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Factory Physics?1

0.1 The Short Answer1

0.2 The Long Answer1

0.2.1 Focus: Manufacturing Management1

0.2.2 Scope: Operations3

0.2.3 Method: Factory Physics6

0.2.4 Perspective: Flow Lines8

0.3 An Overview of the Book10

PART Ⅰ THE LESSONS OF HISTORY14

1 Manufacturing in America14

1.1 Introduction14

1.2 The American Experience15

1.3 The First Industrial Revolution17

1.3.1 The Industrial Revolution in America18

1.3.2 The American System of Manufacturing19

1.4 The Second Industrial Revolution20

1.4.1 The Role of the Railroads21

1.4.2 Mass Retailers22

1.4.3 Andrew Carnegie and Scale23

1.4.4 Henry Ford and Speed24

1.5 Scientific Management25

1.5.1 Frederick W. Taylor27

1.5.2 Planning versus Doing29

1.5.3 Other Pioneers of Scientific Management31

1.5.4 The Science of Scientific Management32

1.6 The Rise of the Modem Manufacturing Organization32

1.6.1 Du Pont, Sloan, and Structure33

1.6.2 Hawthorne and the Human Element34

1.6.3 Management Education36

1.7 Peak, Decline, and Resurgence of American Manufacturing37

1.7.1 The Golden Era37

1.7.2 Accountants Count and Salesmen Sell38

1.7.3 The Professional Manager40

1.7.4 Recovery and Globalization of Manufacturing42

1.8 The Future43

Discussion Points45

Study Questions46

2 Inventory Control: From EOQ to ROP48

2.1 Introduction48

2.2.2 The Model49

2.2.1 Motivation49

2.2 The Economic Order Quantity Model49

2.2.3 The Key Insight of EOQ52

2.2.4 Sensitivity54

2.2.5 EOQ Extensions56

2.3 Dynamic Lot Sizing56

2.3.1 Motivation57

2.3.2 Problem Formulation57

2.3.3 The Wagner-Whitin Procedure59

2.3.4 Interpreting the Solution62

2.3.5 Caveats63

2.4 Statistical Inventory Models64

2.4.1 The News Vendor Model65

2.4.2 The Base Stock Model69

2.4.3 The (Q,r) Model75

2.5 Conclusions88

Appendix2A Basic Probability89

Appendix2B Inventory Formulas100

Study Questions103

Problems104

3 The MRP Crusade109

3.1 Material Requirements Planning—MRP109

3.1.1 The Key Insight of MRP109

3.1.2 Overview of MRP110

3.1.3 MRP Inputs and Outputs114

3.1.4 The MRP Procedure116

3.1.5 Special Topics in MRP122

3.1.6 Lot Sizing in MRP124

3.1.7 Safety Stock and Safety Lead Times128

3.1.8 Accommodating Yield Losses130

3.1.9 Problems in MRP131

3.2 Manufacturing Resources Planning—MRP Ⅱ135

3.2.1 The MRP Ⅱ Hierarchy136

3.2.2 Long-Range Planning136

3.2.3 Intermediate Planning137

3.2.4 Short-Term Control141

3.3 Beyond MRP Ⅱ—Enterprise Resources Planning143

3.3.1 History and Success of ERP143

3.3.2 An Example: SAP R/3144

3.3.4 Advanced Planning Systems145

3.4 Conclusions145

3.3.3 Manufacturing Execution Systems145

Study Questions146

Problems147

4 The JIT Revolution151

4.1 The Origins of JIT151

4.2 JIT Goals153

4.3 The Environment as a Control154

4.4 Implementing JIT155

4.4.1 Production Smoothing156

4.4.2 Capacity Buffers157

4.4.3 Setup Reduction158

4.4.4 Cross-Training and Plant Layout159

4.4.5 Total Quality Management160

4.5 Kanban162

4.6 The Lessons of JIT165

Discussion Point166

Study Questions166

What Went Wrong168

5.1 Introduction168

5.2 Trouble with Scientific Management169

5.3 Trouble with MRP173

5.4 Trouble with JIT176

5.5 Where from Here?181

Discussion Points183

Study Questions183

PART Ⅱ FACTORY PHYSICS186

6 A Science of Manufacturing186

6.1 The Seeds of Science186

6.1.1 Why Science?187

6.1.3 Prescriptive and Descriptive Models190

6.1.2 Defining a Manufacturing System190

