2)DrawtheschematicflowdiagramforSunwindandallVolvoplants.

(Drawatabstractlevelnotdetailed
level).Providesdetailofdistancesanddemand(quantitybasedon1987forecast)flow.
Ans)DemandofSunwindis1250/week=1250*45=56250units
Thefollowingtablegivesusthedemandofeachplantyearlyfortheyear1985
Plant||Torslando|Kalmar|Ghent|Total|
Year|1985|17050|4525|12090|33665|
|%|50.65%|13.44%|35.91%|100%|
Year|1987|32919.947|8736.819|23343.23|65000|
Dependingonthepercentageofshareofeachplantofthetotalin1985,thesamepercentageisusedto
calculatethedemandofeachplantin1987,asweknowthetotalproductionofVolvofromalltheplants
puttogetherin1987.
3)WhatarethechallengesfacingSunwind?DotheyneedachangeinstrategybySunwind?Why?
AnsThechallengesfacedbySUNWINDareasfollows:
*ThemainproblemistomeettheincreaseinthedemandfromVolvowhichisaround650perweekin
1985to1200perweekin1986*Thereisalsoaproblemofmeetingthequalityofthefinishedproducts
suppliedbythem,someofthemachineslikegluingmachinehadprovedparticularlytroublesomeandhas
increasedrejects.*Someotherbotheringissueswouldbetheoffspecplywoodblanksreceivedfrom
Finnishsupplier.*TherejectionofthebatchesbyVolvoastheyhaventmetthequalityconstraints
imposedbythem.*Thedemandforthefinishedgoodsisaround1400units/weekwhiletheidealcapacity
ofplantexcludingwastagesisonly1250units/week;thismismatchisofagreatestconcernforthe
Sunwindinthepresentscenario.*ThetrendofthemajormanufacturerslikeToyotawhoareworkingon
LesssuppliersmodeltoincreasetheefficiencyisofabigthreatasVolvomightevenpersuadeit.*The
systemofJITwhichisbeingimplementedrecentlybytheVolvogroup,theBelgianmanufactureris
turningouttobemajorcompetitortoSunwoodonthisperspective.*Thebatchsizeifweseefordifferent
operationsvariesfrom2500to500,suchahugeamountofbatchsizemightleadtohavingnocontrolover
thequalityissuesi.e.incaseofanydamagedoneitshardtofindoutandthewhobatchhastobesetoff
whichisofahugelossfortheplant.*ThislargebatchsizemightalsoincreasestheMLThenceleadstoa
lotofinventorywhichhasalotofadverseeffects.Fortheotherpartofthequestionwhethertheyneedto
changethestrategyoftheSunwindornot,yestheyhavetochangeindeedtosoastoprotectthemselves
fromVolvobymeetingtheirdemandneeds.AtthesametimethetechnologicalaspectsofSunwindareata
groundlevel,theyneedtocompetewiththecompetitorsandhavetogofornewmachinery.Rightnowthey
arenotfollowingtheJITmethodwhileVolvohasgoneforit,InthatcasetomeettheVolvodemandsit
mighthavetoputahugepileofrawmaterialsinsteadifitmakesitselfaJITsystemitcouldsaveitself
fromoneofthecompetitors.Theirbatchsizeasmentionedbeforeisalsoverylarge,hencetheyneedto
changethisstrategytoo.Thereisaqualityissuealsobeingfacedhencetheyaneedanewstrategywhich
canaddressalltheseissuesinaveryefficientway.
4)WhatarethebenefitstoimplementJITforSunwind?HowVolvowillgetbenefitedifSunwindgoesfor
JITproductionanddelivery?
