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Christal Porter
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1 New students: fill out index card Please list: name what you wish to be called in class/ pronunciation phone number why are you taking this course? personal experience with manufacturing? 1

2 Mechanical Engineering 101 University of California, Berkeley Lecture #3 Key: Period before title: lec version Period after title: handout version 2

3 Today s lecture Review from last time inventory turns, throughput Constant demand inventory model Inventory tradeoffs Mfg system types, layout 3

4 Strategies Decrease inventory Reduce need for long term forecasts reduced lot size = manufacturable more quickly to fill orders for GE.found one extra inventory turn saves $1Billion Eliminate inventory (make products to order) e.g. Tesla negative working capital they have your $$ (long) before assembling product Let customer pull the mfg process (kanban) This is lean mfg ME 101 lec 2 6,

5 Today s lecture Review from last time Constant demand inventory model Inventory tradeoffs Mfg system types, layout 7

6 Inventory (constant demand). Q order size lead time to receive order D demand rate SS safety stock r reorder point (when to place order) Inventory position time 8

7 Average Inventory?. Inventory position time 10

8 Today s lecture Review from last time Constant demand inventory model Inventory tradeoffs Mfg system types, layout 13

9 Holding cost of inventory h = $/item/time Includes? opportunity cost of capital invested storage costs breakage/loss/pilferage taxes insurance refrigeration/special handling costs usually estimated as a portion iof item cost $C i usually.2 to.5 per year h = ic $/item/year 14

10 Holding costs vs. order costs order size tradeoff! more inventory for larger order sizes cost/time_period = h*(q/2) (zero safety stock) more orders for smaller order sizes cost/time_period = A*(D/Q) A = order cost D = demand rate (D/Q is inverse of inventory cycle length) 15

11 Holding costs vs. order costs costs ordering costs holding costs total costs Q* Order size, Q 16

12 Economic Order Quantity EOQ. Find order size Q* minimizing total costs costs = h*(q/2) + A*(D/Q) minimize costs relative to Q 18

13 Holding costs vs. order costs. Coincidence? costs ordering costs holding costs total costs Q* Order size, Q economic order quantity (EOQ), Q* = 20

14 Administrivia Clickers Section Fri 11am Are the funny periods in titles helpful? 21

15 Today s lecture Review from last time Constant demand inventory model Inventory tradeoffs Mfg system types, layout 22

16 Manufacturing vs. Ordering Assume single stage production Setup cost for each batch Exact same concept, formula 23

17 Inventory (constant demand) Q batch size (or order size) lead time to produce batch (or receive order) r reorder point when to start batch (or place order) D demand rate SS safety stock Inventory position Q lead time, r reorder point safety stock SS= r - D time cycle length = Q/demand rate, D 24

18 Holding costs vs. setup costs batch size tradeoff! more inventory for larger batch sizes cost/time = h*(q/2) (zero safety stock) more setups for smaller batch sizes cost/time = A*(D/Q) A = setup cost (order cost) D = demand rate (D/Q is inverse of inventory cycling time) 25

19 Holding costs vs. setup costs costs ordering setup costs holding costs total costs Q* Batch size, Q 26

20 Economic Order Quantity EOQ. Find batch size Q* minimizing total costs costs = h*(q/2) + A*(D/Q) minimize costs relative to Q 28

21 Holding costs vs. setup costs. costs ordering setup costs holding costs total costs Q* Batch size, Q economic order quantity (EOQ), Q* = 30

22 Today s lecture Review from last time Constant demand inventory model Inventory tradeoffs Mfg system types, layout 31

23 Production System Layouts fixed position process cellular product (assembly/flow/transfer line) 32

24 Production System Layouts fixed position part stationary workstations move Ref. M. P. Groover, Automation, Production Systems, and Computer-Integrated Manufacturing, Prentice-Hall, Englewood Cliffs NJ, 1987, p

25 Production System Layouts process organized by machine type Ref. M. P. Groover, Automation, Production Systems, and Computer-Integrated Manufacturing, Prentice-Hall, Englewood Cliffs NJ, 1987, p

26 Production System Layouts cellular part families shafts l/d > 5 wheels pins shafts l/d 5 prismatic parts a, b, c < x prismatic parts a, b, c x 35

27 Production System Layouts product a.k.a. assembly/flow/transfer line parts move stations fixed 36 Ref. M. P. Groover, 1987, p. 29.

28 Typical Production Systems low quantities products can be complex custom orders common infinite variability process or fixed position layout job shop 37

29 Typical Production Systems medium quantities (e.g ,000) limited variability CNC for increased MCE hard product variety (different product categories) process layout machines grouped by functions needed for batch/lot soft product variety (small differences between models) FMS or cellular layout group by similar parts to minimize changeover time 38

30 Typical Production Systems large quantities (e.g. >~10,000) = mass production no additional variability highly automated, hard system dedicated tooling quantity production process layout flow line/transfer line/assembly line sequence of workstations single model or mixed model 39

31 Which System Type? 40

32 Production System Type vs. Lot/Batch Size & Complexity Transfer Line Extension of FMS/Cell flexibility with agile/hmlv Batch size, Q FMS Cell Job Shop e.g. number of parts, number of processing steps Complexity 42

33 Choice of Manufacturing System usually based on [Ayres] product complexity batch/lot size and run length diversity of lots precision mass or linear dimensions 43

34 .Summary: Balance 44

Mechanical Engineering 101

Mechanical Engineering 101 University of California, Berkeley Lecture #2 Key: Period before title: lec version Period after title: handout version 2 Today s lecture... Process... WIP, flow Money Overhead,