Senior Design Project

Project Written Report

Prepared for: Dr. David Bowen

California State University, East Bay

Hayward, California 94542

Prepared by:

Ahmad Alshehri, Abdulaziz Binfares, Justin Serranzana & Noman Arif

Students of ENGR 4620

Engineering Department

California State University, East Bay

Hayward, California 94542

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June 4, 2015

Executive Summary

The main objective of our study at Therm-x was to reduce the time it takes to kit parts in their

warehouse. To improve the kitting process, we would need to propose a barcode system, reduce

fatigue upon employees, and redesign certain aspects of the warehouse. A Pro-model simulation will

help to find which station is the most inefficient and propose several solutions to increase output in

the kitting process. A barcode scanner system can also improve efficiency within the warehouse by

decreasing the time at “the issuing” station. Our team will utilize the 5S methodology and a storage

method to reorganize the shelving, so that the warehouse becomes safer and more efficient.

The kitting process involves the employees gathering parts needed for a work order. One

main problem occurring is that parts needed are scattered throughout the warehouse among shelves

and some work orders require the use of measured and cut wires. Sometimes the parts are not in their

location and the work order gets put on hold until the part is reordered causing a delay in the process.

By implementing our designs the warehouse can prevent delays and improve the speed of the kitting

process.

A new redesign of the shelf labels as well as layout will benefit the workers by allowing them

to locate parts faster and organize the shelf layout. With proposed a barcode scanner, Therm-x can

eliminate one station from their warehouse and still increase production time.

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Table of Contents1. Introduction..........................................................................................................5

1.1 Company Background...................................................................................5

1.2 Mission Statement.........................................................................................5

1.3 Project Mission Statement.............................................................................6

2. Process.................................................................................................................6

2.1 Process Flow Diagram & Warehouse Layout...............................................6

Figure 2.1.........................................................................................................7

Figure 2.2a.......................................................................................................8

Figure 2.2b.......................................................................................................9

2.2 Pro-model Simulation....................................................................................9

Table 2.1........................................................................................................10

Figure 2.3.......................................................................................................11

Table 2.2........................................................................................................12

3. Methods.............................................................................................................12

3.1 Redesign Shelves.........................................................................................12

Figure 3.1.......................................................................................................13

Figure 3.2.......................................................................................................14

Table 3.1a......................................................................................................15

Table 3.2........................................................................................................16

Table 3.3........................................................................................................17

3.2 Implement a Wire Spool Station:…………………………………………….………...17

Figure 3.4a.....................................................................................................18

Figure 3.5a.....................................................................................................19

Table 3.4........................................................................................................20

Table 3.5........................................................................................................20

3.3 Implement a Barcode System......................................................................21

Figure 3.6.......................................................................................................22

Figure 3.7.......................................................................................................23

Table 3.6........................................................................................................25

Table 3.7........................................................................................................25

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4. Analysis.............................................................................................................26

4.1 Cost Analysis:……………………………………………………………………….....26

Table 4.1........................................................................................................26

Figure 4.2.......................................................................................................27

Figure 4.3.......................................................................................................28

Table 4.2........................................................................................................28

4.2 Break-Even Analysis...................................................................................29

Figure 4.4.......................................................................................................29

4.3 Production Analysis.....................................................................................30

Table 4.3........................................................................................................30

Table 4.4........................................................................................................31

5. Conclusion.........................................................................................................32

6. Appendix............................................................................................................33

Table 6.1........................................................................................................33

Table 6.2........................................................................................................34

Table 6.3........................................................................................................35

Table 6.4........................................................................................................36

Figure 6.1.......................................................................................................37

Figure 6.2.......................................................................................................38

7. References..........................................................................................................39

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1. Introduction

1.1 Company Background

Established in 1983, Therm-x eventually became a leader in advanced temperature and

process control systems, and customizing parts for specific applications to support the evolving

temperature management needs of clients, who envision innovative process solutions. They are

known to serve markets involving semiconductor and electronic equipment, alternative energy,

medical/biotech, defense/aerospace, petrochemical and even food/beverages.

