02-Principles of Production Systems

Principles of Production Systems:
Immutable Laws of the Shop
Principles of Production Systems

© Ronald G. Askin 2006
Industrial Engineering
Modern Manufacturing Systems
Characteristics Structure
• Global Markets Supply
• Competitive Environment
• Lean Production Production
• Distributed Manufacturing
• Core Competency Based Distribution
• Information Driven Networks
• Innovation Driven Profit
Margins
Retirement
The Total Supply Chain
(Transformation) Process

Modern Manufacturing Time Line
1200’s Arsenal of Venice Assembly System
1800 Eli Whitney proposes interchangeable parts,

division of labor, powered machines, cost accounting
1900 Henry Ford’s Assembly Lines and Continuous Improvement;

Frederick Taylor’s Scientific Management (Reductionism)

1940’s Statistical Process Control; Hard Automation
1950’s Numerical Control; Quality Mgmt.; Linear Programming
1960’s Mainframes: DNC and MRP; Digital Simulation
1970’s Robotics, AS/RS, CNC
1980’s JIT, GT, CAPP, FMS, CAD/CAM, CIMS, MRP II
1990’s Internet/e-commerce; BPR; Value Streams; Lean; Six Sigma; ERP
2000’s Supply Chains; Outsourcing; Socio-technical Systems, Green Mfg.
2010 Globalization; Risk Management; Green Industries
2020 ?
Buzz Words Change, Technologies Evolve, Principles Remain!

United States
Mfg China
Europe
GDP (ISIC
Japan
D) in 2010 US
S. Korea India
$ Mexico World
$14,000,000,000,000
$12,000,000,000,000
$10,000,000,000,000
$8,000,000,000,000
$6,000,000,000,000
$4,000,000,000,000
$2,000,000,000,000
$0
1970 1980 1990 2000 2010 2016
http://unstats.un.org/unsd/snaama/dnlList.asp © Ronald G. Askin 2006
Types of Layout
• Product Layout
Automobile Assembly
Engine Machining
• Process Layout
Job Shop
• Cellular Layout (Group
Technology)
• Fixed Position
Airplanes, Ships

Layout Comparisons
General Characteristics of Layout Types

Characteristic Product Process Group Fixed Position
Throughput Time Low High Low Medium
Work in Process Low High Low Medium
Skill Level Choice High Medium-High Mixed
Product Flexibilty Low High Medium-High High
Demand Flexibility Medium High Medium Medium
Machine Utilization High Medium-Low Medium-High Medium
Worker Utilization High High High Medium
Unit Production Cost Low High Low High

System Design Goal
Gears Chassis Assembly
Shafts Cards Frame

Key Definitions
Cycle Time = Time Between Consecutive Batches
Inventory
Cycle Time
Lead Time = Time from Placing Order to Receiving Items

Cycle time
Order Release Finished Goods
Op. 1 Op. 2 Op. 3
Lead Time
Lean Creed
• Visualize
• Analyze
• Rationalize
• Simplify, Combine, Eliminate

Law 1. All Models are Wrong, Valid Models are Useful
Uses of Models
• Performance prediction
• Optimize parameters
• Remove personal bias
• Provide common framework for cooperation/discussion
• Develop Insight
• Improve communication of results/plans

Modeling Losses
Loss 4: Implementation
and Maintenance
Real
World
Loss 1: Loss 3: Solution

Perception and Approximation
Measurement
Loss 2: Model Simplification

Modeling Losses
Perception Solution
• Data Definition, Accuracy • Heuristic vs Optimal
• Limited Vision • Limited sensitivity analysis
• Limited Rationality/Hidden
Connections
Simplification Implementation
• Nonlinearity -> Linearity • Training loss
• Stochastic -> Deterministic • Compromises for human and
• Dynamic -> Static (Current) organizational impediments
• Known interactions -> Model • System evolution over time
components/interactions • Turnover in operators, managers
• Individual resources ->
Identical parallel resources
• Product/period aggregation

Model Life Cycle Process: LAVA
Learn: Understand process

and build model
Problem
Learn
Act Act: Deploy

Adapt model and train
Adapt: Update users
model structure
and parameters
as needed over
Validate
time Validate: Track model
performance over time

Law 2: Product Life Cycle
Demand Rate
Time
Introduction Growth Maturation Decline Retire

Automated, Dismantle Line Job Shop
Lab Manual/Job Shop
Dedicated Line
Law 3: Little’s Law
Average Inventory = Production Rate x Throughput Time
WIP = PR x TT or N = XT or L = λW
10 Jobs/Day 10 Jobs/Day
50 Jobs
5 day average: Entry to Exit
Applies to Any System in Steady State!
The Shop Manager’s F = ma

Know Your Profile!
Variability Loss
Capacity
Deterministic
Production
Probabilistic (Exponential)
WIP

Empirical Profile
Little's Law and Chaos
12
Remember
10
8
N = XT
or
Throughput
6
Deterministic
WIP = PR x TT
Exponential
4
Empirical
0
0 10 20 30 40 50 60 70 80 90
WIP
10 stages,  = 1
Little's Law
12
10
M/M/1
8 
L
1 
Throughput
6
Deterministic
Exponential
4
Empirical
0
0 10 20 30 40 50 60 70 80 90
WIP

Questions?
• What happens when we release jobs to a
busy shop floor?
• What happens when we reduce
variability?

