'Learnings from Goal\r'

'SBM, NMIMS, MUMBAI culture by Eliyahu M. Goldratt: Learnings Assignment Submitted by: Triparna Chakravorty (E013) Shalini Chhabra (E014) Shirsh finish upu Datta (E015) Darshi Dixit (E016) Abhishek Gambhir (E017) Shivam Garg (E018) 2013 Submitted to: Prof. Pradeep Owalekar, NMIMS, Mumbai MANAGING BUSINESS surgical processs last by Eliyahu M. Goldratt: Learnings T adequate of Contents â€Å" scene of action and beat up” coarse-grained Description ……………………………………………………………………………………… 3 semblance with a product set up ………………………………………………………………………………………… formation colony and discre pancy ……………………………………………………………………………………. 5 Statistical editions ……………………………………………………………………………………………………….. 5 Statistical fluctuation in the pealing & Stick game ……………………………………………………………………… 5 Relation amid parasitical events and Statistical fluctuations ………………………………………………. Effect of statistical fluctuations on gun roue levels ………………………………………………………………… 6 Implications of statistical fluctuations for organizations…………………………………………………………… 6 Challenges that statistical fluctuations fork up in front of organizations …………………………………….. 6 How to suck up much(prenominal) reliable portendions ab aside jump outs? ………………………………………………………. 6 How to ameliorate the training butt itself? ………………………………………â €¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.. Perils of spunky statistical fluctuations……………………………………………………………………………………… 7 wretched Turnover ………………………………………………………………………………………………………………. 7 utmost Costs ……………………………………………………………………………………………………………………. 7 Carrying Costs ……………………………………………………………………………………………………………….. Loss or Damage …………………………………………………………………………………………………………….. 7 Shifts in Demand …………………………………………………………………………………………………………… 8 Strategic readying Time ……………………†¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.. 8 Lost Sales……………………………………………………………………………………………………………………… laid-back Expenses ……………………………………………………………………………………………………………. 8 Obsolete trade in…………………………………………………†¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦. 8 archetype of Balanced constitute ………………………………………………………………………………………………….. 9 Impact of Dependency and Variability on Balanced Plants ……………………………………………………….. Unremainderd Processes ……………………………………………………………………………………………………….. 9 Fas block out to gradual …………†¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦ 10 Result: ……………………………………………………………………………………………………………………. 10 S blueest to swift ………………………………………………………………………………………………………… 0 Result: …………………………………………â €¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦. 10 Randomly distributed electrical power……………………………………………………………………………………….. 10 Result: ……………………………………………………………………………………………………………………. 10 Developing a balanced and synchronized self-colored kit and caboodle………………………………………………†¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.. 0 To design a functioning with the minimal idle cartridge clip and maximum through ramble …………………………….. 11 Conclusion……………………………………………………………………………………………………………………… 11 2| paginate design by Eliyahu M. Goldratt: Learnings â€Å"Bowl and Stick” Game Description The bankroll and stick game gameylights the importance of statistical fluctuations in a process with leechlike events and its impact on throughput of the process. Mr. Alex Rogo, the protagonist of the book â€Å" cultivation” invents a game wherein there atomic number 18 five roll on a table and just about match sticks. separately bowl is given to a put unitary over who has to manage it. Now every child has to b pretermit market a number of matchsticks through separately of the bowls in succession. The number of sticks distributively child mass hit go away be find out by the number that turns up on a cube that the child has to chance event onward mournful the sticks. For pillowcase if a child gets a lead upon throwing the blend, he washstand move at most triplet sticks ahead. Hence from distributively whiz bowl will move sticks which will fluctuate between one and hexad based on the number that turns up on the founder. Depending on the comely number of sticks passed through by from each one bowl, the average output of the entire process varies.During the course of the game, ? Matches demonstrate the neckcloth or manoeuvre in process. ? Bowls represent the varied mesh displaces ? cube is utilise to picture the Statistical fluctuations Alex reserved a standard quota of 3. 5 which he arrived at by calculating the average of those sise numbers on the die. In order to measure statistical fluctuations, Alex put down the number appearing on the dice each cartridge clip the boys threw dice and recorded difference from the 3. 5 quota. Every player of the game started from zero. If the roll of the die is 4, 5 or 6, then psyche gains of 0. 5, 1. 5 or 2. 5 are recorded.If the outcome from the throw of die comes out to be 1, 2, 3 respective gains of -2. 5, -1. 5 or -0. 5 are recorded. The deviations were interpreted to be cumulative wherein if somebody recorded a gain of say 2. 5, his starting taper on the bordering turn will be 2. 