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Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 1
8. Lean Production Systems
- Lean Concepts
- The Toyota System (JIT, …) - Synchronous Mfg. & Theory of Constraints
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 2
8a. Lean Production
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
• Lean Production Defined
• The Toyota Production System
• Lean Implementation Requirements
• Lean Services
OBJECTIVES
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Lean Production
• Lean Production can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)
• Lean Production also involves the elimination of waste in production effort
• Lean Production also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Pull System
Customers
Sub
Sub
Fab
Fab
Fab
Fab
Vendor
Vendor
Vendor
Vendor
Final Assembly
Here the customer starts the process, pulling an inventory item from Final Assembly…
Here the customer starts the process, pulling an inventory item from Final Assembly…
Then sub-assembly work is pulled forward by that demand…
Then sub-assembly work is pulled forward by that demand…
The process continues throughout the entire production process and supply chain
The process continues throughout the entire production process and supply chain
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Features of Lean Production
• Management philosophy• “Pull” system though the plant
WHAT IT IS
• Employee participation• Industrial engineering/basics• Continuing improvement• Total quality control• Small lot sizes
WHAT IT REQUIRES
• Attacks waste• Exposes problems and bottlenecks• Achieves streamlined production
WHAT IT DOES
• Stable environment
WHAT IT ASSUMES
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8. MoM - Lean Production & ToC
The Toyota Production System
• Based on two philosophies:– 1. Elimination of waste
– 2. Respect for people
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Elimination of Waste
1. Focused factory networks
2. Group technology
3. Quality at the source
4. JIT production
5. Uniform plant loading
6. Kanban production control system
7. Minimized setup times
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Minimizing Waste: Focused Factory
Networks
CoordinationSystem Integration
These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)
These are small specialized plants that limit the range of products produced (sometimes only one type of product for an entire facility)
Some plants in Japan have as few as 30 and as many as 1000 employees
Some plants in Japan have as few as 30 and as many as 1000 employees
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Minimizing Waste: Group Technology (Part 1)
• Using Departmental Specialization for plant layout can cause a lot of
unnecessary material movement • Using Departmental Specialization for plant layout can cause a lot of
unnecessary material movement
Saw Saw
Lathe PressPress
Grinder
LatheLathe
Saw
Press
Heat Treat
Grinder
Note how the flow lines are going back and forthNote how the flow lines are going back and forth
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Minimizing Waste: Group Technology (Part 2)
• Revising by using Group Technology Cells can reduce movement and improve product flow
• Revising by using Group Technology Cells can reduce movement and improve product flow
Press
Lathe
Grinder
Grinder
A
2
BSaw
Heat Treat
LatheSaw Lathe
PressLathe
1
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Minimizing Waste: Uniform Plant Loading (heijunka)
Not uniform Jan. Units Feb. Units Mar. Units Total
1,200 3,500 4,300 9,000
Uniform Jan. Units Feb. Units Mar. Units Total
3,000 3,000 3,000 9,000
Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.
Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.
How does the uniform loading help save labor costs?How does the uniform loading help save labor costs?
