Optimization Requirements in Industrial Sector and Sensitivity Analysis in Industrial Scenario.

Dr. Paruchuri S S Prasad Associate Professor Department of Mechanical Engineering PSG College of Technology Coimbatore 641 004 pssai@yahoo.com

Necessary metrics to carryout optimization in manufacturing industry

Labor Material Process Improvements Overhead Gaining Disciples and Measuring Progress

Labor optimization
key part of any cost reduction effort. Defining an appropriate headcount and controlling staff growth. Developing and implementing time standards. Measuring and using efficiency to improve performance. Assessing machine utilization and improving it. Controlling overtime. Making multiple shifts productive. Finding and reducing lost time. Using the learning curve to drive costs down

Mathematical Model
Min(LHEN)

 LHEN=total labor hours in evening and night shifts; W=planner defined weight to represent the relative importance of minimizing total number of labor hours on night shift; LHE=total number of labor hours in evening shifts; LHN=total number of labor hours in night shifts;
Dho Heon Jun and Khaled El-Rayes, Optimizing the utilization of multiple labor shifts in construction projects.Automation in Construction 19 (2010) 109119.

Defining Headcount and Controlling Staff Growth

How many people do we have? How many people do we need? How do we determine how many people we need? Who approves staff additions? Are there alternatives to hiring more people?

Headcount determination approach

Developing and Implementing Time Standards

Do we have time standards? How accurate are the time standards? How are the time standards communicated to the people doing the work? Do we compare actual performance to the time standards? What do we do when we don't meet the time standards?

Time standard development approach

Measuring and Using Efficiency

Do we measure our efficiency? Can we identify areas of low efficiency and act on these to reduce cost? Is a focus on efficiency adversely affecting product quality? Is there a system that reports efficiencies on a regular basis, and do we use this information appropriately ?

Efficiency Measurement And Improvement Approach

Assessing Machine Utilization

Do we measure utilization? What are the sources of low personnel or machine utilization? Is a focus on utilization adversely affecting efficiency?

Utilization Approach

Controlling Overtime
Why do we need overtime? How much overtime is appropriate? Who authorizes overtime? Do we have an overtime budget? Should we pay overtime to our salaried workforce? How can we reduce overtime?

Overtime Management Approach

Making Multiple Shifts Productive

Do we need a second or third shift? Do the reasons that led to a second or third shift still exist? How do we manage efficiency, quality, and utilization on the second or third shift? Is there anything we can do on the first shift to eliminate the need for a second or third shift?

Multiple-shift Management Approach

Finding and Reducing Lost Time

How much of our time is spent actually making product? What are the tasks that take time away from making product, and what can we do to eliminate or reduce this time?

Delay Ratio Analysis Approach.

Using the Learning Curve to Drive Costs Down

Are we using learning curve theory ? What is our learning curve, and how did we arrive at this number? How do our current costs compare to the learning curve prediction, and if there is a variance, what are we doing about it?

Applications of the learning curve theory include (1) pricing decisions, based on the estimates of expected costs; (2) requirements for scheduling labor; (3) capital budgeting decisions; and (4) setting incentive wage rates. The following data illustrate the 80% learning curve relationship:

Read more: http://www.answers.com/topic/experience-curveeffects#ixzz1XoyS8IzK

Learning curve

Tn =

s Cn

Where n is number of tasks repeated;

Tn is time required for nth item

C is constant. S is slope constant, always negative.

Learning Curve Approach

Break even chart

http://www.google.com/search?hl=en&q=break%20even%20analysis&gs_sm=c&gs_ upl=1422l5500l0l7906l17l16l0l6l6l0l594l2016l0.2.2.2.0.1l7l0&bav=on.2,or.r_gc.r_pw.r _cp.&biw=1366&bih=546&wrapid=tlif131597685589011&um=1&ie=UTF8&tbm=isch&source=og&sa=N&tab=wi

Material
Area with huge cost-reduction opportunities. Make-versus-buy determinations. Inventory minimization. Material utilization. Minimizing supplier costs. Supplier negotiations. Supplier competition.

Make versus Buy Determinations

What is our current make-versus-buy mix? How do we make decisions to do work inhouse versus buying goods or services from outside suppliers? Are there any areas in which changing the existing make-versus-buy decision will result in significant savings, and do the savings outweigh the risks?

Make-versus-buy Approach

Inventory Minimization
Do we have a program in place to reduce inventory? Do we have any areas where we order more than needed to address process yield? Do we know how much absolute inventory we have? What are our inventory turns?

Inventory Reduction Road Map

Material Utilization
What kinds of raw materials do we use in our production operations, and how do we maximize utilization of these materials? Have we contacted any of our material suppliers and enlisted their support and expertise in minimizing material consumption? What do we do with our drop-off, scrap, and supplier packaging materials? Do we use any metrics for assessing our material utilization?

The Material Utilization Improvement Road Map

Minimizing Supplier Costs

Have we asked our suppliers to tell us what we are doing that is driving their cost? Have we prepared our own "should cost" estimates? Are there any features on the supplier's parts that increase cost unnecessarily? Do we ask our suppliers for cost reductions? Does the supplier offer a cost reduction for larger quantity orders? Do all of the requirements imposed on the supplier make sense?

Supplier Cost-Reduction Road Map

Mathemaical Model

TRC Transaction Cost RSC Supplier Risk Cost CFC Collaborative Forecasting Cost IVC Supplier innovation cost RPC Supply Responsiveness cost

Seong-Hyun Nama, JohnVitton and Hisashi KurataRobust supply base management: Determining the optimal number of suppliers utilized by contractors .Int. J. Production Economics 134 (2011) 333343.