6.2 Objectives, Measures, and Controls192

6.2.1 The Systems Approach192

6.2.2 The Fundamental Objective195

6.2.3 Hierarchical Objectives195

6.2.4 Control and Information Systems197

6.3 Models and Performance Measures198

6.3.1 The Danger of Simple Models198

6.3.2 Building Better Prescriptive Models199

6.3.3 Accounting Models200

6.3.4 Tactical and Strategic Modeling204

6.3.5 Considering Risk205

Appendix 6A Activity-Based Costing208

6.4 Conclusions208

Study Questions209

Problems210

7 Basic Factory Dynamics213

7.1 Introduction213

7.2 Definitions and Parameters215

7.2.1 Definitions215

7.2.2 Parameters218

7.2.3 Examples219

7.3 Simple Relationships221

7.3.1 Best-Case Performance221

7.3.2 Worst-Case Performance226

7.3.3 Practical Worst-Case Performance229

7.3.4 Bottleneck Rates and Cycle Time233

7.3.5 Internal Benchmarking235

7.4 Labor-Constrained Systems238

7.4.1 Ample Capacity Case238

7.4.2 Full Flexibility Case239

7.4.3 CONWIP Lines with Flexible Labor240

7.5 Conclusions242

Study Questions243

Problems244

Intuition-Building Exercises246

8 Variability Basics248

8.1 Introduction248

8.2 Variability and Randomness249

8.2.1 The Roots of Randomness249

8.2.2 Probabilistic Intuition250

8.3 Process Time Variability251

8.3.1 Measures and Classes of Variability252

8.3.2 Low and Moderate Variability252

8.3.3 Highly Variable Process Times254

8.4 Causes of Variability255

8.4.1 Natural Variability255

8.4.2 Variability from Preemptive Outages (Breakdowns)255

8.4.3 Variability from Nonpreemptive Outages258

8.4.4 Variability from Recycle260

8.4.5 Summary of Variability Formulas260

8.5 Flow Variability261

8.5.1 Characterizing Variability in Flows261

8.6 Variability Interactions—Queueing264

8.5.2 Batch Arrivals and Departures264

8.6.1 Queueing Notation and Measures265

8.6.2 Fundamental Relations266

8.6.3 The M/M/1 Queue267

8.6.4 Performance Measures269

8.6.5 Systems with General Process and Interarrival Times270

8.6.6 Parallel Machines271

8.6.7 Parallel Machines and General Times273

8.7 Effects of Blocking273

8.7.1 The M/M/1/b Queue273

8.7.2 General Blocking Models277

8.8 Variability Pooling279

8.8.1 Batch Processing280

8.8.2 Safety Stock Aggregation280

8.8.3 Queue Sharing281

8.9 Conclusions282

Study Questions283

Problems283

9 The Corrupting Influence of Variability287

9.1 Introduction287

9.1.1 Can Variability Be Good?287

9.1.2 Examples of Good and Bad Variability288

9.2 Performance and Variability289

9.2.1 Measures of Manufacturing Performance289

9.2.2 Variability Laws294

9.2.3 Buffering Examples295

9.2.4 Pay Me Now or Pay Me Later297

9.2.6 Organizational Learning300

9.2.5 Flexibility300

9.3 Flow Laws301

9.3.1 Product Flows301

9.3.2 Capacity301

9.3.3 Utilization303

9.3.4 Variability and Flow304

9.4 Batching Laws305

9.4.1 Types of Batches305

9.4.2 Process Batching306

9.4.3 Move Batching311

9.5 Cycle Time314

9.5.1 Cycle Time at a Single Station315

9.5.2 Assembly Operations315

9.5.3 Line Cycle Time316

9.5.4 Cycle Time, Lead Time, and Service321

9.6 Diagnostics and Improvement324

9.6.1 Increasing Throughput324

9.6.2 Reducing Cycle Time327

9.6.3 Improving Customer Service330

9.7 Conclusions331

Study Questions333

Intuition-Building Exercises333

Problems335

10 Push and Pull Production Systems339

10.1 Introduction339

10.2 Definitions339

10.2.1 The Key Difference between Push and Pull340

10.2.2 The Push-PuU Interface341

10.3 The Magic of Pull344

