Types of

Manufacturing Processes
 Manufacturing Process

Manufacturing processes
alter material’s shapes or properties
in a controlled manner
to produce components
or products
 Types of Manufacturing Processes

1. Material removal
2. Deform or shape material through heat or
pressure
3. Join two or more materials
 Remove Material

1. Sawing
2. Filing
3. Drilling
4. Milling
5. Grinding
6. Turning (Lathe)
7. Abrasive finishing
 Deform/Shape Material

1. Casting
2. Forging
3. Rolling
4. Extrusion/Drawing
5. Sheet metal forming
6. Powder metal processes
 Join Two or More Materials

1. Welding
2. Brazing
3. Soldering
4. Adhesive bonding
5. Fastening
Selection of Manufacturing Process
In manufacturing there are usually many
ways to make a part, some ways are better
than others. Choose the process based on:
Cost
Quality
Quantity
Safety
Equipment Available (Eg.)
How can you sharpen a wooden pencil?

Knife or other sharp object

Sand or abrasion
Toy pencil sharpener
Hand pencil sharpener
Electric pencil sharpener
Automated pencil sharpener
end
Overview of Plant Design
 Plant

Plant is a production facility (where manufacturing

happens) having different machines and material
handling equipment.
 Plant Layout Design or Plant Design

Plant layout design or plant design is the step by step

process of laying out different facilities like machines, MH
equipment, storing places, inspection places etc. at the
starting of a plant or in between.
 Plant Design Cycle

• Design Process
• Implementation
• Follow-up
• Reactivation
Plant Design Cycle
Plant / Facility Location / Layout Design - Steps

• Formulate the Problem

• Analyze the problem
• Search for Alternatives
• Evaluate the design alternatives
• Select the preferred design
• Specify the solutions
end
Plant Location Factors
 Location Factors
• Albert Weber in 1909, classified the factors in
location as two namely, Primary factors and
secondary factors.
• Primary factors are those that involves
materials and labor.
• Secondary factors include Banking, Credit,
Insurance, Communication and other
infrastructure.
 Need for Plant Location Decisions

• Marketing Strategies
• Growth of Business
• Depletion of Resources
• Cost of Doing Business
 Nature of Plant Location Decisions

• Importance
– Long term commitment / costs
• Objectives
– Profit potential
• Options
– Expand existing facilities
– Add new facilities
– Shut down at one location and move to another
General Procedure for Location Decision Making

• Decide the criteria for evaluating location

alternatives (increase revenues, increase
community service).
• Identify important factors (nearness to
market location, raw materials)
• Develop location alternatives.
• Evaluate the alternatives and make a
selection.
Factors Influencing Plant /Facility Location

• Location conditions are complex and each

comprises a different characteristic of a tangible
(i.e. freight rates, production costs) and non-
tangible (i.e. reliability, security, quality) nature.
• Location conditions are hard to measure.
Tangible cost based factors such as wages and
products costs can be quantified precisely into
what makes locations better to compare.
Factors Influencing Plant / Facility Location
Two types of location factors
1. General locational factors, which include
controllable and uncontrollable factors for all type
of organizations.

2. Specific locational factors specifically

required for manufacturing and service
organizations.
 General Locational Factors
CONTROLLABLE FACTORS
• 1. Proximity to markets
• 2. Supply of materials
• 3. Transportation facilities
• 4. Infrastructure availability
• 5. Labor and wages
• 6. External economies
• 7. Capital
UNCONTROLLABLE FACTORS
• 8. Government policy
• 9. Climate conditions
• 10. Supporting industries and services
• 11. Community and labor attitudes
• 12. Community Infrastructure
 Specific Location Decision Factors

1. Regional Factors

2. Community Considerations

3. Multiple Plant Strategies

4. Site-related Factors
 Location Decision Factors…

Regional Factors Community Considerations

Multiple Plant Strategies Site-related Factors

 1. Regional Factors

1) Location near raw materials

Three reasons firms locate near the source of
raw materials
• necessity: mining, farming, forest
• perishability: canning or freezing fruits, dairy
products
• transportation cost: cheese making, paper
production
 1. Regional Factors……

2) Location of markets
• Retail sales and services are usually found
near the center of the markets they serve:
(fast food service)
• Distribution cost associated with their
products is the main factor
 1. Regional Factors…….

3) Labor factors
• Labor costs
• Employees skills
• Workers attitudes toward turnover,
absenteeism, may differ among potential
locations
 1. Regional Factors…..

