Submitted by Ans Raza

SAP 70057966
Summary and its questions related quires

Quality Parts Company manufactures three different types of gizmos for a local computer

manufacturer. The company produces two different models of gizmos and its production runs

average between 100 and 300 units. According to the quarterly report, monthly demand for the

company’s gizmos is averaging between 125 and 175 units per month and inventory for these

components is increased early in the month to ensure that there is enough product to meet an

unanticipated surge in demand. Currently, 40 percent of the manufacturing costs of each gizmo

can be attributed to raw materials and purchased parts for subassemblies. “Scrap rates are at are

about 10 percent each operation, inventory turns twice yearly, employees are paid on a day rate,

employee turnover is 25 percent per year, and net profit from operation is steady at 5 percent per

year” (Jacobs & Chase, 2013).

Lean Production Philosophy

According to Jacobs and Chase (2013), lean production refers to integrated activities

designed to achieve high-volume, high-quality production using minimal inventories of raw

materials, work-in-process, and finished goods. When using lean production principles, the key

objectives are eliminating waste, unnecessary processing steps and excess inventory.

The changes the manager of Quality Parts Company is proposing are not in-line with lean

production philosophies. Instead of stockpiling inventory and keeping the skids full as the

manager suggested, in a lean production environment, a JIT production strategy is used and the

company only produces the inventory they need and no more. “Anything over the minimum
 Quality Parts Case Study 1

amount necessary is viewed as waste because effort and material expended for something not

needed cannot be utilized now” (Jacobs & Chase, 2013).

Another change that the management of Quality Parts is considering is placing two days worth of

work in front of each workstation and hiring three additional inspectors. “Lean requires the plant

layout to be designed to ensure balanced work flow with a minimum of work-in process

inventory” (Jacobs & Chase, 2013). Since companies that operate using a lean production

philosophy do not produce inventory ahead of time, there is no point in placing the additional

work in front of each workstation. It would be more beneficial to introduce the Quality at the

Source concept that means doing it right first and when there is a problem, stop the assembly line

immediately. In addition, the manager should consider empowering her employees and

encourage them to “buy into” the process by making them accountable for the quality of their

work, the maintenance of their machine and housekeeping. By concentrating on one part of their

job at time, workers are able to take the time to focus better and problems are discovered much

earlier in the process. As a result, hiring the three inspectors would be a waste of money.

Pull System

The following is a diagram of the pull system currently running Quality Parts Company’s

operation. A pull system is based on produces goals that allow Quality Parts to meet the demand

of its customers. This process is based on the critical path method. For model X and Y, please