Ans)ThebenefitstoimplementJITforSunwindare
1.Themainadvantagewouldbesavingoninventoryi.e.thereisnoneedtospendalotofmoneyinstoring
theinventoryforhugenumberofdaysuntilitisusedinsteadJITtakescareofinventoryonlywhenneeded
hencethereisnoidleinventory.2.TheJITsystemwilltakecareofthebatchsizethiswillhelpincreasing
thefrequencyandalsoeasytransportationandontimeasthebatchsizeissmall3.Incaseofanydefects
thewastagewouldbeinasmallscale4.Thequalityissuecanbeaddressed,ifwehavethebatchsizetobe
smallthereisaneverychancetomakestrictqualitychecksandrejecttherest.5.Thishelpsincuttingthe

wastebycuttingtheexcesscapacityorinventoryandremovingthenonvalueaddedactivities.6.Thiswill
developacloserelationshipwiththeirsuppliers,inawaytheywillgetsuppliersasapartnerinthe
venture.7.ThiswillalsoencouragethesupplierstogetthemselvesplacedinandaroundtheSunwoodplant
soastodelivertherawmaterialsontime.8.Thissystemgetsaninplantrepresentativewhowillbeonsite
inSunwindonbehalfofthesupplierswhosemainpurposeistoplanandschedulethereplenishmentofthe
materialsfromthesupplierhenceeventheforecastingisalsotakencarebyhim.9.Healsohelpsin
designingideastohelpreducingcostandimprovemanufacturingprocessesandmanagingproduction
schedulesforsuppliers,materialscontractorsandothersubcontractors.10.Italsoprovidesthebest
organizationalstructureneededtoimprovethesuppliercoordinationbyintegratingthelogistics,production
andpurchasingprocessestogether.
TheadvantagesoftheVolvoifSunwindgoforJITissameastheonesenjoyedbySunwindonbehalfof
theirsupplies*ThiswilldevelopacloserelationshipwithSunwind.
*ThissystemgetsaninplantrepresentativewhowillbeonsiteinVolvoonbehalfoftheSunwindwhose
mainpurposeistoplanandschedulethereplenishmentofthematerialsfromthesupplierhenceeventhe
forecastingisalsotakencarebyhim.*Healsohelpsindesigningideastohelpreducingcostandimprove
manufacturingprocessesandmanagingproductionschedulesforsuppliers,materialscontractorsandother
subcontractors.*Italsoprovidesthebestorganizationalstructureneededtoimprovethesupplier
coordinationbyintegratingthelogistics,productionandpurchasingprocessestogether.
6)HowmanyvarietiesofproductsdoestheSunwindmanufactureforVolvo?Howdoesthisinformation
helptodesignproductionanddelivery?
Ans)Sunwindwastheonlysupplierforthefloorlidforthe5door700seriesstationwagon.Thesewere
offeredinseveralcarpet/colourcombinations.Thelidcomprisedof4separateitemsfrontpanel,rear
panel,leftpanelandtherightpanel.Thecarpetingcouldbeanyoffourdifferentcolourchoicesbeige,
blue,blackandburgundy.Thecarpetingcouldbeeitherneedlefeltortufted.Thus32partnumberswere
neededtospecifyaparticularpart/colour/carpetcombination4partsx4coloursx2carpets
=32
Thisdataofthevarietyofproductsbeingmanufacturewillgiveusanadvantageofdesigningthe
productionthroughJIT.OneoftheprocessconsiderationsinleansystemsUniformworkstationloads
comesintothepicture.Thisinturnwoulddecreasethebiglotstherebydecreasingtheaverageinventory
level.Wecanfollowtheproductionmodelofheijunkawhichisthelevellingofproductionloadbyboth
volumeandproductmix.Usingthiswhatwecandoistoformbatchesinawaysothateachbatchgivesus
32varietiesofdifferentmaterialsinsteadofhavingthesamevarietyinabatch.Thiswouldhelpworkersto
getacquaintanceofalltheproductsandalsothoughthereisanywastageinabatchtheotherbatchcan
coverupforit,ifabatchhasalltheproductsofsamekinditwouldbeaproblemifthereisanydefector
qualityissues.Thusthisdataofthevarietyofproductsgivesusthedivisionofbatchesinanefficientway
whichreducestheextranonvalueaddedcosts.8)Providesdetailsofsomecriticalcharacteristicsofoneof
theVolvooperations(Customerinterfacepoint)betweenVolvoandSunwind.Howdoesmaythis
informationbehelpfultogetadvanceintimationtopreparethenextJITdelivery?
