1) How does the andon procedure work and what are its fundamental aspects? How much does it cost to stop the line? What are the benefits of stopping the line? The andon procedure is adopted by Toyota Motor Manufacturing to ensure quality of their products. It involves the pulling of the andon cord whenever production at a work station is unable to be completed within the cycle time, or whenever any problem is faced. Pulling the andon cord will alert the team leader to the station. If the problem can be corrected immediately, assembly is resumed by pulling the andon cord again. However, if the team leader is unable to solve the problem, the line is stopped. With this process, Toyota is able to manufacture quality products and prevent defective products from being transferred on to the next station. This is in line with Toyota’s principle of jidoka where problems are instantly detected and production is stopped whenever a problem is detected. However, stopping the line will reduce the flow time of the car assembly and flow rate of the production. As more time is required to produce the cars, worker overtime costs will be incurred. According to the case, line stoppages caused a shortfall of 45 cars per shift. These cars could have been sold in the market instead. Thus, line stoppages caused lost revenue (opportunity cost) for these 45 cars. In analyzing the costs for stopping the line, we assume that hourly wage per team leader is set at a 6.5% premium. We assume 769 team members are spread equally between the two shifts. We assume that each worker causes an average of 1 line stop per shift. The number of shortfalls in a shift is based on that in April 1992 i.e. 45 cars. The breakdown of costs incurred to stop the line is as follows: Hourly Wage per Team Member
Hourly Wage per Team Leader (6.5% premium)
Overwage rate per Team Member
Overtime Wage Rate per Team Leader 17
Number of Shortfalls per Shift
Number of Shifts
Total Team Members...
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