MSA

Basic Factory Dynamics (1)

Physics should be explained as simply as possible,

but no simpler.

– Albert Einstein

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Why a Science of Manufacturing?

Confusion in Industry:
• too many “revolutions”
• management by buzzword
• sales glitz over substance
Confusion in Academia:
• high-powered methodology applied to non-problems
• huge variation in what is taught
Example of Other Fields:
• Civil Engineering---statics, dynamics
• Electrical Engineering---electricity and magnetism
• Many others

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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General Measures and Objectives

Fundamental Objective:
• elementary starting point
• source of agreement
• example - make money over the long-term

Hierarchy of Objectives:
• more basic objectives that support fundamental objective
• closer to improvement policies

Tradeoffs:objectives conflict
• we need models

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Hierarchical Objectives
High
Profitability

Low High
Costs Sales

Low Unit Quality High Customer

Costs Product Service

High High Low Fast Many

Throughput Utilization Inventory Response products

Less Short Low High More

Variability Cycle Times Utilization Inventory Variability

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Corporate Measures and Objectives

Fundamental Objective: Maximize the wealth and well-being of the

stakeholders over the long term.

Financial Performance Measures:

1. Net-profit.
2. Return on investment.

Components:
1. Revenue.
2. Expenses.
3. Assets.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Plant Measures and Objectives

Measures:
• Throughput: product that is high quality and is sold.
• Costs: Operating budget of plant.
• Assets: Capital equipment and WIP.

Objectives:
• Maximize profit.
• Minimize unit costs.

Tradeoffs: we would like (but can’t always have)

• Throughput
• Cost
• Assets

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Automobile Design

Requirements:
• Mass of car of 1000 kg
• Acceleration of 2.7 meters per second squared (zero to 60 in 10
seconds)
• Engine with no more than 200 Newtons of force

Can we do it?

Answer: No way!

F = ma
200 Nt ≠ (1000 kg) (2.7 m/s2) = 2,700 Nt.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Factory Design

Requirements:
• Customer demand = 3000 units per day,
• with a (delivery) lead time of not greater than 10 days,
• and with a service level (percent of jobs that finish on time) of at least
90%.

Can we do it?

?
Answer: Who knows?

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Factory Tradeoff Curves

22
21
20
19
18
Lead Time(days)

17
16
15
14
13
12
11
10
9
8
7
74 77 81 85 89 93 97

Service in %
2400 2600 2800 3000

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Definitions

Workstations: a collection of one or more identical machines.

Parts: a component, sub-assembly, or an assembly that moves through the
workstations.

End Items: parts sold directly to customers; relationship to constituent parts

defined in bill of material.

Consumables: bits, chemicals, gasses, etc., used in process but do not

become part of the product that is sold.

Routing: sequence of workstations needed to make a part.

Order: request from customer.
Job: transfer quantity on the line.
Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Definitions (cont.)

Throughput (TH): for a line, throughput is the average quantity of good

(non-defective) parts produced per unit time.

Work in Process (WIP): inventory between the start and endpoints of

a product routing.

Raw Material Inventory: material stocked at beginning of routing.

Crib and Finished Goods Inventory (FGI): crib inventory
is material held in a stockpoint at the end of a routing; FGI is material held in
inventory prior to shipping to the customer.

Cycle Time (CT): time between release of the job at the beginning of the
routing until it reaches an inventory point at the end of the routing.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Reminder: Factory Physics

Definition: A manufacturing system is a network of processes

through which parts flow and whose purpose is to generate profit
now and in the future.

Structure: Plant is made up of routings (lines), which in turn are made

up of processes.

Focus: Factory Physics is concerned with the network and flows at the
routing (line) level.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Parameters

Descriptors of a Line:
1) Bottleneck Rate (rb): Rate (parts/unit time or jobs/unit time) of the
process center having the highest long-term utilization.

2) Raw Process Time (T0): Sum of the long-term average process

times of each station in the line.

3) Congestion Coefficient (α): A unitless measure of congestion.

