Unit 2 Manufacturing Operations

Sections:
1. Manufacturing Industries and Products
2. Manufacturing Operations
3. Production Facilities
4. Product/Production Relationships
5. Lean Production
6. Manufacturing Metrics

Manufacturing Lead Time

Rate of Production
Production Capacity
Work in Progress
Design Times
Utilisation/Availability

Industrial Automation
Architecture
Level 4

Level 3

Business Information
(Business Office)

Level 2

Level 1
Industrial Automation
(Shop Floor)
Level 0

Manufacturing Lead Time

Raw
Materials

Transport

Machine
Group

Work in
Progress

Stores

Operating Times
Non-operating Times

Finished
Goods

Inspect

Manufacturing Lead Time

30%
Cutting

70%
Positioning, Loading

e.g.
Set-up Time
5%
On Machine

Time

95%
Moving and Waiting

1.5% of total time - adds value

Manufacturing Lead Time

n1

n2

Time
Operation Time
Non-operation Time
To = Operation Time per Machine
Tno = Non-operation Time per Machine
nm = Number of Machines
MLT = nm ( To + Tno )

n3

Manufacturing Lead Time

n1

n2

Pallet of six parts

Q = Number of parts
MLT = nm ( QTo + Tno )

n3

Manufacturing Lead Time

n1

n2

Pallet of six parts

Tsu = Set-up Time

MLT = nm ( QTo + Tno + Tsu )

n3

Manufacturing Lead Time

Order #1
Order #2

Process Plan (Routing)

Manufacturing Lead Time

In practice

Q, Tsu, To, Tno and nm will vary considerably

for different order quantities, process routing to find average or ag
values before carrying out analysis. e.g.:

nq

i1

nQ

Operation Times
Operation time has three elements:
Tm = Actual Machining Time
Th = Workpiece Handling Time
Tth = Tool Handling Time
To = Tm + Th + Tth

Rate of Production
Total Batch Time per Machine
Tsu + QTo
Average Production Time per Part
Tp = Tsu + QTo
Q
Rate of Production
Rp = 1/Tp

Lead Times
nq

MLT (Tsui QToi Tnoi )

i1

MLT (Tsu QTo Tno )nm

Job Shop (Q -> 1)

MLT (Tsu To Tno )nm

Mass Production (Tsu + Tno -> 0)

MLT nmQT o

MLT nm (TransferTime Longest(To ))

Production Capacity

Production Capacity, Pc
Pc = WSwHRp
W = number of work centres
Sw = Number of shifts per week
H = Hours per shift
Rp = Rate of production (units per hour)
If process plan requires Nm machines:
Pc = WSwHRp / Nm

Demand Rate
Weekly Demand Rate
Dw = WSwHRp / Nm
WSwH = DwNm/ Rp

Three ways of adjusting capacity

W (number of work centres)
Sw (number of shifts per week)
H (number of hours per shift i.e. overtime)

Work In Progress
WIP :

Amount of product currently located

in the factory that is either being processed
or is in between processing operations

Generally:
WIP = PC U (MLT) / Sw H

WIP Ratio
WIP Ratio = WIP / Number of Machines Processing

WIP Ratio =

PC U
Sw H
WU

Ideal ratio: 1:1

(MLT)

QTo
Tsu + QTo

Worked Problem
The average part produced in a certain batch manufacturing plant must
be processed sequentially through six machines on average. Twenty
(20) new batches of parts are launched each week. Average
operation time = 6 min., average setup time = 5 hours, average batch
size = 25 parts, and average non-operation time per batch = 10
hr/machine. There are 18 machines in the plant working in parallel.
Each of the machines can be set up for any type of job processed in
the plant. The plant operates an average of 70 production hours per
week. Scrap rate is negligible. Determine (a) manufacturing lead time
for an average part, (b) plant capacity, (c) plant utilization. (d) How
would you expect the nonoperation time to be affected by the plant
utilization?

Solution
(a) MLT = 6(5 + 25(0.1) + 10) = 105 hr
(b) Tp = (5 + 25 x 0.1)/25 = 0.30 hr/pc, Rp = 3.333 pc/hr.
PC = 70(18)(3.333)/6 = 700 pc/week
(c) Parts launched per week = 20 x 25 = 500 pc/week.
Utilization U = 500/700 = 0.7143 = 71.43%
(d) As utilization increases towards 100%, we would expect
the nonoperation time to increase. When the workload in
the shop grows, the shop becomes busier, but it usually
takes longer to get the jobs out. As utilization decreases,
we would expect the nonoperation time to decrease.

Utilisation
Utilisation, U = Output/Capacity

Q
Utilization: U =
PC
where
Q = quantity actually produced
PC = plant capacity

Availability
MTBF MTTR
Availability: A =
MTBF

where MTBF = mean time between failures, and

MTTR = mean time to repair

Costs of Manufacturing Operations

Fixed costs - remain constant for any output level
Variable costs - vary in proportion to production output
level
Adding fixed and variable costs
TC = FC + VC(Q)
where
TC = total costs
FC = fixed costs (e.g., building, equipment, taxes)
VC = variable costs (e.g., labor, materials, utilities)
Q = output level

Breakeven Point

Method 1:
Manual

Costs
VC 2

Method 2:
Automated

FC2
1
VC

Breakeven Point

FC1

Quantity, Q

Manufacturing Costs
Alternative classification of manufacturing costs:
1. Direct labor - wages and benefits paid to workers
2. Materials - costs of raw materials
3. Overhead - all of the other expenses associated with
running the manufacturing firm
Factory overhead
Corporate overhead

Overhead Rates
Factory overhead rate:

FOHC
FOHR =
DLC
Corporate overhead rate:

COHC
COHR = DLC
where
DLC = direct labor costs

Cost of Equipment Usage

Hourly cost of worker-machine system:
Co = CL(1 + FOHRL) + Cm(1 + FOHRm)
where
Co = hourly rate, /hr
CL = labor rate, /hr
FOHRL = labor factory overhead rate
Cm = machine rate, /hr
FOHRm = machine factory overhead rate

Worked Problem
The break-even point is to be determined for two production methods,
one a manual method and the other automated. The manual method
requires two workers at 9.00/hr each. Together, they produce at a
rate of 36 units/hr. The automated method has an initial cost of
125,000, a 4-year service life, no salvage value, and annual
maintenance costs = 3000. No labour (except for maintenance) is
required to operate the machine, but the power required to run the
machine is 50 kW (when running). Cost of electric power is
0.05/kWh. If the production rate for the automated machine is 100
units/hr, determine the break-even point for the two methods, using a
rate of return = 25%. The solution requires familiarity with the Uniform
Annual Cost (UAC) method of determining an annual amount payable
(A) on a principle sum (P).

Solution

Manual method: variable cost = (2 workers)(9.00/hr)/(36 pc/hr) = 0.50/pc

Total cost as a function of Q is TC = 0.50 Q assuming no fixed costs.
Automated method: (A/P,25%,4) = = (0.4234)
UAC = 125,000(A/P,25%,4) + 3000 = 125,000(0.4234) + 3000 = 55,930/yr
Variable cost = = 0.025/pc
Total cost as a function of Q = 55,930 + 0.025 Q
Break even point: 0.50 Q = 55,930 + 0.025 Q, 0.475Q = 55,930, Q = 117,747
pc/yr
Hours of operation per year: Manual: H = = 3270.76 hr/yr.
Comment: This would require two shifts.
Automated: H = = 1177.47 hr/yr.
Comment: Plenty of additional capacity in one shift beyond the break-even
point.