tsanthosh / lean-manufacturing

Simulator (in Microsoft Excel) to show how the factory economies (like cost of product, cash in current account and profit on sales) are affected due to changes in the factory parameters (like defect rate, defect rectification time, order turnaround time, cycle time, productivity etc.).

This is a simulator built in Excel to explain lean manufacturing.

Please read about “World Class Factory”& “World Class Manufacturing” in the pdf "WHAT IS A WORLD CLASS FACTORY_.pdf". I am sure some of the stuff explained in this article is very familiar to most of you. But please have a read through because this article is the basis for understanding my simulator.

The simulator’s job is to show us how the following economies are affected:

1. Cost of the product
2. Cash in current account (healthy cashflow = healthy company)
3. Profit on sales

due to the changes in the following factory parameters / KPIs:

1. Defect rate
2. Defect rectification time
3. Order turnaround time
4. Cycle time
5. Raw material lead time
6. Productivity
7. Batch Yield
8. Raw material safety stock
9. Raw material MOQs
10. Finished product safety stock
11. Batch size or Finished product MOQ
12. Change over time

To explain this I have preset six factories and one trial factory:

1. Still open (factory which doesn't care about improving)
2. What should I do (factory willing to change)
3. Getting there (factory which has just started to improve)
4. Excellent (factory having good progress)
5. Extraordinary
6. World class
7. Trial factory (factory parameters can be changed)

Now coming to the economies:

1. Cost of the product: Tried to workout an accurate cost based on batch size, efficiency and change over times etc for one of a product we used to manufacture in our factory.
2. Cash in current account: This account starts with an initial cash of $1,000,000 and is debited a) when a raw material is bought and b) when a batch is manufactured (i.e. the total cost of the batch excluding raw material cost is debited). The account is credited when a sale is made - currently this is set at 300 packs/day of sales for a price of $1.50 per pack but you can change this.
3. Profit on sales: (Sale price – cost price)*no of packs sold.

I hope you all like it. Have fun!