IIE Transactions (2012) 44, 136154

Copyright

C IIE

ISSN: 0740-817X print / 1545-8830 online

DOI: 10.1080/0740817X.2011.593609

A waste relationship model and center point tracking metric

for lean manufacturing systems
SAINATH GOPINATH and THEODOR I. FREIHEIT
University of Calgary, Mechanical & Manufacturing Engineering, 2500 University Dr. NW, Calgary, Alberta, T2N 1N4, Canada
E-mail: tfreihei@ucalgary.ca

Received December 2009 and accepted May 2011

Lean manufacturing is about eliminating waste, which requires the creation of waste metrics that are tracked in order to create
the conditions for its elimination. In this article, metrics used to monitor the seven traditional non-value adding wastes types of
overproduction, defects, transportation, waiting, inventory, motion, and processing are explored and a center point metric pair is
proposed that can give systematic insight into system waste performance and trade-offs. For example, lower work-in-process levels
(inventory waste) may require more replenishment (transportation waste) in order to maintain production. A waste relationship model
is proposed that can be used to derive the relationship between different wastes in a Pareto-optimal waste-dependent lean system.
The trade-off relationships are statistically verified using simulation experiments across different system configurations, complexities,
and planning scenarios.
Keywords: Lean manufacturing, waste relationships, performance metrics, trade-offs, decision making

1. Introduction
Lean manufacturing emphasizes value creation by elimi-
nating waste. Waste consists of non-value-adding activities
that contribute to the product cost and for which the cus-
tomer is unwilling to pay. Eliminating waste can reduce
product costs and improve quality, but it is not possible
to completely eliminate waste even in an efficient system
whose operations are waste dependent (that is, has waste
as a part of its functionality). It is therefore necessary to
understand the waste relationships in order to minimize
system waste to the lowest possible level.
In lean manufacturing, seven types of waste have been
defined (Womack et al., 1991).
1. Overproduction (production ahead of demand).
2. Defects (any product/service that the customer is un-
willing to accept).
3. Transportation (moving products when it is not actually
required to perform a processing step).
4. Waiting (any resources/materials staying idle).
5. Inventory (materials not being completely transformed).
6. Motion (resources moving more than is required to
transform the material).
7. Processing (unnecessary or processing over the mini-
mum necessary for material transformation).
Womack et al. (1991), Hines and Rich (1997), Russell and
Taylor (1999), Canel et al. (2000), Conner (2001), Svensson
(2001), and Rawabdeh (2005) consider waste as an expen-
diture of resources for any means other than the creation
of value for a customer and thus a target for elimination.
Historically, little attention has been given to Non-Value-
Adding (NVA) activities such as storage and transporta-
tion (Rawabdeh, 2005). The result is that only minimal
differences have been realized in the reduction of overall
lead time, the improvement of quality, and the reduction
of cost. For instance, Conner (2001) reported that when
lead time was examined, value-adding activities only ac-
counted for 5% of the lead time. Similarly, Suzaki (1987)
claimed that only 5% of an operators time adds value and
the rest adds cost to the product. Todd (2000) concluded
that waste should be eliminated to reduce lead time and
allow a manufacturer to respond quickly to customer re-
quirements. Samaddar and Heiko (1993, p. 19) summarized
that
. . . the elimination of waste can be viewed as a common
issue in any production/operations system. One should
systematically identify and continuously work to eliminate
such waste in order to achieve effectiveness and efficiency.
The majority of the research literature focuses on the
complete elimination of waste in order to improve produc-
tivity and quality, respond quickly to customer require-

Corresponding author ments, and reduce manufacturing cost.

