Factory Physics? 1
0.1 The Short Answer 1
0.2 The Long Answer 1
0.2.1 Focus: Manufacturing Management 1
0.2.2 Scope: Operations 3
0.2.3 Method: Factory Physics 6
0.2.4 Perspective: Flow Lines 8
0.3 An Overview of the Book 10
PART Ⅰ THE LESSONS OF HISTORY 14
1 Manufacturing in America 14
1.1 Introduction 14
1.2 The American Experience 15
1.3 The First Industrial Revolution 17
1.3.1 The Industrial Revolution in America 18
1.3.2 The American System of Manufacturing 19
1.4 The Second Industrial Revolution 20
1.4.1 The Role of the Railroads 21
1.4.2 Mass Retailers 22
1.4.3 Andrew Carnegie and Scale 23
1.4.4 Henry Ford and Speed 24
1.5 Scientific Management 25
1.5.1 Frederick W. Taylor 27
1.5.2 Planning versus Doing 29
1.5.3 Other Pioneers of Scientific Management 31
1.5.4 The Science of Scientific Management 32
1.6 The Rise of the Modem Manufacturing Organization 32
1.6.1 Du Pont, Sloan, and Structure 33
1.6.2 Hawthorne and the Human Element 34
1.6.3 Management Education 36
1.7 Peak, Decline, and Resurgence of American Manufacturing 37
1.7.1 The Golden Era 37
1.7.2 Accountants Count and Salesmen Sell 38
1.7.3 The Professional Manager 40
1.7.4 Recovery and Globalization of Manufacturing 42
1.8 The Future 43
Discussion Points 45
Study Questions 46
2 Inventory Control: From EOQ to ROP 48
2.1 Introduction 48
2.2.2 The Model 49
2.2.1 Motivation 49
2.2 The Economic Order Quantity Model 49
2.2.3 The Key Insight of EOQ 52
2.2.4 Sensitivity 54
2.2.5 EOQ Extensions 56
2.3 Dynamic Lot Sizing 56
2.3.1 Motivation 57
2.3.2 Problem Formulation 57
2.3.3 The Wagner-Whitin Procedure 59
2.3.4 Interpreting the Solution 62
2.3.5 Caveats 63
2.4 Statistical Inventory Models 64
2.4.1 The News Vendor Model 65
2.4.2 The Base Stock Model 69
2.4.3 The (Q,r) Model 75
2.5 Conclusions 88
Appendix2A Basic Probability 89
Appendix2B Inventory Formulas 100
Study Questions 103
Problems 104
3 The MRP Crusade 109
3.1 Material Requirements Planning—MRP 109
3.1.1 The Key Insight of MRP 109
3.1.2 Overview of MRP 110
3.1.3 MRP Inputs and Outputs 114
3.1.4 The MRP Procedure 116
3.1.5 Special Topics in MRP 122
3.1.6 Lot Sizing in MRP 124
3.1.7 Safety Stock and Safety Lead Times 128
3.1.8 Accommodating Yield Losses 130
3.1.9 Problems in MRP 131
3.2 Manufacturing Resources Planning—MRP Ⅱ 135
3.2.1 The MRP Ⅱ Hierarchy 136
3.2.2 Long-Range Planning 136
3.2.3 Intermediate Planning 137
3.2.4 Short-Term Control 141
3.3 Beyond MRP Ⅱ—Enterprise Resources Planning 143
3.3.1 History and Success of ERP 143
3.3.2 An Example: SAP R/3 144
3.3.4 Advanced Planning Systems 145
3.4 Conclusions 145
3.3.3 Manufacturing Execution Systems 145
Study Questions 146
Problems 147
4 The JIT Revolution 151
4.1 The Origins of JIT 151
4.2 JIT Goals 153
4.3 The Environment as a Control 154
4.4 Implementing JIT 155
4.4.1 Production Smoothing 156
4.4.2 Capacity Buffers 157
4.4.3 Setup Reduction 158
4.4.4 Cross-Training and Plant Layout 159
4.4.5 Total Quality Management 160
4.5 Kanban 162
4.6 The Lessons of JIT 165
Discussion Point 166
Study Questions 166
What Went Wrong 168
5.1 Introduction 168
5.2 Trouble with Scientific Management 169
5.3 Trouble with MRP 173
5.4 Trouble with JIT 176
5.5 Where from Here? 181
Discussion Points 183
Study Questions 183
PART Ⅱ FACTORY PHYSICS 186
6 A Science of Manufacturing 186
6.1 The Seeds of Science 186
6.1.1 Why Science? 187
6.1.3 Prescriptive and Descriptive Models 190
6.1.2 Defining a Manufacturing System 190
6.2 Objectives, Measures, and Controls 192
