What is Lean Production?

What is Lean Production?

Lean production or Lean Manufacturing is a management philosophy focusing on reduction of the seven wastes.

• Over-production
• Waiting time
• Transportation
• Processing
• Inventory
• Motion
• Scrap in manufactured products or any type of business.

By eliminating waste (muda *), quality is improved, production time and costs are reduced.To solve the problem of waste, Lean Manufacturing has several "tools" at its disposal. These include constant process analysis (kaizen), "pull" production (by means of kanban) and mistake-proofing (poka-yoke).

Types of waste
Toyota defined seven categories or types of waste.

1. Overproduction (making more than what is needed, or making it earlier than needed)
2. Transportation (moving products farther than is minimally required)
3. Waiting (products waiting on the next production step, or people waiting for work to do)
4. Inventory (having more inventory than is minimally required)
5. Motion (people moving or walking more than minimally required)
6. Processing itself
7. Defects (the effort involved in inspecting for and fixing defects)
   
   These terms are important to understand lean manufacturing.

*Muda means Waste in Japanese and very important to understand Lean Production Methodology

Calculation of Economic Batch Quantities or Economic Order Quantities (EOQ EBQ Calculation)

Calculation of Economic Batch Quantities or Economic Order Quantities (EOQ EBQ Calculation)

When Production managers make decisions, one of the most important quesitons to be answered is how many products should be produced in a particular production batch. (Especially for Batch production companies). This number may be calculated quickly by Economic Batch quantities. The idea of Economic Batch Quantity may also be used for procurement management purposes. Purchasing departments should make use of Economic Order Quantity idea when buying the raw materials. The theory is valid with certain assumptions. It will not usually give right results in case of price breakdowns (price discounts) in case of procurement management. Since price breakdowns are not an issue with production setups, EBQ is a good tool for production managers.

There are 2 cost parameters to decide economic order quantity. One is the inventory holding cost, another is order cost. Order (or setup) cost decreases dramatically with number of order size. However, the economic batch quantity will be somewhere before the maximum order size due to inventory holding cost which increases linearly.

You can calculate Economic Order (or Economic Batch) Quantities from the following link:- Economic Order Quantity (EOQ) Calculation in Production Planning

What is production planning?

What is production planning?

Manufacturing planning and control entails the acquisition and allocation of limited resources to production activities so as to satisfy customer demand over a specified time horizon. As such, planning and control problems are inherently optimization problems, where the objective is to develop a plan that meets demand at minimum cost or that fills the demand that maximizes profit. The underlying optimization problem will vary due to differences in the manufacturing and market context. This chapter provides a framework for discrete-parts manufacturing planning and control and provides an overview of applicable model formulations.

Manufacturing planning and control address decisions on the acquisition, utilization and allocation of production resources to satisfy customer requirements in the most efficient and effective way. Typical decisions include work force level, production lot sizes, assignment of overtime and sequencing of production runs. Optimization models are widely applicable for providing decision support in this context.