Law 4: Matter has Energy, Energy is Conserved
(Thermo 1)
a. It = It-1 + THt – Dt – Yield Losst
b. Work Week = 40? Hours

Output = Production/Skill Rate – Training Time – Starvation
– Gabbing – Slacking – Absence – Defects
c. Human Energy is Consumed by

Emotional, Cognitive, Physical Activity
Law 5: Entropy of an Isolated System Can Not Increase
(Thermo 2)
Morale: You can’t leave well enough alone,

the do nothing alternative leads to collapse!
Objects and Systems Decay

without Constant Attention/Energy

Is the World Advancing?

Law 6: Basic Reliability Law
N
Reliability R   ri
i 1
N serial components of reliability ri each
If N* = 2N, ri* must equal ri1/2

Example
ri = 0.9  R = 0.93 = 0.73
If R = 0.73, ri must equal 0.95
Design/Maintain More Objects, Each at a Higher Level

Practice Question
A system consists of three components in series.
a. What reliability is required for individual components if the system
is to have a reliability of 0.9?
b. Suppose the system is to be expanded to consist of six
components in series. Components with reliability of 0.9 each cost
$p. Individual component reliability can be improved at higher cost
c by the function r = f (c). If any combination of improved or
parallel components can be used, how would you design the
system to most economically achieve the desired reliability of 0.9?

Law 7: Complexity Grows Nonlinearly
2 Components = 1 Link
3 Components = 3 Links
m(m  1)
m components 
2
5 Components = 10 Links

State Spaces
m Components, n possible States each

m
n  n  ...  n  n Possible States
m=3 m=6
n=2 8 states n=4 4,096 states
a,b a,b,c,d

Law 8: The World is Stochastic
• Quantum Mechanics tells us so

• Experience tells us so
- No 2 Machines Identical
- No 2 Workers Identical
- No 2 Contracts Identical
- No 2 Entities Identical on Consecutive Observations
- Even Measurement has Error
Normal Distribution

Law 9: Pareto Principle
Vital Few vs. the Trivial Many – A Repeating Cycle

• Sources of Defects
• $ invested in Parts
• Income from Customers
• Incomes from Product Lines/Return on Projects
• Creative Contributions from Employees
Frequency/M Frequency/M
1,200 120
1,000
100
800
600 Frequency/M 80
400
60
200
0 40
20
re
id
t
d
rt
rt
rt
or
ne
Pa
ag
Pa
Vo
ilu
Pa
Sh
lig
Fa
m
d
ng
er
g
Da
Ba
isa
in
0
ld
-in
ro
iss
So
M
y
W
rn
bl
Misaligned Assembly Missing Part Solder Void Burn-in Short

Bu
m
se
Damage Failure
As
Cause Cause

Law 10: Learning Curves
Y = Cost, Time
a
Y  KX
X = Units
K = Startup (First Unit)
a = Learning Rate
(a=-.152 for 90%)
Learning Curve
120
100
80
Cost/Time
60
40
20
0
0 200 400 600 800 1000 1200
Unit

Learning Rates
a
Y  KX or ln Y  ln K  a ln X
Constant learning rate defined by a
At X  1; Y  K
ln Y  ln K
For any X , a 
ln X
More sophisticated models exist for forgetting with
intermittent activities, etc.

Law 11: Limits of Rationality
Humans Satisfice Because We Can’t Optimize
• 7 Digit Short Term Memory

• 3D, Linear Thinking
• Memory Recall Based on Snapshots
• Information Processed based on Comparison to Past
Experience

Law 12: Inertia (Resistance to Change)
• Resistance is Rational for Individual

- Change Takes Energy
- Change Has Risk
- Reward Minimal Except in Crisis
- Anchoring of Expectations
Personal Payoff without Crisis Personal Payoff with Crisis
Prob Prob
ils
t Fa
j ec it
Pro Cred l
kes viva
a r
rT Su
Mg
0 Payoff 0 Payoff

Dilbert by Scott Adams
January 13, 2008

Law 13: Paradigm Shifts and Continuous Improvement
We Advance by Leaps and Crawls

Performance
Technology 3
Quartz Crystal
Technology 2
Gears
Technology 1
Sundials Time
Corollary: Forecasting Fails!
Follows from Laws 7 (Nonlinear), 8 (Stochastic),
and 13 (Nondifferentiable)
5 years 5 days
Morale: Must Reduce Cycle Time and Lead Time to Eliminate Waste!