0740-817X

C 2012 IIE
Waste relationship model
It is not possible to completely eliminate all of the seven
waste types even in an efficient system whose operations
are waste dependent. A system that has waste as a part of
its functionality is referred to as a waste-dependent system
in this article. In these systems, complete waste elimination
is not possible. Instead, all wastes can only be reduced to
the minimum level that exhibits Pareto-optimality. Pareto-
optimality (Feldman, 1980) is a term from economics that
is used to describe a set of solutions for a multiple objective
problem that exhibits the property that no single objective
criterion can be improved without a trade-off making some
other criterion worse (Feldman, 1980; Petrie et al., 1995).
To improve upon the Pareto-optimal waste-dependent
system, work tasks within the production system must
be redesigned to achieve functionality without the waste
(waste independent), which may require significant capital
investment. The fullest application of lean principles leads
naturally to transformation into Pareto-optimal waste-
dependent lean systems if we consider the use of capi-
tal as wasteful if the system can be improved (all wastes
reduced; i.e., there is no Pareto trade-off between waste
types) without its expenditure. Until such time that capital
is available to redesign the system, it will operate in this
Pareto-optimal state. The proposed Pareto-optimal waste
relationship model is intended to aid in effective opera-
tional decisions to cut costs and improve efficiency without
the requirement of immediate capital.
The relationship between the waste types must be first
understood in order to achieve a waste-dependent efficient
system. Wastes must therefore be measured quantitatively
in order to derive their relationships. Feld (2001) defines
a manufacturing metric as a standard measure that de-
scribes a performance criterion for a manufacturing process
so that everyone in the organization is working towards the
same goal. An attempt has been made to identify and inte-
grate a set of metrics that can quantitatively measure differ-
ent waste types. However, it was found that not all metrics in
the existing literature fulfill the requirements of this article
in that they be simple and shop floor feasible. For example,
the build-to-schedule (Khadem et al., 2006) metric requires
computer simulations and is not simple. Therefore, a set of
metrics is proposed to provide the information necessary
to understand the waste relationships.
1.1. The center point metric
It is desirable to have a simple, feasible metric that can pro-
vide, at least to some degree, a measure of all waste types
in the manufacturing system. An objective of this article is
to develop a metric or set of metrics to understand the per-
formance of the system in the least possible time and cost.
A single metric, highly correlated to other system metrics,
can reveal critical information about the whole systems
performance. Therefore, a center point metric pair is pro-
posed that can give systematic insight into the system and
can be used for decision making. Gopinath and Freiheit
(2009) have proposed customer waiting waste as a supe-
137
rior center point metric that is highly correlated with other
system waste types. They verified its efficacy using simple
correlation analysis; however, this approach only provides
the direction and degree of linear relationships.
In this article, the center point metric concept is more
rigorously examined using regression analysis, which pro-
vides additional insight into the system sensitivity. The first
metric of the pair is a metric that receives strong signals
from the system or magnifies the effect of changes or ab-
normalities in the system and is termed the Detection Cen-
ter point Metric (DCM). The DCM is highly correlated to
other waste types and it can be used to monitor the system
performance. The second metric of the pair sends strong
signals to the system and is termed the Pivot Center point
Metric (PCM). Small changes in the PCM are magnified
in other system waste types, and it can be used for system
waste optimization or system design and decision mak-
ing. The best center point metric pair will be determined
through statistical evaluation of system waste responses.
This article proposes a waste relationship model that
can be used for decision-making about trade-offs with the
objective to reduce all waste types to the minimum pos-
sible level in a waste-dependent efficient system without
jeopardizing its intended functionality. Moreover, this ar-
ticle identifies, develops, and integrates a set of metrics;
determines the waste relationship; and statistically verifies
the proposed waste relationship and the center point met-
ric across different production planning scenarios and dif-
ferent manufacturing system complexities. The following
sections of this article elaborate further on the research
methodology, quantification of the wastes using metrics,
derivation of the waste relationships, and statistical verifi-
cation of the waste relationship model and the center point
metric using simulation experiments.
2. Methodology
A three-step methodology was followed in this research.
First, the literature on lean manufacturing was reviewed to
define waste types and explore potential metrics. Second,
the logical relationship between waste types was mapped
using concept mapping and a relationship model was de-
veloped. Finally, the model was statistically tested using
discrete-event simulation to determine the trends in the
magnitude and direction between the waste relationships.
Note that an absolute measure of the relationship between
the waste types is not the intent of this analysis.
The review of current research in lean manufacturing
identified a few shortcomings in existing research such as
the lack of simple, shop floorfeasible dedicated metrics
to quantify waste. Next, concept mapping was selected to
assimilate the relationships between waste types, which is
a powerful technique for the graphical representation of
knowledge. Moreover, it is a technique that can aid in the
understanding of relationship concepts (in this case, an
identified waste) with other concepts (other waste types).
138
Table 1. Waste definitions
Waste Definition
Defects Any product that is unacceptable to the
customer. Handling and transformation
defects are considered
Overproduction Production ahead of demand, which is
captured by the finished inventory
Inventory Raw materials and work-in-process not
being processed
Motion Operators movement between workstations
Processing Processing more than the minimum required
for material transformation
Transportation Transporters movement between inventories
Waiting Any resource staying idle during work hours
This process involves creating a global map that shows
the main topics and their relationships, and more detailed
map(s) showing specific details of a particular portion of
the map.


R
Simulation with Arena was used to test the waste re-
lationship model. Design of Experiment (DoE) techniques
were used to run the simulation experiments, and linear
regression and Analysis of Variance (ANOVA) statistical
analysis were performed on the simulation data in order
to understand the systems sensitivity to the center point


R
metric using the statistics toolbox of MATLAB .
3. Metrics
Metrics for measuring waste in a manufacturing systems
should be easy to collect and simple to understand. To be
Gopinath and Freiheit
useful to decision-making processes in manufacturing in-
dustries, metrics must be feasible for collection on a real,
dynamic manufacturing shop floor. In addition, the num-
ber of metrics should be kept to a minimum in order to keep
the data collection costs as low as possible and to minimize
the time necessary to understand what is happening in the
system.
Many manufacturing performance metrics can be iden-
tified in the research literature, but few are both feasible
and simple. A table of proposed waste metrics identified
in the literature is summarized and reviewed in Gopinath
and Freiheit (2009). Performance metrics have been de-
veloped in different contexts such as lean manufacturing,
total productive maintenance, and theory of constraints.
Unfortunately, many of these metrics cannot be used di-
rectly to measure shop floor performance because they
are too general (provide global measures), require overly
complicated calculations (e.g., dock-to-dock as defined by
Khadem et al. (2006)), or do not capture waste as defined
by lean manufacturing, even though, as in machine re-
liability, they are good performance indicators. In some
cases, metrics are better suited for computer simulation
models than direct shop floor measurements; e.g., build-to-
schedule (Khadem et al., 2006). Additionally, some shop
floor performance metrics provide superfluous or redun-
dant information and make things look unnecessarily com-
plex.
Table 1 summarizes how waste types are defined in
this article, and Table 2 summarizes the proposed waste
metrics. The defects (A) waste metric should measure
anything that is unacceptable for the customer. Therefore,
the metric proposed by Rother and Shook (1999) quantifies
the waste by providing the percentage of unacceptable

Table 2. Waste metrics table

Waste code Waste Metric Definition

Si
A Defects P
Rother and Shook (1999)
all MC
1 T

B Overproduction T 0
F Idt Time-persistent measure of finished inventory (Kelton et al., 2007)
Tm
C Motion T
Percentage of time spent in motion
F Tt
D Transportation T
Percentage of time spent in transportation
Tw
E Waiting (customer) T
Percentage of time spent waiting

