Book Report of the Gold Mine

Book Report

Jian Jin

1. Name the 7 wastes in Lean. Provide examples of these wastes (2.5 pts grade score).

• Overproduction. If we produce more than our customers’ needs, we are overproducing.
• Waiting. If an operator is waiting for parts from upstream to work on, that’s a waste.
• Transportation. If operators are moving parts from station to station, that’s a waste.
• Overprocessing. If an operator is working at an unnecessarily high quality standard, that’s a waste.
• Inventory. If a factory has more parts than the immediate need, that’s a waste.
• Motion. If an operator is doing unnecessary walking, that’s a waste.
• Rework. If operators are producing products that have defects and needs rework, that’s a waste.

1. Provide the definition and explanation of a bottleneck machine (or process). Develop your own simple example to demonstrate it to me (2.5 pts grade score).

A bottleneck process is a slow step in the process, where the work is not as fast as downstream needs, work-in-process gets stuck there and accumulates.

Example: A bottleneck process to a system is like RAM to a computer. The performance of CPU, GPU or graphic card of PC has been better and better, for example they can process 10 GB data per second. However, the RAM can only transport 1 GB data to CPU per second. Since the CPU can only get 1 GB data every second, then PC can only process 1 GB data per second.

1. Explain the approach in Operations Management Improvement that needs to be followed to reduce inventory/costs and at the same time improve the service level to the customer (2.5 pts grade score).

Pull and Leveling: You only produce what the customer “pulls out” and for those products customers have high demand for, you can have small amount of inventory to avoid stockout.

Smaller batch and more shipments: We can produce products in a smaller batch and ship in a higher frequency. Because more shipments shorten the reaction time for the production manager and the factory doesn’t need to hold huge amount of inventory. What’s more, more frequent shipments can satisfies customers better.

1. Describe the costs related to keeping inventory? (3 cost examples required) Give 2 examples of how it is possible to calculate these costs? (2.5 pts grade score).

Ordering costs: The costs incurred every time we place an order to the supplier. For example all kinds of clerical costs related to communicating, documenting and invoices.