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Chapter III

Manufacturing System
A manufacturing organization can be looked upon as a production system by
which goods and services are produced. A typical production system
comprises of three main components: inputs, transformation process (or,
conversion process) and output. The manufacturing system needs to interact
with both internal and external environment. The internal environment is the
combination of engineering, marketing, personnel and accounts activities
whereas the external environment comprises of customers, competitors,
suppliers, labour unions etc. A manufacturing system in the combination of
operations and activities employed to create the output goods and services.

The selection of the manufacturing system is a strategic decision for


most organizations since change at a later date are very expensive to make.
The system selected should be such that it can give the desired output,
required quality and is cost- effective.

Factors Influencing Choice of Manufacturing System :

There is no best manufacturing system for any product. The choice of


the system depends on various circumstances, but it must meet two basic
objectives, namely:

i) it must be able to meet the specifications of the final product,

ii) it must be cost effective.

The major factors influencing the choice of appropriate manufacturing


system are as follows:
(a) Effect of Volume–Variety: One of the major considerations in the
process selection is the volume / variety of the products. Their relationship
across different industry are shown as below:

Project Industries
10
8 Project Industries
5 Batch Industries
Mass Production Industries
2
1
0 1 200 2000 2,00,000 α

Volume (in
Log Scale)
Fig.5 The relationship of volume & variety across different industry profile.

High product variety (i.e., many products in one, or, few numbers) require
highly skilled labour, general-purpose machines detailed and sophisticated
production planning and control systems.

(b) Capacity of the Plant: The projected sales volume is a major


influencing factor in determining whether the firm should go in for
intermittent, or, continuous process. Fixed process costs are high for
continuous process and low for intermittent process while variable costs are
more for the intermittent process and less for continuous process.
Intermittent process, therefore, will be cheaper to install and operate at
low volumes and continuous process will be economical to use at high volumes,
as shown in Fig. 6 below:

Fig.6

Variable Cost (Intermittent)


Variable Cost (Intermittent)

Cost
(Rs.)
Total Cost (Continuous)

Variable Cost (Continuous)


Fixed Cost (Continuous)
Fixed Cost (Intermittent)

Intermittent Continuous
Break
Manufacturing Manufacturing
Even
Range Volume Range
Volum
e

c) Flexibility: Flexibility implies the ability of the company to satisfy varied


customer’s requirements. Flexibility and product variety are inter- related.

d) Lead time: Lead-times are more appropriately called delivery lead times
expected by the customers in another major influencing factor in a
competitive market. As a general rule, faster deliveries are expected in a
competitive market. The product may be required to be produced to stock
using principles of batch production / mass production.

e) Efficiency: Efficiency measures the speed and the cost of the conversion
process. Efficiency is the greatest when the product is mass-produced. But
to mass-produce a product, greater sales are required.

f) Environment: Environment brings in new technologies and forces the


adoption of new process of manufacturing. For example, wooden furniture is
gradually being replaced by metals and plastic. A furniture-manufacturing
unit will have to change in technology to fall in line with changing times.

Classification of the Manufacturing Process: The manufacturing process


can basically be classified into five groups:

i) Project Production, where a single assignment of complex nature is


undertaken for completion within the given period and cost.
ii) Jobbing Production, where one, or, few units of a product are
produced to customer’s requirements within the given data and price.

iii) Batch Production, where limited quantity of each type of product is


authorized for manufacture at a time.

iv) Mass and flow production, where a production run is conducted


either on a single machine, or, on a number of machines, arranged
according to the sequence of operations and several number of a
product are manufactured at a time and stocked in warehouse awaiting
sales.

v) Process production, where production run is conducted for an


infinite period.

The above mentioned manufacturing methods are now detailed below and
shown in chart form as below:

Type of
Production

Intermitten Continuou
t s

Project Jobbing Batch Mass and Process


Production Production Production flow Production
production
Fig. 7 Classification of Manufacturing Process.

Selection of the Manufacturing Process: Break–even analysis is the most


suitable technique for selecting the optimal manufacturing process. At the
introduction stage, the product is produced on general-purpose equipments
with little, or, no commitment on fixed cost. Labour intensive methods are
used to keep fixed cost of the project form. As the product enters the
growth phase, general-purpose machines are organized to have batch
production. Finally, when the product enters the maturity phase the
manufacturing is organized on special purpose machines in mass and flow
form to have lower cost per unit of output. Fig. 8 shows the least cost
process at any stage of life cycle.
Project Batch Mass & Flow

Continuous
Cost
(Rs.)
Maturity Phase (use
Process form)

Introduction
(use project
form)
Maturity Phase
(use Mass
Growth Phase
Production
(use batch form)
form)

Fig.8: Selection of Manufacturing Process according to the Product Life Cycle (PLC)