4) Other factors
• Climate, taxes
• Many developing countries offer an
abundant supply of cheap labor
• International locations
 2. Community Considerations

• Community resistance to airport

expansion, changes in zoning, construction
of nuclear facility, waste disposal systems,
recycling centers etc.

• From a company standpoint, facilities for

education, shopping, recreation,
transportation etc.
 3. Multiple Plant Manufacturing Strategies
1) Product plant strategy
• entire products or product lines are produced in
separate plants (based on required quantity)
2) Market area plant strategy
• plants are designed to serve a particular
geographic segment of a market
3) Process plant strategy
• different plants concentrate on different aspects
of process: (Automobile: different plants for
engines, transmissions, body, etc.)
 4. Site-related Factors

• Primary consideration: land features,

transportation, zoning etc.

• Land costs, room for future expansion, etc.

 Trends in Locations
• Foreign producers locating in India.
– “Made in India”
– Currency fluctuations
• Just-in-time manufacturing techniques
• Micro factories
• Information highway
 EVALUATING PLANT LOCATIONS

• Cost-volume Analysis
– Determine fixed and variable costs
– Plot total costs
– Determine lowest total costs
 Example 1: Cost-Volume Analysis

Fixed and variable costs for

four potential locations
L o c a tio n F ix e d V a r ia b le
C o s t C o s t
A $ 2 5 0 ,0 0 0 $ 1 1
B 1 0 0 ,0 0 0 3 0
C 1 5 0 ,0 0 0 2 0
D 2 0 0 ,0 0 0 3 5
 Example 1: Solution

F ix e d V a r ia b le T o ta l
C o s ts C o s ts C o s ts

A $ 2 5 0 ,0 0 0 $ 1 1 (1 0 ,0 0 0 ) $ 3 6 0 ,0 0 0
B 1 0 0 ,0 0 0 3 0 (1 0 ,0 0 0 ) 4 0 0 ,0 0 0
C 1 5 0 ,0 0 0 2 0 (1 0 ,0 0 0 ) 3 5 0 ,0 0 0
D 2 0 0 ,0 0 0 3 5 (1 0 ,0 0 0 ) 5 5 0 ,0 0 0
 Example 1: Graphical Solution

$(000)
800 D
700
600 B
500 C
400 A
300 A Superior
200 C Superior
100 B Superior
0
0 2 4 6 8 10 12 14 16
Annual Output (000)
 EVALUATING PLANT LOCATIONS

• Transportation Model
– Decision based on movement costs of raw
materials or finished goods
• Factor Rating
– Decision based on quantitative and qualitative
inputs
• Center of Gravity Method
– Decision based on minimum distribution costs
Other Factors Influencing Plant Locations
Foreign a. Policies on foreign ownership of production facilities
Government Local Content
Import restrictions
Currency restrictions
Environmental regulations
Local product standards
b. Stability issues
Cultural Living circumstances for foreign workers / dependents
Differences Religious holidays/traditions

Customer Possible buy locally sentiment

Preferences

Labor Level of training and education of workers

Work practices
Possible regulations limiting number of foreign employees
Language differences
Resources Availability and quality of raw materials, energy,
transportation
end
Plant Location Theory
 Plant Location Theory
Location theory addresses the economic activities
influenced to locate facilities. (where and why the
facilities to be located).
Location theory or microeconomic theory generally
assumes that agents (firms / individuals) act in
their own self-interest.
Firms choose locations that maximize their profits
and individuals choose locations that maximize
their utility.
 Plant Location Theories
• Median Location Principle
• Linear Market Model (Hotelling)
• Weber’s Cost Minimizing Model
• Isard’s Substitution Model
• Smiths Spatial Margins
• Webber’s Uncertainty Effect
 Median Location Principle
(Minimize Transport Cost)

Principle of median location theory stating

that an industrial activity will select the
median or middle point of location when
selling an output to, or buying an input
from, when the activity units are located
at disperse points.
 Median Location Principle…
(Eg. Five units: A, B, C, D & E)

A B C D E
1 2 3 4 5 6 7

Distance Distance
from C from D
A 3 4
B 2 3
C 0 1
D 1 0
E 3 2
Sum 9 10
 Linear Market Model (Hotelling)

Hotelling's linear market / city model was

developed by Harold Hotelling (1929). In this
model he introduced the notions of locational
equilibrium in a duopoly (two firms have to
choose their location) taking into
consideration of consumers' distribution and
transportation costs.
 Linear Market Model (Hotelling)…

(Iterative competitive movements to locate markets)

If seller 1 starts at A, then

seller 2 jumps to B,
then seller 1 jumps to C,
and seller 2 could proceed
to D, but that is inferior
to also locating at C,
splitting the market in
half.
A B C D E
 Weber’s Cost Minimizing Model

