Pass L4M7 Exam Guide

Explanation

Kanban (看板) (signboard or billboard in Japanese) is a scheduling system for lean manufacturing and just-in-time manufacturing (JIT).

Poka-yoke (ポカヨケ, [poka yoke]) is a Japanese term that means "mistake-proofing" or "inadvertent error prevention". A poka-yoke is any mechanism in any process that helps an equipment operator avoid (yokeru) mistakes (poka). Its purpose is to eliminate product defects by preventing, correcting, or drawing attention to human errors as they occur.

Kaizen is a concept referring to business activities that continuously improve all functions and involve all employees from the CEO to the assembly line workers. Kaizen (改善) is the Sino-Japanese word for "improvement". Kaizen also applies to processes, such as purchasing and logis-tics, that cross organizational boundaries into the supply chain.

Muda (無駄, on'yomi reading) is a Japanese word meaning "futility; uselessness; wastefulness", and is a key concept in lean process thinking, like the Toyota Production System (TPS) as one of the three types of deviation from optimal allocation of resources (the others being mura and muri). Waste reduction is an effective way to increase profitability.

Explanation

Costs of operating an asset can widely vary. The following table is an example from Guide to Total Cost of Ownership, New Zealand Government:

Explanation

Economic order quantity (EOQ) model is the method that provides the company with an order quantity. This order quantity figure is where the record holding costs and ordering costs are mini-mized. By using this model, the companies can minimize the costs associated with the ordering and inventory holding. In 1913, Ford W. Harris developed this formula whereas R. H. Wilson is given credit for the application and in-depth analysis on this model.

If the economic order quantity model is applied, the following assumptions should be met:

- The rate of demand is constant, and total demand is known in advance.

- The ordering cost is constant.

- The unit price of inventory is constant, i.e., no discount is applied depending on order quantity.

- Delivery time is constant.

- Replacement of defective units is instantaneous.

- There is no safety stock level, i.e., the minimum stock level is zero.

- Restocking is made by the whole batch.

Because the demand and lead time are constant, no stockout events can occur.