Therm-x has continued to develop advanced staffing, tools for design, and analysis of

customer requirements, as well as sophisticated manufacturing capabilities to support design,

production, test and delivery of temperature and process control systems for their customers.

With all these new technologies, they branched off with their low cost region strategic partner

Therm-x SVT, located in Vietnam, which is their outsource solution for higher volume, lower

cost requirements with a quality system developed in the United States.

1.2 Mission Statement

Therm-x takes pride in delivering thermal solutions incorporating our vertical integration

capabilities including: Thermal Design and Test, CNC Machining, Metal Joining & Sheet Metal

Manufacturing. Therm-x’s goal is to develop into one of the leading manufacturers producing

and supplying these products both domestically and Vietnam.

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1.3 Project Mission Statement

Our mission is To increase the employee's efficiency in the warehouse by making a

recommendation for implementing a barcode system, wire carousel, fixed storage location, and

utilize 5S methodology, which will lead to a decrease in the overall kitting process time.

2. Process:

During our first visit to the warehouse, our team was able to get an overview of the main

process in the warehouse, which is the kitting process. Our clients introduced us to the

employees in the warehouse where we found that there were six employees in the area of study.

Five of the six employees were kitters and one was an issuer. Before we were able to start

observing and analyzing the process, we had to have a safety training which was giving by

Therm-x safety department. However, after we finished that training, we started going inside the

warehouse and observe the process and understand it more clearly. We spent hours and hours in

order to identify the drawbacks in the main kiting process that needs improvements.

2.1 Process Flow Diagram & Warehouse Layout

After our observation of the kitting process, our first step was to create a process flow

diagram for the kitting process as shown in Figure 2.1. The process flow diagram helps us

identify the step by step process of the kitting process, and also helps identify areas that need

more focus than others.

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Figure 2.1 Process flow chart (Current)

In Figure 2.1, we can see the process flow of the kitting process starting with receiving

the order and finishing with the issuer. The issuer’s responsibility is to issue the finished work

order and update the ERP system manually, part by part. The yellow line refers to the

uncompleted work-order bin due to missing parts that need to be ordered. The blue line refers to

the completed work-order bin that has all the needed parts in it and is ready to be shipped. Once

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we had characterized the process flow, we were able to proceed with taking times and

measurements.

Then, we were able to create 2D and 3D warehouse layouts to help us analyze the current

design, and get a better picture of the work site as shown in Figure 2.2a & Figure 2.2b.

Figure 2.2a Current warehouse layout, two-dimensional

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Figure 2.2b Current warehouse layout, three-dimensional

After that, we started collecting data for a time study of the process in order to identify

the aspects that need improvement. We visited Therm-x multiple times to observe the kitting

process. We also spoke to the workers in the warehouse regarding the kitting process to

determine what they like and do not like in their work process and environment. All the resultant

data and analyses would be discussed in the following sections.

2.2 Pro-model Simulation:

A simulation program is a tool that helps to find the specific areas that delay a process

and then provides a platform to test potential fixes. The program will also run a small simulation

of the real time work that would happen in the workplace, giving us an estimate on how much is

produced, where the bottlenecks are, and which locations should be more or less utilized to help

organize the workflow and optimize the warehouse.

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Additionally, we determined it would be most beneficial to simulate the most common

three work orders that come into the warehouse to be kitted. To know those three parts we asked

our client to provide us with their production history, which can be found in Table 2.1. We also

questioned workers in the warehouse department about the most common three orders. With the

help of the workers and data we gathered from them, we found the most common work orders in

the warehouse to be the: Water Box, Filter Box, and MESA.

Table 2.1 Actual production history

We analyzed three kits by tracking its movements from station to station and recording

the lead-time in each station. We completed our time studies and collected all the needed data to

start building the simulation. While collecting data for simulation we noticed that the issuer

station was taking the longest time in the process.