1
N
F Waiting (material WIP) N i =1 WQi The time spent waiting (Kelton et al., 2007)
all WI P

all
G Waiting (machine) 1 MC TRi
nT
Percentage of time spent waiting
 Tw + Tm 
H Waiting (operator) 1 T
1% Operator saturation
T
I InventoryWarehouse 0 WHdt Time-persistent measure of raw material inventory (Kelton et al.,
2007)

1
T
J InventoryWork-in-progress T 0 WI Pi dt Time-persistent measure of WIP inventory (Kelton et al., 2007)
all WI P
K Processing C p , C pk Chuan et al. (2001), NIST Handbook
Waste relationship model 139

production. Overproduction (B) is production ahead of
demand and it is captured by the finished inventory. The
finished inventory should be measured based not only on
the inventory content but also the duration of time that the
parts stay in the inventory. Therefore, the time-persistent
metric suggested by Kelton et al. (2007) is used, where the
inventory is time-weighted based on part content duration.
Similarly, work-in-process (J) and warehouse inventories
(I) are quantified using time-persistent measures. Motion
(C) waste occurs when an operator walks between work-
stations and is measured as a percentage of time spent in
motion by the operator. Transporting material between
processes, which adds no value to the product, leads to
transportation (D) waste. This metric should measure
both transportation duration and frequency to provide a
transportation percentage. Waiting material (F) waste is
quantified by measuring the average time waiting in inven-
tory (Kelton et al., 2007). Waiting resource (G, H) waste
is quantified by the time that a resource is idle, expressed
as a percentage of NVA activity by the resource. Similarly,
waiting customer (E) waste is quantified by the percentage
of time that customers wait for product availability. Pro-
cessing (K) waste occurs whenever the material is processed
inappropriately during transformation. Process capability
indices like C p and C pk (Chuan et al., 2001) are appropriate
metrics to use to indicate the statistical potential of the
process toward exceeding customer requirements.
4. The relationships between waste types
not considered in this model as it is specific to particular
manufacturing processes. Rawabdeh (2005) also has simi-
lar views on processing waste. Whether a waste type has a
direct or inverse relationship with another waste type can
be obtained by multiplying the signs on the path between
them. For example, the relationship between overproduc-
tion (B) and WIP (J) is obtained by multiplying the 1
+1 +1 +1 = 1, showing that it has an inverse
relationship.
5. Testing the relationship model using simulation
The waste relationship model is tested using discrete-event
simulation in three similar serial manufacturing system
models of increasing complexity and different production
planning time horizons. The results of the simulation runs
were also used to identify and screen center point metric
candidates. Each complexity model was run at three lev-
els of demand rate where no resource was deliberately set
as a bottleneck. Rather, the resources become system bot-
tlenecks automatically by the randomness induced by the
simulation. The demand rate was varied by 10% with re-
spect to the system throughput time. The system constants
are summarized in Table 3. The system responses are over-
production (finished inventory (B)), inventory (WIP (J),
warehouse (I)), waiting (material (F), machine (G), cus-
tomer (E), and operator (H)), motion (C), transportation
(D), and defects (A).

The concept map illustrated in Fig. 1 was developed to un- Table 3. Simulation model constants
derstand the logical relationships between the waste types.
The starting point for this map was Rawabdeh (2005), who Variables Values
examined similar waste relationships but missed a few criti- Batch size B1 30 Units
cal relationship scenarios such as transportation and inven- Batch size B2 4 Units
tory (Work-In-Process (WIP)). Building on his model, an Lead time LT 90 Min
understanding of the waste relationships was developed, Distance D1 1900 Ft
giving the trade-offs between different waste types in an Velocity V1 265 Ft/min
efficient waste-dependent system. Scrap S1 0.4 %
The concept map shows how different waste types are Scrap S2 0.2 %
conceptually linked together in a system. Darker shaded Scrap S3 0.0 %
nodes are the wastes and lighter shaded nodes are con- Scrap S4 0.0 %
Scrap S5 0.1 %
necting concepts. An example of the interpretation of the
Scrap S6 0.0 %
connections is that as a transportation resource replen- Cycle time CT1 4 Min
ishes inventory, larger batch sizes will lead to higher mate- Cycle time CT2 4.3 Min
rial storage resulting in high inventory waste and lower Cycle time CT3 4 Min
replenishment frequencies (lower transportation waste). Cycle time CT4 3.9 Min
Therefore, an inverse relationship can be derived between Cycle time CT5 4.2 Min
transportation (D) and inventory waste (J). Reorder point ROP1 30 Units
From the concept map, a trade-off model of relation- Reorder point ROP2 15 Units
ships was developed and is summarized in Fig. 2. These Availability A1 90 %
relationships can be used for multi-level decision making Availability A2 95 %
by selecting the appropriate metrics from Table 2 and deter- Availability A3 97.5 %
Availability A4 90 %
mining the relative impact between the waste types result-
Availability A5 95 %
ing from waste reduction program. Processing waste (K) is
140
Fig. 1. A concept map of logical waste relationships. (Color figure available online.)
Waste relationship model 141

Fig. 2. The waste relationship model.

The intermediate complexity model, illustrated in Fig. 3,
has one raw goods warehouse (WH), a raw materials trans-
porter (TR), five serial work stations (WS) with five inter-
spersed WIP buffers (W), a finished goods inventory (FI),
two machine operators (O), and a customer (CU). The raw
goods supplier replenishes the warehouse inventory with
large batch sizes. Production control is a pull system with
the transporter and other system resources triggered by
the finished goods inventory level. The transporter moves
small batches from the warehouse to the WIP buffer. Then,

Fig. 3. Schematic of intermediate complexity manufacturing system model.

