JGT2 Decision Analysis Task 1

A. Recommendations on how to improve current workflow in the Shanghai plant:
In this section of the task, as the operations consultant of Shuzworld, I present my recommendations in detail on how to improve current workflow in the plant of Schuzworld’s Shanghai production facility.

As I reached the Shanghai plant, I received a warm welcome by the plant’s operating director Mr. Alistair Wu. Wu is responsible for production at all the three facilities in China. His team was eagerly waiting for me for my help on finding the ways to improve efficiency and they were willing to put into effect any recommended improvements. After taking a tour of the plant, Wu introduced me to Catherine Pang, one of the line managers. Wu explained the assembly line issues in the production of Rugged Wear Work boot product. The plant is budget to produce 6 work boots per hour and operates 40 hour workweek. The Rugged Wear Work boot has been design as steel tipped boots and hence it takes longer than usual to make. The assembly process of these boots consist of 8 steps as part of the assembly of the boots and below is the schedule, performance time with sequence requirements.

Task | Performance Time (Min) | Predecessors | A | 10 | None | B | 6 | A | C | 3 | A | D | 8 | B,C | E | 3 | D | F | 4 | D | G | 3 | E,F | H | 9 | G | Total | 46 | |

Below is the layout of the production line of work boots (Shuzworld Decision Analysis Case Study):

Upon close review and analysis of the current layout of the assembly line, it is figured out that there are eight work stations set up in the process of production of the work boots. The process takes 6 minutes at work station B and 3 minutes at C. Both B & C have a dependency on A which takes 10 minutes as process time. The next station D need to wait for both B & C to complete their tasks and takes 8minutes for its part of the process. From D, the product moves to work stations E & F, which take 3 & 4 minutes consecutively. The next work station G has prerequisite on E &F and take 3 minutes for its process before sending over to H. Finally, H takes 9 minutes to complete the product in its entirety. As a summation of all the 8 steps of the assembly, the total time taken is 46 minutes per round.

As I analyzed the whole assembly process and the time taken by each step, I came up with this new set of recommendations to improve the efficiency of the production process by reorganizing the assembly line. My first recommendation to the company management would be to take up the task of revising the layout of the plant, in order to improve the workflow in the plant. The company needs to improve the production process efficiently to make the products more cost effective and competitive in the market. The new layout needs to be redesigned to accommodate production efficiency and quality. Equally, an attractive and quality oriented packaging of products increases its market value and salability. To accomplish this goal, the management of Shuzworld should be able to ensure that employee time is maximized to its full potential. This can be accomplished by organizing employees into workstations that focus primarily on the product they are working on. The company needs to make optimum use of production lines and reduce direct labor cost and at the same time the labor workforce needs to feel better of their work environment and process. Creating workstations for employees allows them to communicate with each other in easily and further allows them to get cross trained. An U shaped assembly line over the traditional assembly line reduces the requirement to move frequently in order to communicate or work together during the construction process. Out of this process, employees get additional space to move comfortably and thereby they can move around easily to help their coworkers.

A1. Justification of recommendations
In this section I present my justifications to the recommendations made in the above section. One of the recommendations is to improve the current workflow process by revising the layout of the plant and thereby improving the workflow of the plant. This can be accomplished by using the assembly line balancing process. Assembly line balancing process can be explained as obtaining output of the production at each workstation of the production line at a fixed frequency of time. This process of gathering production output helps monitoring and analyzing the efficiency of the production line and workforce and minimized any delays. The output of a production line is at its optimum only when a smooth, continuing and efficient work flow along the assembly line happens in conjunction with the least idle of idle time. The purpose of assembly lines is to bring together different parts of the product and make a quality product at a series of workstations.
In order to arrive at an optimum cycle time for each work station of the assembly line, by using the Assembly Line Balancing Analysis tool, I established a cycle time for each workstation. Further, I calculated the number of workstations needed, the idle time required for each cycle and the layout of the workstations that are required for optimum efficiency of productivity.

Here is the business logic I followed to determine the cycle time for each work station of the assembly line:

1 Work Day = 8 hrs. x 60 min = 480 min
Number of required units to be completed in 1 work day = 48
Maximum number of minutes allowed for each product at each work station = 480min/48units = 10 minutes

In the next step, I determined the minimum workstations needed for an efficient cycle at the assembly line. by taking the total task time, which was provided by the Shanghai management team, along with the task time and predecessors, I took the total task time and divided it by the cycle time. This gave me the minimum workstations needed. 46total task time/10cycle time = 4 workstations.

To determine how the workstations would be set up I turned to the excel assembly line balancing analysis tool and also to confirm my solution to improving the current workflow in the plant.

The spreadsheet shows that there should be 5 workstations and should be set up as workstation 1 = A, workstation 2 = B, C, workstation 3 = D, workstation 4 = E, F, G and workstation 5 = H. The total idle time would be 4 minutes.

