Production System with Multiple Stations Click this Box to Go to

by Paul Jensen the

Start Worksheet

This game is to illustrate the operation of a production system with several stations. The game is Note. You must install the Si
based on a story adapted from The Goal by Goldratt. We use it to describe a sequential The add-in must be dated no
production process with several production stations. Further, this process is used to explain the
Download the add-in from w
idea of simulation. This simulation is accomplished using Excel with the Simulation add-in.?The
model for the game has parameters that can describe a variety of situations, but we use the
specific case on this page to get started. The model on the Prod1 worksheet has four stations, but
for simplicity we describe the game with three stations. Date for this version for the

Three boys are taking a break from a boy scout hike. They play a game with matches. The loser
must wash the dishes. We start with a big pile of matches to the left of the first boy. Boy 1
throws a single die. The number showing is his production, so in this case the first boy produces
4 matches. These matches are the raw materials for the second boy.?
The second boy throws the die. His production capability is the amount shown on the die, but he
can only produce as much as available from the first boy. His production is the minimum of his
capability or the number remaining from the first boy. There are 4 matches available, but the
capacity of the second boy is only 2. He passes these to the third boy, leaving 2 matches remaining
with the first boy. These two are called work in progress (WIP).?

The raw materials for the third boy are the matches provided by the second boy. Again, he
produces the minimum on his die or the matches available. His production is the system output.
For this case the capacity of the third boy is 5, but only 2 matches are available as raw material.
The remaining 3 units of capacity are wasted. At this first iteration, the system produces 2
matches. Two matches remain in the system as the first boy's WIP. The WIP is available to
processed in the next iteration.?
The boys continue to play the game. Each play consists of three rolls of the die that define the
capacities of the boys. The production of each boy is limited by his capacity and the amount of
material available. Ten plays of the game are shown below. Averages over the ten plays are shown
at the top of the table. The play illustrated above is shown on row 1. The WIP produced in the first
play is shown in the WIP 1 column of row 2.?
We see from these ten plays, that the average system output is 3 units. The WIP that gathers after
the first and second boys varies over the play of the game. We would like to estimate the long term
properties of this game.

What is the average production of this system per play of this game?

How do you expect the piles of matches between the boys (the WIP) to vary as the game
progresses?

Explain the effects of the variability in capacity on system output and in-process inventory (WIP).?
 ick this Box to Go to
the
Start Worksheet

ote. You must install the Simulation add-in to play.

e add-in must be dated no earlier than 1/20/2007
ownload the add-in from www.ormm.net.

ate for this version for the game: 1/20/2007

Start Production System with Multiple Stations

Production System with Four Stations

Game Steps 52 Weeks
Game Seed 141
Initial Raw Material 6 Units
Inventory Cost $1 /Unit/Week
Order Cost $0 /Order
Lost Sales Cost $10 /Unit
Random Variable Capacity 1
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Capacity 2
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Capacity 3
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Capacity 4
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Demand
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
 The spreadsheet is a replica of the spreadsheet created on the next page.
The order quantities in the last column are provided by the player. They were arbitrarily chosen f
Only the first ten periods are illustrated.

Station 1 Station 2 Station 3 Station 4

Purchas
e WIP Cap. Prod. WIP Cap. Prod. WIP Cap. Prod. WIP
Mean 3.5 1.4 3.7 3.5 1.6 3.6 3.1 2 3.4 2.7 0.9
1 6 0 5 5 0 4 4 0 4 4 0
2 3 1 1 1 1 1 1 0 4 1 0
3 2 3 4 4 1 6 5 0 6 5 0
4 4 1 4 4 0 1 1 0 4 1 2
5 5 1 5 5 3 5 5 0 3 3 0
6 3 1 3 3 3 6 6 2 1 1 0
7 4 1 1 1 0 5 1 7 3 3 0
8 2 4 4 4 0 2 2 5 2 2 1
9 4 2 6 6 2 2 2 5 6 6 2
10 2 0 4 2 6 4 4 1 1 1 4

The figures below show weeks 9 and 10. The maroon boxes hold the WIP. The rectangles describ
The raw materials input in period 9 is determined by the decision made at the end of week 8.

