The Impact of Variability on Process PerformancePowerPoint PresentationSlide 3RadPad ScenarioProcess SimulationProduction Lines and BuffersGame sequenceGame 1Slide 9Game 2Game 2: Impact of Buffer SizeGame 3Production Simulation SummaryThe Impact of Variability on Process PerformanceSkiBums.com is a manufacturer of ski equipment and apparel. SkiBums.com has just introduced a new type of snowboard called the RadPad. And since its prime target market is baggy-pants-wearing boarders who use the word “gnarly” far too much, it is anxious to release the product by the time of the winter X-Games. The product is fairly simple to make, requiring 5 steps performed in serial. The process is a “lean process” utilizing only a small amount of work-in-process inventory. The basic process will be nearly identical to the production line for the other snowboard RadX. Sample processing times for each step in the RadX process are provided in the table on the next page (a station consists of machines and people responsible for one step in the production).Your 17 year-old CEO explains to you that the process should be capable of producing 68 units per 20 hour period in order to meet the potential demand. He explains that underproduction could result in lost revenue and overproduction will result in higher operating costs. Would a replica of the current process for RadX be appropriate for the new RadPad? Is it too little or too much capacity?RadPad ScenarioStationItem #1 2 3 4 51 15 10 15 20 602 15 15 15 60 123 60 60 10 12 104 20 12 15 12 125 12 10 30 10 126 12 12 12 10 127 12 12 10 12 108 10 12 12 10 209 12 10 12 10 2010 10 20 12 30 1511 20 20 10 30 2012 12 15 20 15 1513 10 20 20 12 1514 12 15 15 12 1215 12 15 20 60 1016 30 12 15 10 2017 10 10 15 15 1518 15 20 12 10 1219 20 15 10 10 1220 15 12 20 15 1221 20 12 15 15 1522 20 12 12 15 6023 20 15 12 10 1024 15 60 12 10 1225 30 10 15 12 1026 20 12 60 10 1527 10 10 10 11 2028 10 15 12 21 1529 10 20 10 15 1230 20 15 15 20 15AVG: 16.97 16.93 15.77 17.13 17.00RadPad Scenario: Processing Time Data (in minutes)RadPad ScenarioHow many boards can you make in 20 hours?Station #1 Station #5Station #4Station #3Station #2CT: 16.97CT: 16.93 CT: 15.77 CT: 17.13 CT: 17.00Station 4 has the longest cycle time, so it’s the bottleneck.Its throughput is 60/17.13 = 3.5 units/hour.This is the throughput of the line since station 4 is the bottleneck.We can make 20*3.5 = 70 boards in 20 hours if the cycle time is constant.What happens if the cycle time has variability?Let’s simulate and see.Process Simulation•Inventory buffers between stations; start out with 4 units in each.•Each hour, each station will be able to produce between 1 and 6 units according to their die roll. •Throughput rate (capacity) of each station?•The amount each station produces and puts in inventory is limited by the amount of work-in-process inventory available.•We will simulate production for 20 hours.•Station #5 will count the actual production at the end of the simulation to calculate the throughput rate (capacity) of the system.Station #1 Station #5Station #4Station #3Station #2Production Lines and BuffersStation 1 Station 2BufferIf the buffer has 4 units of inventory and Station 2 is capable of producing 2 units per hour, how many units will be completed by Station 2 in one hour? 2What if Station 2 is capable of producing 6 units per hour? 4CompletedActual Production = min(capacity,inventory)Game sequenceStep 1: ProductionRoll the die. Take min(inventory, die roll) from your inventory and put it in front of you.Step 2: ReplenishmentPush over these units to the next stage’s inventory.Game 1•Initial Buffer size between each station is 4.•What is the total production over 20 hours?Team Total Production123456786056475259565661Average production = 55.8!Game 1•Result: Throughput much less than 70!!•Why: WIP limit and variability•Solutions: Increase WIP limit, decrease variabilityGame 2•Initial Buffer size between each station is 8.•What is the total production over 20 hours?Team Total Production123456786666656356736065Average production = 64.25That’s better!Game 2: Impact of Buffer SizeGame 3•Initial Buffer size between each station is 4.•Use coin instead of die (heads = 3, tails = 4)•What is the total production over 20 hours?Team Total Production123456786667696767686871Average production: 67.9Much better!Notice that the variability in total production is lower as well.Production Simulation SummaryWith limited WIP, production variability reduces the effective throughput rate (capacity) of the system.Why does variability occur? Machine and human variations, errors, raw material quality problems,… Variability hurts!What’s the solution?Increase inventory; Disadvantage: costlyReduce variability; e.g. Toyota Production