Overproduction

For the completion of the assignment I reviewed two article on Overproduction

Micro prospective & totally cost benefit oriented (Cheatham, 1989)1

Macro Prospective, (KAJII, 2009)2

I feel zeroed of following findings

Over-production

Overproduction occurs when more products is produced than is required at that time by

customers. One common practice that leads to this muda is the production of large batches, as

often consumer needs change over the long times large batches require. Overproduction is

considered the worst muda because it hides and/or generates all the others. Overproduction

leads to excess inventory, which then requires the expenditure of resources on storage space

and preservation, activities that do not benefit the customer but manufacturer point of view

some issue has to identified & rectified accordingly.

1) - Strategic Issue

1.1) - Appropriate Forecasting model & demand estimation

With the help of proper demand estimation the volume of production can controlled for

which appropriate forecasting model is needed.

1.2) - Push & Pull Model of business & market requirement

Business nature is also a critical factor for example if there is a commodity business there is

always excess quantity is needed neither opportunity cost is very high, so it should be celery

identify the business is Push Or Pull

1 Cheatham, C. (1989, NOVEMBER). REPORTING THE EFFECTS OF EXCESS

INVENTORIES. Retrieved from JOURNAL OF ACCOUNTANCY.

2 KAJII, A. (2009, March 1). SUNSPOT EQUILIBRIA IN A PRODUCTION ECONOMY: DO

RATIONAL ANIMAL SPIRITS CAUSE OVERPRODUCTION. Retrieved from The Japanese

Economic Review.

By

Praveen Sidola

1021026

Lean Operation & System

2) - Operational Issue

2.1) - Theory of constraint

2.2) - Optimum batch quantity model for a lean production system

2.3) - Trade off between change management & over product inventory

2.4) - Economic Order Quantity

3) -Opportunity Cost

3.1) - Inventory Holding Cost

Finished goods holding cost play a very significant role in the price decision so

3.2) - Perishability & absolution of the finished product

Nature of finished goods wills also a considerable factor to determine the production quantity

4)-Technology Involvement

4.1) - RFID System implementation

4.2) - ERP

4.3) - JIT implementation

4.4) - Real Time Flow of information among all channel partners