142
the workstations pick the parts from their respective WIP
buffers and process them. Operator 1 loads, unloads, and
transfers parts between workstations 1, 2, and 3 and oper-
ator 2 controls workstations 4 and 5. Finally, the customer
consumes from the finished goods inventory.
The simple model has the same features as the above-
described model except for the number of resources. It has
two machines and one operator to load, unload, and trans-
fer between them. In contrast, the complex model has eight
machines and three operators. The increase in the resources
complicates the material flow and increases the overall sys-
tem complexity. All models are considered to be efficient
because the resources were saturated to the maximum pos-
sible level, line balanced, made highly reliable, use pull
signals to control the excess inventory build-up, and the
system was operated close to the takt time. At the same
time, stochasticity was introduced into the system to repli-
cate the real, dynamic environment, such as resource failure
patterns following an exponential distribution, demand fol-
lowing a Poisson distribution, and process times following
a triangular distribution. While these models are appropri-
ate to explore the relationship between the waste types, this
simulation model is limited to efficient waste-dependent
lean systems.
Each complexity simulation run was performed across
three different production planning time horizons, namely,
Long-Term Steady State (LTSS), Short-Term (ST), and
Production Ramp-up (PR). The LTSS (truncated replica-
tion steady state) was run for 249 600 min of production
time (representing a year) for 30 replications using Arena.
System performance statistics were collected after a 4800-
min warm-up to avoid the initialization biases. The ST sim-
ulation was run for 4800 min after a 4800-min warm-up for
30 replications, whereas the PR simulation used terminat-
ing replications and was run for a total time of 4800 min
without clearing the initial statistics. The waste responses
from the simulation model were normalized in order to
address slope magnitude variation because waste response
magnitudes can vary significantly.
A test for Pareto optimality was conducted on the sim-
ple model to ensure that the selected system parameters
showed appropriate trade-off relationships. The waste types
were minimized by integrating the Arena simulation soft-
ware with the optimization toolbox of MATLAB. Ten sys-
tem parameters, consisting of the independent variables
operator transfer time, machine cycle times, finished inven-
tory re-order point, supplier lead time, operator cycle time,
warehouse re-order point, internal batch size, warehouse
order batch size, and transporter scrap rate, were numer-
ically optimized using the MATLAB fmincon function to
minimize the objective function of the weighted sum of
the simulation response waste metrics. The variation of the
simulation model was controlled by using random num-
ber seeds, steady-state truncated replication simulation
strategy, and averaging the waste function value from five
replications. The system parameters for the waste relation-
Gopinath and Freiheit
ship verification models were chosen to be in between the
Pareto-optimal bounds obtained from this optimization.
5.1. Preliminary data visualization
The raw simulation waste measures from the various com-
plexity and demand LTSS runs were aggregated and then
plotted pair-wise in a matrix scatterplot to visualize the re-
lationships between the wastes; see Fig. 4. Note that there
is considerable dispersion in the data and in many cases
multiple distinct lines can be seen. In general, wastes with
highly consistent data spread, defined as a tendency to be
coherent yet have a distributed data frequency (short bars
in the histogram), have higher sensitivity to other waste
types. For example, consider waiting customer and waiting
material wastes. The histogram for waiting customer waste
(E) is more consistently distributed (more toward a uni-
form distribution) than waiting material (F), which results
in a slope tending to the extremes of either zero or large
when predicting one waste from the other. Motion (C),
transportation (D), waiting machine (G), waiting operator
(H), and warehouse (I) wastes have similar histograms to
waiting customer (E) waste and tend to show coherent dis-
tributions and are expected to have higher sensitivity levels
to the other wastes. Overproduction (B) waste is incoher-
ent and has a concentrated interval frequency that results
in lower system sensitivity. Defects (A) and WIP (J) waste
show random scatter, which is also expected to show lower
system sensitivity. The diverging multi-streams that lead to
the incoherence in these plots is due to noise factors such as
demand and complexity, which can be filtered out to give
better insight into the system.
The raw waste data were filtered of the obscuring effects
of the known noise factors, namely, demand and complex-
ity, by regressing each waste against another waste type but
blocking for the noise, which is possible in a controlled ex-
periment. Blocking is a statistical technique used to remove
the obscuring effect of factors and their sources of variabil-
ity (Montgomery, 2008). Equation (1) is the pair-wise waste
relationship model used in the regression analysis:
Wi = 0 + 11 C1 + 12 C2 + 2 D + j Wj + ,
i, j = , . . . , 10, i = j. (1)
The system complexity has two regression coefficients for
blocking. Demand, a continuous variable, was scaled in
the regression equation and took the values 0, 0.5, and 1.0.
Unlike demand, complexity is a categorical variable and a
DoE-based coding convention was adapted for complexity
blocking, where (C1 , C2 ) are respectively (1, 0), (0, 1), and
(1, 1) for low, intermediate and high complexity (Mont-
gomery, 2008). This regression allows the response waste
from every simulation sample k to be adjusted to account
for the effect of complexity and demand, giving a noise
filtering equation:
i k = Wi k 0 11 C1 12 C2 2 D.
W (2)
Waste relationship model 143

Fig. 4. Pair-wise waste comparisonpreliminary data visualization.