Ans)SunwindsinterfacewithVolvopartsattheorderplacement.Every4weeksVolvosendanorder
formindicationtherequirementovera60weekplanninghorizon.Thiswasbrokenintoseven4week
periodsandone32weekperiod.Thenextinterfacewasattheloadingstageoftheshippingprocess.Volvo
mandatedthatitsuppliersuseVolvoswhollyownedtransportcompany,usestandardcontainersandship
onepartpercontainer.Sunwindorderedtransportationandemptycontainersasrequired.Postshipping,the
nextinterfacewouldbeattheinspectionuponreceiptofpartsbyVolvo.Iftherandomlychosencontainer
didnotpassthestringentqualitycontrolcriteria,theentireshipmentwouldberejectedandthesupplier
wouldbecalled.SunwindcouldtheneitherreplacetheentireshipmentotcometoTorslandatocheckthe
rejectedshipmentsandreplacethedefectiveparts.Rejectedpartswereeitherscrappedorsentbacktothe

supplieratthesuppliersexpense.Thefaultwouldbeofficiallynotifiedandthenextshipmentwouldbe
subjectedto100%inspection.Theinterfacepointsareat
variousstagesinthepartprocurementprocess.Continuouscommunicationbetweensupplierandvendor
enablesupdationofrecordsonbothendsandrealtimeflowofinformation.The4weekperiodicalorder
placementcanhelpSunwindplanitsproductionsuchthattheycompleteproductionjustintimefor
shipmentandtheshipmentoccursjustintimeforassemblyatVolvo.ShippingisdonethroughVolvos
owntransportsystem.KnowledgeoftheproductionschedulesofVolvoinadvancewillenableSunwindto
requesttransportandcontainersinadvancesothattheyarrivejustintimeforloading.Thismakesfor
efficientoperationsastheproductioncanthenbeplannedtomeettheshipmentschedule.Inspection
procedureiswelldefinedandknowledgeofthiscanhelpSunwindoptimizeitsproductionto
avoidrejectionuponshipment.Rejectionofshipmentscanbecostlyandtheyruntheriskofnotbeingable
tomeetthejustintimeproductionschedule.
9)HowKANBAN,facilitatorofJITinventoryDesignbeusedforSunwindoperations?Showfewsample
calculations.
Ans)InordertoavoidthestockoutsoroverproductionKanbancanbeusedasafacilitatorofJITsystem.
AccordingtoKanbansystem,thereisacardwhichcontainstherequirementorthesupplyofunitswritten
onit.Onceifthecardreachesthesupplierdependingontherequirementsthedesireddatethesupplier
manufacturesorpreparethegoodsandthentheywillbeputinthesameboxwiththecardinplace.The
sameprocessisdonewhentheunitsreachtheorderedcompanyitwillcrosscheckthenumberofunitsin
theboxwiththerequiredinthecard,onceitmatchesitwillthenproceedtotheoperations.Thebestuseof
thiscomeswhenthemanufacturingprocesshaslotsofoperationsinvolvedinitwithdifferentbatchsizes
andcycletimeandleadtime.ForexampleifwetakeSunwindithas8operationswithdifferentbatchsizes
hencebyusingthisitcansendtheKanbancardsatwillaccordingtotheleadtimetotherespective
suppliersandtheycanreceivethedesiredgoodsrightontimeandcanverifyitalsoaccordingly.
ThebasicformulaetocalculatethenumberofKanbancardsis
Kanbanquantity=DailyDemandxLeadtime(indays)xSafetyfactor
Containerquantity
Herethedailydemandcanbecalculatedasweknowthatthedemandperweekis1250andthereare5
workingdaysperweekthusthedailydemandis250units
Theleadtimehereasitisnotmentionedclearlyanywhereinthecasewehavetakenthesentencethe
productionisplannedtwoweeksbefore.Usingthatwecangettheleadtimeas2weeksi.e.14days
(includingworkingandnonworkingdays)
Safetyfactor:wearetakingastandard10%(assumption)hencethewholequantityismultipliedby1.1
Containerquantityisgiveninthecaseas20units
HenceKanbanquantity=250*14*1.1=192.5
20
ThususingthisestimatethiswillgiveusaforecastofhowmanyKanbancardsareinplacefortheJIT
beforehandandwouldmaketheprocessefficientenough.
