Transparency Master 27(12)-1
MANUFACTURING SIMULATION
TRADITIONAL VS. JUST-IN-TIME
SYSTEMS
Discuss the impact of moving from a traditional manufacturing system to a just-intime system on the following items.
Group 1: Amount of Inventories
Group 2: Lead Time Needed to Produce the
Product
Group 3: Production Layout
Group 4: Work Scheduling—who/what
determined when each worker
performed a task
Group 5: Quality
Transparency Master 27(12)-2
VALUE-ADDED & NON-VALUEADDED LEAD TIME
Catalog Sales Company
1. Customer calls a 1-800 number.
2. If all operators are busy, the customer’s call is
placed in a queue, waiting for an available operator.
3. Operator enters the customer’s order using a computerized order entry system.
4. The completed customer order is placed in a queue
of orders waiting to be filled. Orders are pulled and
packed in the order they were received. Most orders are pulled within 48 hours.
5. Items from the customer’s order form are pulled
and placed in a box.
6. Box moves on a conveyor belt to the packaging area.
7. Packing material is added if necessary to avoid
damage during shipment. The box is sealed and a
mailing label is attached.
8. Box is moved to the shipping dock.
9. The box is stacked based on the carrier that will be
used for delivery (UPS, FedEx, etc.). The box then
sits until the appropriate carrier arrives.
Transparency Master 27(12)-3
QUALITY COST
CLASSIFICATIONS
1. Prevention
2. Appraisal
3. Internal Failure
4. External Failure
Transparency Master 27(12)-4
PARETO CHART
Quality Costs at Sycamore Manufacturing
200,000
175,000
Dollars
150,000
125,000
100,000
75,000
50,000
25,000
0
1
2
3
4
5
6
7
Activities
Activity 1: Travel & Labor Costs for Warranty Repairs
Activity 2: Cost of Defective Goods Produced
Activity 3: Wages Paid to Quality Inspectors
Activity 4: Parts for Warranty Repairs
Activity 5: Vendor Certification Program
Activity 6: Training for Machine Operators
Activity 7: Preventive Maintenance on Machines
Note: Sycamore Manufacturing’s total sales were $4,000,000.
Transparency Master 27(12)-5
COST OF QUALITY REPORT
SYCAMORE MANUFACTURING
Quality Cost
Classification
Quality
Cost
Cost Summary
Percent of Total
Quality Cost
Prevention
$100,000
16%
3%
Appraisal
125,000
20%
3%
Internal
Failure
150,000
24%
4%
External
Failure
250,000
40%
6%
$625,000
100%
16%
Total
Percent of
Total Sales
Key:
Activity Number
1.
2.
3.
4.
5.
6.
7.
Quality Cost Classification
External Failure
Internal Failure
Appraisal
External Failure
Prevention
Prevention
Prevention
Transparency Master 27(12)-6
ACTIVITY ANALYSIS: RAW
MATERIALS PROCUREMENT
PROCESS AT LOGAN
MANUFACTURING
Raw Materials
Procurement
Activities
Unload shipment
Count quantity of
materials & complete receiving
report
Inspect materials
for quality
Move materials to
factory floor
Total
Activity
Cost
Percent
of Total
Process
Cost
Cost per Raw
Materials
Shipment (600
shipments per
year)
$18,000
20%
$ 30
$12,000
13%
$ 20
$51,000
57%
$ 85
$ 9,000
10%
$ 15
$90,000
100%
$150