MAN 341

Group Homework 4
Due by the final exam time

HOMEWORK-4-GROUP;
MAN341-1;
İMAMALİ AZİZOV & CAN SULTANOĞLU;

Solutions;

1) İt can be expressed a goal in different ways. Three indicators of a

healthy business: Operational expense, inventory, and throughput.
Goal of making money for the system as a whole and not reducing
costs in a compartmentalized fashion that doesn’t take the whole
system into account. The ironic result of this money making focus
is that costs are naturally reduced as flow increases. The company
will make more money and become more efficient because of
increasing flow and focusing on throughput instead of costs.
İncrease Throughput -Completed final products that create money
coming in for the company. Decrease Inventories - Inventories can
be defined as merchandise on hand, work in process, raw
materials, and finished goods on hand. Excess inventories cost
money and take up space. We want to decrease inventories as
much as possible without having a negative effect on Throughput.
Decrease Operating Expenses - these are money used to make
throughput happen. We can we eliminate employees, create parts
more cheaply, create parts more quickly. While measuring these
three metrics will give you clues to how your system is performing,
it’s important to look for improvements in flow to increase
 throughput in order to improve the whole system. You wouldn’t
want to look at just decreasing inventories. This is a lagging
indicator. As flow and throughput increase the inventories will
naturally decrease.

2) The Goal describes a "theory of constraints," which focuses on

identifying bottleneck operations in a manufacturing process,
increasing throughput and identifying statistical fluctuations and
dependent events in the process. Statistical fluctuations and
dependent events can have a subtle impact on the productivity of a
manufacturing process. So, dependent events require one more
step to happen before another in a process. Statistical fluctuations
are within a range process happens. Accumulation of fluctuations
happens further down a process ,dependency limits the chances for
higher fluctuations. For example, The measure of trail is stock.
Slower walkers increment stock. Stock goes up (terrible),
throughput goes down (awful), and operational cost (to get up to
speed) goes up (awful). With a moderate record of young men, put
the slowest in advance to decrease stock. Diminish his heap to
speed the pace, and increment throughput.
3) Cutting the batch size in half led to less idle time for non-
bottleneck resources, where idle time exists it has been spread out
more diffusely, and work is flowing through the plant faster with
lower overall inventory. However the classic measures, which
focus on cost per step in the process rather than the system cost,
do not show the improvement. The additional set ups have
associated costs and effort which are a problem. Even through the
 plan is making more completed product with less inventory, the
metrics do not show the improvement. Jonah believes the “new
bottlenecks” are not real bottlenecks, but self-created bottlenecks.
The problem is material is being “released” to the plant just to
keep the non-bottleneck machines busy. This improves these
machines efficiency measures, but does not help the goal. As Jonah
says “A system of local optimums is not an optimum system at all;
it is a very inefficient system”. The possible solution is to do not
try to make non-bottlenecks work all the time. They should be idle
some of the time. Using a rope and a drum. Attach a rope from
Herbie (bottleneck machine) to the kid at the front (assembly). The
length of rope represents inventory. For drum, Herbie tells the kid
at the front to slow down or speedup (beats the drum). Need some
kind of signaling or communication between assembly and the
bottleneck. On the other side, everything is going good now except
it looks like part costs are going up. However, in reality all costs
have gone down. The reason cost per part has risen because more
setups are occurring because of smaller batch sizes. However,
workers were idle, so the increased number of setups didn’t really
increase costs.
4) Batch reduction helps the plant save cost management by not
having an extra batch. High collections need different cost designs
for better work in the plant, affecting the entire plant budget from
every perspective. Plant when requiring less batch help in working
short targets and directions that help make new and small goals. It
can prevent the local level strategies for effective changes and
functional approaches. It maintains the plant quality by not having
 an extra batch for the strictly required process.
Limit batch size reduction is a process to decrease the number of
batch sizes for the procedure. It is not necessary to work
ultimately. Sometimes, the batch only requires small dimensions to
protect their regular targets in the plans and strategy. Batch size
reduction in fix limitations helps in completing this process.
It is an issue when targets appear to be slow for the process and
size limitations for the batch. These issues sometimes come with
significant problems and affect the complete batch limitation with
mark acting. They can solve it by predicting some extra chances of
a batch limitation and help in completing better functional
programming.
5) They find two bottlenecks, NCX-10 and Heat Treat. The first step is
to move QC in front of bottlenecks. Make a list of all late jobs and
what components from those jobs flow through the bottleneck
machines. They then create a schedule/list in due date order and
instruct the bottleneck operators to only work on those jobs in that
order. The method they used is system scheduling. Back at the
plant, Alex and his team set out to identify which machines at the
plant are the bottleneck resources. After talking to staff and
walking around the factory, where there are big piles of inventory
sitting in front of two main machines, the bottlenecks become
obvious. Eighty per cent of parts have to go through these
machines, and the team make sure that all such parts are
processed on the non-bottleneck machines in priority to the other
20% of parts, by marking them up with a red label. The parts that
don’t go through the bottlenecks are marked with a green label.
6) Alex is then left with the difficult task of working out how that goal
can be achieved. The answer begins to present itself to Alex when
he takes his son and some other boys on a 10-mile hike. Given that
the average boy walks at two miles an hour, Alex expects to reach
the halfway point on the hike after about two and a half hours of
walking. When this doesn’t happen, and Alex finds that the group
is behind schedule and big gaps are appearing between them, he
begins to question what is going on. He soon realises that the
problem is arising because one of the boys is much slower than the
others. This boy is preventing the other boys from going faster and
Alex realises that, if everyone is to stay in one group as they must,
the group can only go as fast as their slowest walker. The slow
walker is effectively a bottleneck: the factor that prevents the
group from going faster. It doesn’t matter how fast the quickest
walker is; he cannot make up for the fact that the slowest walker is
really slow. While the average speed may be two miles per hour,
the boys can all only really walk at the speed of the slowest boy.
However, Alex also realises that they can increase the boy’s speed
by sharing out the heavy load he is carrying in his bag, enabling
him to walk faster. In this way, they can ‘elevate the bottleneck’ –
ie increase the capacity of the critical resource. Alex cannot wait
to get back and identify where the bottlenecks are happening in his
factory and find out if they can be elevated in any way, without
laying out any capital expenditure. Alex and his staff realize that
they have two bottleneck machines, neither of which can be sped
up, and through which most of the parts they make must go. Jonah
advises that since the bottlenecks are the slowest component of the
 manufacturing system, if they can increase their bottlenecks’
capacity, they can increase the capacity of the entire system, which
will raise their throughput. Jonah gives them advice on how they
can improve the way they operate their bottlenecks to increase
their capacity, and Alex and Stacey develop a tagging system to
organize which parts need to be processed by bottleneck machines.