5 and non zero. According to a mathematical prescript, the fluctuations of the un authoritative down the line will fluctuate round the maximum deviation established in the earlier performance. Analogy with a intersection set up The Bowl and stick game models a plain production process where material is processe d consecutive through several(prenominal) build locates.In a typical manufacturing setup, several in subordinate production lines with several workstations exist. An operator ordinarily pass bys one workstation. A similar setup with six workstations is illustrated in the plan below. Except for the archetypical workstation, each workstation maintains add-process store. The first workstation fill ups material from raw material stores, processes the material, and passes it to the work-in-process enrolment memory board area for station two. Workshop station two eventually 3|Page close by Eliyahu M. Goldratt: Learnings processes and moves the material to station three, etc.When a whole of material has been processed by the last workstation, it moves the arranging output. Raw materials Station 1 Station 2 Station 3 Station 3 blameless Goods In the game, the roll of a dice is used to simulate actual production capacity of each individual workstation. The possible rack capa city of the process varies from one to six units, with an average of 3. 5 units. Each child is allowed to process (move) the number of match sticks determined by the roll of the dice, subject to the availability of work-in -process fund at that station at the bloodline of the cycle.No child is permitted to use sticks that were non accessible at the station at the bafflening of the solar day †those units become part of the next cycle? s work queue. Thus, it often happened that an individual workstation (Bowl in this case) was not able to arise to its capability payable to a lack of ready(prenominal) materials. The bowls here represent work stations of a manufacturing unit or an agreement and the matches represent production output as wholesome as work in process strain. scroll of a die helps to simulate the statistical fluctuations (variation) in performance at each work station or accomplishment.The bowls are set up as a production line representing babelike even ts where each operation has the aforementioned(prenominal) capacity, i. e. , six products per day with a tell of variation from one to six. whorl of the die and determining how many matches to move from one bowl to the next represents one cycle of production run. Each operation is low-level on the upriver operation for input. For e. g. if a scout rolls a five, he house solo move four from his bowl if there are only four gettable to him from the previous bowl (upstream operation) in the process.The previous operation hence becomes the stymy operation. If an early(a) player downstream rolls less than a four, then he becomes the bottleneck. roller the die several clock in period represents several cycles of production runs and each measure the bottleneck nearly always appears at a contrasting operation or scout. Demonstration through „Bowl and Stick? game is to show that where each operation in a sequence of dependent events has the same amount of capacity (a balanc ed botany), the variation and dependent events will cause the bottleneck to move from operation to operation, i. . , floating bottlenecks make out. Hence it is difficult for Manager to determine where the bottleneck will show up next and manage the system. 4|Page Goal by Eliyahu M. Goldratt: Learnings Defining Dependency and Variability Dependency is express to exist when certain operations or activities washbasinnot begin until certain other operations or activities consecrate been completed, whereas variability is manifested in the form of random events and statistical fluctuations. Random events are those events that occur at unconventional intervals and clear a disruptive effect on the process.Statistical fluctuation refers to the idea that all processes are characterized by some degree of inherent variability. Dependency is manifested in the dice game by the requirement that units of sticks cannot be moved by a workstation until first universe passed by all previous wo rkstations. Variability is manifested by the different numbers that whitethorn occur when the dice are rolled. Statistical fluctuations Statistical fluctuations occur when one is unavailing(p) to precisely predict events and quantities and which can only be specified within a certain range.The book gives very good illustrations to explain this principle †Alex and Jonah were sitting in a restaurant and Jonah says that they are able to precisely predict the capacity of the restaurant by counting the available seats. While on the other hand, they are unable to predict how long the waiter will guide to fulfil their order. This uncertainty is referred to as statistical fluctuations. still if one gets fairly accurate estimates for each lay out in the breeding project, it is still possible, and quite probable, that a project will come in later than expected due to the effects of statistical variation.Statistical fluctuation in the Bowl & Stick game In stick and bowl gam e Every sequence the dice is rolled, a random number is generated that is inevitable only within a certain range, specifically numbers one to six on each die. This is an example of statistical fluctuations. Relation between dependent events and Statistical fluctuations Dependent events are processes that must first take place earlier other ones can begin, For example a product has to be assembled before it can be transported.The relation between the statistical fluctuations and the dependent events is expressed as â€Å"Maximum deviation of a preceding operation becomes the starting point of a subsequent operation. ” 5|Page Goal by Eliyahu M. Goldratt: Learnings Effect of statistical fluctuations on scrutinise levels The Author predicted that on an average in each round the throughput (No. of matches coming out of the final bowl) should be 3. 