or
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8. MoM - Lean Production & ToC
Minimizing Waste: Inventory Hides Problems
Work in
process
queues
(banks)
Change
orders
Engineering design
redundancies
Vendor
delinquencies
Scrap
Design
backlogs
Machine
downtime
Decision
backlogsInspection
backlogs
Paperwork
backlog
Example: By identifying defective items from a vendor early in the production process the downstream work is saved
Example: By identifying defective work by employees upstream, the downstream work is saved
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Minimizing Waste: Kanban Production Control Systems
Storage Part A
Storage Part AMachine
Center Assembly Line
Material Flow
Card (signal) Flow
Withdrawal kanban
Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place
This puts the system back were it was before the item was pulled
The process begins by the Assembly Line people pulling Part A from Storage
Production kanban
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8. MoM - Lean Production & ToC
Determining the Number of Kanbans Needed
• Setting up a kanban system requires determining the number of kanbans cards (or containers) needed
• Each container represents the minimum production lot size
• An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
The Number of Kanban Card Sets
C
SDL
k
)(1
container theof Size
stockSafety timelead during demand Expected
C
SDL
k
)(1
container theof Size
stockSafety timelead during demand Expected
k = Number of kanban card sets (a set is a card)D = Average number of units demanded over some time periodL = lead time to replenish an order (same units of time as demand)S = Safety stock expressed as a percentage of demand during leadtimeC = Container size
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Example of Kanban Card Determination: Problem Data
• A switch assembly is assembled in batches of 4 units from an “upstream” assembly area and delivered in a special container to a “downstream” control-panel assembly operation
• The control-panel assembly area requires 5 switch assemblies per hour
• The switch assembly area can produce a container of switch assemblies in 2 hours
• Safety stock has been set at 10% of needed inventory
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Example of Kanban Card Determination: Calculations
3or ,75.24
5(2)(1.1))(1
container theof Size
stockSafety timelead during demand Expected
C
SDL
k
3or ,75.24
5(2)(1.1))(1
container theof Size
stockSafety timelead during demand Expected
C
SDL
k
Always round up!
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Respect for People
• Level payrolls
• Cooperative employee unions
• Subcontractor networks
• Bottom-round management style
• Quality circles (Small Group Involvement Activities or SGIA’s)
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8. MoM - Lean Production & ToC
Toyota Production System’s Four Rules
1. All work shall be highly specified as to content, sequence, timing, and outcome
2. Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses
3. The pathway for every product and service must be simple and direct
4. Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Design Flow Process
• Link operations
• Balance workstation capacities
• Redesign layout for flow
• Emphasize preventive maintenance
• Reduce lot sizes
• Reduce setup/changeover time
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Lean Implementation Requirements: Total Quality Control
• Worker responsibility
• Measure SQC
• Enforce compliance
• Fail-safe methods
• Automatic inspection
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Stabilize Schedule
• Level schedule
• Underutilize capacity
• Establish freeze windows
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Kanban-Pull
• Demand pull
• Backflush
• Reduce lot sizes
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Work with Vendors
• Reduce lead times
• Frequent deliveries
• Project usage requirements
• Quality expectations
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Reduce Inventory More
• Look for other areas
• Stores
• Transit
• Carousels
• Conveyors
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Improve Product Design
• Standard product configuration
• Standardize and reduce number of parts
• Process design with product design
• Quality expectations
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Concurrently Solve Problems
• Root cause • Solve permanently
• Team approach
• Line and specialist responsibility
• Continual education
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8. MoM - Lean Production & ToC
Lean Implementation Requirements: Measure Performance
• Emphasize improvement
• Track trends
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8. MoM - Lean Production & ToC
Lean in Services (Examples)
• Organize Problem-Solving Groups
• Upgrade Housekeeping
• Upgrade Quality
• Clarify Process Flows
• Revise Equipment and Process Technologies
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Lean in Services (Examples)
• Level the Facility Load
• Eliminate Unnecessary Activities
• Reorganize Physical Configuration
• Introduce Demand-Pull Scheduling
• Develop Supplier Networks
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 32
Question Bowl
Lean Production seeks to achieve high volume
production using which of the following?
a. Minimal inventory of raw materials
b. Minimal inventory of work-in-process
c. Minimal inventory of finished goods
d. All of the above
e. None of the aboveAnswer: d. All of the above
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 33
Question Bowl
In the Toyota Production System, the
“elimination of waste” involves which of the following?
a. Overproduction
b. Waiting time
c. Transportation
d. All of the above
e. None of the above
Answer: d. All of the above
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 34
Question Bowl
In the Pull System the partner that begins the
process of “pulling” is which of the following?
a. Customers
b. Vendors
c. Fabrication personnel
d. CEO
e. All of the aboveAnswer: a. Customer
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 35
Question Bowl
A Lean Production program requires which of
the following?
