© Stevenson, McGraw Hill, 2007- Assoc. Prof. Sami Fethi, EMU, All Right Reserved. JIT and LEAN...

© Stevenson, McGraw Hill, 2007- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.

JIT and LEAN Operation; Chapter6

MGMT 405, POM, 2010/11. Lec Notes

Chapter 6: JIT and LEAN OPERATIONS

Department of Business Administration

FALL 2012-2013

MGMT 405, POM, 2010/11. Lec Notes © Stevenson, McGraw Hill, 2007- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.


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Outline: What You Will Learn . . .

Explain what is meant by the term lean operations system.

List each of the goals of JIT and explain its importance. List and briefly describe the building blocks of JIT. List the benefits of the JIT system. Outline the considerations important in converting a

traditional mode of operations to a JIT system. List some of the obstacles that might be encountered

when converting to a JIT system.



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JIT vs. Lean

Over the past couple of years, Just-in-Time (JIT) is a system and idea that has gradually seen wide acceptance within the business and manufacturing community.

As the competition heats up between companies, and the pressures from Asian manufacturers’ continuous cultural improvements take their toll on manufacturers, many firms are forced to seek more innovative methods to reduce costs and cope with the competition.



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JIT vs. Lean The two could also ‘play’ perfectly well together, and there are

many advantages of using both methodologies concurrently. The aim of JIT at this point, is to explicitly highlight all the

problems in the process. Lean will focus on eliminating the Lean will focus on eliminating the problems pertaining to the process (system)problems pertaining to the process (system) inin orderorder to increase to increase productionproduction.

The fundamental component of JIT, is the elimination of waste while adding value.

JIT’s role is to explicitly highlight process problems, while Lean aims at eliminating the problems.

Lean can be used to achieve JIT, as the two employ almost the same set of tools, for example, kanban and error proofing.

Although both methodologies can be used to eliminate waste, JIT alone cannot achieve this, hence the transformation to Lean.



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JIT/Lean Production Just-in-time (JIT): The term JIT (a highly coordinated processing

system) is used to refer to an operations system in which goods are moved through the system, and services are delivered with precise timing so that they are performed at each step of the process just as they are needed.

Initially, the term JIT referred to the movement of materials, parts and semifinished goods within a production system. Over time, the scope of JIT broadened and the term became associated with lean productions.

JIT is a disciplined approach to improving overall productivity and eliminating waste. It provides for the cost-effective production and delivery of only the necessary quantity of parts at the right quality, at the rigth time and place while using a minimum amount of facilities, equipment, materials and human resources.

JIT is dependent on the balance between the supplier’s flexibility and the user’s flexibility. It is accomplished through the application of elements which require total employee involvement and teamwork.

A key philosophy of JIT is simplification.



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JIT/Lean ProductionLean: A highly coordinated system that uses minimal

resources and procedures high-quality goods or services. Lean operation depends on having high-quality processes in place. Quality is an integral part of lean operation, without high process quality, lean operation cannot exist.

Lean productions began as lean manufacturing in the mid-1990. It was developed by the Japanese automobile manufacturer-Toyota. The development in Japan was influenced by the limited resources available at the time.

Not surprisingly, the Japanese were very sensitive to waste and inefficiency. Widespread interest in lean manufacturing occurred after the book about automobile production, The Machine That Changed the World by Womack, Jones and Roos was published in 1991.



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JIT/Lean Production In the famous book, Toyata’s focus was on the

elimination of all waste from every aspect of the process. Waste was defined as anything that interfered with or did not add value to the process of producing automobiles.

In the mid 1980s GM operated a plant using lean manufacturing concept and they adopted lean method succesfully. However GM closed the plant in 1982 because of its low productivity and high absenteeism.

A few year later the plant was reopened as a joint venture of Toyota and GM. In 1985, they improved quality and productivity by negliging absenteeism.



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JIT/Lean Production As other North American companies attempted to

adopt the lean approach, they began to realize that in order to be successful, they need to make major organizational and caltural changes.

They also recognized that mass production which emphasizes the efficency of individual operations and leads to unbalanced system and large inventories, was outmoded.

