Processes are the core of production systems

They transform inputs into outputs.

More than products or technologies, the ability to do things well- processes –
constitutes a firm’s

Types of Processes
Projects: It is one-of-a kind production of a product to customer order.
Batch Production: Batch production systems process many different jobs through
the system in groups (or batches).
Mass production(Line processes) : It produces large volumes of a standard
product for a mass market.
Continuous production: They are used for very high volume commodity products.

Process Planning
Make-or-buy decisions
1. Cost (fixed cost + variable cost) make = Cost (vendor’s fixed cost + Variable cost
+ profit) buy
2. Available capacity
3. Quality considerations
4. Speed
5. Reliability 6. Expertise

Determination whether to produce a component part internally or to buy it from

an outside supplier. This decision involves both qualitative and quantitative
factors. Qualitative considerations include product quality and the necessity for
long-run business relationships with subcontractors. Quantitative factors deal
with cost. The quantitative effects of the make-orbuy decision are best seen
through the Relevant Cost Approach

The supplier has offered the subassembly at a price of $16 each. Two-thirds of
fixed factory overhead, which represents executive salaries, rent, depreciation,
and taxes, continue regardless of the decision. Should the company buy or make
the product? The key to the decision lies in the investigation of those relevant
costs that change between the make or buy alternatives. Assuming that the
productive capacity will be idle if not used to produce the subassembly, we can
make the following analysis ….
• The make-or-buy decision must be investigated in the broader perspective of
available facilities. The alternatives are: (1) leaving facilities idle; (2) buying the
parts and renting out idle facilities; or (3) buying the parts and using unused
facilities for other products.

Process selection
Capacity Planning
Assembly Chart