In other words, the effect of the predicted variation of the waste variation. Table 4 summarizes the effect of noise
the complexity and demand resulting from the regression factors for the LTSS simulation waste measures. It shows
model is removed from the simulation waste response data, that defects (A), motion (C), waiting machine (G), waiting
and the resultant pair-wise relationships can be examined operator (H), and WIP (J) waste variation is influenced by
with minimal influence of noise; see Fig. 5. As can be seen, complexity. This follows because these factors are scaled
the data are much more coherent and the histograms are directly by the amount of processing required and this in-
more symmetric. Consider again the example of waiting creases with system complexity. Example patterns in the
customer (E) and waiting material (F), the diverging multi- magnitude of the complexity coefficients are illustrated in
streams of waiting customer waste have for the most part Fig. 6(a). Low complexity tends to decrease the overpro-
disappeared, and the data are generally more coherent for duction (B) waste response, whereas intermediate complex-
both waiting customer and waiting material wastes. The ity is more neutral, and high complexity tends to increase
filtered data make response prediction much clearer; for ex-
ample, when customer waiting waste is predicted by waiting
material waste, the slope is generally more distinct, and vice Table 4. Contribution of noise (in %) to waste variation
versa. Complexity and demand parameters were included
in all subsequent regression analyses of the data. Waste (see Table 2 for code)
Response A B C D E F G H I J
5.2. The influence of complexity and demand on waste Complexity 54 17 65 19 21 13 64 73 14 47
Demand 4 64 3 8 0 0 3 2 10 9
An ANOVA test was conducted on the complexity and
Other 43 19 32 73 79 87 33 25 76 44
demand noise factors to determine their contribution to
144
Fig. 5. Noise-filtered pair-wise waste comparisonpreliminary data visualization.
overproduction (B) response waste. The WIP (J) and mo-
tion (C) response waste exhibits an opposite behavior, with
low complexity increasing WIP and motion waste response
and high complexity decreasing them. The waste response
shows a trade-off between internal (WIP) (J) and finished
goods inventory (B) when going from low to high complex-
ity. The pattern of motion (C) response waste follows di-
rectly from the simulation models, where for low complexity
there is one operator for two stations, for intermediate there
are two operators for five stations complexity, and for high
complexity there are three operators for eight stations.
Table 4 also shows that, as expected, overproduction
(B) is most influenced by demand because finished inven-
tory, its metric, acts as a cushion for demand fluctu-
ation. Likewise, other inventory waste measures such as
warehouse (I) and WIP (J) are also influenced by demand.
The demand coefficients, Fig. 6(b), are much higher than
the complexity coefficients, indicating a strong coupling
of demand to inventory waste. The demand coefficients
for the response wastes of both overproduction (B) and
WIP (J) were both large and had mixed signs depend-
ing on the predictor waste. When defects (A), motion (C),
Gopinath and Freiheit
and transportation (D) were predictor wastes, demand in-
creased over-production (B) and WIP (J) response waste.
This is because these predictor wastes are tightly coupled
with higher production volumes. The demand coefficients
for the other response wastes were of similar magnitude for
each predictor waste.
5.3. Pair-wise linear regression of waste relationships
A pair-wise linear regression analysis was performed where
each waste response from the simulation experiments was
used to predict every other waste response to understand
their relationship. The regression analysis provides a slope
whose direction determines whether the relationship is di-
rect or inverse, and a magnitude which determines the
strength of the relationship. The regression also provides
an adjusted R2 , which, as a measure of the models fit, pro-
vides an estimate of how effective a given waste is in predict-
ing changes in another waste. Equation (1) is the pair-wise
waste relationship model used for this regression analysis.
Tables 5 and 6 summarize the slope and adjusted R2 val-
ues derived for the time horizon of the LTSS. As can be
Waste relationship model 145

Fig. 6. Effect of system complexity and demand on waste relationship (LTSS).

146 Gopinath and Freiheit
Table 5. LTSS predictor waste regression coefficients (slope)

Predictor waste
Response waste A B C D E F G H I J

Defects (A) 1 0.69 0.86 0.90 0.83 1.08 0.91 0.86 0.86 0.81
Overproduction (B) 0.58 1 0.55 0.57 0.57 0.79 0.58 0.54 0.56 0.71
Motion (C) 1.08 0.82 1 1.05 0.97 1.21 1.06 1.00 1.00 0.95
Transportation (D) 1.02 0.78 0.95 1 0.92 1.13 1.01 0.95 0.95 0.90
Waiting customer (E) 1.10 0.90 1.02 1.08 1 1.26 1.09 1.02 1.03 0.99
Waiting material (F) 0.53 0.47 0.48 0.50 0.47 1 0.50 0.47 0.50 0.58
Waiting machine (G) 1.00 0.77 0.94 0.99 0.91 1.12 1 0.94 0.94 0.89
Waiting operator (H) 1.08 0.82 1.00 1.06 0.97 1.20 1.07 1 1.01 0.95
Warehouse inventory (I) 0.95 0.74 0.88 0.93 0.86 1.11 0.94 0.88 1 0.90
WIP inventory (J) 0.75 0.79 0.71 0.75 0.70 1.10 0.76 0.71 0.76 1

