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Chapter 6
Manufacturing and Process Selection Design
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Process selection
– Deciding on the way production of goods or services will be organized

Major implications
– Capacity planning – Layout of facilities – Equipment – Design of work systems

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Process Selection and System Design
Forecasting Capacity Planning Facilities and Equipment

Product and Service Design Process Selection

Layout

Technological Change
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Work Design

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Process Strategy
• Key aspects of process strategy
– – –

Capital intensive – equipment/labor Process flexibility Adjust to changes
– – –

Design Volume technology
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Process Selection

Variety
– How much

Flexibility
– What degree

Batch Job Shop Repetitive/ Assembly Continuous

Volume
– Expected output

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Types of Processes

Conversion (ex. Iron to steel) Fabrication (ex. Cloth to clothes) Assembly (ex. Parts to components) Testing (ex. For quality of products)
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Process Flow Structures

Job shop (ex. Copy center making a single copy of a student term paper) Batch shop (ex. Copy center making 10,000 copies of an ad piece for a business) Assembly Line (ex. Automobile manufacturer) Continuous Flow (ex. Petroleum manufacturer)

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Product – Process Matrix
Process Type

Job Shop Batch

Appliance repair Emergency room Commercial bakery Classroom Lecture

Not feasible

Repetitive

Automotive assembly Automatic carwash

Continuous (flow)

Not feasible

Oil refinery Water purification

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Product – Process Matrix
Dimension Job variety Process flexibility Unit cost Volume of output Very High Very High Very High Very High Moderate Moderate Moderate Low Low Low Low High Very low Very low Very low Very low

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Exhibit Exhibit 6.10 6.10

Low Volume, One of a Kind

Few High Multiple Major Volume, Products, Products, High Low Higher StandardVolume Volume ization
Flexibility (High) Unit Cost (High)

I. Job Shop II. Batch III. Assembly Line IV. Continuous Flow
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Commercial Printer French Restaurant Heavy Equipment Automobile Assembly Burger King Sugar Refinery

These are These are the major the major stages of stages of product product and and process process life cycles life cycles
Flexibility (Low) Unit Cost (Low)

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Automation

Automation: Machinery that has sensing and control devices that enables it to operate
– Fixed automation – Programmable automation

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Automation
• Computer-aided design and manufacturing systems (CAD/CAM) • Numerically controlled (NC) machines • Robot • Manufacturing cell • Flexible manufacturing systems(FMS) • Computer-integrated manufacturing (CIM)
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A standard approach to choosing among alternative processes or equipment Model seeks to determine the point in units produced (and sold) where we will start making profit on the process or equipment Model seeks to determine the point in units produced (and sold) where total revenue and total cost are equal
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Break-Even Analysis

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Break-Even Analysis
Total cost (dollars)
Process 2: Specialpurpose equipment Break-even quantity

F2 F1

Process 1: Generalpurpose equipment

Units per year (Q)
Figure 3.7 – Relationship Between Process Costs and Product Volume
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Break-Even Analysis (Continued)
Break-even Demand= Break-even Demand= Purchase cost of process or equipment Purchase cost of process or equipment Price per unit --Cost per unit Price per unit Cost per unit or or Total fixed costs of process or equipment Total fixed costs of process or equipment Unit price to customer --Variable costs per unit Unit price to customer Variable costs per unit

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This formula can be used to find any of its components algebraically if the other parameters are known

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Break-Even Analysis (Continued)
 

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 Break-even Demand:  Break-even Demand:

Example: Suppose you want to purchase a new Example: Suppose you want to purchase a new computer that will cost $5,000. It will be used to computer that will cost $5,000. It will be used to process written orders from customers who will pay process written orders from customers who will pay $25 each for the service. The cost of labor, electricity $25 each for the service. The cost of labor, electricity and the form used to place the order is $5 per and the form used to place the order is $5 per customer. How many customers will we need to serve customer. How many customers will we need to serve to permit the total revenue to break-even with our to permit the total revenue to break-even with our costs? costs?

= Total fixed costs of process or equip. = Total fixed costs of process or equip. Unit price to customer – Variable costs Unit price to customer – Variable costs =5,000/(25-5) =5,000/(25-5) =250 customers =250 customers
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BBC is deciding whether to weld bicycle frames manually or to purchase a welding robot. If welded manually, investment costs for equipment are only $10,000. the per-unit cost of manually welding a bicycle frame is $50.00 per frame. On the other hand, a robot capable of performing the same work costs $400,000. robot operating costs including support labor are $20.00 per frame.
welded manually (Make) Fixed costs Variable costs $10,000 $50 welded by robot (Buy) $400,000 $20

Application 3.3

At what volume would BBC be indifferent to these alternative methods? Q = Fm – Fb cb –
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=

$10,000 – $400,000 $20 – $50

= 13,000 frames

c

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Manufacturing Process Flow Design

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A process flow design can be defined as a mapping of the specific processes that raw materials, parts, and subassemblies follow as they move through a plant The most common tools to conduct a process flow design include assembly drawings, assembly charts, and operation and route sheets
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Example: Assembly Chart (Gozinto)
Lockring Spacer, detent spring Rivets (2) Spring-detent A-5
Component/Assy Operation Inspection From Exhibit 5.14 From Exhibit 5.14

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4 5 6 7

SA-2

A-2

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Example: Process Flow Chart
Material Received from Supplier

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Inspect Material for Defects

No, Continue… Defects found?

Yes

Return to Supplier for Credit

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What is the break-even in demand for a new process that costs $25,000 to install, will generate a service product that customers are willing to pay $500 per unit for, and whose labor and material costs for each unit is $100? a. 400 units b. 250 units c. 100 units Answer: d. 62.5 d. 62.5 units e. None of the above units (25,000/(500-

Question Bowl

100)=62.5)

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Question Bowl
Which of the following is an example of a Continuous Flow type
a. b. c. d. e.

of process flow structure? Fast food Grocery Hospitals Chemical company None of the above

Answer: d. Chemical company

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Question Bowl
Which type of process is by changing of raw materials into some specific form (such as sheet metal into a car fender)? Conversion Fabrication Assembly Testing None of the above

a. b. c. d. e.

Answer: b. Fabrication
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End of Chapter 6

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