6.2.1 The Systems Approach 192
6.2.2 The Fundamental Objective 195
6.2.3 Hierarchical Objectives 195
6.2.4 Control and Information Systems 197
6.3 Models and Performance Measures 198
6.3.1 The Danger of Simple Models 198
6.3.2 Building Better Prescriptive Models 199
6.3.3 Accounting Models 200
6.3.4 Tactical and Strategic Modeling 204
6.3.5 Considering Risk 205
Appendix 6A Activity-Based Costing 208
6.4 Conclusions 208
Study Questions 209
Problems 210
7 Basic Factory Dynamics 213
7.1 Introduction 213
7.2 Definitions and Parameters 215
7.2.1 Definitions 215
7.2.2 Parameters 218
7.2.3 Examples 219
7.3 Simple Relationships 221
7.3.1 Best-Case Performance 221
7.3.2 Worst-Case Performance 226
7.3.3 Practical Worst-Case Performance 229
7.3.4 Bottleneck Rates and Cycle Time 233
7.3.5 Internal Benchmarking 235
7.4 Labor-Constrained Systems 238
7.4.1 Ample Capacity Case 238
7.4.2 Full Flexibility Case 239
7.4.3 CONWIP Lines with Flexible Labor 240
7.5 Conclusions 242
Study Questions 243
Problems 244
Intuition-Building Exercises 246
8 Variability Basics 248
8.1 Introduction 248
8.2 Variability and Randomness 249
8.2.1 The Roots of Randomness 249
8.2.2 Probabilistic Intuition 250
8.3 Process Time Variability 251
8.3.1 Measures and Classes of Variability 252
8.3.2 Low and Moderate Variability 252
8.3.3 Highly Variable Process Times 254
8.4 Causes of Variability 255
8.4.1 Natural Variability 255
8.4.2 Variability from Preemptive Outages (Breakdowns) 255
8.4.3 Variability from Nonpreemptive Outages 258
8.4.4 Variability from Recycle 260
8.4.5 Summary of Variability Formulas 260
8.5 Flow Variability 261
8.5.1 Characterizing Variability in Flows 261
8.6 Variability Interactions—Queueing 264
8.5.2 Batch Arrivals and Departures 264
8.6.1 Queueing Notation and Measures 265
8.6.2 Fundamental Relations 266
8.6.3 The M/M/1 Queue 267
8.6.4 Performance Measures 269
8.6.5 Systems with General Process and Interarrival Times 270
8.6.6 Parallel Machines 271
8.6.7 Parallel Machines and General Times 273
8.7 Effects of Blocking 273
8.7.1 The M/M/1/b Queue 273
8.7.2 General Blocking Models 277
8.8 Variability Pooling 279
8.8.1 Batch Processing 280
8.8.2 Safety Stock Aggregation 280
8.8.3 Queue Sharing 281
8.9 Conclusions 282
Study Questions 283
Problems 283
9 The Corrupting Influence of Variability 287
9.1 Introduction 287
9.1.1 Can Variability Be Good? 287
9.1.2 Examples of Good and Bad Variability 288
9.2 Performance and Variability 289
9.2.1 Measures of Manufacturing Performance 289
9.2.2 Variability Laws 294
9.2.3 Buffering Examples 295
9.2.4 Pay Me Now or Pay Me Later 297
9.2.6 Organizational Learning 300
9.2.5 Flexibility 300
9.3 Flow Laws 301
9.3.1 Product Flows 301
9.3.2 Capacity 301
9.3.3 Utilization 303
9.3.4 Variability and Flow 304
9.4 Batching Laws 305
9.4.1 Types of Batches 305
9.4.2 Process Batching 306
9.4.3 Move Batching 311
9.5 Cycle Time 314
9.5.1 Cycle Time at a Single Station 315
9.5.2 Assembly Operations 315
9.5.3 Line Cycle Time 316
9.5.4 Cycle Time, Lead Time, and Service 321
9.6 Diagnostics and Improvement 324
9.6.1 Increasing Throughput 324
9.6.2 Reducing Cycle Time 327
9.6.3 Improving Customer Service 330
9.7 Conclusions 331
Study Questions 333
Intuition-Building Exercises 333
Problems 335
10 Push and Pull Production Systems 339
10.1 Introduction 339
10.2 Definitions 339
10.2.1 The Key Difference between Push and Pull 340
10.2.2 The Push-PuU Interface 341
10.3 The Magic of Pull 344
10.3.1 Reducing Manufacturing Costs 345
