free java barcode reader api Activity Turnover Time d B B (1-NdP) B in Software

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Activity Turnover Time d B B (1-NdP) B
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NS + NPB B NS + NPB d(NS + NPB) NdS NdS 1-NdP for each activity in the Process
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NdS + NdPB
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After Batch B is produced, it is delivered to Finished Goods inventory, where the inventory level approaches zero, at which point a new batch has been produced and is delivered to replenish Finished Goods Thus the average Finished Goods inventory is approximately half the batch size:
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Average inventory due to a product
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NdS 2(1 NdP)
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And for an Activity that produces N different products:
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Average total inventory due to an Activity
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N dS 2(1 NdP)
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But Nd is just the total number of products D delivered each hour, thus we can write the above equation as:
Average Total Finished Goods on hand
NDS 2(1 DP)
Conquering Complexity in Your Business
The formula for Work in Process Inventory levels can be derived in a similar way For a process consisting of A activities in series, the total average inventory (WIP + FGI) in the organization is given by:
Total Inventory
NADS (1 DP)
NDS 2(1 DP)
We can combine these fractions using a common denominator to reach:
Total Inventory
(2A + 1) NSD 2(1 DP)
Now we know from Little s Law that
Total Lead Time
Number of Things in Process Average Completion Rate
Since Average Completion Rate= D, then
Lead Time
(2A + 1) NS 2(1 DP)
Adapting the basic PCE equation (from 2), we get
Process Cycle Efficiency = Value-add Time Total Lead Time
where PCE max = 100%
Process Cycle Efficiency
2V(1 PD) (2A + 1)NS
In many instances, it is reasonable to assume that the only value-add time is the processing time Further, we know that there is a relationship between Process Cycle Efficiency and non-value-add cost that is determined by the Complexity Value Stream Map and is often nearly linear over a range from 2% to 20%:
Non-value-add cost
f (Process Cycle Efficiency) 2KV(1 PD) (2A + 1)NS
Non-value-add cost
where K is the proportionality constant
Appendix
The effect of scrap is derived in the referenced patents and results in
Non-value-add cost
2KV(1 X PD) (2A + 1)NS
Where X is the % of work that must be scrapped and reproduced (The full equations include expressions for rework, absenteeism, downtime, etc) The power of the Complexity equation lies in its ability to determine whether a complexity reduction initiative (attacking N and A) or quality initiative (reducing X) or a Lean initiative (reducing S and or P) will be most effective in reducing cost consistent with other strategic initiatives such as customer satisfaction, etc And that s what the simplified form of the Complexity Equation does From there, we can generalize the equations such that each product or task has its own unique setup time, processing time per unit, defect %, etc We denote the setup time for the ith product at the jth Activity by SIJ, etc, and end up with some fearsome triple sum notations but the ideas are the same The power of the simple form of the Complexity Equation is that it allows management to have an idea of what can be accomplished
Management Policy as an issue affecting PCE
It should be emphasized that these equations show the best possible intrinsic Process Cycle Efficiency Management may make things much worse by arbitrarily having larger amounts of things in process By using the complexity equations, the minimum safe level of work in process (and batch size in manufacturing) related to this intrinsic PCE can be determined and an immediate improvement in Process Cycle Efficiency realized For example, one of our clients manufactured antenna systems, and their management policy was to release a one-month requirement of each product into the line A Complexity Value Stream map showed that the setup times were minimal The Complexity Equation then showed that material could be released in batches of 2 days requirement with no process improvement We would refer to this batch size as the intrinsic batch size, as determined by the Complexity Equation This was increased to 3 days due to demand fluctuations By implementing a Pull system to put this 3-day cap on material releases, the number of things in process began to fall, which led to an overall reduction in the amount of WIP decrease in lead , time by nearly 90% , and a ten-fold increase in Process Cycle Efficiency over the next six months This is the most extreme example of the impact of management
Conquering Complexity in Your Business
policy on Things In Process that we have ever encountered However, it is not unusual to see a 20% to 30% excess amount of Things In Process that can be immediately eliminated However, recalling Figure 15, we would not expect to be able to remove a lot of non-value-add cost until we had removed 60% to 70% of Things In Process
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