February 9 – Dynatrol Corporation

Assignment Questions:

1. If you were in the position of Jan Havel, what is your analysis of the operations at the
Andover Assembly Division? What action, if any, would you take and why?
2. Part of the second class session will be used to review the course to date and address
questions regarding the mid-term exam.

 6 month deadline to reverse andover assembly’s unacceptable operating performance

and requesting assurance that ramp-up for a new sensor product line could be
completed within one year
 New product line was more sophisticated and expected to sell at a lower price that the
plant’s dynasense product line
 Performance improvements in dynasense production mighy be irrelevant if production
of the new product line were to be lost to another dynatrol plant and sales of the
established line were to drop
 Needed to reverse the trend of poor operating performance and end customer
complaints
 Operated as a business unit organized around 3 functional activities: product
development, customer service and operations
 Product development:
o 6 engineers – 40% of time on developing new sensor products and 60% of their
time tailoring existing sensor products to specific customer needs
 Customer service:
o 5 staff – 2 engineers, 2 technicians and 1 clerk
o Technicians spent 100% of their time managing rework
 Production organization employed 48 operators, 10 first line supervisors, 6 material
handlers and 2 shift supervisors evenly split over 2 shifts
 Operations comprised 1 machining, 2 assembly and compensation and 3 packaging and
shipping
 Manager of manufacturing engineering synder had a team of 3 staff – 1 tooling, 1
industrial and 1 process engineer
 Maintenance Group did little preventive maintenance since they had to fix frequent and
recurring problems in the manufacturing cells
 `led by jerry pakmer and 3 technicians under him
 Customers typically ordered 3-6 units for a given custome design but order might range
from 1-140 units
 Plant’s first-pass yield was 75% - average at th test/compensation stage and sold at
premium products if passed
 Products that failed first pass insoection were reclassfieie to lesser precision and sold at
discount as a secondary product line (8%) or reworked (17%)
 Raw material and compenent costs average $150 per finished unit)
 Reworked sensors were sold as secondary product (70%) or if thry failed second pass
testing they were scrapped (30%)
 $500 for premium products, $400 for secondary
 Direct labour costs for a premium sensor $45, variable plant overhead $70, remaining
non material costs were $108 per unit
 Secondary products requiring rework: unit direct labour costs $54, variable plant
overhead $90
 Annual output was 28500 units
 New sensor line talkback:
o Production equipment was unavailable for prototype development and testing
during either of the 2 8-hour production shifts, development engineers were
forced to work after midnight and on weekends
o Prototype would be ready in 2 months
o 4 months to get the full production line in working order
 Manufacturing process:
o Production of dynasense sensors occurred in 2 phases: parts manufacture and
assembly
o Manufacturing lead time for chamber machining was 8 days
o A different product family was run each week and a different product type each
day
o Each week 600 units of a product family were started through the process in
batch sizes of 120 units of each product type
o 2 8-hour shifts were operated, 5 days per week, 50 weeks per year
o Batches remained at each of the six assembly and compensation stations for a
full day
o 1 day of inventory was maintained between each station
o Lead time for each dynasense batch in assembly and compensation was 12 days
o Of units that required rework, 60% needed to have material removed from the
chamber through regrinding, 40% required new chamber blanks
o A sensor that did not meet specifications for a premium or secondary
classification on first pass was disassembled by one of the technical specialists
o Prototype batch sizes of 10 for talkback
 Order fulfillment lead time ranged from 5-16 weeks
 4 months inventory, 15% of production capacity in the chamber machining cell
consumed by rework
 Could buy a new CNC grinding machine for $450,000 and would be delivered in 2
months and installation and shakeout would consume another 4 months
 Many wanted to switch to talkback but sales team said current customers would no
switch to the new product and that their computers aren’t good enough to use it
 Marketing projected demand to be 20,000 a year for talkback
 Havel thought on the low side of 10,000 – 40,000 units per year
 Corporate wants to cut inventory but customers complained less when they carried
more wip in the system
  Manufacturing engineering was a constraining factor
 New line would cost 2 million
 Alternatives:
o Implement a performance improvement program now on the existing dynasense
line or several months out on the new line
o Incur the capital expense of thr new CNC grinder or even an entirely new line

Competitive advantage that they are trying to provide:

 Flexibility
 Innovation
 Quality

Problems:
 Late delivery
 Machines break down a lot – maintenance team is overworked by demand to fix
machines all the time rather than doing preventative maintenance that would stop
them from breaking down so often
 Bad resource allocation
 expedite rework: - need to rework faster to meet demand
o Minimize set up costs
o Messes up normal schedule – if you have to change the machine to do the
rework it takes time to switch it from the current product you are working on

25 different types of products (5x5 types)

150 process sheets so you can have a lot of customization
120 batch size
High degree of customization
Work in progress is very high due to high level of reworked products

Lack of specialization (workers performing all tasks instead of focusing on one) may lead to
lower quality since it could lead to more mistakes since they have a lot of general knowledge
and not a lot of specialized knowledge

Hybrid pull and push system

Pull – customization of orders for the second half of production
Push – first part of production, they prepare the products until the point where they need to be
customized so they create enough inventory when the time comes for an order
1 day of work in progress between each station because you need to keep a batch in between
each step so you have goods that are ready for the next step right away
How can we minimize the set-up time of rework: