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The Use of Operations Research Techniques to Improve the Design of a
Hewlett-Packard Printer Production Line
Mitchell Burman
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Analytics’ Focus
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Analytics Operations Engineering
Quantitative Analysis– Inventory Optimization– Forecasting & Scheduling– SKU Rationalization– Distribution Efficiency– Quality Engineering– Supply-Chain Management
Operational
Tactical
Strategic
Skill LevelLow High
Focu
s Ar
ea
OperationalOperational
TacticalTactical
StrategicStrategic
Skill LevelLow High
Focu
s Ar
ea
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Selected Results (Confidential)
Fleet ManagementFleet Management
• United $30m Savings• Flight Options $6m Profit Increase• Active Aero 15% EBITDA Increase*
ProductivityProductivity
• HP $280m Increase• Truck Mfr. >10% Increase• Baxter $5m Scrap Reduction
SKU Rationalization & PricingSKU Rationalization & Pricing
• Unisource >$10m Profit Increase* • Broder $30m Inventory Reduction• Superior >10% Profit Increase
Supply Chain Design & MgtSupply Chain Design & Mgt
• IBM $750m Savings• Samsonite $25m Savings • Boeing $9m Inventory Reduction
Fleet ManagementFleet Management
• United $30m Savings• Flight Options $6m Profit Increase• Active Aero 15% EBITDA Increase*
ProductivityProductivity
• HP $280m Increase• Truck Mfr. >10% Increase• Baxter $5m Scrap Reduction
SKU Rationalization & PricingSKU Rationalization & Pricing
• Unisource >$10m Profit Increase* • Broder $30m Inventory Reduction• Superior >10% Profit Increase
Supply Chain Design & MgtSupply Chain Design & Mgt
• IBM $750m Savings• Samsonite $25m Savings • Boeing $9m Inventory Reduction
* Estimates based on work in progress
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Selected Analytics Clients
Acme SteelActive Aero (Berkshire)AlcanAtkins (Parthenon)Baxter HealthcareBICC GeneralBoeingBoston ScientificBroder Brothers (Bain)Cambridge Industries (Bain)DESA (HIG)Endres (JMH Capital)Flight Options
FluidSenseGMACHarley-DavidsonHewlett PackardICI (Imperial Chemical)3i (Advent)IntelJ.M. Huber CorporationJohnson & JohnsonKarsten Textilia (Brazil)Kraton Polymers (TPG)Lockheed MartinLone Star IndustriesMotorolaNorthrop Grumman
Nutraceutical (Bain)Palm Coast Data (Tinicum)PrimedicaRaytheon/Flight OptionsSamsonite (Bain)SAPPI PaperSuperior EssexTeam Products (HIG)Thomson Legal & RegulatoryTruck Mfr. (BCG)Unisource (Bain)US Can (Berkshire)Western Mining (Australia)Wolverine (Parthenon)
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Presentation Outline
Business Need Application of Technology BenefitsSummary
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The Product
HP Desk Jet Printer>$1,000,000,000 in demandEncroaching competition (Canon)
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Business Need
HP backgroundVancouver Division (VCD) backgroundVCD Business requirements“HP Way”
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VCD Business Strategy
Productivity improvement to meet business needsAutomation for attaining productivity objectives
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Eclipse Project Design
Original System
FinishedAssembly
Tightly Coupled Process
EmptyPallet
SubassemblyCell
Subassemblies
ProductBaseProcess
Station
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Buzacott Approximation
E = ------------ = 0.98MTTF
MTTF + MTTR1Single Machine
MTTF = Mean Time to FailMTTR = Mean Time to Repair
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Buzacott Approximation
E = ------------ = 0.98MTTF
MTTF + MTTR1Single Machine
MTTRMTTF
Systems with no buffers = 0.0204
E = ---------------- = 0.3281
1 + 100 MTTRMTTF
100 Machines
MTTF = Mean Time to FailMTTR = Mean Time to Repair
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MTTF = Mean Time to FailMTTR = Mean Time to Repair
MTTRMTTF = 0.0204
Single Machine E = ------------ = 0.98MTTF
MTTF + MTTR1
E = ---------------- = 0.3281
1 + 100 MTTRMTTF
100 Machines
Buzacott Approximation
Systems with no buffers
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OneYearLater
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Business Situation Statement
Eclipse sub-assembly performance insufficientSimulation not workingMethod needed to quickly assess alternative system architectures
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Buffer Analysis
Early paradigm:– Large Buffers
Efficiency Total System Buffer Space
oo-bufferlimit
0-bufferlimit
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Buffer Analysis
Early paradigm:– Large Buffers
Efficiency Total System Buffer Space
oo-bufferlimit
0-bufferlimit
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Buffer Analysis
Early paradigm:– Large Buffers
Efficiency Total System Buffer Space
oo-bufferlimit
0-bufferlimit
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Buffer Analysis
Early paradigm:– Large Buffers
JIT– Buffers Unnecessary
Efficiency Total System Buffer Space
oo-bufferlimit
0-bufferlimit
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Buffer Analysis
Early paradigm– Large Buffers
JIT– Buffers Unnecessary
Reality– The truth is in between
Efficiency Total System Buffer Space
oo-bufferlimit
0-bufferlimit
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Important System Phenomena
Long multi-stage processFailing machinesDifferent operation times Finite storage space
Machine
Buffer
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Application of Technology
Goal: Rapidly predict performance of a production system
– Many alternatives (695,784,701,952)– Long execution times make simulation
awkward
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Development of Technology
Analytical method needed for rapid system evaluationDifficulty: Large state space makes brute force numerical solution of Markov chain impractical
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Known Two Stage Models
µ1MTTF1MTTR1
µ2MTTF2MTTR2
N
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Development of Decomposition
Analysis of large system by breaking it into smaller systems
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Solution Approach
Analytical systems performance model was developedHardware changesCritical operational targets
Cost of Changes ~$1,000,000
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Implementation Results
New system architectureSystem validationNew methodology for system optimization
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Short-Term Benefits
Eclipse system throughput increased 25%$280 million in incremental revenueIncremental pen and media revenueLower production costs
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Long-Term Benefits
More robustness and predictability for all new manufacturing system designsFaster production rampsGreater throughput and productivity
Potential long-term financial benefitsfar outweigh the short-term
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Summary
Realized $280 million incremental revenueCaptured incremental market share at critical time which increasedLeveraged the methodology into future system designs