7) İnitially, Alex’s thinking is distorted by conventional management

accounting metrics. This causes him to waste time and energy
“improving efficiency” even though it has no impact on the profits
of the division. Jonah helps Alex align his organization to the Goal
by distinguishing between three operational measurements:
Throughput: the rate at which the system generates money through
sales net of variable costs. This corresponds to the value added by
the system. Inventory: “all the money that system has invested in
purchasing things which it intends to sell,” This was later
expanded to include all investment such as plant, property,
equipment etc. Operating Expense: “all the money the system
spends in order to turn inventory into throughput.” These fixed
costs like rent and salaries are incurred whether or not throughput
increases or decreases. nitially, Alex’s thinking is distorted by
conventional management accounting metrics. This causes him to
waste time and energy “improving efficiency” even though it has
no impact on the profits of the division. Jonah helps Alex align his
organization to the Goal by distinguishing between three
operational measurements: Throughput: the rate at which the
system generates money through sales net of variable costs. This
corresponds to the value added by the system. Inventory: “all the
money that system has invested in purchasing things which it
intends to sell,” This was later expanded to include all investment
such as plant, property, equipment etc. Operating Expense: “all
the money the system spends in order to turn inventory into
throughput.” These fixed costs like rent and salaries are incurred
whether or not throughput increases or decreases. The
disadvantages of relying on cost accounting yardsticks such as
local efficiencies, economic batch sizes, product‐cost and
inventory evaluations are clearly explained. It is emphasized that
the two essential things necessary for an organization to succeed
are a demand for the product or services of the organization and a
determination to effect change, when required.