Line Balancing..

Purpose is to minimize the number

of people and/or machines on an
assembly line that is required to
produce a given number of units

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 71

Line Balancing Example

EXAMPLE
Green Grasss plant manager just received marketings latest
forecasts of fertilizer spreader sales for the next year. She
wants its production line to be designed to make 2,400
spreaders per week. The plant will operate 40 hours per week.

a. What should be the lines cycle time or throughput rate per

hour be?
Throughput rate/hr = 2400 / 40 = 60 spreaders/hr
Cycle Time = 1/Throughput rate= 1/60 = 1 minute = 60 seconds

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 72

Line balancing Example continued:
Assume that in order to produce the new fertilizer spreader on
the assembly line requires doing the following steps in the order
specified:

Work Time Immediate

Description
Element (sec) Predecessor(s)

A Bolt leg frame to hopper 40 None

B Insert impeller shaft 30 A
C Attach axle 50 A
D Attach agitator 40 B
E Attach drive wheel 6 B
F Attach free wheel 25 C
G Mount lower post 15 C
H Attach controls 20 D, E
I Mount nameplate 18 F, G
Total 244

b. What is the total number of stations or machines required?

TM (total machines) = total production time / cycle time = 244/60 = 4.067 or 5
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 73
Draw a Precedence Diagram
SOLUTION
The figure shows the complete diagram. We begin with work
element A, which has no immediate predecessors. Next, we add
elements B and C, for which element A is the only immediate
predecessor. After entering time standards and arrows showing
precedence, we add elements D and E,
and so on. The diagram simplifies
D
interpretation. Work element F, H
for example, can be done B 40
20
anywhere on the line after 30 E
element C is completed. 6
However, element I must A
F
await completion of 40 C
25
elements F and G. 50
I
18
G
Precedence Diagram for
Assembling the Big Broadcaster 15

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 74

Allocating work or activities to
stations or machines
The goal is to cluster the work elements into
workstations so that
1. The number of workstations required is minimized
2. The precedence and cycle-time requirements are not
violated
The work content for each station is equal (or
nearly so, but less than) the cycle time for the line
Trial-and-error can be used but commercial
software packages are also available

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 75

Finding a Solution

The minimum number of workstations is 5 and the

cycle time is 60 seconds, so Figure 5 represents
an optimal solution to the problem

D
H
B 40
20
30 E
6
A
F
40 C
25
50
I
18
G
15

Firtilizer Precedence Diagram Solution

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 76

Calculating Line Efficiency

c. Now calculate the efficiency measures of a five-station

solution:

t 244
Efficiency = (100) = = 81.3%
nc 5(60)

Balance delay (%) = 100 Efficiency = 100% - 81.3% = 18.7%

Idle time = nc t = 5(60) 244 = 56 seconds

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 77

A Line Process

The desired output rate is matched to the

staffing or production plan
Line Cycle Time is the maximum time
allowed for work at each station is
1
c=
r

where
c = cycle time in hours
r = desired output rate

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 78

A Line Process

The theoretical minimum number of

stations is

t
TM =
c

where
t = total time required to assemble
each unit

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 79

A Line Process

Idle time, efficiency, and balance delay

Idle time = nc t

where
n = number of stations

t
Efficiency (%) = nc (100)

Balance delay (%) = 100 Efficiency

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 10

Solved Problem 2
A company is setting up an assembly line to produce 192 units
per 8-hour shift. The following table identifies the work
elements, times, and immediate predecessors:

Work Element Time (sec) Immediate Predecessor(s)

A 40 None
B 80 A
C 30 D, E, F
D 25 B
E 20 B
F 15 B
G 120 A
H 145 G
I 130 H
J 115 C, I
Total 720

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 11

Solved Problem 2

a. What is the desired cycle time (in seconds)?

b. What is the theoretical minimum number of stations?
c. Use trial and error to work out a solution, and show your
solution on a precedence diagram.
d. What are the efficiency and balance delay of the solution
found?

SOLUTION
a. Substituting in the cycle-time formula, we get

1 8 hours
c= r = (3,600 sec/hr) = 150 sec/unit
192 units

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 12

Solved Problem 2

b. The sum of the work-element times is 720 seconds, so

t 720 sec/unit
TM = c = = 4.8 or 5 stations
150 sec/unit-station

which may not be achievable.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 13

Solved Problem 2
c. The precedence diagram is shown in Figure 7.6. Each row in
the following table shows work elements assigned to each of
the five workstations in the proposed solution.
Work Immediate
Element Predecessor(s)
D A None
25 B A
C D, E, F
D B
B E C
E B
80 20 30 F B
G A
F J
A H G
15 115 I H
40 G J C, I
120
H I