Instead, they discovered that lean methods involve demand based operations, flexible operations with rapid changeover capability, effective worker behaviours, and continous improvement efforts.



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Many of the methods that are common to lean operations were developed as part of Japanese car maker Toyota’s approach to manufacturing. Some of the term used by the company are as follows:

Muda: Waste and inefficiency (important) Keban: A manual system that signals the need for parts or materials.

This applies both to delivery to the factory as well as delivery to each workstation.

Pull system: Replacing materials or parts based on demand, produce only what is needed. (important)

Heijunka: variations in production volume lead to waste. The workload must be leveled-workload leveling.

Kaizen: Continious improvement of the system. Jidoka: Quality at the source and to make workers aware of quality. Poka-yoke: Safeguard built into a process to reduce the possibility of

errors. Team concept: Use small teams of workers for process improvement.

The Toyota Approach



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JIT Philosophy The JIT Philosophy was pioneered by the Japanees engineers

Ohno and Shingo at Toyata Motor company in the mid 1970s as a response to the world wide oil crisis in the dacade.

Japan is a small country with minimal resources and large population as well as the destruction of second world war. They only use their own human capital.

This brings the cornerstones of the Toyota Production System. Their intention was to develop a process that could economically

produce a wide variety of automobiles in small volumes. The Toyota company has also achieved both concepts economies

of scale and economies of scope. The company can easily compete on service as well as cost,

quality, dependability, flexibility and time



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The goal of JIT is to produce only the necessary item in the necessary quantity at the necessary time.

Achieving such goal can radically increase the responsiveness of a company to the demands of its customers and improve its ability to compete on cost, quality, dependability, flexibility and time

The ultimate goal of JIT is a balanced system.This is one that achieves a smooth, rapid flow of

materials through the system.The idea is to make the process time as short as

possible by using resources in the best possible way

Goal of JIT



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The degree to which the overall goal is achieved depends on how well certain supporting goals are achieved. Those are as follows:

Eliminate disruptions Make the system flexible Eliminate waste, especially excess inventory Reduce setup time and lead time Minimize inventory

Goal of JIT



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Sources of Waste

On the JIT philosophy, wastes include the following concepts:OverproductionWaiting timeUnnecessary transporting Inventory storageScrap Inefficient work methodsProduct defects



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The Goals and Building Blocks of Lean System

Product Design

ProcessDesign

PersonnelElements

Manufactur-ing Planning

Eliminate disruptions

Make the system flexible Eliminate waste

Abalancedrapid flow

UltimateGoal

SupportingGoals

BuildingBlocks



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Kaizen Philosophy Waste is the enemy(important) Improvement should be done gradually and continuously Everyone should be involved Built on a cheap strategy Can be applied anywhere Supported by a visual system Focuses attention where value is created Process oriented Stresses main effort of improvement should come from new

thinking and work style The essence of organizational learning is to learn while doing



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Big JIT – broad focusVendor relationsHuman relationsTechnology managementMaterials and inventory management

Little JIT – narrow focusScheduling materialsScheduling services of production

Big vs. Little JIT



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JIT Building Blocks(heads of the concept are important)

Product design

Process design

Personnel/organizationalelements

Manufacturing planning and control



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Product Design Standard parts

Workers have fewer parts to deal with and traning times and cost are reduced

Modular design

This greatly reduce the number of parts to deal with, simplifying assembly, purchasing, handling, training so on.

Highly capable production systems

Quality must be embedded in goods and processes, otherwise poor quality can create major disruptions.

Concurrent engineering

Engineering changes can be very disruptive to smooth operation. Practices can subtantially reduce these disruptions.



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Process Design

Small lot sizes (important)Setup time reductionManufacturing cellsLimited work in processQuality improvementProduction flexibilityBalanced systemLittle inventory storage



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Process Design Small lot sizes Small lot size in both production process and deliveries from

suppliers yield a number of benefits that enable JIT system to operate effectively. Benefits of Small Lot Sizes are as follows:

Reduces inventory

Less storage spaceLess rework

Problems are more apparent

Increases product flexibility

Easier to balance operations



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Process Design Setup time reduction(important) In JIT system, it is a necessary step to have a smooth proceess and

quality product. Worker are trained to da their own setups.