11)RepeatQ10forVolvosKalmarandGhentplants.Writeonlyshortdiscussionanddetailedcalculation
anddiagramisnotexpectedasinQ10.
Ans)ThedistanceplaysamajorrolewhenitcomestoKalmarandGhentplantsasforustomakeaJIT
deliveryof4timesaday,thetransportationincludingalllogisticsplaysthedecidingfactor.Similarlyifwe

lookintothiscasethedistancesareshownbelow
SavetoKalmar179.82Milesor289.39KM(Source:http://www.mapcrow.info)SavetoGhent
1284KM(source:GoogleMaps)
ForboththeplantsifweseethereisnofeasibilitytodotheJITsupply4
timesadayasthedistanceissolargethatthetransportationbecomesaproblemandeventhoughifpains
aretakenandthethingsaremeetingthedeadline,theefficiencydecreasesasthiswillinnowayanaddon
forthecurrentexistingprocessintermsoftheROI(ReturnonInvestment).
Q5)DrawtheprocessflowdiagramofSunwindoperations.PerformcapacityanalysisSunwinds
operations.Isthecapacityatplantsufficienttomeettherequirement(Demandandanyother)ofall
VOLVOplants?Howwouldyouinterpretthecapacitycalculations?(Considerabatchsizeandprocess
timeinformationinExhibit8).WhatistheManufacturingLeadtime?Doyouthinkitisrightoralong
MLTinlinewithJITrequirement?Ifitisshortorlong,whatiscauseofsuchshort/LongMLT?Ans.
Operation2Painting
Cycletime:1.15min
Operation3&4batterns,rivetinginsertingstudsCycletime:6.85minmins
Operation1Shapingplywoodpanel
Cycletime2.8min
Rawmaterial(plywood)
Operation7Attachingmetalandcarpetfixtures
CycleTime:2.2min
Operation6GluingCarpet
CycleTime:4.25min
Operation5Mountinghinges
CycleTime:0.95min
Operation8Assemblyofleftandrightunits
Operation3isthebottleneckwithmaximumcycletimeof6.85mins.
Soitbecomesthecycletimefortheentireprocess.
Theworkingtimeforapersonnel/week=40.7hours.
So,effectiveworkinghours/day=8.14hours.
Therefore,totalno.ofunitsproduced/day=8.14*60/6.85=71units.(considering100%capacity
utilisation)
Soat100%utilization,output/week=71*5=355units/week
Monthlyproduction=1420units.
StartingfromJanuary1985VolvosmaximumdemandpermonthtillJulywas1115units.SoSunwind
wasabletomeetthedemand.InAugust1985whendemandofVolvosthreeplantssurmountedto4000
units/monthSunwindwasunabletosupplytherequiredquantity.
In1986whentheforecasteddemandofVolvestands1387units/weekpresentcapacityofSunwind(355
units/week)isnotsufficienttomeetthedemand.
Directlaborcontent(partsfabrication+operations19)=18.8+25.2+5.15=49.15mins/shirt(excluding
setuptime)
Ifweconsiderbatchsizesof500(operation6hastheminimumbatchsizeof500)thechangedcycletime
foreachoperationareasfollows:
Operation4withzerosetuptimestillremainsthebottlenecktimeandhencethecycletime.Sothebatch

sizedoesnotinfluencetheprocesscycletime.
Tomeettheaverageforecasteddemandof1400units/weekin1986thecycletimeoftheentireprocess
shouldbe1.4minassumingtheplantoperatesat80%efficiencylevel.
SincedifferentoperationshavedifferentWIPs(accordingtobatchesasshownbelow):
Manufacturingleadtimeisgivenby
MLT=WIP*Cycletime
Atcurrentplantcapacity,consideringlidsareproducedinbatchesof500
MLT=(2500+1500+1000+1500+500+500)*6.85=51375mins
=856.25hrs=21weeks(consideringworkinghoursof40.7/weekasbottleneckoperationisrunin1shift
only)
Theleadtimeisveryhighandtheprimarycauseforthisislargelotsizeusedforproduction.