Supplier Negotiation
How do we negotiate with suppliers? Do we know our objectives and plan a strategy prior to entering the negotiation? Who negotiates for us? What has our history been in attaining what we want in a negotiation? How skilled are our negotiators?

Supplier Negotiation Road Map

Supplier Competition
Do we make suppliers compete for our business? Where and why do we use sole-source suppliers? Where does it make sense to incorporate supplier competition? What are the risks that existing sole-source suppliers will exit the business if we compete the work? What are the risks that existing sole-source suppliers will exit the business for reasons other than competition?

Supplier Competition Road Map

Process Improvements
Work-flow improvement. Setup time reduction. Material-handling improvement. Scrap and rework reduction. Work center cleanliness and organization.

Workflow Optimization
How do we design our processes? Does our workflow in a straight line? Have we flowcharted our processes to search for improvement opportunities? DO operators have a defined sequence for what they do, or is it left up to them?

Flowcharting and Process Analysis

Setup Time Reduction

Do we have a program in place to reduce setup time? Do we perform setups online or offline? Which of our setups consume the most time?

Mathematical Model

Guisen Xue a,n, O.FelixOffodile , HongZhou and MarvinD.Troutt Integrated production planning with sequence-dependent family setup times.Int. J. Production Economics 131 (2011) 674681.

Setup Time Reduction Road Map

SMED

http://en.wikipedia.org/wiki/Single-Minute_Exchange_of_Die#Example

SMED

changeover time at this stage is between 20 to 30 minutes

changeover time at this stage is between 10 to 15 seconds

http://www.fredwebberking.com/SMED%20Examples/PDF%20Version/SMED%20Examples%20 Volume%201.pdf

Material-Handling Improvements
Do we have any issues with material-handling damage? Are we doing anything to reduce how often and how far we have to move material?

Material-Handling Improvement Road Map

Layout vs Material Handling

http://www.me.utexas.edu/~jensen/ORMM/omie/desi gn/unit/layout/layout.pdf

Layout vs Material Handling

http://www.ateneonline.it/chase2e/studenti/tn/6184-7_tn05.pdf

Layout vs Material Handling

http://www.ateneonline.it/chase2e/studenti/tn/6184-7_tn05.pdf

Scrap and Rework Reduction

What are our most frequently occurring nonconformances? What are our most expensive nonconformances? What is our approach for eliminating recurring non-conformances? Do we measure our progress in eliminating recurring non-conformances?

Mathematical Model
Repairing cost:

Total defective products:

Sijkt is Quantity of product i sold from plant j to market k in period t.

Xijt is Quantity of product i manufactured at regular time at plant j in period t.

Yijt is Quantity of product i manufactured at overtime at plant j in period t. C9ij denotes Repairing cost per unit for product i as plant j. ij denotes Defect rate for product i at plant j.

Stephen C.H. Leung and Shirley S.W. Chan,A goal programming model for aggregate production planning with resource utilization constraint.Computers & Industrial Engineering 56 (2009) 10531064.

Scrap and Rework Reduction Road Map

Work Center Cleanliness

Are we satisfied with the cleanliness of our work environment, both in the shop and in the office? How often does management get into the plant? What is our approach for keeping our facility clean and organized?

Autonomous Maintenance
Machine concern / fault analysis ..throug h cleaning you touch, through touching you find when you find, you fix !!
http://www.beyondlean.com/support-files/autonomous-maintenance.pdf

5S

http://www.tocforme.com/5s/finishing5spicturesn.html

Cleanliness Road Map

Overhead
General overhead expenses. Travel. Inspection.

General Overhead Expenses

Do we have an overhead budget, and do we monitor performance to it? How do we determine headcount in the purchasing, quality assurance, and other overhead departments? How many organizational layers are there from a worker in the shop to the president? Who gets a company cell phone? Do we need a facility as big as the one we have now? Have we recently assessed the necessity of each overhead expense?

Overhead cost-reduction approach

Travel
Do we have travel guidelines? Do we have a travel budget? Who approves travel plans? How do we make sure each trip is necessary? What are we doing to minimize airfare and other travel expenses? What trade shows do we attend, and what has resulted from our attendance?

Travel Cost-Reduction Road Map

Inspection
How do we assign inspection points? How do our returns and warranty claims compare to our final inspection results? Do we use redundant inspections? Do any of our receiving inspections duplicate supplier final inspections? Do our manufacturing people feel responsible for the quality of what they produce?

Improving Inspection

Gaining Disciples and Measuring Progress

It offers a simple approach for measuring how well the cost-reduction team and the entire organization are doing.

Recommended suggestion program approach

Supply Chain Optimization in Process Industries

SAP: Enterprise Resource Planning (ERP)
APO Advanced Planner and Optimizer

WM Warehouse Management

MM Materials Management

QM Quality Management

PP-PI PM Production Planning Plant Process Industries Maintenance

Information exchange

Technical Logistics (MIMS)

Production Preparation

Production Execution (Batch)

Production Data Analysis

Laboratory Asset Automation Managemen (LIMS) t

Performance Training Monitoring Simulator

Manufacturing Execution System Control Systems

Electrical & Instrumentation On-Line PAT

Advanced Process Control

Process Optimization In-Process Control

Raw Material Logistics

Plant - Unit - Process - Laboratory

Sales Products Logistics

BIBLIOGRAPHY
Cost Reduction and Optimization for Manufacturing and Industrial Companies (Wiley-Scrivener Publishers) JOSEPH BERK

http://library.nu/docs/FWXZO8BMN0/Cost%20Reducti on%20and%20Optimization%20for%20Manufacturing% 20and%20Industrial%20Companies%20%28WileyScrivener%29