The efficiency of this line balance would be 92.0%. The efficiency is calculated by taking the total task time (46) and dividing it by the workstations (5) times the cycle time (10). The result would be 92.0%. By determining the efficiency of a line balance a company can determine the sensitivity of the line changes in the production rate and workstation assignments. The company would be able to know what the efficiency percent would be if it added more workstations or removed workstations.

A1ai. Explaining why the decision analysis tool is chosen
The reason I chose the assembly line balancing analysis tool is because it is specifically geared towards minimizing imbalance between machines or personnel while meeting a required output from the line. The Shanghai manager wanted his facility to be as efficient as possible. In order to be efficient the facility most use its production time wisely with as less of idle time as possible. For this reason I chose the assembly line balancing analysis because it provides a layout for the factory that would target exactly what they wish.

B. Analyzing the initial and ongoing costs
Initial and ongoing costs were analyzed for the new sandal line using the learning curve logarithmic approach. This approach allows us to determine labor hours for any unit produced. Once the labor hours for the units produced are determined we can then determine the costs.

Catherine Pang is concerned about what their first month’s production hours should be in order to produce 5 batches of the new sandal line. Using the learning curve tool I determined that the factory would need to put in 3737.7 hours the first month in order to reach their goal of 5 batches. The hours were calculated by first entering the first batches hours (1000) and the learning curve percentage (80%) into the spreadsheet. The spreadsheet then calculates the labor hours needed using the logarithmic formula Tn=T1 (Nb). Tn is the time it will take for the unit desired (5), T1 is the time it took for the first batch (1000) and Nb is the learning rate (80%)/ (log2). Log2 is a table that calculates the answer for b using the learning rate percentage. The spreadsheet calculates the answer to this formula to give us the production hours needed in order to produce the 5 batches.

The second month production hours would be a total of 4,772.8 hours. This total was calculated by taking unit 15 (10 batches) and subtracting the cumulative time for unit 5. This is the calculation necessary to get the answer for 10 batches for month 2 and for the following batches. The production hours for month 3 would be 5,509.4 hours (15 batches) and for the 4th month production hours would be 6,101.82 hours (20 batches). As you can see labor hours decreased every month because of the learning curve the labor hours are calculated more precisely. Workers are able to complete tasks more quickly the more they do it.

The labor costs for each of those months should be budgeted as follows. The first month will take 3737.7 hours. We then take the labor hours and multiply it by the hourly rate of $1.08 and get an answer of $4,036.72 for the 1st months labor costs. The second month would be $5,154.62 (4772.8 x $1.08). The third month is $5,950.15 (5509.4 x $1.08). The forth month would be $6,589.97 (6101.82 x 1.08).

Because labor hours will continue to decrease month by month, so will labor costs. The hourly rate will still be the same but because the labor hours decrease as the learning curve adjusts the labor hours. It will result in the company having less labor costs month by month. The calculations show the cost increasing but in reality it is not because each month the batches are increased by 5 batches. Making costs lower as the learning curve adjusts each month.

B2a. Explaining why the chosen decision analysis tool is the best fit for this problem
A copy of my decision analysis is attached. The tool I used was the learning curve spreadsheet tool to calculate the production hours needed in order to achieve the desired batches a month. I chose this decision analysis because it can provide the most accurate of results. It can also tell you the labor hours for as many units as you would like. The analysis also provides a cumulative total production hours if needed. For visual purposes the analysis also provides a graph showing the learning curve by units. The graph is very helpful because it gives a quick view of how the learning curve continues to decrease by units produced. This analysis tool is very helpful in determining the labor hours and costs more accurately; therefore, this is why I chose to use this analysis tool.

C. Recommending a staffing plan
Mr. Dieter Hansel from the Shanghai plant would like to know the current system reliability for the three machines in the Shanghai plant. Reliability is the probability that the machine part or product will function properly for a specified time under stated conditions. Understanding failure occurrence is an important reliability concept. The method of computing the system reliability is simply using the formula Rs=R1 x R2 x R3. Machine 1 has a reliability of .84, machine 2 has a reliability of .91 and machine 3 has a reliability of .99. This means that the system reliability is .757 or 75.7%.

The system reliability can also be determined by using the reliability tool in Excel OM, which I have provided in my attachment. In the excel spreadsheet you will simply have to enter the reliability numbers for each machine and it will automatically compute the system reliability for you. Using the Excel reliability tool is better to use than manually calculating the reliability because it will reduce the chances of errors.

The company also wishes to improve its system reliability, in the event of failure, by backing up one of the machines with a machine that will perform with the same reliability. To increase the reliability of systems, redundancy is added. Redundancy is the use of components in parallel to raise reliability. In order to select which machine needs to be backed up I used the excel reliability tool to get my answers because it is more accurate and reduces the chances of errors. To use the tool you simply enter the reliability rate under the machine that you wish to back up and it will give you the new reliability for each machine and the system reliability for backing up that machine.