AhighMLTcannotgohandinhandwithJITproduction.TheJITphilosophyistimelydeliveryof
customerorder.TomeetthedeliverydeadlineforaJIT
weneedtostarttheproductionassoonastheorderisbooked.Forthisweneedtomaintainaminimum
ManufacturingLeadTimeasproductsareproducedinbatches.
Q7)ShouldLarsOlavweretodesignaJITprogrammeatSunwind,whatshouldbeitselements?Give
detailsaboutthecurrentstatusandfuturerequirementoffewessentialingredientsofJIT/Leanelements
requiringimprovement/changeinSunwind.Pleasesuggest/showyourimproved/changedversionofthe
Sunwindoperationsprocesstomeettherequirement(Demandandanyother)toallVolvoplants.Hint:You
mayliketomeetthenewdemand(1987forecast)bybalancingthecapacityofSunwindoperations.
Ans.TheelementsofaJITprogrammewouldbeasfollows:1)Maketoorderstrategyandnotmaketo
stock.Thiswillreduceoverproductionwhichnotonlycreatesexcessiveleadtimesandinventorybutalso
makesitdifficulttodetectdefects.2)Reductionofinventorylevelsoastoidentifyqualityissuesmore
promptlyandeffectivelytherebycorrectingatsourceinsteadofcreatingrejectionsatend.3)Settingaplant
layoutsuchthatthedistancebetweenadjacentworkstationisminimum.Thiswillreducematerialhandling
costandtime.Excessivemovementofproductscanattimescausedamageanddeteriorationofproduct
quality.4)Manufacturingleadtimetobeminimumsoastoreducewaitingtimeforstartingproduction
whenanorderisbooked.5)Closetieswithsuppliermakingsuretheyarelocatedinclosegeographic
proximityinordertopromotestrongpartnershipsandbettersynchroniseproductflows.
CurrentstatusandrequirementsforadoptingJITinSunwind:1)HighrawmaterialandWIPinventory
level.Highbatchsizesdontallowproblemstosurfaceimmediately.Thishindersqualitycheckatsource.
Fewofthequalitycontrolprocedureswerefollowedinpractice.Processeswerenotmonitoredformally.
Defectswereinspectedbycustomersafterdeliveryinsteadofidentificationinhouse.Defectivematerials
wererejectedbyeliminatingtheproblembutnosummarystatementswereavailableinSunwind
concerningtherejects.
SunWindneedstoreduceitsinventorylevelandpresentMLTsoastoidentifydefectsatsourcethereby
reducingcostasrejectionratecomesdown.2)PresentlyinSunwindduetoextendeddeliveryleadtimeof
someitems(eg.Carpeting)thepurchasingdepartmentusesa36monthsplanninghorizon.Onthecontrary
theproductionplanningdepartmentfocusesonfirstfourweeksofdeliveryschedulewhichunnecessarily
increasestheinventorylevel.Asaresultrawmaterialinventoryunnecessarilygoesup.
SunWindshouldaskitsuppliertoreducethisleadtimeasitisplanningtogoforJIT.Thebenefitsofa
successfulJITcanonlyberealizedifyourinventorylevelsarelow.Consideringsuppliersaspartnersin
venturecanbuildlongtermprofitablerelationshipwhereinthereisawinwinsituationforeveryone.3)
SunWindispresentlyoperatinginmoderatebatcheswhichisgivingaveryhighManufacturingleadtime
whichisnotacceptableforaJIT.
TomeettheincreaseddemandforVolvoSunwindneedstoimproveitscycletimeaswellasreduceits

MLTbyreducingbatchsize.Onlyoperation6hasasignificantsetuptimewhichhastobereducedfor
goingtoJITbyenactingmachinecontrolsorpreparingforchangeoverswhileajobcurrentlyinproduction
isstillbeingprocessed.4)InSunwindtheworkstationloadatdifferentoperationsisnotuniform.Thecycle
timeatdifferentprocessesvaryconsiderably.Asaresultthereisinventorypileupatworkstationswith
highcycletime.
CapacityplanningandlinebalancingaretobeusedtomeetthechangedrequirementofVolvoplantin
1987.