seen, the magnitude of the slopes and the fit of the rela- 5.4. Center point metric analysis
tionships between the wastes are not symmetric, whereas
Three broad criteria were established to test for the center
the directions are perfectly symmetric between the wastes.
point metrics. The first is the ability of the metric to
Consider waiting customer (E) and waiting material (F)
predict the system waste performance, as measured by
wastes. While their direction relationship is direct, posi-
the Pearson r correlation coefficient. The second is the
tive, and symmetric, their magnitude relationship is non-
overall sensitivity of the metric to other waste metrics, as
symmetric because the two wastes change in a dissimilar
measured by its regression coefficient slope, ignoring its
rate with respect to each other; i.e., one or more of the
direction. A third customized measure, referred to as a
wastes are non-linear. In this case, waiting customer waste
predictive slope, is the product of the adjusted R2 and the
changes at a rate 1.26 times that of the waiting material
slope and represents the sensitivity of the metric weighted
change, whereas the waiting material waste only changes
by its ability to predict the waste relationship.
by 0.47 times. In other words, waiting material waste is less
A four-step methodology was adopted to determine the
sensitive to change than waiting customer waste is.
center point metric pair. First, a correlation analysis was
The slope magnitudes and directions were found to be
conducted in order to identify the dependence relationship
uniformly consistent across the RU, ST, and LTSS produc-
between the wastes (Gopinath and Freiheit, 2009). Then, a
tion planning time horizons. Figure 7 shows an example of
statistical comparison was conducted between the correla-
the variation in predictor waste coefficients and adjusted
tion coefficients of all the system wastes to identify the top
R2 for customer waiting (E) and WIP (J) response wastes.
four center point metric candidates that have correlations
As can be seen, the variation in slopes between the time
significantly larger than the others. Second, each candidate
frames is generally small, less than 1020%, with only a
waste was compared using a two sample, one-tailed t-test
few predictor wastes such as defects (A) and material wait-
for statistical difference to determine the number of wastes
ing (F) having larger variation. These two predictor wastes
that have statistically higher mean waste sensitivity and pre-
are relatively rare events in the simulation model, as can be
dictive slope in order to identify the metrics that send or
seen by their poorer model fit at shorter time frames.
receive significantly higher signals. Third, the magnitude of

Table 6. LTSS waste relationship model fit (adjusted R2 )

Predictor waste
Response waste A B C D E F G H I J

Defects (A) 0.48 0.94 0.93 0.92 0.63 0.92 0.93 0.84 0.66
Over production (B) 0.85 0.86 0.86 0.88 0.84 0.86 0.86 0.85 0.89
Motion (C) 0.93 0.51 1.00 0.99 0.63 1.00 1.00 0.90 0.71
Transportation (D) 0.94 0.58 1.00 0.99 0.67 1.00 1.00 0.92 0.76
Waiting customer (E) 0.93 0.61 0.99 0.99 0.67 0.99 0.99 0.90 0.76
Waiting material (F) 0.62 0.44 0.62 0.61 0.64 0.61 0.62 0.61 0.68
Waiting machine (G) 0.94 0.59 1.00 1.00 0.99 0.68 1.00 0.92 0.76
Waiting operator (H) 0.93 0.54 1.00 1.00 0.99 0.65 1.00 0.91 0.73
Warehouse inventory (I) 0.86 0.54 0.91 0.91 0.91 0.65 0.91 0.91 0.76
WIP inventory (J) 0.73 0.70 0.78 0.78 0.79 0.76 0.78 0.78 0.79
Waste relationship model 147

Fig. 7. Effect of time frame on waste relationship.

148 Gopinath and Freiheit

the difference between the waste slopes was compared in or- The slopes and predictive slopes of the wastes were next
der to identify the wastes that send and receive the strongest compared to identify center point metric candidates that
signals to and from the system. Finally, the magnitude of had the strongest response to and from the system and
the predictive sensitivity difference was also compared. were most predictive of the system (Wuensch et al., 2002).
Pearson product-moment correlation coefficients, r , The t-statistic was calculated by first determining the stan-
were determined and compared for all waste pairs in or- dard error of each predictor waste slope (regression coeffi-
der to obtain the center point metric candidates. A Pearson cient) from the mean standard error (MSE) of the regres-
coefficient ranges from +1 to 0 to 1, indicating relation- sion model:
ships that are perfectly linear and direct to unrelated to 
perfectly linear and inverse, respectively. Correlation co- MSE j
s j = . (5)
efficients are not directly comparable because they ignore n
the inherent variance of the sample, so they must be trans- Then, determining the standard error of the difference
formed into a normally distributed variable using a Fisher between two predictor slopes:
z-transformation (Shen and Lu, 2006): 
 
1 1 + r  si j = s2i + s2 j , (6)

