Problem description:

LGG company is interested in implementing lean

concepts in its refrigerator production facility to

reduce its production lead time and costs. A major

step to convert its traditional production system to

a lean one is to develop the current state map. The

company produces different models of

refrigerators, but they decided to start with a

product family that contains two models: model

$301$ and model $302.$ The final products are sent

directly to the distributor Sellers Inc. once a week

and the metal sheets are received from their

supplier Steels Co$.$ once a week.

Customer$$s demand

While the weekly demand may exhibit

considerable mix variations, the total demand has

been quite stable at an average of $140$ units per

week $($with an average of $100$ units for model $301$

and $40$ units for model $302).$ Sellers Inc. currently

receives one weekly shipment from the company

and would prefer daily shipments in the future as

well as some reduction in unit cost.

Work time

$5$ days per week; One $8-$hr shift per day.

Two $15-$min paid break periods;

The regular time labour cost is $$40/$hr and the

overtime labour cost is $$60/$hr$.$

The current collective agreement limits overtime

to a maximum of $2$ hrs per day.

Production Control Department

The Production Control Department performs the

following actions:

Receives a monthly forecast from the buyer via

fax and enters it manually into the SAP system.

Receives weekly order from the buyer via fax,

Sends the $8-$week forecast to the raw material

supplier via fax,

Replenishes the raw metal sheets by weekly

orders via fax,

Generates the MRP$-$ based weekly requirements,

Sends weekly operations schedules to all the

departments.

Production processes:

Each unit goes through all the production processes

in the following order.

Process Name Metal cutting &

bending $($shared$)$

Used labor $1$

Cycle time $($sec$.)45$

Changeover time

$($min$.)$

$45$

Up$-$time $60\%$

Observed inventory $15$ days of raw sheets

$($worth $$6000),$

$380$ units of cut$/$bent

sheets @$$5$ each$*$

Process Name Base & Door

assembly

Used labor $3$

Cycle time $($min$)36($cannot reduce$)$

Changeover time $($min$.)2$

Up$-$time $95\%$

Observed inventory $300($units$)$ @ $$50$

each$*$

Process Name Insulation

Used labor $2$

Cycle time $($min$)20($cannot reduced$)$

Changeover time $($min$.)5$

Up$-$time $85\%$

Observed inventory $261($units$)$ @ $$60$

each$*$

Process Name Engine $+$

Condenser

$2/2$

Used labor $2$

Total cycle time $($min$)20($cannot reduce$)$

Changeover time $($min$.)4$

Up$-$time $95\%$

Observed inventory $210($units$)$ @ $$150$

each$*$

Process Name Gas insertion$*$

Used labor $1$

Cycle time $($min$)15$

Changeover time $($min$.)15$

Up$-$time $90\%$

Observed inventory $200($units$)$ @ $$300$

each$*$

$*$Gas insertion is done at another location and

cannot be relocated. Refrigerators are transferred

to the gas insertion station once a day.

Process Name Main Assembly

Used labor $6$

Total cycle time $($min$)60$

Changeover time $($min$.)0$

Up$-$time $95\%$

Observed inventory $247($units$)$ @ $$500$

each$*$

Process Name Testing &

Packaging

Used labor $3$

Cycle time $($min$)27$

Changeover time $($min$.)5$

Up$-$time $90\%$

Observed inventory $290($units$)$ @ $$650$

each$*$

Process Name Shipping

$*$ Note: Given costs represent the unit material

$+$ labour cost of an item at that particular stage

of production $($excluding overhead cost$).$

Annual unit holding cost is historically shown to

be $15\%$ of the material $+$ labour costs.

Use Microsoft Visio to draw the current state

map $($CSM$)$ of the case described below. Write

a report to explain the material and information

flow.

Also show your calculations for the total

production lead$-$time and value$-$added time as

well as all the information required in the

following table:

CSM

Total Production Leadtime

$($days$)$

Total Value Added Time

$($minutes$)$

Number of Operators

Total annual Mtl$+$Labour Cost

Unit labour cost

Unit holding cost $($annual$)$

Your report should also contain a discussion of

the wastes you see and their sources.

Process Name Accessory insertion

Used labor $2$

Cycle time $($min$)16$

Changeover time $($min$.)0$

Up$-$time $95\%$

Observed inventory $200($units$)$ @ $$600$