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9609 · 9.3.4

Lean production — practice questions

Practice and worked examples for 9609 Lean production. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

Car plant holds 14 days' component stock, produces to monthly forecast not orders, and rework area busy. Identify lean wastes and suggest fixes.

Show solution outline

Inventory waste: 14-day stock — move toward JIT with key suppliers (4.2.2).

Overproduction waste: Forecast push builds cars not yet sold — switch to order-driven pull where feasible.

Defect waste: Busy rework area — quality at source, stop the line authority for workers (TQM 9.2.1).

Waiting waste: Rework causes line stoppages — fix root cause not symptoms.

People: Kaizen teams + 5S on tool cribs — multiskill for flexibility (9.3.2).

Worked example 2

FlexiWidgets Ltd is considering a switch from traditional batch production to a lean production system incorporating JIT. Analyse the financial and productivity impact of this change using the data below.

Data Before Lean (per month):

  • Average component inventory: 5,000 units
  • Cost per component: 1010
  • Annual inventory holding cost: 20% of inventory value
  • Production output: 10,000 widgets
  • Production workers: 25

Data After Lean (projected, per month):

  • Average component inventory: 500 units
  • Cost per component: 1010
  • Production output: 11,000 widgets
  • Production workers: 25

Calculate:

  1. The annual saving in inventory holding costs.
  2. The percentage increase in labour productivity.
Show solution outline

Step 1: Calculate annual inventory holding cost BEFORE lean.

  • Average inventory value = 5,000 units × $10/unit = $50,000
  • Annual holding cost = 20% of 50,000=0.20×50,000 = 0.20 \times 50,000 = **10,000∗∗10,000**

Step 2: Calculate annual inventory holding cost AFTER lean.

  • Average inventory value = 500 units × $10/unit = $5,000
  • Annual holding cost = 20% of 5,000=0.20×5,000 = 0.20 \times 5,000 = **1,000∗∗1,000**

Step 3: Calculate the annual saving in inventory holding costs.

  • Annual saving = Cost before - Cost after
  • Annual saving = 10,000−10,000 - 1,000 = **9,000∗∗9,000**

Step 4: Calculate labour productivity BEFORE lean.

  • Labour productivity = Total output / Number of workers
  • Labour productivity = 10,000 widgets / 25 workers = 400 widgets per worker per month

Step 5: Calculate labour productivity AFTER lean.

  • Labour productivity = 11,000 widgets / 25 workers = 440 widgets per worker per month

Step 6: Calculate the percentage increase in labour productivity.

  • Increase in productivity = 440 - 400 = 40 widgets per worker
  • Percentage increase = (Increase / Original productivity) × 100
  • Percentage increase = (40 / 400) × 100 = 10%

Conclusion: By implementing lean production, FlexiWidgets Ltd can expect to save $9,000 annually in inventory holding costs and increase labour productivity by 10%. This demonstrates how reducing the waste of 'inventory' and improving process flow can lead to significant financial and operational benefits.

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