Manufacturing cells The cell are highly specialized and efficient production center. The

important benefits of this cell are reduced changeover times, highly utilization of equipment.

Limited work in process Quality improvement Production flexibility Balanced system Distributing the workload evenly among the workstations or achieve a

rapid flow of work through the system. The time needed for work assigned to each workstations. This also is refered as takt time (it is for work shift). (important)

Little inventory storage



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Single-Minute Exchange Shigeo Shingo made a very significant contribution to lean

operation with the development of the system called SMED. Single-minute exchange of die (SMED): A system for reducing

changeover time. Categorize changeover activities

Internal – activities that can only be done while machine is stopped External – activities that do not require stopping the machine

A simple approach to achieve quick changeover is to convert as many internal acctivities as possible to external activities then streamline the remaining internal activities.

The principles of the SMED system can be applied to any changeover operation.

In 1982 at Toyota the changeover time for machine was reduced from 100 minutes to 3 minutes.



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Guidelines for increasing Production Flexibility

Reduce downtime by reducing changeover timeUse preventive maintenance to reduce

breakdownsCross-train workers to help clear bottlenecksUse many small units of capacityUse off-line buffersReserve capacity for important customers



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Quality ImprovementThe occurence of quality defects during the process

can distrup the orderly flow of work. It focuses on finding and eliminating the causes of problems to make non-stop processes.

Autonomation Automatic detection of defects during production

Jidoka Japanese term for autonomation. It can be used with

machines or manual operation.The first mechanism is for detecting defectsThe second mechanism for stop production to correct the

cause of the defects.



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Personnel/Organizational Elements

Workers as assetsCross-trained workersContinuous

improvementCost accountingLeadership/project

management



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Workers as assets: A fundamental tenet (or principle) of the JIT philosophy. Well trained and motivated workers are heart of a JIT system.

Cross-trained workers To perform several parts of process and operate a variety of machines.

This shows system flexibility cause workers are able to help each other when bottlenecks occur or a coworker absent.

Continuous improvement JIT workers receive extensive training in statistical process control,

quality improvement and problem solving. Compared to workers in tradational systems, JIT workers have greater responsibility to keep quality at the best level for the sake of continuous improvement.

Problem solving is a cornerstone of any JIT system and when occur during production must be dealt with quickly. Some companies in Japan use a light system to signal problems and such a system is called andon.




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Cost accounting Another feature of some JIT system is the method of

allocating overhead, however tradational methods sometimes distort overhead allocation because they allocate it on the basis of direct labor hours

One alternative method of allocating overhead is activity-based costing which is designed to more closely reflect the actual amount of overhead consumed by particular job or activity.

Leadership/project management Another feature of JIT relates to leadership. Managers are

expected to be leaders and facilitiors, not order givers.




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Manufacturing Planning and Control

Level loadingPull systemsVisual systemsClose vendor relationshipsReduced transaction processingPreventive maintenance



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Pull/Push SystemsThe the terms pull and push are used to describe two

different systems for moving work through a production process.

Pull system: System for moving work where a workstation pulls output from the preceding station as needed. (e.g. Kanban). When it is needed, the output is pulled by customer demand or the master schedule.

Push system: In tradational production environments, this one is used. When work is finished at a workstation, the output is pushed to the next station (System for moving work where output is pushed to the next station as it is completed).



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Kanban Production Control System-Visual system

Kanban: Card or other device that communicates demand for work or materials from the preceding station.

Kanban is the Japanese word meaning “signal” or “visible record”

When a worker needs materials work from the proceeding station, s/he uses a Kanban card.

Paperless production control system Authority to pull, or produce comes from a downstream process. Production Kanban (p-kanban):Signal the needs to produce parts Conveyance Kanban (C-kanban):signal the needs to deliver parts to

next work center.



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Manufacturing Planning and Control Level loading: JIT systems place a strong emphasis on

achieving stable level daily schedules. At the end, the master production schedule is developed to provide level capacity.

A level of production schedule requires smooth production. When a company produces different products or product model, it is desirable to produce in small lots and spread the production of different product throughout the day to achieve smooth production.

While this approach will allow for maximum smoothness, it will generally not be practical due to excessive setup cost.

