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1 Introduction to Operations Management Process Selection and Facility Layout (Ch.6) Hansoo Kim ( ) Dept. of Management Information Systems, YUST

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2 What you should do! Review Capacity Planning Read Chapter 6 and 6s

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3 OM Overview Class Overview (Ch. 0) Project Management (Ch. 17) Strategic Capacity Planning (Ch. 5, 5S) Operations, Productivity, and Strategy (Ch. 1, 2) Mgmt of Quality/ Six Sigma Quality (Ch. 9, 10) Supply Chain Management (Ch 11) Location Planning and Analysis (Ch. 8) Demand Mgmt Forecasting (Ch 3) Inventory Management (Ch. 12) Aggregated Planning (Ch. 13) Queueing/ Simulation (Ch. 18) MRP & ERP (Ch 14) JIT & Lean Mfg System (Ch. 15) Term Project Process Selection/ Facility Layout; LP (Ch. 6, 6S) X X X X

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4 Key Terms Assembly line Line balancing Automation Numerically controlled(N/C)machines Balance delay Precedence diagram Cellular production Process layout Computer-aided manufacturing Production line Computer-integrated manufacturing Product layout Cycle time Product or service profiling Fixed-position layout Project Flexible manufacturing system Robot Group technology Technological innovation Intermittent processing technology

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5 Learning Objectives Explain the strategic importance of process selection. Explain the influence that process selection has on an organization. Describe the basic processing types. Discuss automated approaches to processing. Explain the need for management of technology. List some reasons for redesign of layouts. Describe the basic layout types. List the main advantages and disadvantages of product layouts and process layouts. Solve simple line-balancing problems. Develop simple process layouts.

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6 Capacity and Process Selection Process Strategy (Key Aspects) 1.Capital Intensity 2.Process Flexibility

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7 Process Selection Strategy ( , ) Process Selection ( ) Deciding on the way production of goods or services will be organized ? Process = Transformation ( ) Objective( ) Meet or exceed customer requirements ( ) Meet cost & managerial goals ! Long-term effect ( ) Product & Volume Flexibility Costs & Quality

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8 (or ) ? (Which types of process strategy can exist?) (or ) ? Which factors should be considered to select the process strategy?

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9 4 (Four Process Strategies) Process Focus ( ) Product Focus ( ) Repetitive Focus ( ) (Assembly Line) Mass Customization Focus ( )

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10 Machining Process Process Time ( ) = Setup Time ( ) + Machining Time ( ) How is the utilization of the Machine? Machine S-A-A-A-A-S-B-B-B-B S-A-S-B-S-A-S-B-S-A-S-B-S-A-S-B S = Setup Time ?

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11 Process-Focused Strategy ( ) process Facilities( ) are organized by process Similar processes are together Example: All drill presses are together Low volume, high variety products ( ) Jumbledflow Jumbled flow ( ) Other names Intermittent process Job shop* Job shop* Operation Product A Product B 112233

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12 Process-Focused Strategy Examples Bank 1995 Corel Corp. Machine Shop 1995 Corel Corp. Hospital 1995 Corel Corp.

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13 Process Focus (job shop) L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

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14 Process Focused Strategy Greater product flexibility ( ) general purposeequipment More general purpose equipment ( ) Lower initial capital investment ( ) High variable costs ( ) More highly trained personnel ( ) More difficult production planning & control ( ) Low equipment utilization (5% to 25%) ( )

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15 Product Focused Strategy ( ) product Facilities( ) are organized by product High volume, low variety products ( ) Where found Discrete unit manufacturing Continuous process manufacturing Other names Flow Line production Flow Line production Continuous production Products A & B 1 1 2 2 3 3 Operation 2 2 4 4 3 3

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16 Product Focused Examples 1995 Corel Corp. Light Bulbs (Discrete) Paper (Continuous) 1984-1994 T/Maker Co. 1995 Corel Corp. Soft Drinks (Continuous, then Discrete) Mass Flu Shots (Discrete) 1995 Corel Corp.

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17 Product Focus L A L M D MD LG L In Out M A L S D GD GP L In Out Product A Product B

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18 Product Focused Strategy Lower variable cost per unit ( ) Lower but more specialized labor skills Easier production planning and control ( ) Higher equipment utilization (70% to 90%) ( ) Lower product flexibility ( ) More specialized equipment ( ) Usually higher capital investment ( )

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19 Repetitive Focused Strategy ( ) Facilities often organized by assembly lines ( ) modules Characterized by modules Parts & assemblies made previously options Modules combined for many output options Other names Assembly line Production line

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20 Repetitive Focus Modules Parts or components of a product previously prepared

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21 Repetitive Focused Strategy - Considerations ( ) More structured than process-focused, less structured than product focused quasi-customization Enables quasi-customization Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model ( )

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22 Repetitive-Focused Strategy Examples Truck 1995 Corel Corp. Clothes Dryer 1995 Corel Corp. Fast Food McDonalds over 95 billion served 1984-1994 T/Maker Co.