r = loge   . (3)
2 1r
and then the two sample t-test formula at a 95% confidence
The statistical comparison methodology suggested by level was used to determine whether a predictor waste slope
Wuensch et al. (2002) was used to compare the correla- was significantly greater than another candidates slope:
tion coefficients as well as the slope and predictive slope
magnitudes of different wastes. The transformed correla- i j
t= . (7)
tion coefficients, r  , can now be directly compared using a si j
statistical z-test:
For both the slope and predictive slope, the DCM candidate
ri r j wastes ranked as having the highest number of significant
z= . (4)
(1/(n i 3)) + (1/(n j 3)) better differences are (i) waiting customer (E) (100% and
97% of the slope and predictive slope, respectively, were
Table 7 summarizes the number of times a predictor higher in their paired comparison); (ii) waiting operator
waste had a significantly higher correlation coefficient to (H) (86% and 76%); (iii) motion (C) (76% and 69%); and
a response waste than the other predictor wastes. The z (iv) transportation (D) (60% and 58%). The PCM candi-
statistic is used as the t in a one-tailed t-test conducted at date wastes ranked as having the highest number of signifi-
a 95% confidence level for the LTSS production planning cant differences are (i) waiting material (F) (100% and 42%
scenario. The top five candidates with the highest count of for slope and predictive slope, respectively); (ii) defects (A)
correlations that are statistically significantly higher than (74% and 56%); (iii) waiting machine (G) (65% and 81%);
other wastes are motion (C), transportation (D), waiting and (iv) transportation (D) (56% and 72%). As can be seen,
customer (E), waiting machine (G), and waiting operator weighting the slope for its model fit reduces the attractive-
(H), which were significantly higher approximately 57% of ness of some candidate wastes. In fact, motion performed
the time. The number of waste types that tested significantly better than material waiting with a count of significantly
higher was found to be similar for all three production plan- better predictive slope differences of 43%.
ning scenario time frames. Taking into account the correlation, slope, and predictive
slope significant difference counts for the LTSS planning
Table 7. Correlation analysisdetection center point metric period, the top three DCM candidates are waiting customer
(LTSS) (E), waiting operator (H), and motion (C), whereas the top
Predictors
three PCM candidates are waiting machine (G), defects
(A), and transportation (D). While waiting material (F)
Responses A B C D E F G H I J Sum was a promising PCM candidate because of its high slopes,
as can be seen by inspecting Table 5, its model fit is poor
Defects (A) 0 7 0 0 0 1 0 0 0 2 10 and was eliminated from the finalists.
Overproduction (B) 1 0 0 0 0 0 0 0 0 0 1
The difference in the magnitude of the slope and predic-
Motion (C) 8 7 0 1 5 6 2 0 4 6 39
Transportation (D) 8 7 2 0 4 6 1 1 4 6 39 tive slope for the DCM was then calculated using Equation
Waiting customer (E) 8 8 2 2 0 8 2 2 2 6 40 (8), where Ri2 is set to one for the slope difference and set
Waiting material (F) 3 7 2 1 0 0 1 2 2 3 21 to the adjusted R2 for the predictive slope difference. In
j
Waiting machine (G) 8 7 2 0 4 6 0 1 4 6 38 this equation, k is the coefficient for predictive waste j for
Waiting operator (H) 8 7 3 0 5 6 1 0 5 6 43 j
candidate response k, whereas i is the coefficient for the
Warehouse inventory (I) 8 7 0 0 1 6 0 0 0 6 29
same predictive waste j for all other response wastes i . This
WIP inventory (J) 3 8 1 1 1 2 1 1 1 0 19
difference represents how much stronger a candidate waste
Waste relationship model 149

Fig. 8. DCM candidate slope and predictive slope comparison (LTSS).

150 Gopinath and Freiheit
Table 8. Contribution (in %) of factors with an inverse relationship to DCM slope variation

Predictor waste j
A B C D E F G H I J

Demand 11.2 5.7 5.0 4.8 12.7 9.4 10.2 10.5 4.7 33.0
Complexity 14.1 9.1 1.6 1.4 10.3 33.3 11.0 11.7 61.4 42.9
Response waste
A 0.0 0.1 0.0 0.0 0.1 0.0
B 0.6 0.0 0.4 0.4 0.0 0.0
C 0.0 0.0 0.0 0.0 0.0 0.0
D 0.0 0.0 0.0 0.0 0.0 0.0
E 3.4 4.3 3.9 3.9
F 0.7 1.3 1.5 1.5
G 6.4 8.0 7.7 7.7
H 12.8 16.1 15.6 15.6
I 5.8 6.0 5.6 5.6
J 0.0 0.0 0.0 0.0
Other 45.6 49.6 59.4 59.4 76.4 57.1 78.4 77.4 33.9 24.1

receives a signal from the predictive waste. Figure 8 illus-
trates this difference for the three finalist candidate wastes
and indicates that for both slope and predictive slope, cus-
tomer waiting (E) receives the strongest signal from the
predictive wastes.
 j  j
DCM =  Rk2 k   Ri2 i , i, k = j. (8)
Similar to the DCM, the predictor waste j that sends the
strongest signal to response wastes can be calculated for
the PCM, Equation (9)
    tion (D) to be the best PCM, although it was only a little
PCM =  Rk2 ki   R2j ij  , j, k = i, (9)
where in this equation, ki is the coefficient for candidate k
predictive waste for response waste i and ij is the coeffi-
cient for all other predictive waste j for the same response
waste i . Figure 9 illustrates this difference for the three final-
ist PCM candidates. While defects (A) sends the strongest
signal to the response wastes, second only to material wait-
ing (F), when weighing for the regression model fit, waiting
machine (G) waste is a more favorable PCM.
This analysis indicates that the best DCM is customer
waiting (E) and the best PCM is waiting machine (G). The
ST and RU planning scenarios generally yield the same
conclusion as the LTSS. The PCM predictive slope analysis
conducted for the ST planning scenario found transporta-
better than waiting machine (G) in terms of sending strong
signals to the system. However, this result may be due to
unknown outliers or noise in the model. Therefore, it is sug-
gested that transportation waste should not be discounted
as a PCM for short-term planning.

Table 9. Contribution (in %) of factors with a direct relationship to DCM slope variation

Predictor waste j

A B C D E F G H I J

Demand 13.9 15.2 12.6

Complexity 13.6 11.7 6.9 28.8 16.7
Response waste
A 1.0
B 1.7
C 7.1 3.7
D 20.5 10.9
E 3.3 3.6
F
G 5.0 1.8
H 8.3 3.5
I 0.0 17.3 0.0 0.0 12.6
J 21.8 29.2 21.2 21.2 10.4
Other 43.3 57.5 100.0 100.0 78.3 29.9 78.9 78.9 60.8 49.2
Waste relationship model 151

Fig. 9. PCM candidate slope and predictive slope comparison (LTSS).

