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A Model for Assessing Cost Effectiveness of Applying Lean Tools
Växjö University, Faculty of Mathematics/Science/Technology, School of Technology and Design.
Växjö University, Faculty of Mathematics/Science/Technology, School of Technology and Design.
2007 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The purpose of this thesis is to develop a model for assessing cost effectiveness of applying lean tools. The

model consists of eight phases: it starts by understanding customers' requirements using Voice of Customer

(VOC) and Quality Function Deployment (QFD) tools. In phase 2, the current state of plant is assessed

using lean profile charts based on Balanced Scorecard (BSC) measures. In phase 3 and phase 4,

identification of critical problem(s) and generating of improvement suggestion(s) are performed. Phase 5

provide evaluation of the cost effectiveness of implementing the suggested lean methods based on life cycle

cost analysis (LCCA) and phase 6 prefers the right alternative based on multiple criteria decision making

(MCDM). In phase 7 the selected alternative is supposed to be implemented and finally the user should

monitor and control the process to make sure that the improvement is going as planned. The model was

verified successfully using a case study methodology at one Swedish sawmill called Södra Timber in

Ramkvilla, one part of Södra group. Results obtained from the study showed that the production and human

resources perspectives are the most critical problem areas that need to be improved. They got the lowest

scores in the lean profile, 63% and 68%, respectively. Using value stream mapping (VSM) it was found that

the non value added (NVA) ratios for the core and side products are 87.4% and 90.4%, respectively. Using

the model, three improvement alternatives were suggested and evaluated using LCCA and MCDM.

Consequently, implementing 5S got the highest score, second came redesigning the facility layout.

However, it was estimated that 4.7 % of NVA for the side product would be reduced by redesigning the

facility layout. The recommendations were suggested for the company to improve their performance. The

novelty of the thesis is based on the fact that it addresses two main issues related to lean manufacturing:

firstly, suggesting lean techniques based on assessment of lean profile that is based on BSC and QFD, and

secondly assessing the cost effectiveness of the suggested lean methods based on LCCA and MCDM. This

thesis provides a generalized model that enables the decision-maker to know and measure, holistically, the

company performance with respect to customer requirements. This will enable the company to analyze the

critical problems, suggest solutions, evaluate them and make a cost effective decision. Thus, the company

can improve its competitiveness.

Place, publisher, year, edition, pages
2007. , p. 74
Keywords [en]
Lean manufacturing, Lean tools, Cost effectiveness, Life cycle cost analysis, Balanced scorecard, Multiple
National Category
Production Engineering, Human Work Science and Ergonomics
Identifiers
URN: urn:nbn:se:vxu:diva-2292OAI: oai:DiVA.org:vxu-2292DiVA, id: diva2:206207
Uppsok
teknik
Supervisors
Examiners
Available from: 2008-09-18 Created: 2008-09-18 Last updated: 2010-03-10Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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