145 130

Figure 7.6 Precedence Diagram

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 14

Solved Problem 2 D
25

B E C

80 20 30
J

A F 115

40 G 15 I
H
120 130
145

Work-Element Cumulative Idle Time

Station Candidate(s) Choice
Time (sec) Time (sec) (c= 150 sec)
S1

S2

S3
S4

S5

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 15

Solved Problem 2 D
25

B E C

80 20 30
J

A F 115

40 G 15 I
H
120 130
145

Work-Element Cumulative Idle Time

Station Candidate(s) Choice
Time (sec) Time (sec) (c= 150 sec)
S1 A A 40 40 110
B B 80 120 30
D, E, F D 25 145 5
S2 E, F, G G 120 120 30
E, F E 20 140 10
S3 F, H H 145 145 5
S4 F, I I 130 130 20
F F 15 145 5
S5 C C 30 30 120
J J 115 145 5

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 16

Solved Problem 2

d. Calculating the efficiency, we get

t 720 sec/unit
Efficiency (%) = nc (100) =
5(150 sec/unit)

= 96%

Thus, the balance delay is only 4 percent (10096).

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 17

In class - Example
A plant manager needs a design for an assembly line to
assembly a new product that is being introduced. The time
requirements and
immediate Work Element Time (sec)
Immediate
predecessors for the Predecessor
work elements are A 12
as follows: B 60 A
C 36
D 24
E 38 C, D
F 72 B, E
G 14
H 72
I 35 G, H
J 60 I
K 12 F, J
Total = 435

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 18

In class - Example
Draw a precedence diagram, complete I, F, J, and K

Work Time (sec) Immediate

Element Predecessor A
A 12
B 60 A
C 36 B
D 24 C
E 38 C, D F
F 72 B, E
D E K
G 14

H 72
J
I 35 G, H

J 60 I
G I
K 12 F, J

Total = 435
H

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 19

In class - Example

If the desired output rate is 30 units per hour, what are the cycle
time and theoretical minimum?

1 1
c= r = (3600) = 120 sec/unit
30

t 435
TM = c = = 3.6 or 4 stations
120

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 20

In class - Example

Suppose that we are fortunate enough to find a solution with

just four stations. What is the idle time per unit, efficiency, and
the balance delay for this solution?

Idle time = nc t = 4(120) 435 = 45 seconds

t 435
Efficiency (%) = nc (100) = (100) = 90.6%
480

Balance delay (%) = 100 Efficiency = 100 90.6 = 9.4%

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 21

In class - Example

Using trial and error, one possible solution is shown below.

Work
Elements Idle Time
Station Assigned Cumulative Time (c = 120)
1
2
3
4
5

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 22

In class - Example

Using trial and error, one possible solution is shown below.

Work
Elements Idle Time
Station Assigned Cumulative Time (c = 120)
1 H, C, A 120 0
2 B, D, G 98 22
3 E, F 110 10
4 I, J, K 107 13
5 A fifth station is not needed

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 23

Managerial Considerations

Pacing is the movement of product from

one station to the next
Behavioral factors such as absenteeism,
turnover, and grievances can increase after
installing production lines
The number of models produced
complicates scheduling and necessitates
good communication
Cycle times are dependent on the desired
output rate

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall. 7 24

Inventory
Management & the
Economic Order
Quantity (EOQ)

7 25
Lecture today

Why is inventory so bad?

Why hold inventory?
Where to hold inventory?
What are types of inventory to keep?
What are the inventory costs?
How much inventory to keep?
When to order & how much to order?
What do I need to know to make those
decisions?

7 26
Inventory Management

Inventory management is the planning and

controlling of inventories in order to meet the
competitive priorities of the organization.

Inventory management requires information

about expected demands, amounts on hand and
amounts on order for every item stocked at all
locations.

7 27
Inventory Basics

Inventory is created when the receipt of

materials, parts, or finished goods
exceeds their disbursement.
Inventory is depleted when their
disbursement exceeds their receipt.
An inventory managers job is to balance
the advantages and disadvantages of
both low and high inventories.

7 28
Inventory Costs

Cost of capital
Obsolescence
Storage
Insurance
Taxes
Security
Theft
Damage
Locating
Measurement
Management & Labor
7 29
Why hold Inventory?

Customer Sales & Service: Avoid Retail

stock outs and thus customer goodwill
(Retailing)
Seasonal sales (Xmas trees)
Take advantage of quantity discounts
Balance process flow time
Uncertainty in supply and demand
Lead Time
Speculative inventory (wine, gold)

7 30
Inventory at WAL-MART

Making sure the shelves are stocked with tens of

thousands of items at their 5,379 stores in 10 countries is
no small matter for inventory managers at Wal-Mart.
Knowing what is in stock, in what quantity, and where it is
being held, is critical to effective inventory management.
With inventories in excess of $29 billion, Wal-Mart is aware
of the benefits from improved inventory management.
They know that effective inventory management must
include the entire supply chain.
The firm is implementing radio frequency identification
(RFID) technology in its supply chain.

7 31
7 32
Macro Inventory Decisions

Where do we hold inventory?