10.3.1 Reducing Manufacturing Costs345

10.3.2 Reducing Variability346

10.3.3 Improving Quality347

10.3.4 Maintaining Flexibility348

10.3.5 Facilitating Work Ahead349

10.4 CONWIP349

10.4.1 Basic Mechanics349

10.4.2 Mean-Value Analysis Model350

10.5 Comparisons of CONWIP with MRP354

10.5.2 Efficiency355

10.5.1 Observability355

10.5.3 Variability356

10.5.4 Robustness357

10.6 Comparisons of CONWIP with Kanban359

10.6.1 Card Count Issues359

10.6.2 Product Mix Issues360

10.6.3 People Issues361

10.7 Conclusions362

Study Questions363

Problems363

11 The Human Element in Operations Management365

11.1 Introduction365

11.2 Basic Human Laws366

11.2.1 The Foundation of Self-interest366

11.2.2 The Fact of Diversity368

11.2.3 The Power of Zealotry371

11.2.4 The Reality of Burnout373

11.3 Planning versus Motivating374

11.4 Responsibility and Authority375

11.5 Summary377

Discussion Points378

Study Questions379

12 Total Quality Manufacturing380

12.1 Introduction380

12.1.1 The Decade of Quality380

12.1.2 A Quality Anecdote381

12.1.3 The Status of Quality382

12.2.2 Internal versus External Quality383

12.2 Views of Quality383

12.2.1 General Definitions383

12.3 Statistical Quality Control385

12.3.1 SQC Approaches385

12.3.2 Statistical Process Control385

12.3.3 SPC Extensions388

12.4 Quality and Operations389

12.4.1 Quality Supports Operations390

12.4.2 Operations Supports Quality396

12.5 Quality and the Supply Chain398

12.5.1 A Safety Lead Time Example399

12.5.2 Purchased Parts in an Assembly System399

12.5.3 Vendor Selection and Management401

Study Questions402

12.6 Conclusions402

Problems403

PART Ⅲ PRINCIPLES IN PRACTICE408

13 A Pull Planning Framework408

13.1 Introduction408

13.2 Disaggregation409

13.2.1 Time Scales in Production Planning409

13.2.2 Other Dimensions of Disaggregation411

13.2.3 Coordination413

13.3 Forecasting414

13.3.1 Causal Forecasting415

13.3.2 Time Series Forecasting418

13.3.3 The Art of Forecasting429

13.4 Planning for Pull430

13.5 Hierarchical Production Planning432

13.5.1 Capacity/Facility Planning434

13.5.2 Workforce Planning436

13.5.3 Aggregate Planning438

13.5.4 WIP and Quota Setting439

13.5.5 Demand Management441

13.5.6 Sequencing and Scheduling442

13.5.7 Shop Floor Control443

13.5.8 Real-Time Simulation443

13.5.9 Production Tracking444

13.6 Conclusions444

Appendix13A A Quota-Setting Model445

Study Questions447

Problems448

14 Shop Floor Control453

14.1 Introduction453

14.2 General Considerations456

14.2.1 Gross Capacity Control456

14.2.2 Bottleneck Planning458

14.2.3 Span of Control460

14.3 CONWIP Configurations461

14.3.1 Basic CONWIP461

14.3.2 Tandem CONWIP Lines464

14.3.3 Shared Resources465

14.3.4 Multiple-Product Families467

14.3.5 CONWIP Assembly Lines468

14.4 Other Pull Mechanisms469

14.4.1 Kanban470

14.4.2 Pull-from-the-Bottleneck Methods471

14.4.3 Shop Floor Control and Scheduling474

14.5 Production Tracking475

14.5.1 Statistical Throughput Control475

14.5.2 Long-Range Capacity Tracking478

14.6 Conclusions482

Appendix14AStatistical Throughput Control483

Study Questions484

Problems485

15 Production Scheduling488

15.1 Goals of Production Scheduling488

15.1.1 Meeting Due Dates488

15.1.2 Maximizing Utilization489

15.1.3 Reducing WIP and Cycle Times490

15.2 Review of Scheduling Research491

15.2.1 MRP, MRP Ⅱ, and ERP491

15.2.2 Classic Scheduling491

15.2.3 Dispatching493

15.2.4 Why Scheduling Is Hard493