a. Employee participation
b. Total quality control
c. Small lot sizes
d. Continuing improvement
e. All of the above
Answer: e. All of the above (Also included in Industrial engineering/basics)
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 36
Question Bowl
Inventory has been known to hide which of the
following production problems?
a. Scrap
b. Vendor delinquencies
c. Decision backlogs
d. All of the above
e. None of the above
Answer: d. All of the above
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 37
Question Bowl
You want to determine how many kanban card sets you need for an
operation. You find that average number of units demanded is
1,000 per hour, the lead time to replenish the order for this item is
10 hours, the container size is 10 units, and the safety stock is
estimated to be 5% of the expected demand. Which of the
following is the desired number of kanban card sets?
a. 1050
b. 1000
c. 605
d. 500
e. None of the above
Answer: a. 1050 ([1000x10](1+0.05)/10=1050)
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 38
Question Bowl
When trying to implement Lean system a
“stabilized schedule” includes which of the
following?
a. Demand pull
b. Backflush
c. Fail-safe methods
d. All of the above
e. None of the above
Answer: e. None of the above (These include: level schedule, underutilization capacity, and establish freeze windows.)
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8. MoM - Lean Production & ToC 39
8b. Synchronous Manufacturing and
Theory of Constraints
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8. MoM - Lean Production & ToC
• Goldratt’s Rules
• Goldratt’s Goal of the Firm
• Performance Measurement
• Capacity and Flow issues
• Synchronous Manufacturing
OBJECTIVES
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8. MoM - Lean Production & ToC
Goldratt’s Rules of Production Scheduling
• Do not balance capacity balance the flow• The level utilization of a nonbottleneck
resource is not determined by its own potential but by some other constraint in the system
• Utilization and activation of a resource are not the same
• An hour lost at a bottleneck is an hour lost for the entire system
• An hour saved at a nonbottleneck is a mirage
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8. MoM - Lean Production & ToC
Goldratt’s Rules of Production Scheduling (Continued)
• Bottlenecks govern both throughput and inventory in the system
• Transfer batch may not and many times should not be equal to the process batch
• A process batch should be variable both along its route and in time
• Priorities can be set only by examining the system’s constraints and lead time is a derivative of the schedule
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8. MoM - Lean Production & ToC
Goldratt’s Theory of Constraints (TOC)
• Identify the system constraints• Decide how to exploit the system
constraints• Subordinate everything else to that
decision• Elevate the system constraints• If, in the previous steps, the constraints
have been broken, go back to Step 1, but do not let inertia become the system constraint
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8. MoM - Lean Production & ToC
Goldratt’s Goal of the Firm
The goal of a firm is to make money
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8. MoM - Lean Production & ToC
Performance Measurement:Financial
• Net profit– an absolute measurement in dollars
• Return on investment– a relative measure based on investment
• Cash flow– a survival measurement
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8. MoM - Lean Production & ToC
Performance Measurement:Operational
• 1. Throughput– the rate at which money is generated by the
system through sales
• 2. Inventory– all the money that the system has invested in
purchasing things it intends to sell
• 3. Operating expenses– all the money that the system spends to turn
inventory into throughput
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8. MoM - Lean Production & ToC
Productivity
• Does not guarantee profitability– Has throughput increased?– Has inventory decreased?– Have operational expenses
decreased?