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Figure 2.3 Simulation logical model

Subsequently, we started simulating the work process with all collected data for the three

work orders. Running the simulation program for 250 days/year, 8hrs/day, with 5 kitters, and 1

issuer, as shown in Figure 2.3. Then we got the result from simulation for the process time and

average time in system for each work order. Our client has validated this as a match of their

actual production time for each of the three work orders. For example, as Table 2.2 shows, the

average time in system for the Water Box is 279.73 min. This time include all the process in

system including the queuing time as well.

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Table 2.2 Summary of simulation results (Current)

Later, we report results of running the simulation program based on prototypes for each

proposed design separately to determine how much our design will improve the process of

kitting and how much throughput can be increased.

3. Methods:

3.1 Redesign Shelves

We have noticed that there are cramped work spaces that obstruct workers and make

kitting process an issue because of lack of organization. Workstations need more space for

workers to organize the gathered parts and to move freely. Finding parts for their order has

become an additional issue, since there are multiple parts in each box in each shelf as it shows in

Figure 3.1. This issue causes each employee to consume extra time to look for the right part and

increases the probability of errors and mistakes during the kitting process. The current layout of

the shelves had many flaws that made the warehouse unorganized and thus, workers take longer

time to find the correct bin and make sure they pick the correct part.

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Figure 3.1 Current shelf

From what we have observed, we were able to propose a new design of shelves to be

more convenient and ergonomic to the workers. In the new design, we followed 5S and fixed

methodologies to design our new shelves as shown in Figure 3.2.

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Figure 3.2 Proposed shelf design

The new design organizes the boxes, so the parts are clearly labeled. These labels should

be durable and fixed in place. Also, we added arrow points for the labels of the shelves to

remove any doubt about which location the label is referring to. The boxes should contain only

one part and be organized so that the bigger boxes will be on the bottom while the small boxes

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are located on the top. This would reduce workers’ stress and fatigue while picking the parts

from shelves. This recommendation meets the new warehouse specification.

Additionally, the new design includes a safety wire to prevent boxes from moving or

falling out of the shelves and also would make sure that all boxes are lined correctly in the

shelves. This will increase the safety and organization in the warehouse. We also used fixed

location storage method to design our new shelves and added numbers to each box. Numbers on

the boxes will refer to the location of the box on the shelf, in order, from left to right. So looking

at Table 3.1a, we can see how the current and Table 3.1b shows the new work order would look

like.

Table 3.1a Current WO label Table 3.1b Proposed WO label

Firstly, the current work order contains 3 digits, which refer to which shelf and rack the

parts are on. By having multiple boxes in each rack and multiple parts in each box, the time spent

on the process of gathering the parts is high. However, in this new design, the work order will

contain 4 digits for the location column. The fourth added digit refers to which box the required

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part is in. For example, part XTMI123’s location would be written as “1B45”. The first three

digits, “1B4”, refer to the shelf “1B” and rack number “4”. The last digit which is “5” refers to

the fifth box on that shelf.

Applying the above recommendations on the shelves with a prototype, we found the time

spent in finding the parts decreasing. We got the decreased time for finding one part and

multiplied that time for the total parts in each work order. Then we programmed the simulation

based on the new times in finding the parts for work order.

From our proposed design simulation results in Appendix Table 3.2, which is

summarized as shown in Table 3.3. We found that there are improvements in the total exits for

each work order. Thus, the total production rate per day has increased by 18%.

Table 3.2 Current total exits method (1)

Moreover, applying the fixed location storage method would decrease the time spent on

gathering the parts. The decreased time for the three work orders can be shown in Table 3.3. For

example, the time spent on MESA work order was 225.23 min and with our new proposed

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design, it decreased by 23.71 min, which is a saving of 10.5%. Finally, this new design benefits

the workers by helping them find items and parts more easily with less time possible.

