This thesis aims to optimize materials flow and order control at a ventilation manufacturing company through implementing Lean tools. The current system has issues like high inventory, occupied space, and low productivity. The thesis proposes introducing a wagon system in the assembly line, implementing kanban for materials ordering, and calculating optimal order quantities. These improvements were implemented and led to reductions in non-value added time, inventory levels, and space usage, as well as increases in productivity and ergonomics. The conclusion is that the wagon system provided major benefits and kanban simplified materials ordering. Future research could expand Lean tools to other areas and continuously review costs.

1. Thesis title
Optimization of materials flow and order control by
balancing assebly line based on Lean manufacturing tools
and techniques
Presented by
S M Sanaullah
Supervisor: Dr. Ove Bayard
Ulf Johansson
KTH Royal Institute of Technology
Production Engineering and Mnagement

2. Contents of presentation
• Thesis background
• Current sytem and problem description
• Thesis aims and objectives
• Improvement proposals
• Implementation procedure
• Result and discussion
• Conclusion and future research

3. Thesis Backgroud
• In plants materials flow
• Lean manufacturing
• Research methodology
• Data collection

4. Case company outline
• Ventilation manufacturer
• Established in 1974
• 200 employees
• Annual turnover 375 milion NOK
• Supplier of ventilation and vacuum sytem
• Norway and sweden
• Huge investment in product development,
market research and quality assurance

5. Current system and Problem description
• 3 persons for warehouse
• 1 person for materials handling
• MRP and trditional push system
• Materials planner
• No standardize procedure for materials handling
• High amount of non assembling time
• Huge inventory
• Ocuupied floor space
• Ergonomics
• Less productivity and utilization rate

6. Objectives
• Reduce all kinds of inventory
• Release space
• Implement efficient way of material handling
• Implement kanban system for materials order control
• Reduce non assembling time
• Increase productivity and ergonomics of workers
• Rearrange the assembly shelves
• Find out optimal order quantity
• Balance assembly line and lay out design

7. Improvement proposals
• Wagon system in assembly line
• Kanban
• Optimal order quantity prior to EOQ

8. Wagon sytem in assembly line

9. Advantages of wagon sytem
• Less inventory and work in process
• Better quality (due to the next station can´t continue
unless everything is assemble from the station before)
• Standardized method is established to simplify assembly
• No time consume for materials searching for operator
• Material wagons handled as KANBAN or as 2 bin system
• Continuous flow of materials
• So on

10. Kanban card/container
Number of kanban cards or containers needed
Demand during lead time + safety stock
Conatainer size

11. Implementation procedure
Kanban system
• Number of kanban cards or containers needed
for item 110260
• Daily demand 20 pcs, safety stock 40 pcs,
container size 40 pcs, lead time 3 days
(20*3 + 40)/60
= 1,67 # 2 round up
We need 3 kanban container

12. Kanban sytem
• Number of kanban cards or containers needed
for item 110260
• Daily demand 20 pcs, safety stock 50 pcs,
container size 50 pcs, lead time 5 days
(20*5 + 50)/50
= 3 round up
We need 5 kanban container

13. Optimal order quantity
EOQ formula
2(annual volume in units)*(order cost)
Inventory holding cost

14. Optimal order quantity
EOQ for Item 110271
Minimum order quantity 208 pieces
Cost per unit 48,5 SEK
Annual demand (D) 4400 pieces
Lead time 7 days
Safety stock 36 pieces
Order cost 300 SEK
Holding cost = 48,5*20%=9,7

15. Optimal order quantity
EOQ formula for item 110271
√{2(annual volume in units)*(order cost per
order)/Inventory holding cost}
{(2*4400*100)/9,7}
=522
So, EOQ for 110260 is 522 pieces

16. Total cost (TC)
Total cost = purchase cost+order cost+ inventory
Holding cost
Purchase cost=Cost per unit (CU)*annual
demand(D)
Order Cost=Per order
Cost(CO)*(demand(D)/EOQ)
Invetory Cost=Holding Cost(HC)*(EOQ/2)

17. Total cost (TC) for item 110271
Total cost = purchase cost+order cost+ inventory
Holding cost
For EOQ 522, TC=218810
EOQ 500, TC=218814
EOQ 540, TC=218813
EOQ 100, TC=227434

18. Total cost (TC) for item 110271
• Therefore, EOQ 522 pcs initiates the lowest
annual total cost for item 110271

19. Result and discussion
• 25% non value adding time reduced
• Materials handling activites reduced 50%
• Space released for 400 m²
• Inventory reduced 50%
• Labor productivity increades 21%
• Work process productivity increased 22%
• Ergonomics improved
• Quality improved

20. Conclusion
• Major improvements come from wagon sytem
• Instead of batch and queuq, kitting system
implemented
• Instead kanban card to simplify materials order I use
container for scheduling
• If it would be possible to spend more time to study
assembly line and materials handling area, then
measurements and results would be more accurate
and reliable.
• Try to implement 5S and visual control

21. Future research
• Kaban can probably be introduced in all
assembly lines
• Target warehouse
• Review different costs continuously
• Draw Value stream Mapping

22. Thank you