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8. MoM - Lean Production & ToC
Unbalanced Capacity
• In earlier chapters, we discussed balancing assembly lines– The goal was a constant cycle time
across all stations
• Synchronous manufacturing views constant workstation capacity as a bad decision
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8. MoM - Lean Production & ToC
The Statistics of Dependent Events
• Rather than balancing capacities, the flow of product through the system should be balanced
Process Time (B)Process Time (A)
106 8 10 12 14
Process Time (B) Process Time (A)
10 6 8 10 12 14
(Constant)
(Constant)(Variable)
(Variable)
When one process takes longer than the average, the time can not be made up
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8. MoM - Lean Production & ToC
Capacity Related Terminology
• Capacity is the available time for production
• Bottleneck is what happens if capacity is less than demand placed on resource
• Nonbottleneck is what happens when capacity is greater than demand placed on resource
• Capacity-constrained resource (CCR) is a resource where the capacity is close to demand placed on the resource
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8. MoM - Lean Production & ToC
Capacity Example Situation 1
X Y Market
Case A
X YBottleneck Nonbottleneck
Demand/month 200 units 200 unitsProcess time/unit 1 hour 45 minsAvail. time/month 200 hours 200 hours
There is some idle production in this set up. How much?There is some idle production in this set up. How much?
25% in Y25% in Y
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8. MoM - Lean Production & ToC
Capacity Example Situation 2
Y X Market
Case B
X YBottleneck Nonbottleneck
Demand/month 200 units 200 unitsProcess time/unit 1 hour 45 minsAvail. time/month 200 hours 200 hours
Is there is going to be a build up of unnecessary production in Y?
Is there is going to be a build up of unnecessary production in Y?
Yes, 25% in YYes, 25% in Y
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8. MoM - Lean Production & ToC
Capacity Example Situation 3
X Y
Assembly
Market
Case C
X YBottleneck Nonbottleneck
Demand/month 200 units 200 unitsProcess time/unit 1 hour 45 minsAvail. time/month 200 hours 200 hours
Is there going to be a build up in unnecessary production in Y?
Is there going to be a build up in unnecessary production in Y?
Yes, 25% in YYes, 25% in Y
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC
Capacity Example Situation 4
X Y
Market Market
Case D
X YBottleneck Nonbottleneck
Demand/month 200 units 200 unitsProcess time/unit 1 hour 45 minsAvail. time/month 200 hours 200 hours
If we run both X and Y for the same time, will we produce any unneeded production?
If we run both X and Y for the same time, will we produce any unneeded production?
Yes, 25% in YYes, 25% in Y
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8. MoM - Lean Production & ToC
Time Components of Production Cycle
• Setup time is the time that a part spends waiting for a resource to be set up to work on this same part
• Process time is the time that the part is being processed
• Queue time is the time that a part waits for a resource while the resource is busy with something else
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8. MoM - Lean Production & ToC
Time Components of Production Cycle (Continued)
• Wait time is the time that a part waits not for a resource but for another part so that they can be assembled together
• Idle time is the unused time that represents the cycle time less the sum of the setup time, processing time, queue time, and wait time
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8. MoM - Lean Production & ToC
Saving Time
Bottleneck Nonbottleneck
What are the consequences of saving time at each process?
What are the consequences of saving time at each process?
Rule: Bottlenecks govern both throughput and inventory in the system. Rule: An hour lost at a bottleneck is an hour lost for the entire system. Rule: An hour saved at a nonbottleneck is a mirage.
Rule: Bottlenecks govern both throughput and inventory in the system. Rule: An hour lost at a bottleneck is an hour lost for the entire system. Rule: An hour saved at a nonbottleneck is a mirage.
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8. MoM - Lean Production & ToC
Drum, Buffer, Rope
A B C D E F
Bottleneck (Drum)
Inventorybuffer
(time buffer)Communication
(rope)
Market
Exhibit 18.9Exhibit 18.9
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8. MoM - Lean Production & ToC
Quality Implications
• More tolerant than JIT systems– Excess capacity throughout system
• Except for the bottleneck– Quality control needed before
bottleneck
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8. MoM - Lean Production & ToC
Batch Sizes
• What is the batch size?
• One?
• Infinity?