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23 Mass-Customization Focused Strategy ( ) Rapid, low-cost production that caters to constantly changing unique customer desires : Customization ( Needs ) : Low-cost rapid Production ( ) OM

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24 Process Strategies Rapid throughput techniques Mass Customization Modular techniques Repetitive Focus Modular design Flexible equipment Product-focused Low variety, high volume High utilization (70% - 80%) Specialized equipment Process-focused High variety, low volume Low utilization (5% - 20%) General purpose equipment Effective scheduling techniques

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25 A Comparison (1) Process Focus (Job Shop) (Low volume, High variety) Repetitive Focus (Modular) Product focus (High-volume, low-variety) Mass Customization (High-volume, high-variety) 1. Small quantity, large variety of products Long runs, standardized product, from modules Large quantity, small variety of products Large quantity, large variety of products 2. General purpose equipment ( ) Special equipment aids in use of assembly line Special purpose equipment Rapid changeover on flexible equipment

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26 A Comparison (2) Process FocusRepetitive FocusProduct focusMass Customization 3 Broadly skilled operators ( ) Modestly trained employees Operators less broadly skilled Flexible operators trained for customization 4 Many instructions because of change in jobs Reduced training and number of job instructions Few work orders and job instructions Custom orders require many instructions 5 Raw material high relative to product value JIT techniques used Raw material low relative to product value

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27 A Comparison (3) Process FocusRepetitive FocusProduct focusMass Customization 6 WIP high relative to output JIT techniques used WIP low relative to output WIP driven down by JIT, kanban, lean production 7 Units move slowly thru plant Movement measured in hours & days Units move swiftly thru facility Goods move swiftly thru facility 8 Finished goods made to order, not stored Finished goods made to frequent forecasts Finished goods made to forecast, then stored Finished goods made to order

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28 A Comparison (4) Process FocusRepetitive FocusProduct focusMass Customization 9 Scheduling complex and concerned with trade-off between inventory, capacity, and customer service Scheduling based on building models from a variety of forecasts Scheduling relatively simple, concerns establishing sufficient rate of output to meet forecasts Scheduling sophisticated to accommodate customization 10 Fixed costs low, variable costs high Fixed costs dependent on flexibility of facilities Fixed costs high, variable costs low Fixed costs high; variable costs must be low

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29 A Comparison (5) Process FocusRepetitive FocusProduct focusMass Customization 11 Costing, done by job, is estimated prior to doing job but only known after doing job Costs usually known based on experience Because of high fixed costs, cost dependent on utilization of capacity High fixed costs and dynamic variable costs

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30 Volume and Variety of Products Volume and Variety of Products Low Volume High Variety Process (Intermittent) Repetitive Process (Modular) High Volume Low Variety Process (Continuous) One or very few units per lot Projects Very small runs, high variety Job Shops Modest runs, modest variety Disconnected Repetitive Long runs, modest variations Connected Repetitive Very long runs, changes in attributes Continuous Equipment utilization5%-25%20%-75%70%-80% Poor Strategy (High variable costs) Mass Customization

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31 Areas of Technology Machine technology Automatic identification systems (AIS) Bar-code, RFID Process control Vision system Robot Automated storage and retrieval systems (ASRS) Flexible manufacturing systems (FMS) Computer-integrated manufacturing (CIM)

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32 FMS 1 2 3 4 5 6 7 8

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33 FMS

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34 FMS

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35 FMS

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37 Types of Robot Cylindrical Polar Cartesian Joint Arm

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38 FMS Machine

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39 ASRS ( )

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40 AGV ( )

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41 AGVS ( ) http://www.steinbockus.com/AGVs/animation.gif

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42 Computer Integrated Manufacturing (CIM)

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43 Facility Layout Design

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44 Objectives of Facility Layout Develop an economical layout which will meet the requirements of: product design and volume (product strategy) process equipment and capacity (process strategy) quality of work life (human resource strategy) building and site constraints (location strategy)

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45 What is Facility Layout Location or arrangement of everything within & around buildings Objectives are to maximize Customer satisfaction Utilization of space, equipment, & people Efficient flow of information, material, & people Employee morale & safety

