Apply the results from the HP video:

Assumptions:

Your plant operates 24 hours a day, 365 days per year.

There are currently 1000 workstations at this plant and each workstation occupies

approximately 64 square feet of floor space.

You have a flexible lease on the building and the terms of the lease are

$15/sq.foot/month.

Assume any efficiency realized in space requirements is savings.

Each unit of work-in-process has an estimated value of $2000.

It currently takes 18 hours to assemble your product from beginning to end.

Whenever a quality issue occurs, you estimate that re-work will cost an additional $500

per unit.

Complete the following:

Rent:

Push 6 1,000 workstations X 64 sq ft X $15 = $960,000 rent/month

Pull 3 1,000 workstations X 64 sq ft X $15 = $960,000 rent/month

Pull 1

Rent savings per month =

Cycle Time:

3 min 17 sec = 197 sec 1min 40 sec = 100 sec

197 push-6 time : 100 pull-3 time = approximately 2:1

197 push-6 time : 19 pull-1 time = approximately 10:1

Push 6 Under the current system cycle time is 18 hours

Pull 3

Pull 1

Work In Process:

Push 6 30 units, 4 work stations ===> (30units/4ws) X 1,000 workstations =

7,500 units

Pull 3

Pull 1

Value of Work in Process:

Push 6 7,500 units X $2,000 = $15,000,000

Pull 3

Pull 1

Cost of Rework:

Push 6 (26 units/4ws) X 1,000ws = 6,500 units X $500 per unit = $3,250,000

per incident

Pull 3

Pull 1