Manufacturers and suppliers
warehouses and distribution centers
retailers
Types of Inventory to keep?
raw materials
WIP
finished goods

7 33
Micro Inventory Decisions

When to order items?

How much of each item to order?
How much safety stock to keep?

Objective: minimize overall cost of keeping

inventory!

7 34
Relevant Costs in an Inventory System

Procurement costs
Ordering cost (administrative, inspection,
transportation etc.)
Holding costs
Maintenance and Handling
Taxes

Obsolescence

Stock-outs costs
Lost sales (Customer goodwill)
Backorders

7 35
 Relevant information to any inventory
decision

Knowing how much demand there is

Knowing if this demand is fairly constant or
varies
Knowing what is in stock
Knowing where they exist in the supply chain
Knowing how long it will take to replenish
Knowing where it is going to be replenished from

7 36
Frequently used inventory terms

Inventory lot size

Replenishment Lead time
Stock out
Reorder Point
Safety stock

7 37
Knowing which Items are Critical

Thousands of items are held in inventory

by a typical organization, but only a
small % of them deserves managements
closest attention and tightest control.

ABC analysis: The process of dividing

items into three classes, according to
their dollar usage, so that managers can
focus on items that have the highest
dollar value.

7 38
 ABC Analysis

100 Class C
Class B
90
Percentage of dollar value Class A
80

70

60

50

40

30

20

10

0
10 20 30 40 50 60 70 80 90 100
Percentage of items
7 39
Economic Order Quantity (EOQ)

Economic Order Quantity (EOQ) is the

lot size that minimizes total annual
inventory holding and ordering costs.
Assumptions of EOQ
1. The demand rate is constant and known with
certainty.
2. There are no constraints on lot size.
3. The only relevant costs are holding costs
and ordering/setup costs.
4. Decisions for items can be made
independently of other items.
5. Lead time is constant and known with
certainty.

7 40
7 41
7 42
Cycle-Inventory Levels

Receive Inventory depletion

order (demand rate)
On-hand inventory (units)

Q Average
cycle
2
inventory

1 cycle
Time
7 43
Total Annual Cycle-Inventory Costs

Q = lot size; C = total annual cycle-inventory cost

H = holding cost per unit; D = annual demand
S = ordering or setup costs per lot
Annual cost (dollars)

Q D
Total cost = (H) + (S)
2 Q

Q
Holding cost = (H)
2

D
Ordering cost = (S)
Q

Lot Size (Q)

7 44
Costing out a Lot Sizing Policy

Museum of Natural History Gift Shop:

Bird feeder sales are 18 units per week, and the
supplier charges $60 per unit. The cost of placing an
order (S) with the supplier is $45.
Annual holding cost (H) is 25% of a feeders value,
based on operations 52 weeks per year.
Management chose a 390-unit lot size (Q) so that new
orders could be placed less frequently.
What is the annual cycle-inventory cost (C) of the
current policy of using a 390-unit lot size?

7 45
 Costing out a Lot Sizing Policy

Museum of Natural History Gift Shop:

What is the annual cycle-inventory cost (C) of the

current policy of using a 390-unit lot size?

D = (18 /week)(52 weeks) = 936 units H = 0.25 ($60/unit) = $15

Q D 390 936
C= (H) + (S) = (15) + (45)
2 Q 2 390

C = $2925 + $108 = $3033

7 46
 Lot Sizing at the Museum
of Natural History Gift Shop
Current
cost
3000
Annual cost (dollars)

Total cost

2000

Holding cost

1000

Lowest Ordering cost

cost
0 | | | | | | | |
50 100 150 200 250 300 350 400
Best Q (EOQ) Current
Lot Size (Q) Q 7 47
 Computing the EOQ

Bird Feeders:
D = annual demand
2DS
EOQ = S = ordering or setup costs per lot
H
H = holding costs per unit

D = 936 units
2(936)45 = 74.94 or 75 units
H = $15 EOQ =
15
S = $45

Q D 75 936
C= (H) + (S) C= (15) + (45)
2 Q 2 75

C = $1,124.10
7 48
Time Between Orders

Time between orders (TBO) is the average

elapsed time between receiving (or placing)
replenishment orders of Q units for a particular
lot size.
EOQ
TBOEOQ =
D

For the birdfeeder example, using an EOQ of 75

units. TBO = EOQ = 75/936 = 0.080 year
EOQ
D
TBOEOQ = (75/936)(12) = 0.96 months

TBOEOQ = (75/936)(52) = 4.17 weeks

TBOEOQ = (75/936)(365) = 29.25 days

7 49
In Class Example

7 50
In Class Example

7 51
In Class Example (continued)

7 52
In Class Example
continued

7 53
Understanding the Effect of Changes

What happens if there is a change in the

Demand Rate (D)?
What happens if the Setup Costs (S)
changes?
What happens if the holding Costs (H)
change?
What happens if there are errors in
estimating D, H, and S?

7 54