Under these circumtances, mix-model sequencing approach is advised.

This begins with daily production requirements of each product or model.



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Limited Work in Process-WIP=Cycle x Arrival Rate Benefits in controling the amount of work in progress in a

production systemLower carrying costs Increased flexibilityAids schedulingSaves cost of rework and scrap

Two general approaches to conrol WIPKanban – focuses on individual work stationsConstant work in process (CONWIP) – focuses on the system

as a whole Close Vendor relationship JIT system typically have close relationship with vendors who are expected to

provide frequent small deliveries of high-quality goods.



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Reduced Transaction Processing Tradational manufacturing system often have many built in

transactions that do not add value. It is also well known as ‘the hidden factory’

JIT system cut transaction costs by reducing the number and frequency of transactions (i.e., production floor-storeroom).

The transactions can be classified: (bar coding system reduce transactions and increase accuracy).

1. logistical2. Balancing3. Quality4. Change



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Preventive Maintenance and Housekeeping

Preventative maintenance: Maintaining equipment in good condition and replacing parts that have a tendency to fail before they actually fail.

Housekeeping: Maintaining a workplace that is clean and free of unnecessary materials.

Housekeeping Five S’s to make the workplace effective:1. Sort2. Straighten3. Sweep4. Standardize5. Self-discipline



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Comparison of JIT and Traditional

Factor Traditional JIT

Inventory Much to offset forecast errors, late deliveries

Minimal necessary to operate

Deliveries Few, large Many, small

Lot sizes Large Small

Setup; runs Few, long runs Many, short runs

Vendors Long-term relationships are unusual

Partners

Workers Necessary to do the work Assets



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Transitioning to a JIT SystemPlaning a successful Conversion

Get top management commitmentDecide which parts need most effortObtain support of workersStart by trying to reduce setup timesGradually convert operationsConvert suppliers to JITPrepare for obstacles



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Suppliers May Resist JIT

Unwilling to commit resourcesUneasy about long-term commitmentsFrequent, small deliveries may be difficultBurden of quality control shifts to supplierFrequent engineering changes may cause JIT changes



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JIT in Services

The basic goal of the demand flow technology in the service organization is to provide optimum response to the customer with the highest quality service and lowest possible cost. Eliminate disruptionsMake system flexibleReduce setup and lead timesEliminate wasteMinimize WIPSimplify the process



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JIT II: a supplier representative works right in the company’s plant, making sure there is an appropriate supply on hand.

JIT II



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A furniture’s production analyst determined that a 2 hour production cycles would be acceptable between two departments. Further, he concluded that a set-up time that would accommodate the 2-hour cycles time should be achieved. Finally, he developed the following data and procedure to determine optimum set-up time analytically; annual demand is 400000 units, number of work days/year is 250 days, daily production rate is 4000 units/day, quantity order is desired as 400 unit, holding cost is 20 MU, daily demand is 1600 day per hour, and the cost on hourly basis of setting up equipment is 30 MU.

Setup time-Example



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Setup time-Answer

sorhoursMUS

S

D

DPdHQS

DPdH

DSQ

min8.408.030/40.240.2

)400000(2

))4000/1600(1)(20)(400(

2

))(1((

))(1(

2

2

2



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Takt time-Example

Takt time is the cycle time needed to match customer demand for final product.

Question: Given the following information: total time per shift is 480 minutes per day and there are two shifts per day. There are also two 20 minute rest breaks and a 30 minutes lunch break per shift. Daily demand are reported as 80 units.

Required: compute the takt time.



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First, let us compute net time available per shift:

-Total time is 480 mins

Rest breaks -40 mins

Lunch -30 mins

total is 410 mins per shift Second, let us compute net time available per day:

- 410 mins per shift x 2 shifts/day=820 mins per day Third, let us compute the takt time:

- Takt time= (net time available per day)/Daily demand

= 820/80

= 10.25 minutes per cycle

Takt time-Answer



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Mix model-Example

Mixed model: Four issues should be taken into account. Which sequence to use How many times (i.e., cycle) the sequence should be repeated daily How many units of each model to produce in each time Setup time or cost is important in chosing the sequences ABC-AB or

AC or BC

Question: Suppose a department produces three models in the following table: A, B and C with the daily requirements; 10,15 and 5.