Table 3.3 Proposed Total Exits Method (1)

3.2 Implement a Wire Spool Station:

Many work orders require wires of different sizes and lengths. As shown in Figure 3.3,

workers need to climb a ladder to retrieve the spools, carry the spool down to the cut station, and

replace the spool back on the shelves. This method takes too much time, energy, and travel

distance. In terms of safety, the current organization of

the spools on the shelves increases the chances of

potential injuries and hazards. Therefore, we have come

up with two different alternatives recommendations to

implement a wire spool carousel to reduce worker time

requirements, fatigue, and increase safety.

Figure 3.3 Wire spool shelves

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● Alternative A (Automatic):

This wire spool carousel, as shown in Figure 3.4a & b, has an organized revolving vertical

storage system, which will come with a measurement and cutter attached to the machine to

prevent the worker from walking back and forth from the wire station. This would reduce the

amount of travel time per order and decrease fatigue for the workers. Also, this machine is safer

because it allows a worker to stay in the same place only having to push a button to revolve the

different spools to locate the specific wire needed.

Figure 3.4a Revolving wire spool Figure 3.4b Cutter and measurer

http://www.storevertical.com/products/vertical-storage-system/wire-carousel

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● Alternative B (Manual):

The other alternative is a manually operated vertical wire carousel, which is our original

design as shown in Figure 3.5a & b. The workers would need to manually revolve a wheel on the

side to rotate the carousel to find the specific wire spool. Our design comes with ten racks that

can hold up to six spools each, so a total of sixty spools per carousel. With this alternative, it

eliminates the use of a ladder, and thus, the time it takes to retrieve the spools decreases as well

as fatigue.

Figure 3.5a Measurement for wire Figure 3.5b Measurement for wire

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Applying our proposed recommendation by eliminating the ladder and having a wire

carousel with a prototype, we found the time spent retrieving the spools to be significantly

decreased with the carousels. We got the decreased time for finding one part and multiplied that

time for the spools required in each work order. Then we programmed the simulation based on

the new times spent on the work order, and got the result Table 6.1 in appendix.

The summary of the results as shown in the following Table 3.4 shows the decreased time

in the system for each work order. As an example, the time for water box work order has

decreased by 11.78 min. Therefore, both of these carousels would be beneficial to the warehouse

because it will reduce the time it takes to measure and cut a piece of wire.

Table 3.4 Current average time in system for method (2)

Also, from the simulation data, specifically for both proposed carousel recommendations, the

total production rate in the system has increased by 12.7 % as shown in Table 3.5 because with the wire

carousel, we are expecting to decrease the time for each work order.

Table 3.5 Current Total Exits for Method (2)

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3.3 Implement a Barcode System

Considering the results of the simulation program as well as the workers' feedback, we

determined that the issuer station takes a long time to update the ERP system. We recommend

adding a barcode system to help Therm-x increase their efficiency in the warehouse. Our

research produced two alternatives for implicating the barcode system, which are both capable

with SAGE 100, the current ERP system.

Since we are proposing to implement a barcode scanner, we can eliminate the “Issuer

Station”, and all the time it takes for each work order. The barcode scanner would update the

ERP system right when the workers gather the parts and thus, eliminate the issuer’s job. The

process flow in this case would be altered since the issuer will be eliminated as shown in Figure

3.6.

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Figure 3.6 Proposed process flow chart

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Alternative A: MC9200 MOBILE COMPUTER

Figure 3.7 Handheld barcode scanner

Figure 3.7 is our first alternative for implementing a barcode system. The MC9200

mobile computer is compatible with SAGE 100, which is the current ERP system that Therm-x is using.

It should be an easy option to implement this alternative. It is a durable and wireless device, which

means when an employee scans a part; it will automatically subtract the amount needed from the

ERP system. This alternative will eliminate the issuer station. If a certain work order needs more

parts than there are available, the worker could check with the supplier department and not start

on that work order until all the parts are received. This will save time since the operator knows

that before he starts to gather the parts, not all parts are currently available.