5, which is the average of all the possibilities that is, 1 to 6. But after(prenominal) he carried out the experiment 10 times he found that the throughput was significantly unhorse (21) kinda of 35 as predicted.As the process goes on it can be seen that the forecasted throughput is never reached. This happened as the six sided die was causing the variance (statistical fluctuations) by changing the production capacity of each of the stages. Thus, due to the relation between dependent events and Statistical fluctuation each time some step in the process was work as a bottleneck for the capacity of the whole process meaning many sticks were stuck in the median(a) bowls. Hence, statistical fluctuations summation the roll (stock) of the system. Implications of statistical fluctuations for organizationsThis in organization setup means: ? The system wastes coin by stocking excess inventory that is not directly converted to throughput, yet raises operational expense in the form of carrying cost. ? Some areas collapse lower capacity than others and in turn work as a bottleneck for the whole system. In General , Running areas of the manu factory that have mellow(prenominal) capacities will not growing the general throughput of the system. The measure that the increase is inventory, as the factory produces parts that cannot be assembled into finished goods that will at last result into sales until the area of lowest capacity produces enough parts.Inventory is an investment of money and thus subtracts from the bottom-line. tutelage humongous amounts of inventory is not desirable, because warehouse blank is costly. Challenges that statistical fluctuations present in front of organizations How to make more reliable predictions about projects? This is one of the major(ip) challenges an organization faces. Statistical fluctuations hinder the management to accurately predict the output they can produce as they are unable to gauge the maximum likely of each station.Due to the fluctuations they end up getting lower throughput than predicted which ultimately leads in the late preservatio n of the orders. 6|Page Goal by Eliyahu M. Goldratt: Learnings How to improve the breeding process itself? Due to statistical fluctuations, an unregulated development process will be slower than the slowest of the process steps. Therefore, it is impossible to accurately estimate the time required by adding together the time estimates for individual process steps and thus it is difficult to improve the development process. Perils of high statistical fluctuations cardinal of the outcomes of high statistical fluctuations is excess inventory. The major mischiefs of the same are: low-down Turnover Companies typically want to produce or maintain only enough inventories to meet present(prenominal) demands and to avoid stock outs. When companies have excessive amounts of inventory, they are generally not selling enough to restrain inventory build-up. This is not a good land site as businesses need to turn over inventory efficiently to maintain reasonably high dough margins and to avo id the costs and other disadvantages that come with high levels of inventory. High CostsCarrying excess inventory has significant costs. One of the highest costs for many companies is financing the purchase and safekeeping of inventory. Also, the more inventories you feed, the more you have to spend on labour to manage it, space to hold it, and in some cases, insurance to protect against its way out or damage. Physically counting and monitoring the levels of inventory you hold to a fault takes time and has costs. Carrying Costs Low inventory turnover can result in higher carrying costs. Inventory needs to be stored, handled and insured, all of which represent costs to the business.Stored inventory is in like manner susceptible to shrinkage, which is loss due to occurrences like damage and theft. As with ancient merchandise, carrying a large volume of slow-moving products also results in lost opportunities due to not being having the storage space for more rapidly tour items. L oss or Damage Related to the high costs of high inventory, some inventory can also go bad after a certain amount of time and go to waste. When retailers demoralise excess inventory of perishable food items, for instance, they may have to throw out inventory that spoils or becomes rotten.When you carry high inventory, you also have greater exposure to lost or damaged product. Thieves have more products to choose from and you have greater potential for product to turn up missing or broken when you count inventory. 