10.3.2 Reducing Variability 346
10.3.3 Improving Quality 347
10.3.4 Maintaining Flexibility 348
10.3.5 Facilitating Work Ahead 349
10.4 CONWIP 349
10.4.1 Basic Mechanics 349
10.4.2 Mean-Value Analysis Model 350
10.5 Comparisons of CONWIP with MRP 354
10.5.2 Efficiency 355
10.5.1 Observability 355
10.5.3 Variability 356
10.5.4 Robustness 357
10.6 Comparisons of CONWIP with Kanban 359
10.6.1 Card Count Issues 359
10.6.2 Product Mix Issues 360
10.6.3 People Issues 361
10.7 Conclusions 362
Study Questions 363
Problems 363
11 The Human Element in Operations Management 365
11.1 Introduction 365
11.2 Basic Human Laws 366
11.2.1 The Foundation of Self-interest 366
11.2.2 The Fact of Diversity 368
11.2.3 The Power of Zealotry 371
11.2.4 The Reality of Burnout 373
11.3 Planning versus Motivating 374
11.4 Responsibility and Authority 375
11.5 Summary 377
Discussion Points 378
Study Questions 379
12 Total Quality Manufacturing 380
12.1 Introduction 380
12.1.1 The Decade of Quality 380
12.1.2 A Quality Anecdote 381
12.1.3 The Status of Quality 382
12.2.2 Internal versus External Quality 383
12.2 Views of Quality 383
12.2.1 General Definitions 383
12.3 Statistical Quality Control 385
12.3.1 SQC Approaches 385
12.3.2 Statistical Process Control 385
12.3.3 SPC Extensions 388
12.4 Quality and Operations 389
12.4.1 Quality Supports Operations 390
12.4.2 Operations Supports Quality 396
12.5 Quality and the Supply Chain 398
12.5.1 A Safety Lead Time Example 399
12.5.2 Purchased Parts in an Assembly System 399
12.5.3 Vendor Selection and Management 401
Study Questions 402
12.6 Conclusions 402
Problems 403
PART Ⅲ PRINCIPLES IN PRACTICE 408
13 A Pull Planning Framework 408
13.1 Introduction 408
13.2 Disaggregation 409
13.2.1 Time Scales in Production Planning 409
13.2.2 Other Dimensions of Disaggregation 411
13.2.3 Coordination 413
13.3 Forecasting 414
13.3.1 Causal Forecasting 415
13.3.2 Time Series Forecasting 418
13.3.3 The Art of Forecasting 429
13.4 Planning for Pull 430
13.5 Hierarchical Production Planning 432
13.5.1 Capacity/Facility Planning 434
13.5.2 Workforce Planning 436
13.5.3 Aggregate Planning 438
13.5.4 WIP and Quota Setting 439
13.5.5 Demand Management 441
13.5.6 Sequencing and Scheduling 442
13.5.7 Shop Floor Control 443
13.5.8 Real-Time Simulation 443
13.5.9 Production Tracking 444
13.6 Conclusions 444
Appendix13A A Quota-Setting Model 445
Study Questions 447
Problems 448
14 Shop Floor Control 453
14.1 Introduction 453
14.2 General Considerations 456
14.2.1 Gross Capacity Control 456
14.2.2 Bottleneck Planning 458
14.2.3 Span of Control 460
14.3 CONWIP Configurations 461
14.3.1 Basic CONWIP 461
14.3.2 Tandem CONWIP Lines 464
14.3.3 Shared Resources 465
14.3.4 Multiple-Product Families 467
14.3.5 CONWIP Assembly Lines 468
14.4 Other Pull Mechanisms 469
14.4.1 Kanban 470
14.4.2 Pull-from-the-Bottleneck Methods 471
14.4.3 Shop Floor Control and Scheduling 474
14.5 Production Tracking 475
14.5.1 Statistical Throughput Control 475
14.5.2 Long-Range Capacity Tracking 478
14.6 Conclusions 482
Appendix14AStatistical Throughput Control 483
Study Questions 484
Problems 485
15 Production Scheduling 488
15.1 Goals of Production Scheduling 488
15.1.1 Meeting Due Dates 488
15.1.2 Maximizing Utilization 489
15.1.3 Reducing WIP and Cycle Times 490
15.2 Review of Scheduling Research 491
15.2.1 MRP, MRP Ⅱ, and ERP 491
15.2.2 Classic Scheduling 491
15.2.3 Dispatching 493
15.2.4 Why Scheduling Is Hard 493