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Alternative B: App Barcode Scanner

To propose the mobile application, we had to design and prototyped the User Interface to

show get a quote on the cost to build the whole application. We also show the functionality of

the application to our clients, so they can visualize the app and offer suggestions.

Using a mobile application overcomes many potential constraints. For example, mobile

phones have sufficient RAM and hard drive capacities and therefore can run necessary software.

Mobile phones have multiple functionalities and also can meet all the requirements Therm-x

needs currently, and any future implementations. The software can add non-barcode related

functions to the application for better customization to better fulfill the current and future needs

of Therm-x. Financially, the mobile application has a greater cost initially but as the team grows,

the cost does not change for the mobile application.

The mobile application can be programmed to be compatible with the ERP system, Sage-

100. The application features:

● Live inventory

● Location of parts

● Quantity needed to complete the order

● Order unavailable or missing parts

● Image of the part needed

● Print labels

● Customize additional features that can be added later.

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As an analysis of this implementation, we reprogrammed the simulation with eliminating

the issuer station and the time it takes. The result of the simulation is shown in table 3.6. It shows

the decreased time per work order after eliminating the issuer and replacing it with proposed

barcode scanner. Taking part MESA as an example, we expect to save 62.62 minutes per work

order which is a saving of 27.8% in the average time MESA takes.

Table 3.6 Proposed average time in system method (3)

Also, we can conclude from our simulation results that our applied improvements in the

whole warehouse affected the production positively. From Table 3.7 , we can see the total

production rate in the system expect to increase by 94.4 % by replacing the issuer with a barcode

scanner.

Table 3.7 Proposed total time exits method (3)

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4. Analysis

4.1 Cost Analysis:

After researching our recommendations, we have calculated and provided the cost

analysis for our proposed designs. We are using 5 years as the time period, MARR at 10%, and

not incorporating depreciation or tax. Starting with the two wire spool carousel designs, The

estimated cost for the automatic carousel is between $20,000 - $25,000, while the estimated cost

of the manual carousel is between $5,000 - $10,000. Although both carry the same load of

spools, the automatic carousel has more maintenance than the manual one. However, the manual

carousel takes more physical effort, which can create fatigue. The following Table 4.1 are

summarizing and comparing these two alternatives.

Table 4.1 Summary for method (2)

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By implementing the barcode scanners we eliminate the issuer, and thus Therm-x would

benefit by eliminating the cost of the issuer. For our recommendations for the barcode scanner,

we had to do a cost analysis for both alternatives to help Therm-x in making decisions.

Alternative A: Barcode Scanner Cash-flow diagram

Figure 4.2 Cash flow diagram for alternative A

The cost of one barcode scanner is approximately $2,300 with a warranty of $300 each.

Currently, each of the 5 workers will need a scanner, so the initial cost is estimated to be

$11,500, as shown in Figure 4.2. There no maintenance fee, no recurring cost, just a one-time

cost to purchase the scanner. However, it will require some training for employees to understand

the entire functionality of the scanner.

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Alternative B: Mobile Application

Figure 4.3 Cash flow diagram for alternative B

The cost in building a mobile application is between $30,000 - $40,000. There is a

recurring maintenance cost of $7,500 plus $500 for hosting cost, every year, as shown in Figure

4.3. The mobile app can have unlimited users, which requires little to no training, and any new

functionality can be added with updates to meet Therm-x’s requirements. Table 4.2 below is a

summary of the two alternatives.

Table 4.2 Comparison between alternative A and alternative B

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4.2 Break-Even Analysis

Here is the break-even analysis for barcode scanner alternatives. If Therm-x decides that

no more than 15 workers will ever be in the warehouse, then Therm-x should go with Alternative

A, Motorola MC9200. Otherwise, Therm-x should go with Alternative B, creating a mobile

application. The Figure 4.4 shows the break-even point for these two proposed alternative is at

15 mobile computers.