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46 Types of Layouts Fixed-position layout Process-oriented layout Office layout Retail layout Warehouse layout Product-oriented layout

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47 Emergency Room Layout (Process-Oriented Layout) Surgery Radiology E.R. bedsPharmacyBilling/exit E.R.Triage room E.R. Admissions Patient B - erratic pacemaker Patient A - broken leg Hallway

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48 Steps in Developing a Process-Oriented Layout 1Construct a from-to matrix 2Determine space requirements for each department 3Develop an initial schematic diagram 4Determine the cost of this layout 5By trial-and-error (or more sophisticated means), try to improve the initial layout 6Prepare a detailed plan that evaluates factors in addition to transportation cost

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49 Cost of Process-Oriented Layout

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50 Interdepartmental Flow of Parts 123456 1 2 3 4 5 6 501000020 30 50 10 0 200 100 50 0 0

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51 Possible Layout 1

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52 Interdepartmental Flow Network Showing Number of Weekly Loads 100 5030 10 20 50 20 100 50 2 3 4 5 6 1 1 (Adjacent Cost) = $1, (Non-Adjacent C.) = $2 Total Cost = 50+200+40+30+50+10+40+100+50 = $570

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53 Possible Layout 2

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54 Interdepartmental Flow Graph Showing Number of Weekly Loads 213 654 10050 30 10 20 50 20 100 50 (Adjacent Cost)= $1, (Non-Adjacent C.)=$2 Total Cost = 50+100+20+60+50+10+40+100+50=$480

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55 Computer Programs to Assist in Layout CRAFT SPACECRAFT CRAFT 3-D MULTIPLE CORELAP ALDEP COFAD FADES - expert system

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56 Cellular Layout - Work Cells A temporary product-orient arrangement of machines and personnel in what is ordinarily a process-oriented facilities

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57 Work Cell Floor Plan Office Tool Room Work Cell SawsDrills

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58 Improving Layouts by Moving to the Work Cell Concept

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59 Work Cell Advantages Inventory Floor space Direct labor costs Equipment utilization Employee participation Quality

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60 Office Layout Design positions people, equipment, & offices for maximum information flow Arranged by process or product Example: Payroll dept. is by process Relationship chart used Examples Insurance company Software company

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61 Relationship Chart ( ) 1 President O 2 CostingU AA 3 EngineeringI O 4 Presidents Secretary 1 2 3 Ordinary closeness: President (1) & Costing (2) Absolutely necessary: President (1) & Secretary (4) 4

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62 Office Relationship Chart 1 President 2 Chief Technology Officer 3 Engineers Area 4 Secretary 5 Office entrance 7 Equipment cabinet 8 Photocopy equipment 9 Storage room UIIAUOEUIIAUOE I O E I OAOAXOUEOAOAXOUE A I E U A IIEAXIIEAX UUOUUO OUOU O Val. Closeness A Absolutely necessary E Especially important I Important O Ordinary OK U Unimportant X Not desirable

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63 Retail /Service Layout - Grid Design Office Carts Check- out Grocery Store MeatBread Milk Produce Frozen Foods

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64 Store Layout - with Dairy, Bread, High Drawer Items in Corners

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65 Warehouse Layout Design balances space (cube) utilization & handling cost Similar to process layout Items moved between dock & various storage areas Optimum layout depends on Variety of items stored Number of items picked

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66 An Assembly Line Layout

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67 Line Balancing Precedence diagram Precedence diagram Network showing order of tasks and restrictions on their performance Network showing order of tasks and restrictions on their performance Cycle time Cycle time Maximum time product spends at any one workstation Maximum time product spends at any one workstation

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68 Line Balancing Precedence diagram Precedence diagram Network showing order of tasks and restrictions on their performance Network showing order of tasks and restrictions on their performance Cycle time Cycle time Maximum time product spends at any one workstation Maximum time product spends at any one workstation C d = production time available desired units of output Cycle time example C d = (8 hours x 60 minutes / hour) (120 units) C d = = 4 minutes 480 120

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69 Flow Time vs Cycle Time Cycle time = max time spent at any station Cycle time = max time spent at any station Flow time = time to complete all stations Flow time = time to complete all stations

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70 Flow Time vs Cycle Time Cycle time = max time spent at any station Cycle time = max time spent at any station Flow time = time to complete all stations Flow time = time to complete all stations 123 4 minutes Flow time = 4 + 4 + 4 = 12 minutes Cycle time = max (4, 4, 4) = 4 minutes

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71 Efficiency of Line i i = 1 titititi nC a E =E =E =E = i i = 1 titititi CdCdCdCd N =N =N =N = Efficiency Minimum number of workstations where t i = completion time for element i j = number of work elements n = actual number of workstations C a = actual cycle time C d = desired cycle time

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72 Line Balancing Process 1. Draw and label a precedence diagram. 2. Calculate the desired cycle time required for the line. 3. Calculate the theoretical minimum number of workstations. 4. Group elements into workstations, recognizing cycle time and precedence constraints. 5. Calculate the efficiency of the line. 6. Stop if theoretical minimum number of workstations on an acceptable efficiency level reached. If not, go back to step 4.