• Developed in the early 20th Century in

Southern Germany
• Input factors are not ubiquitous (available everywhere)
• This means that:
– physical resources are not found everywhere.
– human labor is differentiated by skill & ability.
– capital availability varies.
– other inputs are also differentiated.
 Weber’s Cost Minimizing Model…
• Given market prices, producers would seek
to minimize production costs to maximize
profits.
• This leads to a taxonomy of production cost
situations, considering
– factor costs
– transport costs on input items
– transport costs on finished goods
 Weber’s Cost Minimizing Model…

Min: ΣIpiqi+ ΣIriqidi +rqqdj

Minimize sum of factor costs + transport costs

on factor inputs + transport cost on shipment
of product to the market
If factor costs are “given,” then the problem
becomes how to minimize transport costs.
 Weber’s Cost Minimizing Model…

Material index (MI) = weight of localized material

weight of product (unit)
If MI < or = 1, locate manufacturing near market
Material types:
“Pure” materials: no weight loss in production
“Weight-losing materials”
“ubiquities” – available everywhere
 Weber’s Cost Minimizing Model…

Example: 2T local materials

3T ubiquities
MI = 2/5 = 0.4, locate at market
Alternative Situations
(1) Ubiquities only, MI = 0, locate at market
(2) Pure Materials only
(a) 1 pure material, MI = 1
 Weber’s Cost Minimizing Model…
(b) 1 pure material + ubiquities
MI < 1, locate at market
(c) several pure materials only
MI = 1, locate at market
(d) several pure materials + ubiquities
MI < 1, locate at market
(3) Weight Losing Materials
(a) 1 weight losing material
MI > 1, locate at material location
 Isard’s Substitution Model
Isard linked location theory to the general
theory of economics through the substitution
principle. The selection of a manufacturing
site from among alternative locations can be
viewed as substituting expenditures among
the various production factors such that the
best site is chosen.
 Isard’s Substitution Model

Input-factors (A & B) can often be used substitutability

although the degree of substitution can vary by scale
and by technology

• Q3
A A • Q2
• Q1
Q2
Q1
B B
“Perfect” substitutability No substitution
 Isard’s Substitution Model…
Isoquants - Equal levels of output
Substitution is possible over a range

but factor proportions change

Q2
Q1

B
 Isard’s Substitution Model…
Two point location model - pure materials
Positioning along the line will be optimum
Distance from M

Transformation Line

Distance from C
 Smith’s Spatial Margins
•Weber’s concept: equal transport costs from a reference
point.
• Smith’s Spatial Margins formed by adding transport
costs for individual factors - mapped as “isotims”
X and Y are the “spatial margins of profitability”
$
(Material & Product)

Area of Profit
Total Cost

X Market Y
Material Source
 Webber’s Uncertainty Effect
• In reality, we do not have perfect knowledge
about markets and factor costs.
• Uncertainty deters (large) investments.
• Uncertainty enhances the importance of
external economies - new entrants get the
benefits caused by existing sellers.
• Ex ante versus ex post evaluations, leads to
satisficing behavior / decisions.
end
Facilities Layout Planning (FLP)
Nature, Significance & Scope
 Facilities Layout

Facility (plant) layout is the optimum arrangement of facilities, machines,

equipment etc. to reduce the material handling cots, improve operational
efficiency and plant related performance measures.

Facility (plant) layout involves the development of physical relationship

among building, equipment and production operations, which will enable
the manufacturing process to be carried on efficiently.
 Facilities Layout Planning (FLP)

Facilities Layout Planning (FLP) refers to the planning process for

the physical arrangement of all production related facilities.

It is the configuration of departments, work centers and

equipment in the conversion process.

It is a floor plan of all the physical facilities, which are used in the
production or conversion process.
 Nature of FLP

FLP is a process for optimum arrangement of facilities

including personnel, operating equipment, storage space,
material handling equipment and all other supporting
services along with the design of best structure to contain all
these facilities.
 Significance & Scope of FLP

1. Streamline the flow of materials through the plant.

2. Facilitate the manufacturing process.

3. Maintain high turnover of in-process inventory.

4. Minimize materials handling and cost.

5. Effective utilization of men, equipment and space.

6. Make effective utilization of cubic space.

 Significance & Scope of FLP

7. Flexibility of manufacturing operations and arrangements.

8. Provide for employee convenience, safety and comfort.
9. Minimize investment in equipment.
10. Minimize overall production time.
11. Maintain flexibility of arrangement and operation.
12. Facilitate the organizational structure.
end