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8. MoM - Lean Production & ToC
Bottlenecks and CCRs:Flow-Control Situations
• A bottleneck – (1) with no setup required when changing from
one product to another– (2) with setup times required to change from
one product to another
• A capacity constrained resource (CCR)– (3) with no setup required to change from one
product to another– (4) with setup time required when changing
from one product to another
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8. MoM - Lean Production & ToC
Inventory Cost Measurement:Dollar Days
• Dollar Days is a measurement of the value of inventory and the time it stays within an area
department a withindays of Number
inventory of Value Days Dollar
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8. MoM - Lean Production & ToC
Benefits from Dollar Day Measurement
• Marketing– Discourages holding large amounts of
finished goods inventory
• Purchasing– Discourages placing large purchase orders
that on the surface appear to take advantage of quantity discounts
• Manufacturing– Discourage large work in process and
producing earlier than needed
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8. MoM - Lean Production & ToC
Comparing Synchronous Manufacturing to MRP
• MRP uses backward scheduling
• Synchronous manufacturing uses forward scheduling
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8. MoM - Lean Production & ToC
Comparing Synchronous Manufacturing to JIT
• JIT is limited to repetitive manufacturing
• JIT requires a stable production level
• JIT does not allow very much flexibility in the products produced
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8. MoM - Lean Production & ToC
Comparing Synchronous Manufacturing to JIT (Continued)
• JIT still requires work in process when used with kanban so that there is “something to pull”
• Vendors need to be located nearby because the system depends on smaller, more frequent deliveries
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8. MoM - Lean Production & ToC
Relationship with Other Functional Areas
• Accounting’s influence
• Marketing and production
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8. MoM - Lean Production & ToC 68
Question Bowl
Which of the following are examples of Goldratt’s Rules of Production Scheduling?
a. Balance flow, not capacityb. Utilization and activation are the samec. Nonbottlenecks govern throughputd. All of the abovee. None of the aboveAnswer: a. Balance flow, not capacity
(There are eight other rules.)
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8. MoM - Lean Production & ToC 69
Question Bowl
Which of the following are examples of Goldratt’s Theory of Constraints?
a. Identify the system constraintsb. Decide how to exploit the system
constraintsc. Elevate the system constraintsd. All of the abovee. None of the aboveAnswer: d. All of the above
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8. MoM - Lean Production & ToC 70
Question Bowl
Which of the following is Goldratt’s “Goal of the Firm”?
a. Reduce costsb. Increase jobsc. Increase market shared. All of the abovee. None of the aboveAnswer: e. None of the above (The Goal
of the Firm is to “make money”.)
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8. MoM - Lean Production & ToC 71
Question Bowl
Which of the following are Goldratt’s Financial Measurements used to measure a firm’s ability to make money?
a. Net profitb. Return on investmentc. Cash flowd. All of the abovee. None of the aboveAnswer: d. All of the above
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8. MoM - Lean Production & ToC 72
Question Bowl
Which of the following are Goldratt’s Operational Measurements used to measure a firm’s ability to make money?
a. Throughputb. Inventoryc. Operating expensesd. All of the abovee. None of the aboveAnswer: d. All of the above
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 73
Question Bowl
According to Goldratt, any resource whose capacity is less than the demand placed on it, is considered which of the following?
a. Nonbottleneck resourceb. Bottleneck resourcec. Capacity-constrained resourced. A buffer resourcee. None of the aboveAnswer: b. Bottleneck resource
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8. MoM - Lean Production & ToC 74
Question Bowl
Which of the following kinds of time make up a “cycle time”?
a. Setup b. Processingc. Queued. Waite. All of the aboveAnswer: e. All of the above (The correct
answer can also include Idle Time.)
Compiled by Ramesh Adavi
8. MoM - Lean Production & ToC 75
Question Bowl
When comparing JIT to synchronous manufacturing, synchronous manufacturing has which of the following drawbacks?
a. Limited to repetitive manufacturingb. Requires stable production levelc. Does not allow much flexibility in the
products producedd. All of the abovee. None of the aboveAnswer: e. None of the above (These are
drawbacks of JIT, not synchronous manufacturing.)