Law 14: Setup Efficiency Drives Performance
• Longer Throughput Time & More WIP

Larger • Longer Forecast Horizons
Batches • Slower Detection of Quality Problems
• More Space Between Processors
Inventory Level - One Setup per Week Inventory Level - One Setup per Day
30 30
25 25
20 20
Product 1 Product 1
15 15
Product 2 Product 2
10 10
5
5
0
0
0 4 8 2 6 2 4 8 2 6 4
0 1 2 3 4 0. 0. 1. 1. 2. 2. 3. 3.
Week Week

Law 15: You Get What You Measure
IE Empirical History:
Productivity without Standards: 33%
Productivity with Standards: 65%
Productivity with Standards & Control: 85%
Arbitrary Actions and Output

without Standards and Control Coordinated, Consistent Flow with
Standards and Control

Law 16: System Performance ≠ Sum of Unit
Performances
No Shared Vision or System Metrics Common Goal and System Metrics

Law 17: Design Rules!
• System/Product Design Fixes 80% of Time & Cost

• Operation Controls 20% of Time & Cost
Morale: Focus on Defining the Right System and Processes!

Cost Commitment vs. Development Cycle
% Cost
Committed
100
0
Concept Design Release Mfg

Law 18: Weakest Link in Chain Sets the Pace
• Lowest Available x Proc. Rate Workstation

• Slowest Hiker

Law 19: One Piece Flow Minimizes Throughput Time
(Absent Setup)
Throughput Time = 3 hours

1 piece = 1 hour 1 piece = 1 hour 1 piece = 1 hour
Throughput Time = 12 hours

Law 20: Cost Reduction vs. Market Creation
Company has $1B revenue

Operating margin is 30%.
Are you better off reducing cost 10% or increasing sales 10%?
Increase sales 10%:

Revenue is $1.1B.
Revenue – cost = $330M ($300M + $30M)
Reduce cost 10%:

Revenue is $1B
Revenue – cost = $370M = $1B – 0.9*700M


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Principles of Production Systems:

Immutable Laws of the Shop

Principles of Production Systems

Principles of Production Systems

1200’s Arsenal of Venice Assembly System

1800 Eli Whitney proposes interchangeable parts,

1900 Henry Ford’s Assembly Lines and Continuous Improvement;

Principles of Production Systems

1950’s Numerical Control; Quality Mgmt.; Linear Programming

1960’s Mainframes: DNC and MRP; Digital Simulation

1970’s Robotics, AS/RS, CNC

1980’s JIT, GT, CAPP, FMS, CAD/CAM, CIMS, MRP II

1990’s Internet/e-commerce; BPR; Value Streams; Lean; Six Sigma; ERP

2000’s Supply Chains; Outsourcing; Socio-technical Systems, Green Mfg.

2010 Globalization; Risk Management; Green Industries

Buzz Words Change, Technologies Evolve, Principles Remain!

Principles of Production Systems

Principles of Production Systems

Principles of Production Systems

General Characteristics of Layout Types

Principles of Production Systems

Gears Chassis Assembly

Shafts Cards Frame

Principles of Production Systems

Lead Time = Time from Placing Order to Receiving Items

Order Release Finished Goods

Op. 1 Op. 2 Op. 3

Principles of Production Systems

Principles of Production Systems

Loss 1: Loss 3: Solution

Loss 2: Model Simplification

Principles of Production Systems

Principles of Production Systems

Learn: Understand process

Act Act: Deploy

Principles of Production Systems

Introduction Growth Maturation Decline Retire

Average Inventory = Production Rate x Throughput Time

5 day average: Entry to Exit

Applies to Any System in Steady State!

The Shop Manager’s F = ma

Principles of Production Systems

Principles of Production Systems

Principles of Production Systems

a. It = It-1 + THt – Dt – Yield Losst

b. Work Week = 40? Hours

c. Human Energy is Consumed by

Morale: You can’t leave well enough alone,

Objects and Systems Decay

Principles of Production Systems

Principles of Production Systems

N serial components of reliability ri each

If N* = 2N, ri* must equal ri1/2

Principles of Production Systems

ri = 0.9  R = 0.93 = 0.73

If R = 0.73, ri must equal 0.95

Design/Maintain More Objects, Each at a Higher Level

Principles of Production Systems