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Chapter 3

33:799:460 Chapter Notes - Chapter 3: Capacity Utilization, Full-Time Equivalent, Value Stream Mapping


Department
Supply Chain Management
Course Code
33:799:460
Professor
Ajay Das
Chapter
3

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Value Stream Mapping Practice
Farmington, Inc. makes a wide variety of propane tanks. The business is seasonal with May
through October being their busy season. During this period, the weekly requirement for the sole
customer served from Farmington’s Columbus, Indiana manufacturing plant—Johnson, Inc.—is
15,000 model NCX-10 tanks. The Columbus plant ships to Johnson, Inc. weekly by truck.
The Columbus manufacturing plant runs two eight-hour shifts per day, five days a week during
the busy season. A finished propane tank requires three operations: Welding, Painting, and
Packaging. Production control receives emailed orders from Johnson, Inc. weekly for different
colors, variations, and models of tanks and issues daily schedules to each operation.
Production control also orders raw materials from their supplier—B.T. Industries. Raw materials
are delivered once every two weeks by truck from B.T. Industries’ warehouse.
Rihanna, an expert in the “lean” process improvement methodology, traced the material and
information flows at the Columbus plant for the production of the NCX10, available in three
colors and three variations. She observed the following:
• There were 14 days of raw materials waiting before the Welding operation.
• There was one employee working at the Welding workstation. Rihanna watched that operation
for 30 minutes and observed that work on 84 tanks was completed. Rihanna was informed that
there is a 30 minute changeover/setup in this operation between variations.
• There were 16,000 welded tanks in inventory after the Welding operation.
At the Painting operation, there were three employees working in parallel at three workstations.
Rihanna observed one person working in the painting operation for 30 minutes and observed that
she painted 35 tanks. Rihanna was informed that there is a 5 minute changeover/setup in this
operation to change paint colors.
• There were 20,000 painted tanks in inventory after the Painting operation.
• The Packaging operation on the NCX10 production line is shared with other products. The
station has six workstations for six employees to work in parallel, and each employee dedicates
30% of their time to packing NCX10 tanks. After observing one of the six workers at the station
for 30 minutes, Rihanna observed that the worker had packaged 40 tanks.
• There were 25,000 tanks sitting in the finished goods area waiting to be shipped.
Please help Rihanna prepare a current state value stream map based on her observations. Provide
the computations for parts 1-15 and complete the attached blank template of the value stream.
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1. What is the unit of analysis in this process? (What is it that is flowing through the
process?)
2. What is the takt time of the entire value stream process
Takt time = total capacity ÷ demand
= (2 * 8hr shifts * 60 min * 60 sec) ÷ (15k tanks/week ÷ 5 days/week)
= 57,600 seconds ÷ 3000 tanks = 19.2 seconds
3. Processing time for the welding task? (Note PT does not include waiting time, so PT is
just time spent on the actual operation on the unit, NOT Flow time/Lead time)
Processing time (PT) = actual operation time ÷ units outputted
= (30 min ÷ 84 tanks) = 21.4 seconds
4. Cycle time for the welding task (time between 2 successive units)? 1 FTE (Full Time
Employee) works at this station.
Cycle time (CT) = processing time ÷ # of FTE
= 21.4 seconds ÷ 1 FTE = 21.4 seconds
5. Implied capacity utilization for the welding station given the stated demand on the station
(15000 tanks/mo = 3000 tanks/day; capacity of the station = 1 FTE/shift * 2 shifts *
8hrs/shift * 3600 secs/hr).
Implied utilization = (CT * demand/day) ÷ (# of FTE * total capacity/day)
= (21.4 sec * 3k tanks/day) ÷ (1 FTE * 57,600 sec) = 111.46%
OR
Implied utilization = (CT ÷ takt time)
= (21.4 sec ÷ 19.2 sec) = 111.46%
6. Processing time for the painting task?
PT = 30 min ÷ 35 units = 51.4 sec
7. Cycle time for the painting task (time between 2 successive units)? 1 FTE (Full Time
Employee) works at this station.
CT = 51.4 sec ÷ 3 FTE = 17.1 sec
8. Implied capacity utilization for the painting station given the stated demand on the station
(same demand; but note 3 FTEs/shift working simultaneously at this location).
Implied utilization = 17.1 sec ÷ 19.2 sec = 89.27%
9. Processing time for the packaging task?
PT = 30 min ÷ 40 tanks = 45 sec
10. Cycle time for the packaging task (time between 2 successive units)? 1 FTE (Full Time
Employee) works at this station.
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