The $200,000$ sq$.$ ft$.$ facility has been manufacturing flanges in Indianapolis, IN for the past $50$ years. Flanges are bolted, steel plates used to connect pipes with one and other. Manufacturing of flanges consists of five operations: $(1)$ hot forging; $(2)$ batch normalizing; $(3)$ turning; $(4)$ drilling; and $(5)$ assembly. As is typical of a facility of this age, all production assets are fully depreciated.

To address some issues within the facility, senior management has asked for a present$-$state VSM covering all aspects of flange manufacturing, from incoming raw materials to outgoing finished products. Management has likewise asked for a future$-$state VSM to address any issues uncovered.

Outgoing Logistics

Flanges made in the factory are shipped to the company$$s distribution center in Muncie, IN$.$ The distribution center$$s standing $12,000-$piece weekly production order is issued to the factory through SAP $($enterprise resource planning software$).$ The logistics department arranges for pick$-$up from the factory$$s finished product warehouse every Friday at the end of the production shift for evening delivery to Muncie. Recently, the logistics department at the distribution center has been complaining about excessively long manufacturing lead times as compared to the industry standard of two weeks.

Incoming Logistics

The factory manufactures flanges from steel bars. Each bar weighs $94$ kg and costs USD $88($excluding delivery fee$).$ The steel bar supplier is located in Gary, IN$.$ The bar vendor is capable of delivering every week, every two weeks, every three weeks, and so forth. The purchasing department issues a purchase order $($PO$)$ through SAP for $1,000$ steel bars to be delivered every four weeks. The transportation cost is USD $300$ per truckload. A single truck can carry $20,000$ kgs of bar. Every week, the purchasing department at the flange manufacturer sends a USD $700$ PO for a single pallet of $25,000$ screws. Of that amount, USD $500$ is for screws $($i$.$e$.,$ USD $0\mathrm{.}02/$screw$).$ The courier charges USD $200$ per pallet delivered. Pallets can hold up to $25,000$ screws. The distributor, which is located in Evansville, IN$,$ is only able to offer weekly pallet shipments to Indianapolis out of its warehouse.

Presently, there are $1,000$ steel bars and $100,000$ screws in the raw materials warehouse at the factory. The carrying cost of steel bar inventory is $3\%$ of the total amount spent on bars in inventory $($excluding transportation cost$).$ The annual carrying cost of screws is$,$ likewise, $3\%$ of the total amount spent on screws inventory $($excluding transportation cost$).$ Delivery of bars from the vendor in Gary has been an issue. On average, shipments are one day late. Screws, however, are always delivered on time.

Manufacturing Operations

The flange$-$making factory is open $50$ weeks per year, five days per week, eight hours per shift, and three shifts per day. The production office does not plan for processes to be running for all eight hours in a shift. Actual production time available is assumed to be at $85\%$ overall equipment efficiency $($OEE$).$

Hot Forging $-$ In the hot forging department, one flange is made from $2$ kg of bar stock $($not including scrap$).$ Forging involves three steps:

$(1)$ induction heating bar to $300\backslash$deg C

$(2)$ shearing bar into segments of appropriate length; and then

$(3)$ closed die shaping segments.

The factory$$s two bar forging lines were purchased for USD $500,000$ each. Each line is run by a single operator and runs a $90-$second cycle time. Uptime in the forging department averages $94\%.$ Scrap is $3\%.$

Batch Normalizing $-$ After forging, steel grains making up the flange are too distorted for machining. Parts must be cooled for a day and then transferred into steel tubs for a batch heat$-$treating process called normalizing. Approximately $200$ parts fit into a tub. The normalizing furnace was purchased for USD $1,000,000.$ Depreciation was done on a straight$-$line basis over $10$ years, as is standard at the facility. One person operates the furnace and is capable of processing $250$ kg per hour. Uptime is $100\%.$ After normalizing, parts must be placed in a holding area for at least one day to allow them to reach room temperature for subsequent machining

Turning $-$ Turning is done on the opposite side of the factory from normalizing and drilling. This is because only the side of the factory where turning is located is plumbed for turning coolant. The turning department has three machining centers, each operated by a single machinist. One turning center costs USD $250,000.$ Cycle time per machine is $80$ seconds. Average uptime in the turning area is $99\%.$ Scrap is $2\%.$

Drilling $-$ After machining, flange holes are drilled. The factory has six computerized numerical controlled $($CNC$)$ drills. Each was purchased for USD $100,000.$ It takes $160$ seconds to drill $($and tap$)$ four screw holes. Drilling is highly automated and located adjacent to assembly. One operator runs all six drills. Average uptime in the turning area is $99\%.$ Scrap is $0\mathrm{.}5\%.$