32 hours
= 4 8 = wT0
TH = 4/32 = 1/8 = 1/T0

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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TH vs. WIP: Worst Case

0.6

rb

Best Case

0.5
TH

0.4
0.3

Worst Case

0.2

1/T0

0.1
0
0

W0

9 10 11 12

WIP
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http://factory-physics.com

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

CT vs. WIP: Worst Case


Worst Case

CT

32
28
24
20
16
12
T0 8
4
0

Best Case

4 5

9 10 11 12

W0 WIP
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Worst Case Performance


Worst Case Law: The worst case cycle time for a given WIP level,
w, is given by,
CTworst = w T0
The worst case throughput for a given WIP level, w, is given by,
THworst = 1 / T0
Randomness? None - perfectly predictable, but bad!

http://factory-physics.com

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

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Practical Worst Case


Observation: There is a BIG GAP between the Best Case and Worst
Case performance.

Question: Can we find an intermediate case that:


divides good and bad lines, and
is computable?

Experiment: consider a line with a given rb and T0 and:


single machine stations
balanced lines
variability such that all WIP configurations (states) are equally likely

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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PWC Example 3 jobs, 4 stations


clumped
up states

State
1
2
3
4
5
6
7
8
9
10

Vector
(3,0,0,0)
(0,3,0,0)
(0,0,3,0)
(0,0,0,3)
(2,1,0,0)
(2,0,1,0)
(2,0,0,1)
(1,2,0,0)
(0,2,1,0)
(0,2,0,1)

State
11
12
13
14
15
16
17
18
19
20

Vector
(1,0,2,0)
(0,1,2,0)
(0,0,2,1)
(1,0,0,2)
(0,1,0,2)
(0,0,1,2)
(1,1,1,0)
(1,1,0,1)
(1,0,1,1)
(0,1,1,1)

Note: average WIP at any station is 15/20 = 0.75,


so jobs are spread evenly between stations.
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

spread
out states

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Practical Worst Case


Let w = jobs in system, N = no. stations in line, and t = process
time at all stations:
CT(single)

= (1 + (w-1)/N) t

CT(line)

= N [1 + (w-1)/N] t
= Nt + (w-1)t
= T0 + (w-1)/rb

TH

= WIP/CT
= [w/(w+W0-1)]rb

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

From Littles Law

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Practical Worst Case Performance


Practical Worst Case Definition: The practical worst case (PWC)
cycle time for a given WIP level, w, is given by,

CTPWC = T0 +

w 1
rb

The PWC throughput for a given WIP level, w, is given by,

TH PWC =

w
rb ,
W0 + w 1

where W0 is the critical WIP.


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http://factory-physics.com

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

TH vs. WIP: Practical Worst Case

0.6

rb

Best Case

0.5
TH

0.4
0.3

Worst Case

Bad

0.2

1/T0

PWC

Good

0.1
0
0

W0
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

9 10 11 12

WIP

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CT vs. WIP: Practical Worst Case

Worst Case

32
28
24
20
16
12
T0 8
4
0

PWC

CT

Bad

Best Case
Good

8 9 10 11 12

W0 WIP
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http://factory-physics.com

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

Penny Fab Two Performance


0.5

Note: process
times in PF2
have var equal
to PWC.

Best Case

rb 0.4
Penny

Fab 2

0.3

TH

l Worst

Practica

0.2

But unlike
PWC, it has
unbalanced
line and multi
machine
stations.

Case

0.1

1/T0
Worst Case

0
0

10

W0
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

12

14

16

18

20

22

24

26

WIP

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Penny Fab Two Performance (cont.)


80
70
Worst Case

60

ase

tC

50

CT

al

ctic

Pra

rs
Wo

ny

Pen

40

Fab

1/rb

30
T0 20

Best Case

10
0
0

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

8 10
W0

12

14 16

18 20

22 24

26

WIP
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http://factory-physics.com

Back to the HAL Case - Capacity Data


Large Panel Line:
Process
Lamination
Machining
Circuitize
Optical Test/Repair
Drilling
Copper Plate
Procoat
Sizing
EOL Test
rb, T0

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

Rate (p/hr)
191.5
186.2
150.5
157.8
185.9
136.4
146.2
126.5
169.5
126.5

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Time (hr)
1.2
5.9
6.9
5.6
10.0
1.5
2.2
2.4
1.8
33.1

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HAL Case - Situation


Critical WIP: rbT0 = 126.5 33.1 = 4187
Actual Values:
CT = 34 days = 816 hours
WIP = 37400 panels
TH = 45.8 panels/hour

Conclusions:
Throughput is 36% of capacity
WIP is 8.9 times critical WIP
CT is 24.6 times raw process time

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

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http://factory-physics.com

HAL Case - Analysis


WIP Required for PWC to Achieve TH = 0.36rb:
TH =
w=

w
rb = 0.36rb
w + W0 1

0.36
0.36
(4,187 1) = 2,355
(W0 1) =
0.64
0.64

Much lower than


actual WIP!

TH Resulting from PWC with WIP = 37,400:


TH =

w
37,400
rb =
126.5 = 113.8 Much higher
than actual TH!
w + W0 1
37,400 + 4,187 1

Conclusion: actual system is much worse than PWC!


Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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HAL Internal Benchmarking Outcome


140

Best Case

TH (panels/hr)

120

"Good" Region
Practical Worst Case

100
80
60

"Bad" Region

40
Actual Performance

20
0

Worst Case

-20
0

10000

20000

30000

40000

WIP (panels)
Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

50000
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Labor Constrained Systems


Motivation: performance of some systems are limited by labor or a
combination of labor and equipment.

Full Flexibility with Workers Tied to Jobs:

WIP limited by number of workers (n)


capacity of line is n/T0
Best case achieves capacity and has workers in zones
ample capacity case also achieves full capacity with pick and run policy

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Labor Constrained Systems (cont.)


Full Flexibility with Workers Not Tied to Jobs:
TH depends on WIP levels
THCW(n) TH(w) THCW(w)
need policy to direct workers to jobs (focus on downstream is effective)

Agile Workforce Systems

bucket brigades
kanban with shared tasks
overlapping zones
many others

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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Factory Dynamics Takeaways


Performance Measures:

throughput
WIP
cycle time
service

Range of Cases:
best case
practical worst case
worst case

Diagnostics:
simple assessment based on rb, T0, actual WIP,actual TH
evaluate relative to practical worst case

Wallace J. Hopp, Mark L. Spearman, 1996, 2000

http://factory-physics.com

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