7|Page Goal by Eliyahu M. Goldratt: Learnings Shifts in Demand Another disadvantage of keeping a large amount inventory on hand is that certain goods dexterity not sell due to shifts in market demand. For example, a clothing store that stocks likewise many armoured combat vehicle tops during the summer may find tself unable to get rid of the tank tops before fall. During the fall, consumers might demand different types of clothing, like T -shirts or sweatshirts, leaving the fraternity with a large quantity of goods on hand that simply take up space. Strategic Planning Time come with leaders typically have to spend more time in strategic planning meetings when the company has high inventory levels. Management must figure out how to communicate with suppliers, how to improve ordering processes or how to increase market demand to reduce the high levels of inventory.This caper takes away from the ability of these managers to focus on other proactive or more crucial strategic decisions to move the company forward. Dealing with inventory problems is a more reactive strategy to resolve the issue at hand. On the other end of spectrum is the problem that arises due to inventory levels getting too low are: Lost Sales If inventory turns over too quickly, it could negatively affect sales. Merchants may elect to limit the variety of products they carry to frustrate a backlog of inventory and keep goods moving through the operation.While merchants might qu ickly sell the stock they have on hand, they may have worry keeping shelves full or may not offer a broad enough selection to meet customer needs. Customers who cannot find what theyre looking for or are not impressed with the product merge will look elsewhere and may not return to the establishment. Higher Expenses Merchants who purchase in secondary quantities to keep inventory turnover high typically incur greater costs. They may not be eligible for volume discounts or special deals available to those who buy in bulk.Transportation costs may also be higher, as manufacturers and distributors often charge higher shipping prices for belittled orders. In some cases, merchants may have to go back to expensive express delivery methods to prevent out-of-stock situations. Merchants may need to place orders more frequently, resulting in greater processing expenses. Obsolete Merchandise In operations where inventory turnover is low, merchants run the risk of being stuck with merchandi se that becomes unsalable due to obsolescence. This can be a major problem in industries where consumer tastes constantly change or engineering rapidly evolves.Carrying obsolete merchandise means the merchant may not have adequate storage space to carry items currently in demand, resulting in lost sales. The merchant may have to resort to selling the merchandise at greatly lessen prices, which reduces its profits. 8|Page Goal by Eliyahu M. Goldratt: Learnings When allocating time for each activity project managers and planners often interject buffer times. These buffer times might be small numbers for each activity that might be added to guard against statistical fluctuations that normally occur in each activity.While these numbers are small they add up over the entire project activities to a significant time frame. When the histrions realize that they have the necessary time built in as buffers they are more likely to push out the start of the job and concentrate their efforts o n other task at hand. Concept of Balanced Plant One of the learnings from the bowl and stick game is that addiction and variability will combine to degrade overall plant performance. Several balanced plant models has been proposed to test the hypothesis that change magnitude (decreasing) levels of dependency and variability will increasingly degrade (improve) plant performance.A balanced plant requires that every workstation have identical capacity. In the consideration of the game every workstation will have an average capacity of 3. 5 units of matchsticks. Impact of Dependency and Variability on Balanced Plants After understanding the prefatory dice game setup, the key learning is that in the long run the average number of units of output a plant should be able to produce in every cycle is the mean of the range of outputs that each station can produce which is 3. 5 units in the game.But the plant may not real achieve the theoretically expected results because of the variati ons that occur in the output of each workstation which may beat the balance of the plant. Unbalanced Processes In virtually all processes, the capacities of the conglomerate workstations are unbalanced. Goldratt initially developed the production dice game to illustrate the combined effects of dependency and variability on flow processes. Moreover, he combines insights derived from the basic production dice game to provide the intro for understanding the dynamics in unbalanced plants.Statistical fluctuations disturb the balance of plant which in turn leads to increase in work in process inventory. 9|Page Goal by Eliyahu M. Goldratt: Learnings In The Goal, Goldratt describes three general unbalanced models which are described as follows: Fastest to slowest This occurs when the workstations are arranged gibe to the fastest producing to the slowest producing. In this model, the first worker transfers the highest output, the second worker lesser, and so on.The average cycle capaciti es for all the workstations are in order. Result: High output and high inventory Slowest to fastest In this model, the workstations are distributed in order of increasing capacity. That is, the first worker receives transfers the smallest output, the second worker transfers a higher output and so on. Result: low inventory Randomly distributed capacity In this model, different workstations producing at different capacities are randomly distributed in the process line. Result: High output and high\r\n'