By entering the backup for machine 3 I received a system reliability of .764. The reliability remained the same for all 3 machines. For machine 2 I received a system reliability of .825 with the reliability being .99 and the two other machines remaining the same. For machine 1 the system reliability was .878 with a reliability of .974.

From the results that were received for backing up each of the three machines, machine number 1 resulted in the highest system reliability rate of .878 or 87.8%. My recommendation is for the company to back up machine 1.

The other issue discussed was finding a way to save on production costs by shifting the operators around. In order to find the lowest total cost possible I used the assignment decision tool. Using the excel software application is much easier to use than calculating the answer manually. Also, doing it in excel reduces the chances of making a mistake and provides a more accurate answer. I will begin to say how I came up with my answer and the plant can continue to use this tool, which I included in the attached spreadsheet named assignment, in the future if needed.

To use the assignment decision tool I simply entered the job costs and the number of assignments detailing the cost for each. The spreadsheet then automatically gave me after selecting the solve button, the best job assignments to what operators with the lowest job cost.

Machine operator 1 should be assigned to job 1, machine operator 2 should be assigned to job 2, machine operator 3 should be assigned to job 4 and machine operator 4 should be assigned to job 3. This shift would result in a total job cost of $37.

The assignment decision tool can also be applied to assigning jobs to machines, people to projects and salespeople to territories. Just simply follow the same input instructions for the tool and it will produce the lowest job cost.

The Shanghai plant also expressed concerns about their transportation costs and shipping plan. They would like to increase production at the Shanghai location to 2800 from 1300 and this will throw off the supply and demand balance because the demand has not increased. The reason the plant would like to do this is to have a stock of shoes on the side in case something goes wrong at one of the plants. Currently the three plants produce one of the major lines of shoes and are sent to three warehouses for distribution.

In order to develop a shipping plan that will accurately distribute the shoes to the different warehouses, making sure that we do not go over capacity at any location, we must do the following. First, I used the transportation decision tool in Excel and attached it to this memo so that it can be used in the future for any other transportation projects. In the transportation tool in order to get the problem answered you must enter in the data. The number of origins and destinations must be entered in the first step once the tool is opened. Then, you simply enter your transportation cost for each origin to destination. After that the supply column is filled in and also the demand row. The total supply and demand will be displayed in the bottom right corner. This number must be equal to each other in order for it to provide the correct total cost and shipping plan answer.

In this case the Shanghai plant has a supply higher than the demand. In order to get the supply and demand to equal each other we will create a dummy warehouse to balance it out. The cost is entered as $0 and the demand is simply the overage of the supply from the demand. Once the data is entered you select solve and it will produce the shipping plan and total costs. The total cost would be 13,400. The shipping plan would be the results that are at the bottom of the spreadsheet under shipments.

This is the best tool to get the total transportation cost and shipping options because in a few easy steps it does the work for you instead of having to do a very long manual process in order to get your answer. This tool provides you with the transportation options and cost to different situations very easily.

D. Two short term scheduling technics
Good scheduling means lower costs and faster and more dependable delivery. Shuzworld can adopt some or all of the following scheduling techniques to help improve movement of goods through the assembly line process.

The correct scheduling techniques have criteria that depend on the volume of the order, nature of operations and overall complexity of jobs. The four criteria are: minimize completion time, maximize utilization, minimize work in process inventory and minimize customer-waiting time.

A Gantt chart is a technique used to schedule resources and allocate time. The charts show the use of resources, such as work centers and labor. It is used to monitor jobs in progress and project scheduling. The charts let you know which jobs are on schedule and what jobs are behind. This technique is useful to maintain, keep track and maintain production schedules.

Priority rules is another technique used that provides guidelines for the sequence in which jobs should be worked. Priority rules try to minimize completion time, number of jobs in system, and job lateness while maximizing facility utilization.

The most popular rules for priority rules are First Come First Served, which means the first job to arrive at the work center is processed first. Then there is Shortest Processing Time, which means the shortest jobs are handled first and completed. Earliest Due Date, which is the job with the earliest due date, is selected first. And then there is Longest Processing Time, this process involves selecting the jobs that are longer and bigger jobs first because they are most often very important. The company would choose which priority rule is most important to them and then follow that rule. The company could also examine each of the four rules and compute its measure of effectiveness and decide which rule is best for the company.

E. References

Plant Floor Visibility: Getting More from Your Plant Floor by Maryanne Steidinger, Yves Dufort and Enrique M. Herrera. Retrieved from http://iom.invensys.com/EN/pdfLibrary/Whitepaper_Invensys_Microsoft_GettingMoreForYourPlantFloor_03-10.pdf Analysis Plant Layout Design for Effective Production by Anucha Watanapa, Phichit Kajondecha, Patcharee Duangpitakwong , and Wisitsree Wiyaratn. Retrieved from http://www.iaeng.org/publication/IMECS2011/IMECS2011_pp1174-1176.pdf Aggregate Planning. Retrieved from
http://www.encyclopedia.com/doc/1G2-3273100012.html