Over production

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Over production

  1. 1. By Praveen Sidola 1021026 Lean Operation & System OverproductionFor the completion of the assignment I reviewed two article on OverproductionMicro prospective & totally cost benefit oriented (Cheatham, 1989)1Macro Prospective, (KAJII, 2009)2I feel zeroed of following findingsOver-productionOverproduction occurs when more products is produced than is required at that time bycustomers. One common practice that leads to this muda is the production of large batches, asoften consumer needs change over the long times large batches require. Overproduction isconsidered the worst muda because it hides and/or generates all the others. Overproductionleads to excess inventory, which then requires the expenditure of resources on storage spaceand preservation, activities that do not benefit the customer but manufacturer point of viewsome issue has to identified & rectified accordingly.1) - Strategic Issue1.1) - Appropriate Forecasting model & demand estimationWith the help of proper demand estimation the volume of production can controlled forwhich appropriate forecasting model is needed.1.2) - Push & Pull Model of business & market requirementBusiness nature is also a critical factor for example if there is a commodity business there isalways excess quantity is needed neither opportunity cost is very high, so it should be celeryidentify the business is Push Or Pull1 Cheatham, C. (1989, NOVEMBER). REPORTING THE EFFECTS OF EXCESSINVENTORIES. Retrieved from JOURNAL OF ACCOUNTANCY.2 KAJII, A. (2009, March 1). SUNSPOT EQUILIBRIA IN A PRODUCTION ECONOMY: DORATIONAL ANIMAL SPIRITS CAUSE OVERPRODUCTION. Retrieved from The JapaneseEconomic Review.
  2. 2. 2) - Operational Issue2.1) - Theory of constraint2.2) - Optimum batch quantity model for a lean production system2.3) - Trade off between change management & over product inventory2.4) - Economic Order Quantity3) -Opportunity Cost3.1) - Inventory Holding CostFinished goods holding cost play a very significant role in the price decision so3.2) - Perishability & absolution of the finished productNature of finished goods wills also a considerable factor to determine the production quantity4)-Technology Involvement4.1) - RFID System implementation4.2) - ERP4.3) - JIT implementation4.4) - Real Time Flow of information among all channel partners

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