Required: Determine a production plan for these three models using the sequence A-B-C:

Model Daily Quantity

A 7

B 16

C 5



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Mix model-Answer

Mixed model: Four issues should be taken into account.

Which sequence to use How many times (i.e., cycle) the

sequence should be repeated daily How many units of each model to

produce in each time Setup time or cost is important in

chosing the sequences ABC-AB or AC or BC

Model Daily QuantityUnits per cycle

A 7 7/5=1.4

B 16 16/5=3.2

C 5 5/5=1

Cycle 1 2 3 4 5

Pattern AB(3)C A(2)B(3)C AB(4)C A(2)B(3)C AB(3)C

Extra Unit(s) A B A



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Cycle 1 2 3 4 5

Pattern A(2)B(3)C AB(3)C A(2)B(4) C AB(3)C A(2)B(3)C

Extra Unit(s) A AB A

If requirement for model A had been 8 units a day instead of 7, the manager might decide to use the following pattern:

Mix model-Answer



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Mix model-Example2 Mixed model: Four issues should be taken into account. Which sequence to use How many times (i.e., cycle) the sequence should be repeated daily How many units of each model to produce in each time Setup time or cost is important in chosing the sequences ABC-AB or

AC or BC

Question: Suppose a department produces four models as can be seen in the following table. The department operates five days a week.

Required: Determine the number of per day and the production quantity per cycle for this set of products.

Product Weekly Quantity

A 20

B 40

C 30

D 15



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Mix model-Answer2

ProductWeekly

QuantityDaily Unit per

cycleUnits Short (3

cycles)

A 20 20/5=4 1

B 40 40/5=8 2

C 30 30/5=6 -

D 15 15/5=3 -

Cycle 1 2 3

Pattern A B(3) C (2) D A B(3)C (2) D A(2)B(2) C(2) D

Extra Unit(s) B B A

There are several posibilities in producing all four products in the three cycles. One possible way is dispalyed above.



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How to use such card-Kanban Formula

N = DT(1+X)C

N = Total number of containers

D = Planned usage rate of using work center

T = Average waiting time for replenishment of parts plus average production time for a container of parts

X = Policy variable set by management - possible inefficiency in the system

C = Capacity of a standard container



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Kanban-Example 1

Question: Usage at a work center is 300 parts per day and a standard container holds 25 parts. It takes an average of 0.12 day for a container to complete a circuit from time a kanban card is received until the container is returned empty.

Required: Compute the number of Kanban cards (containers) needed if X=0.20.



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Kanban-Answer 1

N = Total number of containers=?

D = Planned usage rate of using work center=300 parts/day

T = Average waiting time for replenishment of parts plus average production time for a container of parts=0.12 day

X = Policy variable set by management - possible inefficiency in the system=0.20

C = Capacity of a standard container=25 parts/container

containerstwoalmostC

XDTN 728.1

25

)20.01()12.0()300()1(

Rounding up will cause the system to be looser and rounding down will cause the system to be tighter. Usually rounding up is preferable.



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Kanban-Example 2

Question: Usage at a workstation is 100 parts per hour and a standard container holds 84 parts. It takes an average of 90 minutes for a container to complete a cycle (move, wait, empty, return, fill) from time a kanban card is received. An inefficiency factor of 0.10 is being currently used.

Required: Determine the number of containers needed if the scenario is abovementioned.



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Kanban-Answer 2

N = Total number of containers=?

D = Planned usage rate of using work center=100 parts/day

T = Average waiting time for replenishment of parts plus average production time for a container of parts=90mins or 1.5 hours

X = Policy variable set by management - possible inefficiency in the system=0.10

C = Capacity of a standard container=84 parts/container

containerstwoalmostC

XDTN 96.1

84

)10.01()5.1()100()1(

Rounding up will cause the system to be looser and rounding down will cause the system to be tighter. Usually rounding up is preferable.



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Thanks

© Stevenson, McGraw Hill, 2007- Assoc. Prof. Sami Fethi, EMU, All Right Reserved. JIT and LEAN...

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