• Zero variability case, α = 0.
• “Practical worst case,” α = 1. Note: we won’t use α quantitatively,
• “Worst possible case,” α = W0. but point it out to recognize that lines
with same rb and T0 can behave very
differently.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Basic Parameters (1)

Bottleneck Rate: Rb
the rate of the process center having the least long-term capacity

Capacity
Bottleneck

Rb

Machine

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Basic Parameters (2)

Raw Process Time: T0
the sum of the long-term average process times of each
workstation in the line

T0

Cycle time

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Basic Parameters (3)

Critical WIP : W0 = Rb * T0
the WIP level for which a line having parameters Rb and T0 with no
variability in process time achieves maximum throughput(i.e., Rb ) with
minimum cycle time(i.e., T0)

2 hrs 2 hrs 2 hrs 2 hrs

WIP = w0 = 4
thruput = rb = 0.5

WIP = 10
thruput = rb = 0.5

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Parameters (cont.)

Relationship:

Critical WIP (W0): WIP level in which a line having no congestion

would achieve maximum throughput (i.e., rb) with minimum cycle time
(i.e., T0).

W0 = rb T0

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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The Penny Fab

Characteristics:
• Four identical tools in series.
• Each takes 2 hours per piece (penny).
• No variability.
• CONWIP job releases.

Parameters:
rb = 0.5 pennies/hour
T0 = 8 hours
W0 = 0.5 × 8 = 4 pennies
α = 0 (no variability, best case conditions)

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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The Penny Fab

WIP TH CT TH x CT
1
2
3
4
5
6
7
8
9

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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TH vs. WIP: Best Case

.5
Throughput (Jobs/hr)

.4

.3

.2

.1

0
0 2 4 6 8 10 12 14

WIP (Jobs)

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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CT vs. WIP: Best Case

20
Cycle time (Hours)

16

12

0
0 2 4 6 8 10 12 14

WIP (Jobs)

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Best Case Performance

Best Case Law: The minimum cycle time (CTbest) for a given WIP
level, w, is given by

T0 , if w ≤ W0
CTbest =
w / rb , otherwise.

The maximum throughput (THbest) for a given WIP level, w is given by,

w / T0 , if w ≤ W0
TH best =
 rb , otherwise.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Best Case Performance (cont.)

Example: For Penny Fab, rb = 0.5 and T0 = 8, so W0 = 0.5 × 8 = 4,

8, if w ≤ 4
CTbest =
2 w, otherwise.

w / 8, if w ≤ 4
TH best =
0.5, otherwise.
which are exactly the curves we plotted.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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A Manufacturing Law

Little's Law: The fundamental relation between WIP, CT, and TH

over the long-term is:

WIP = TH × CT

pieces
pieces = × hours
hour

Examples:
• Checking WIP levels in cash flow analysis.
• Measure of cycle time (e.g., what is cycle time for an automobile?)
• FGI and planned inventory.

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Penny Fab Two

2 hr
5 hr 3 hr

10 hr

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Penny Fab Two

Station Number of Process Station

Number Machines Time Rate
1 1 2 hr j/hr
2 2 5 hr j/hr
3 6 10 hr j/hr
4 2 3 hr j/hr

rb = T0 = W0 =

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Worst Case

Observation: The Best Case yields the minimum cycle time and
maximum throughput for each WIP level.

Question: What conditions would cause the maximum cycle time and
minimum throughput?

Experiment:
• set average process times same as Best Case (so rb and T0 unchanged)
• follow a marked job through system
• imagine marked job experiences maximum queueing

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Worst Case Penny Fab

Time = 0 hours

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Worst Case Penny Fab

Time = 32 hours Note:

CT = 32 hours
= 4× 8 = wT0
TH = 4/32 = 1/8 = 1/T0

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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TH vs. WIP: Worst Case

0.6
0.5
Best Case
rb
0.4
TH

0.3
0.2
0.1
Worst Case
1/T0 0
0 1 2 3 4 5 6 7 8 9 10 11 12
WIP

W0

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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CT vs. WIP: Worst Case

32 Worst Case
28
24
20
CT

16
12 Best Case
8
T0 4
0
0 1 2 3 4 5 6 7 8 9 10 11 12

WIP

W0

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman
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Worst Case Performance

Worst Case Law: The worst case cycle time for a given WIP level,
w, is given by,

CTworst = w T0

The worst case throughput for a given WIP level, w, is given by,

THworst = 1 / T0

Randomness? None - perfectly predictable, but bad!

Factory Dynamics (1) Text Source: Factory Physics (2008) by Hopp & Spearman