A HOLISTIC APPROACH TO MANUFACTURING SYSTEM DESIGN IN THE DEFENSE AEROSPACE INDUSTRY

Manufacturing has evolved to become a critical element of the competitive skill set of defense aerospace firms. Given the changes in the acquisition environment and culture; traditional “thrown over the wall” means of developing and manufacturing products are insufficient. Also, manufacturing systems are complex systems that need to be carefully designed in a holistic manner and there are shortcomings with available tools and methods to assist in the design of these systems. This paper outlines the generation and validation of a framework to guide this manufacturing system design process.

A Holistic Approach to Manufacturing System Design in the Defense Aerospace Industry

Manufacturing has evolved to become a critical element of the competitive skill set of defense aerospace firms. Given the changes in the acquisition environment and culture; traditional “thrown over the wall” means of developing and manufacturing products are insufficient. Also, manufacturing systems are complex systems that need to be carefully designed in a holistic manner and there are shortcomings with available tools and methods to assist in the design of these systems. This paper outlines the generation and validation of a framework to guide this manufacturing system design process.

Strategies for Lean Product Development

The essence of lean is very simple, but from a research and implementation point of view overwhelming. Lean is the search for perfection through the elimination of waste and the insertion of practices that contribute to reduction in cost and schedule while improving performance of products. This concept of lean has wide applicability to a large range of processes, people and organizations, from concept design to the factory floor, from the laborer to the upper management, from the customer to the developer. Progress has been made in implementing and raising the awareness of lean practices at the factory floor. However, the level of implementation and education in other areas, like product development, is very low.

Benefits of Implementing Lean Practices and the Impact of the Lean Aerospace Initiative in the Defense Aerospace Industry and Government Agencies

In the 1980’s, many United States industrial organizations started developing new production processes to improve quality, reduce cost, and better respond to customer needs and the pressures of global competition. This new paradigm was coined Lean Production (or simply “Lean”) in the book The Machine That Changed The World published in 1990 by researchers from MIT’s International Motor Vehicle Program. In 1993, a consortium of US defense aerospace firms and the USAF Aeronautical Systems Center, together with the AFRL Materials and Manufacturing Directorate, started the Lean Aircraft Initiative (LAI) at MIT. With expansion in 1998 to include government space products, the program was renamed the Lean Aerospace Initiative. LAI’s vision is to “Significantly reduce the cost and cycle time for military aerospace products throughout the entire value chain while continuing to improve product performance.” By late 1998, 23 industry and 13 government organizations with paying memberships, along with MIT and the UAW were participating in the LAI.

Lean Transition of Emerging Industrial Capability

This volume of the final report documents the technical work performed from December 1998 through December 2002 under Cooperative Agreement F33615-97-2-5153 executed between the U.S. Air Force, Air Force Research Laboratory, Materials and Manufacturing Directorate, Manufacturing Technology Division (AFRL/MLM) and the McDonnell Douglas Corporation, a wholly-owned subsidiary of The Boeing Company. The work was accomplished by The Boeing Company, Phantom Works, Huntington Beach, St. Louis, and Seattle; Ford Motor Company; Integral Inc.; Sloan School of Management in the Massachusetts Institute of Technology; Pratt & Whitney; and Central State University in Xenia, Ohio and in association with Raytheon Corporation. The LeanTEC program manager for AFRL is John Crabill of AFRL / MLMP and The Boeing Company program manager is Ed Shroyer of Boeing Phantom Works in Huntington Beach, CA. Financial performance under this contract is documented in the Financial Volume of the final report.

Summary of Research Conducted by the Manufacturing Systems Team 1994-2002

The Manufacturing Systems team was one of the research teams within the Lean Aerospace Initiative (LAI) whose goal was to document, analyze and communicate the design attributes and relationships that lead to significant performance improvements in manufacturing systems in the defense aerospace industry. This report will provide an integrated record of this research using the Production Operations Transition to Lean Roadmap as its organizing framework.

Coordinating Inventory Control and Pricing Strategies with Random Demand and Fixed Ordering Cost: The Finite Horizon Case

We analyze a finite horizon, single product, periodic review model in which pricing and production/inventory decisions are made simultaneously. Demands in different periods are random variables that are independent of each other and their distributions depend on the product price. Pricing and ordering decisions are made at the beginning of each period and all shortages are backlogged. Ordering cost includes both a fixed cost and a variable cost proportional to the amount ordered. The objective is to find an inventory policy and a pricing strategy maximizing expected profit over the finite horizon. We show that when the demand model is additive, the profit-to-go functions are k-concave and hence an (s,S,p) policy is optimal. In such a policy, the period inventory is managed based on the classical (s,S) policy and price is determined based on the inventory position at the beginning of each period. For more general demand functions, i.e., multiplicative plus additive functions, we demonstrate that the profit-to-go function is not necessarily k-concave and an (s,S,p) policy is not necessarily optimal. We introduce a new concept, the symmetric k-concave functions and apply it to provide a characterization of the optimal policy.

Coordinating Inventory Control and Pricing Strategies with Random Demand and Fixed Ordering Cost: the Infinite Horizon Case

We analyze an infinite horizon, single product, periodic review model in which pricing and production/inventory decisions are made simultaneously. Demands in different periods are identically distributed random variables that are independent of each other and their distributions depend on the product price. Pricing and ordering decisions are made at the beginning of each period and all shortages are backlogged. Ordering cost includes both a fixed cost and a variable cost proportional to the amount ordered. The objective is to maximize expected discounted, or expected average profit over the infinite planning horizon. We show that a stationary (s,S,p) policy is optimal for both the discounted and average profit models with general demand functions. In such a policy, the period inventory is managed based on the classical (s,S) policy and price is determined based on the inventory position at the beginning of each period.