The effect of shop floor continuous improvement programs on the lot size-cycle time relationship in a multi-product single-machine environment

While continuous improvement on the shop floor is a major component of many popular management movements such as lean manufacturing and Six Sigma, there are few quantitative studies of the cumulative effects of such improvement programs over time. On the other hand, lot sizing has long been recognized as an important problem in manufacturing management. In this paper, we use a system dynamics model based on the Factory Physics relationships proposed by Hopp and Spearman [1] to examine the effect of different continuous improvement programs on the relationship between lot sizes and cycle times. We compare two different types of improvement programs: large improvements in a single parameter, such as might be obtained by a focused project, or small improvements in many parameters simultaneously. Our results show that the relationship between lot sizes, cycle times, and shop floor parameters is complex and nonlinear. The cycle time benefits of improvements in shop floor parameters are significantly enhanced by the reduced lot sizes they enable; on the other hand, a poor choice of lot sizes can negate the benefits of a continuous improvement program. Although the largest cycle time reduction is achieved by a large reduction in setup time, small, simultaneous improvements in several parameters can achieve much of the same benefit. The cycle time benefits of multiple simultaneous improvements are mutually reinforcing, creating a positive feedback between shop floor improvements and reduced lot sizes. Our model yields insight into why the Toyota Production System has been able to obtain such excellent results over time, and suggests a number of interesting future directions.