15.2.5 Good News and Bad News 497
15.2.6 Practical Finite-Capacity Scheduling 498
15.3 Linking Planning and Scheduling 501
15.3.1 Optimal Batching 502
15.3.2 Due Date Quoting 510
15.4 Bottleneck Scheduling 513
15.4.1 CONWIP Lines Without Setups 513
15.4.2 Single CONWIP Lines with Setups 514
15.4.3 Bottleneck Scheduling Results 518
15.5 Diagnostic Scheduling 518
15.5.1 Types of Schedule Infeasibility 519
15.5.2 Capacitated Material Requirements Planning—MRP-C 522
15.5.3 Extending MRP-C to More General Environments 528
15.5.4 Practical Issues 528
15.6 Production Scheduling in a Pull Environment 529
15.6.1 Schedule Planning, Pull Execution 529
15.6.2 Using CONWIP with MRP 530
15.7 Conclusions 530
Study Questions 531
Problems 531
16.1 Introduction 535
16 Aggregate and Workforce Planning 535
16.2 Basic Aggregate Planning 536
16.2.1 A Simple Model 536
16.2.2 An LP Example 538
16.3 Product Mix Planning 546
16.3.1 Basic Model 546
16.3.2 A Simple Example 548
16.3.3 Extensions to the Basic Model 552
16.4 Workforce Planning 557
16.4.1 An LP Model 557
16.4.2 A Combined AP/WP Example 559
16.4.3 Modeling Insights 568
16.5 Conclusions 568
Appendix16A Linear Programming 569
Study Questions 575
Problems 575
17 Supply Chain Management 582
17.1 Introduction 582
17.2 Reasons for Holding Inventory 583
17.2.1 Raw Materials 583
17.2.2 Work in Process 583
17.2.3 Finished Goods Inventory 585
17.2.4 Spare Parts 586
17.3 Managing Raw Materials 586
17.3.1 Visibility Improvements 587
17.3.2 ABC Classification 587
17.3.3 Just-in-Time 588
17.3.5 Setting Order Frequencies for Purchased Components 589
17.3.4 Setting Safety Stock/Lead Times for Purchased Components 589
17.4 Managing WIP 595
17.4.1 Reducing Queueing 596
17.4.2 Reducing Wait-for-Batch WIP 597
17.4.3 Reducing Wait-to-Match WIP 599
17.5 Managing FGI 600
17.6 Managing Spare Parts 601
17.6.1 Stratifying Demand 602
17.6.2 Stocking Spare Parts for Emergency Repairs 602
17.7 Multiechelon Supply Chains 610
17.7.1 System Configurations 610
17.7.2 Performance Measures 612
17.7.3 The Bullwhip Effect 612
17.7.4 An Approximation for a Two-Level System 616
17.8 Conclusions 621
Discussion Point 622
Study Questions 623
Problems 623
18 Capacity Management 626
18.1 The Capacity-Setting Problem 626
18.1.1 Short-Term and Long-Term Capacity Setting 626
18.1.2 Strategic Capacity Planning 627
18.1.3 Traditional and Modern Views of Capacity Management 629
18.2 Modeling and Analysis 631
18.2.1 Example: A Minimum Cost, Capacity-Feasible Line 633
18.2.2 Forcing Cycle Time Compliance 634
18.3 Modifying Existing Production Lines 636
18.4.1 The Traditional Approach 637
18.4 Designing New Production Lines 637
18.4.2 A Factory Physics Approach 638
18.4.3 Other Facility Design Considerations 639
18.5 Capacity Allocation and Line Balancing 639
18.5.1 Paced Assembly Lines 640
18.5.2 Unbalancing Flow Lines 640
18.6 Conclusions 641
Appendix18A The Line-of-Balance Problem 642
Study Questions 645
Problems 645
19 Synthesis-Pulling It All Together 647
19.1 The Strategic Importance of Details 647
19.2 The Practical Matter of Implementation 648
19.2.1 A Systems Perspective 648
19.2.2 Initiating Change 649
19.3 Focusing Teamwork 650
19.3.1 Pareto s Law 651
19.3.2 Factory Physics Laws 651
19.4 A Factory Physics Parable 654
19.4.1 Hitting the Trail 654
19.4.2 The Challenge 657
19.4.3 The Lay of the Land 657
19.4.4 Teamwork to the Rescue 660
19.4.5 How the Plant Was Won 666
19.4.6 Epilogue 668
19.5 The Future 668
References 672
Index 683