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Figure 4.4 Break-even point for method (3)

4.3 Production Analysis

In table 4.3 shows the production rate of the current vs proposed designs, and the work order cost

for Therm-x. Assuming the workers in the warehouse are getting paid $30/hour (wages plus benefits

included), and working for 8 hours a day, and for 260 days a year. We have assumed the issuer will be

counted only in methods 1 and 2 and not in method 3. We build the following calculation based on these

assumptions.

Table 4.3 Production analysis

Accordingly to table 4.3, Therm-x’s cost of employee per day is at $1,440 (wage plus benefits

included). To Figure out the cost of each work order per day is to divide the employee’s wages by total

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exit. This gives us our current cost per work order at $115.75. To calculate the total production

capabilities, we multiplied the total work order produce per day by the amount of work days, which will

gives us 3,234.40. Looking at the first method, based on simulation, we expect to increase daily

production rate to 14.68 per day. As a result, we expect to reduce the work order cost to $98.09.

Our second method, based on simulation, we expect to increase daily production rate to 14.08 per

day. And as a result, we expect to reduce our work order cost to $102.71. Our third and last method, we

decreased the production rate to $24.18. We eliminated the issuer, which decreased the cost of a single

work order and based on simulation, increased our work order to 6,286.80 work orders per year.

Table 4.4 Cost analysis

Accordingly to table 4.4, the total cost currently is calculated by total work order produced per

year multiplied by the cost to produce one work order is at $374,355.50 per year. We are assuming the

same production capabilities as the current process so we can see the actual savings using our proposed

work order prices. Following the same calculation method, we calculated the total savings per each

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proposed methods. Method three shows the most savings because it increases the total work order

produced in a year and eliminated the issuer’s job position.

5. Conclusion:

To summarize this project, we figured out the main problem in the warehouse; the issuer and the

shelf layout. We collected data from the most frequently kitted parts, Water Box, MESA, and Filter Box,

and simulated the kitting process, and then analyzed it. The issuer takes a long time to update the ERP

system, which we recommend to eliminate because of the proposed barcode scanner.

Another problem we wanted to solve was to reorganize the shelving layout. We wanted to

eliminate fatigue and create a safe work environment for the workers by designing a new shelf design that

followed 5S methodology and fixed storage method. This will not only eliminate stress, but also increase

accuracy and decrease the time spent in gathering items.

We also want to recommend a wiring spool carousel. Currently, some spools are located up high

on the shelf and others are located on the bottom. Workers might have to get a spool from the top of the

shelf, where he or she has to grab a ladder to bring the spool down. Not only is this tiresome, it creates a

safety hazard and is prone to injuries. What we recommend is a carousel (containing maximum of 60

spools) so that an employee does not need to bring the spool down, rather just turn the whole carousel and

have the spool be brought to the worker where they can cut the wire needed. This will reduce the

employee's fatigue, increase safety, and speed up the process. Finally, we simulated each proposed

method separately to see individually how each method improved the kitting process. This can be shown

in Tables 6.2, 6.3, 6.4

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6. Appendix:

Table 6.1 Simulation results for the current kitting process

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Table 6.2 Simulation results for proposed method (1)

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Table 6.3 Simulation results for proposed method (2)

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Table 6.4 Simulation results for proposed method (3)

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Figure 6.1 Lack of organization at workstation

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Figure 6.2 Ladder issue (Spools area)

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7. References

"Barcode Scanners." Zebra Technologies. N.p., n.d. Web. May 2015.

"How to Label Inventory Locations - Clearly Inventory." How to Label Inventory Locations –

Clearly Inventory. Web. May 2015.

."Vidir Vertical Storage Solutions." Automated Storage & Retrieval Storage System & Vertical

Carousels. N.p., n.d. Web. May 2015.

 "Vidir Wire Carousel." YouTube. YouTube, n.d. Web. May 2015.

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