152
6. Discussion
This article assumes that the only noise factors in a sys-
tem are demand and complexity. However, real, dynamic
manufacturing systems have many potential noise factors.
The sources of variance outlined in Table 4 support that
only demand and complexity are noise factors in this arti-
cles simulation models. Wastes such as defects (A), motion
(C), waiting machine (G), waiting operator (H), and WIP
(J) are significantly affected by complexity because it is as-
sumed that increased system complexity can be modeled as
increases in the number of machines, interspersed buffers,
scrap accumulation locations, and operators. However, this
assumption may not hold in all cases. For instance, system
complexity may increase as a result of complex material
flow, resource movement, or batch size. Moreover, all waste
types in this article are equally weighted, which may not re-
veal accumulation of the most critical costs in the system
that could be understood if the wastes were weighted by us-
ing financial metrics. The PCM, which is only identified in
this article, has the potential for effective system waste cost
minimization and prevention when used with the financial
metrics.
The objective of this article was to find the waste types
that are most coupled to other wastes in the system. The
waste types are not only sensitive to system noise such as
complexity and demand but are also sensitive to variation
in other wastes. Two tests for robustness of the DCM were
conducted. First, the contribution of noise to waste re-
sponse variation was evaluated and, second, ANOVA tests
were conducted on the predictive waste slopes. Equation
(10) is the regression model used to calculate the response
variable, j , for the ANOVA factors of noise (complexity
and demand) and the other predictor wastes. The response
waste Wi was kept constant for the ANOVA tests. The re-
sponses were separated out for the direct relationships (pos-
itive slopes) and the inverse relationships (negative slopes)
to prevent the misleading conclusion that results from ag-
gregating all of the waste slopes.
Wi = 0 + j Wj + . (10) changes. Most systems are designed to have waiting cus-
Table 4 shows the effect of noise factors on waste re-
sponses. It can be observed that most of the variation in
the DCM (waiting customer (E)) is due to factors other
than noise. This is desirable because the DCM should be
as independent as possible from sources of noise. Second,
Tables 8 and 9 show the percentage contribution of differ-
ent system factors and noise to the waste slope variations.
Robust wastes, i.e., those that have lower sensitivity to vari-
ations in the system, have a high percentage in the other
field, as higher unexplained variation indicates that waste is
insensitive to other factors and most of its slope variation is
due to inherent random variation. By this measure, waiting
customer waste is a robust metric, performing as well or
better as any other waste.
Gopinath and Freiheit
A sense of how important a given variance factor is to
the overall strength of a signal can be derived by examining
the contribution to variation, F (%), as weighted by a ratio
of the range of variation to its average value, Equation
(11):
max( j ) min( j )
F = F. (11)
E( j )
For all sources of variance, this weighted variation around
the waiting customer DCM is only 15.6%, the lowest of
the predictive wastes. Furthermore, Table 8 indicates that
12.7% of the DCM slope variation is due to the noise fac-
tor demand, but this contribution to the slope magnitude
is small when applying Equation (11), where its weighted
contribution is only 2.0%.
7. Conclusions and recommendations
The relationship between the waste types in waste-
dependent Pareto-optimal lean manufacturing systems has
been examined in this article. Metrics that are simple and
feasible to measure on the shop floor have been proposed.
A trade-off relationship between the waste types in efficient
waste-dependent systems was demonstrated using discrete-
event simulation and examined across different system con-
figurations, complexities, and planning scenarios. A center
point metric pair has been identified by examining the pair-
wise slopes between the wastes. Customer waiting time (E)
has been identified as a DCM, which is an important per-
formance measure for responsive production systems and
can be used for system monitoring and abnormality diag-
nosis. Waiting machine time (G) has been identified as a
PCM, which can be readily obtained from the common
shop floor performance measure machine saturation and
can be used for system optimization, waste prevention, and
decision making. In addition, the center point metric pair
has been tested for robustness.
The DCM is expected to reflect and magnify system
tomer waste, which is a measure of the inverse of the sys-
tems service level, to be as low as possible because low
service levels are viewed to be detrimental to the business.
However, this may not always be true in waste-dependent
Pareto-optimal lean systems, as it depends on the nature,
location of waste cost accumulation, and efficiency priority
of a particular system. Therefore, it is suggested that cus-
tomer waiting waste be used to monitor the system changes
and machine waiting waste be used to aid in making effi-
cient system changes.
In future work, the above assumptions and limitations
should to be addressed. It is suggested that financial waste
metrics be developed and their relationships verified in or-
der to determine the critical waste cost contributors of the
system. Moreover, it is suggested that the potential of the
Waste relationship model 153

PCM be further explored by combining it with the finan-
cial metrics for product waste cost minimization. Finally,
the waste relationships should be verified in a real, dynamic
manufacturing environment.
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R
confidence interval in SAS , SUGI 31 Proceedings, San Francisco,
CA, March 2629. Sainath Gopinath received an M.Sc. degree in Mechanical Engineering
Suzaki, S. (1987) The New Manufacturing Challenge-Techniques for Con- from the University of Calgary, Canada, in 2010; an M.S. degree in
tinuous Improvement, The Free Press, New York, NY. Industrial Management from the Royal Institute of Technology, Sweden,
154
in 2008; and a B.Eng. degree in Production Engineering from Anna
University, India, in 2005. He has been a Manufacturing Engineer at Lean
Manufacturing Engineer at Magna International since 2010. His research
interests include manufacturing systems, competitive manufacturing, and
statistical engineering.
Theodor Freiheit is an Associate Professor in the Department of
Mechanical and Manufacturing Engineering at the University of
Gopinath and Freiheit
Calgary. His expertise is in both product and manufacturing sys-
tem design and testing. He has a Ph.D. (2003) in Mechanical En-
gineering an MBA (1995) from the University of Michigan, and
an MSE (1988) in Design Optimization from Purdue University.
At the University of Calgary, he runs the senior capstone design
course. He has an active research program in the psychology of de-
sign innovation, design and analysis of manufacturing systems, and
micro-engineering.
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