UNIVERSITY OF ECONOMICS AND LAW

FACULTY OF INTERNATIONAL ECONOMIC RELATIONS

PRODUCTION MANAGEMENT

Dung Nguyen
 Types of production systems

 Make-to-stock (MTS): Finished product is produced prior to a

customer order
 Assemble-to-order (ATO): Finished product is assembled in
response to a specific customer order from prebuilt and
purchased components
 Make-to-order (MTO): Finished product is produced in
response to a specific customer order from purchased
components
 Engineer-to-order (ETO): Finished product is designed,
developed, and produced in response to a specific customer
request

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 Pull approach to production

 Pull approach: Actual inventory is used to signal when to order

or make product
 Kanban system: Used for controlling the movement of parts and
materials to signal the need for delivery of parts or materials
 Advantages:
• Simplicity
• Limit the amount of inventory between stages
 Disadvantages:
• need stable environment
• lots of flexibility
• lots of inventory to achieve high service

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 Kanban System

Source: toyota-global.com

Back

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 Kanban Card

Source: velaction.com

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 Push approach to production

 Push approach: Projected inventory is used to signal when to

order or make product
 Material Requirements Planning (MRP): A computer system
based information that translates master schedule requirements
for end items into requirements for subassemblies,
components, and raw materials
 Advantages: Proactive
 Disadvantages: Complex & only as good as quality of
projections

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 Material Requirements Planning

Source: Webster (1958)

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Product structure tree for chair assembly

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 Lean
A philosophy that seeks to economically optimize time, human resources,
assets and productivity while improving product and service quality

(a) Traditional approach – buffers separate stages

Buffer Buffer
Inventory Inventory
Stage A Stage B Stage C

(b) Lean (JIT) approach – deliveries are made on request

Orders Orders

Stage A Stage B Stage C

Deliveries Deliveries

Source: Slack et al. (2015)

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 Lean (JIT)

The lean philosophy of operations

• Eliminate waste • Involve everyone • Continuous improvement

JIT as a set of techniques for managing operations JIT as a method of

• Basic working practices • Total Productive Maintenance (TPM) planning and control
• Design for manufacture • Set-up reduction • Pull scheduling
• Operations focus • Total people involvement • Kanban control
• Small simple machines • Visibility • Levelled scheduling
• Flow layout • JIT supply • Mixed modelling
• Synchronization

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 Lean

Main elements:
• Waste reduction
• Lean supply chain relationships
• Lean layouts
• Inventory and setup time reduction
• Small batch scheduling
• Continuous improvement
• Workforce empowerment

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 Waste reduction
 Seven wastes (TIMWOODS):
• Transportation
• Inventory
• Movement
• Waiting Most business processes
• Over-production are 90% waste
and 10% value-added work
• Over-processing
• Defects
 Five-Ss to reduce waste:
• Sort (Seiri)
• Set in order (Seiton)
• Sweep (Seiso)
• Standardize (Seiketsu)
• Self-discipline (Shitsuke)
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