In1987,Volvoneeds65000unitsof700series5doorstationwagons.
TomeetthisdemandSunwindneedstoproduce=65000/52=1250units/week.
AtcurrentcapacitySunwindcanonlyproduce350units/week.
TomeetthedemandSunwindneedstoproduce=1250/5=250units/day.
Weproposechangeinnumberofworkersandnumberofshiftstomeettherequireddemand(considering
SaveplantofSunwindalonewillbeproducingforallVolvoplants)asshownbelow.
PresentSituation
ProposedCapacityPlanningandlinebalancingtomeetnewrequirement
InthischangedlinebalancingthebottleneckoperationisOperation6withacycletimeof2.83mins.Since
operation6hasgotmaximumsetuptimeandSunwindisproducing32combinationsofpart/color/carpet,
weassumeJapaneseconceptofheijunkaforaJIT,abatchof32eachwhereinallthevarietieswillbethere
perbatch.Assumingareducedsetuptimeof15mins/batchforJITachievedbymachinecontrol,wegeta
cycletimeof2.83+0.47=3.3mins.
Sincethisoperationisrunfortwoshiftsthedailyproductionwillbe=2*8*60/3.3=290units/day.
Operation7whichhasalowercycletimebecomesthebottleneckastheprocessisrunfor1shiftonly.No
ofunitsproduced/day=8*60/1.83=262units.
Hencewecansaytheactualbottleneckisoperation7withacycletimeof1.83minswhichrunforsingle
shift.Hencethisbecomesthecycletimefortheentirebatchprocess.Tomeetthisrequirement3additional
workersatSunwindsSavefactoryareneededasperchangedcapacityplanning.
InthisscenarioofJITanoperationalefficiencyofabove95%willbeneededtomeetthedemand
requirementof250units/dayor1250units/week(assuming5daysweek)IfeachbatchofJITis32units,in
thatcaseperdaynoofbatchesproducedwillbe=250/32=7.8
HenceaJITwillshortentheManufacturingleadtimetherebyreducingtheinventorylevelandlumpy
requirementsondifferentworkstations.Thiswillhelpidentifydefectsimmediatelyandstrengthenquality
controlmeasuresandhelpachievehigherefficiency.MLTforJIT=WIP*Cycletime
=32*6*1.83=351.4mins=5.86hours.
Q10AssumingthatSunwindisnowreadyforJITdelivery(hopeso,basedonyourQ1to9analysisand
suggestedimprovement),howtosynchronizethedeliveryofproduct4timesadaytoVolvosTorslanda
Plant?(ForthisyoumayrequiretheonedaydemandofTorsdlandplant)
Ans.Theactualdemandof5doormodel700forVolvosTorslandaPlantis1985is17050.Thetotal
demandforVolvoisn1985is33665.
SoTorslandaplantproducedaround51%oftotalVolvosproduction.Consideringthesamepercentage
productionoftotalVolvosrequirement,byusingtheoverallforecasteddemandofVolvoplantin1986,
Torslandaplantwillrequiretoproduce=51%of62400=31824unitsannually.Henceperweekdemandis

calculatedtobe=31824/52=612units.SinceSunwindruns5daysaweek,dailyproductionrequirement
willbe=612/5=122units.ConsideringnewCapacityplanningandlinebalancingforSunwindasinQ7,our
cycletimeis1.83mins(bottleneckprocess7runningforsingleshift).Asthebottleneckoperationisfor
singleshift,inordertosynchronisethedeliveryofproducts4timesadaytoVolvosTorslandaplantwe
needtohaveanMLTwhichwillbeatleast=8*60/4=120mins.Consideringthepreviouslyarrivedcycle
timeof1.83minsinQ7TherewillbeWIPofequalsizeat6differentworkstations(Operation1to7)
whereprocessingwillbedoneinbatches.Hencemaximumbatchsizethatcanbeallowedsoastomakea
justintimedeliveryofneworderbooked4timesaday=120/(6*1.83)=11Lotsizesof11unitsifproduced
inJITsystemcanenableustodeliverproducts4timesaday,iftheproductcriteriaandcombinationis
knownbeforehand.