15.2.5 Good News and Bad News497

15.2.6 Practical Finite-Capacity Scheduling498

15.3 Linking Planning and Scheduling501

15.3.1 Optimal Batching502

15.3.2 Due Date Quoting510

15.4 Bottleneck Scheduling513

15.4.1 CONWIP Lines Without Setups513

15.4.2 Single CONWIP Lines with Setups514

15.4.3 Bottleneck Scheduling Results518

15.5 Diagnostic Scheduling518

15.5.1 Types of Schedule Infeasibility519

15.5.2 Capacitated Material Requirements Planning—MRP-C522

15.5.3 Extending MRP-C to More General Environments528

15.5.4 Practical Issues528

15.6 Production Scheduling in a Pull Environment529

15.6.1 Schedule Planning, Pull Execution529

15.6.2 Using CONWIP with MRP530

15.7 Conclusions530

Study Questions531

Problems531

16.1 Introduction535

16 Aggregate and Workforce Planning535

16.2 Basic Aggregate Planning536

16.2.1 A Simple Model536

16.2.2 An LP Example538

16.3 Product Mix Planning546

16.3.1 Basic Model546

16.3.2 A Simple Example548

16.3.3 Extensions to the Basic Model552

16.4 Workforce Planning557

16.4.1 An LP Model557

16.4.2 A Combined AP/WP Example559

16.4.3 Modeling Insights568

16.5 Conclusions568

Appendix16A Linear Programming569

Study Questions575

Problems575

17 Supply Chain Management582

17.1 Introduction582

17.2 Reasons for Holding Inventory583

17.2.1 Raw Materials583

17.2.2 Work in Process583

17.2.3 Finished Goods Inventory585

17.2.4 Spare Parts586

17.3 Managing Raw Materials586

17.3.1 Visibility Improvements587

17.3.2 ABC Classification587

17.3.3 Just-in-Time588

17.3.5 Setting Order Frequencies for Purchased Components589

17.3.4 Setting Safety Stock/Lead Times for Purchased Components589

17.4 Managing WIP595

17.4.1 Reducing Queueing596

17.4.2 Reducing Wait-for-Batch WIP597

17.4.3 Reducing Wait-to-Match WIP599

17.5 Managing FGI600

17.6 Managing Spare Parts601

17.6.1 Stratifying Demand602

17.6.2 Stocking Spare Parts for Emergency Repairs602

17.7 Multiechelon Supply Chains610

17.7.1 System Configurations610

17.7.2 Performance Measures612

17.7.3 The Bullwhip Effect612

17.7.4 An Approximation for a Two-Level System616

17.8 Conclusions621

Discussion Point622

Study Questions623

Problems623

18 Capacity Management626

18.1 The Capacity-Setting Problem626

18.1.1 Short-Term and Long-Term Capacity Setting626

18.1.2 Strategic Capacity Planning627

18.1.3 Traditional and Modern Views of Capacity Management629

18.2 Modeling and Analysis631

18.2.1 Example: A Minimum Cost, Capacity-Feasible Line633

18.2.2 Forcing Cycle Time Compliance634

18.3 Modifying Existing Production Lines636

18.4.1 The Traditional Approach637

18.4 Designing New Production Lines637

18.4.2 A Factory Physics Approach638

18.4.3 Other Facility Design Considerations639

18.5 Capacity Allocation and Line Balancing639

18.5.1 Paced Assembly Lines640

18.5.2 Unbalancing Flow Lines640

18.6 Conclusions641

Appendix18A The Line-of-Balance Problem642

Study Questions645

Problems645

19 Synthesis-Pulling It All Together647

19.1 The Strategic Importance of Details647

19.2 The Practical Matter of Implementation648

19.2.1 A Systems Perspective648

19.2.2 Initiating Change649

19.3 Focusing Teamwork650

19.3.1 Pareto s Law651

19.3.2 Factory Physics Laws651

19.4 A Factory Physics Parable654

19.4.1 Hitting the Trail654

19.4.2 The Challenge657

19.4.3 The Lay of the Land657

19.4.4 Teamwork to the Rescue660

19.4.5 How the Plant Was Won666

19.4.6 Epilogue668

19.5 The Future668

References672

Index683