Solve the following case:

XYZ Products Company is a supplier of gizmos for a large computer manufacturer located a few miles away. The company produces three different models of gizmos in production runs ranging from 100 to 300 units.

The production flow of Models X and Y is shown in the following exhibit.  Model Z requires milling as its first step, but otherwise follows the same flow pattern as X and Y.  Skids can hold up to 20 gizmos at a time. Approximate processing times per unit by operation number and equipment setup times are shown below.

The demand for gizmos from the computer company ranges between 125 and 175 per month, equally divided among X, Y, and Z.  Subassembly builds up inventory early in the month to make certain that a buffer stock is always available.  Raw materials and purchased parts for subassemblies each constitute 40 percent of manufacturing cost of a gizmo.  Both categories of parts are multiple sourced from about 80 vendors and are delivered at random times. (Gizmos have 40 different part numbers.)

Some other information: Scrap rates are about 10 percent at each operation, inventory turns twice yearly, employees are paid on day rate, employee turnover is 25 percent per year, and net profit from operations is steady at 5 percent per year. Maintenance is performed as needed.

The manager of XYZ has been contemplating installing an MRP system to help him control inventories and to "keep the skids filled."  (It is his view that two days of work in front of a workstation motivates the worker to produce at top speed.)  He is also planning to add three inspectors to clean up the quality problem.  Further, he is thinking about setting up a rework line in order to speed up repairs.  While he is pleased with the high utilization of most of his equipment and labor, he is concerned about the idle time of his milling machine. Finally, he has asked his industrial engineering department to look into high-rise shelving to store parts coming off Machine 4.

QUESTIONS:

1. Which of the changes being considered by the manager of XYZ go counter to the JIT philosophy?

2. Make recommendations for JIT improvements in such areas as scheduling, layout, Kanban, task groupings, and inventory.  Use quantitative data given above as much as possible; state necessary assumptions.

3. Sketch the operation of a pull system for XYZ's current system.

Gizmo Production Flow

MachlnAng Dept

Machine No   1n Mill

Lathe1 II

II. XYZ Production has completed the following analysis of the 9 products it makes:

Product                      A        B         C         D        E          F         G         H        I            TOTAL

Daily sales forecast         400     250     200      150     150      150      150       75      75            1600

XYZ has an assembly line that can produce 200 units per hour and works eight hours per day:

a) Prepare a daily level schedule for XYZ, assuming a container size of 50 for each product.

b) Calculate the number of kanban cards required for each product, assuming a 2 hour lead time and a 15% safety stock. What is the total number of kanban cards for all products?

Attachment:- OM Problems.rar