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73 Line Balancing WORK ELEMENTPRECEDENCETIME (MIN) APress out sheet of fruit0.1 BCut into stripsA0.2 COutline fun shapesA0.4 DRoll up and packageB, C0.3 Desired unit of output : 6,000 units Available working hour a day : 40 Hrs

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74 Line Balancing WORK ELEMENTPRECEDENCETIME (MIN) APress out sheet of fruit0.1 BCut into stripsA0.2 COutline fun shapesA0.4 DRoll up and packageB, C0.3 0.10.20.4 0.3 D B C A

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75 Line Balancing WORK ELEMENTPRECEDENCETIME (MIN) APress out sheet of fruit0.1 BCut into stripsA0.2 COutline fun shapesA0.4 DRoll up and packageB, C0.3 0.10.20.4 0.3 D B C A C d = = = 0.4 minute 40 hours x 60 minutes / hour 6,000 units 2400 6000 N = = = 2.5 workstations 1.0 0.4 0.1 + 0.2 + 0.3 + 0.4 0.4

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76 Line Balancing WORK ELEMENTPRECEDENCETIME (MIN) APress out sheet of fruit0.1 BCut into stripsA0.2 COutline fun shapesA0.4 DRoll up and packageB, C0.3 0.10.20.4 0.3 D B C A C d = = = 0.4 minute 40 hours x 60 minutes / hour 6,000 units 2400 6000 N = = = 2.5 workstations 1.0 0.4 0.1 + 0.2 + 0.3 + 0.4 0.4 3 workstations

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77 Line Balancing WORK ELEMENTPRECEDENCETIME (MIN) APress out sheet of fruit0.1 BCut into stripsA0.2 COutline fun shapesA0.4 DRoll up and packageB, C0.3 0.10.20.4 0.3 D B C A C d = 0.4 N = 2.5

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78 Line Balancing 0.10.20.4 0.3 D B C A C d = 0.4 N = 2.5 REMAINING WORKSTATIONELEMENTTIMEELEMENTS

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79 Line Balancing 0.10.20.4 0.3 D B C A C d = 0.4 N = 2.5 REMAINING WORKSTATIONELEMENTTIMEELEMENTS 1A0.3B, C

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80 Line Balancing 0.10.20.4 0.3 D B C A C d = 0.4 N = 2.5 REMAINING WORKSTATIONELEMENTTIMEELEMENTS 1A0.3B, C B0.1C, D

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81 Line Balancing 0.10.20.4 0.3 D B C A C d = 0.4 N = 2.5 REMAINING WORKSTATIONELEMENTTIMEELEMENTS 1A0.3B, C B0.1C, D 2C0.0D

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82 Line Balancing 0.10.20.4 0.3 D B C A C d = 0.4 N = 2.5 REMAINING WORKSTATIONELEMENTTIMEELEMENTS 1A0.3B, C B0.1C, D 2C0.0D 3D0.1none

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83 Line Balancing 0.10.20.4 0.3 D B C A C d = 0.4 N = 2.5 REMAINING WORKSTATIONELEMENTTIMEELEMENTS 1A0.3B, C B0.1C, D 2C0.0D 3D0.1none A, B C D Work station 1 Work station 2 Work station 3 0.3 minute 0.4 minute 0.3 minute

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84 Line Balancing 0.1 0.2 0.4 0.3 D B C A C d = 0.4 N = 2.5 REMAINING WORKSTATIONELEMENTTIMEELEMENTS 1A0.3B, C B0.1C, D 2C0.0D 3D0.1none A, B C D Work station 1 Work station 2 Work station 3 0.3 minute 0.4 minute 0.3 minute E = = = 0.833 = 83.3% 0.1 + 0.2 + 0.3 + 0.4 3(0.4) 1.0 1.2

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85 Announcement Next week Exam I Concepts, Terms Calculation Problems Examples, Solved problems, and HW HW ( ) Example 1, 2 Solved Problem 1

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86 Good Bye!