Week 9

4 6 2 6
Station 1 Station 2 Station 3
2 Cap. 6 2 5 2
Cap. 2 Cap. 6
Rem. 0 Rem. 6 Rem. 1

2 2 5 2

At each station, the material available is the WIP remaining from previous weeks and the produc
The capacity of a station is randomly determined from a uniform distribution ranging from 1 to 6
The station produces the minimum of its capacity and the material available.
Any remaining material becomes the WIP for the next week. The figure below shows the WIP for

Week
10
2 2 4 1
Station 1 Station 2 Station 3
0 Cap. 4 6 1 4
Cap. 4 Cap. 1
 Rem. 0 Rem. 4 Rem. 4

0 6 1 4

In each week demand is randomly generated from the uniform distribution.

The amount available for sales is the production of station 4 plus the finished goods inventory.
Sales are the minimum of the demand and the amount available.
The excess of the demand over the amount available are the lost sales for the week.

The Total WIP column is computed as the sum of the raw materials purchased, the station WIP v

The total cost is (Inventory Cost)*(Total WIP) + (Lost Sales Cost)*(Lost Sales) + (Order Cost)*(

The example tries to replicate the scout example on the previous page. Since there is an unlimite
We choose 1 as the inventory cost and 10 as the lost sales cost, so that minimizing total cost wil

The scouts in the example, produced as much as possible in there turns.

To reflect the maximum throughput goal in your order decisions, order for the next week exactly
When the system starts with an initial raw material purchase of 6, station 1 will always have 6 av
By the rules of the simulation, the remainder of the stations will produce as much as possible and

When you play the game, notice how the total inventory grows with time.
This is the message Goldratt's story was trying to get across.

Try to find a solution to the game that gives almost the same production with much less WIP.
y were arbitrarily chosen for this example.

Station 4 Finished Goods

Lost Total
Cap. Prod. WIP Demand Sales Sales WIP Cost Order
3.6 2.7 0.5 2.7 2 0.7 9.9 16.9
4 4 0 3 3 0 6 6 3
1 1 1 2 2 0 6 6 2
3 3 0 5 3 2 6 26 4
5 3 0 3 3 0 7 7 5
6 3 0 2 2 0 9 9 3
4 1 1 3 2 1 10 20 4
2 2 0 2 2 0 12 12 2
1 1 0 5 1 4 12 52 4
4 4 0 1 1 0 15 15 2
6 5 3 1 1 0 16 16 0

IP. The rectangles describe the stations.

at the end of week 8.

4 Sales
Station 4 Demand 1
Cap. 4 0
Lost Sales
Rem. 4
0
Dem.= 1
0 Rem.= 3

us weeks and the production of the previous stage.

ution ranging from 1 to 6 (like the numbers on a die).

below shows the WIP for week 10.

5 Sales
Station 4 Demand 1
4 Cap. 6 3
Lost Sales
 Rem. 0
0
Dem.= 1
3 Rem.= 7

nished goods inventory.

for the week.

chased, the station WIP values and the finished goods WIP.

t Sales) + (Order Cost)*(1 if a positive quantity and 0 otherwise)

Since there is an unlimited match supply there is no order cost.

t minimizing total cost will tend to maximize production, while penalizing high WIP.

for the next week exactly the production of the first station.
on 1 will always have 6 available.
e as much as possible and the throughput of the line is maximized.

n with much less WIP.

 Station 1

Step
Purchase WIP Cap.
Mean 3 ### ###
1 6 0 ###
Restart 2 0 ### ###

Simulate

Production System with Four Stations

Game Steps 52 Weeks
Game Seed 141
Initial Purchase 6 Units
Inventory Cost $1 /Unit/Week
Order Cost $0 /Order
Lost Sales Cost $10 /Unit
Random Variable Capacity 1
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Capacity 2
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Capacity 3
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Capacity 4
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Random Variable Demand
Distribution Uniform_Int
lower limit (a) 1 Units/Week
upper limit (b) 6 Units/Week
Station 1 Station 2 Station 3 Station 4 Finished Goods
Deman
Prod. WIP Cap. Prod. WIP Cap. Prod. WIP Cap. Prod. WIP d Sales
### ### ### ### ### ### ### ### ### ### ### #VALUE! ###
### 0 ### ### 0 ### ### 0 ### ### 0 #VALUE! ###
### ### ### ### ### ### ### ### ### ### ### #VALUE! ###
 Production Statistics
Avg.
Lost Total Avg. Avg. Lost
Cost Avg. WIP Cycle
Sales WIP Cost Order Sales Sales
Time
### ### ### #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
### 6 ### 0
### ### ### 0