O.M.-manufacturing and Process Selection Design

8/9/2019 O.M.-manufacturing and Process Selection Design

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Manufacturing and Process

Selection Design


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Learning Objectives

Process Selection Types of processes

Process Flow Structure

Product process matrix


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Process Selection

It refers to the strategic decision of selecting which

kind of production processes to have in the

manufacturing plant.

E.g.

For Low volume of production

- we may have a worker manually assemble each

item by hand.For High volume of production

- setting up an assembly line may be appropriate.


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Types of Processes

(Based on what they do) Conversion (ex. Iron ore into steel)

Fabrication (ex. Forming gold into a crown for a

tooth or making sheet metal into car fender)

Assembly (ex. Parts to components or assembling afender to a car, putting toothpaste tubes into a box)

Testing (ex. For quality ofproducts)


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Process Flow Structures

- Hayes and Wheelwright It refers to how a factory organizes material flow using one or

more of the process technologies listed above.

Following are the four major process flow structures:

Job shop(ex. Copy center making a single copy of a studentterm paper, machine tool shops, commercial printing firms)

Batch shop(ex. Copy center making 10,000 copies of an adpiece for a business, heavy equipment, electronic device)

Assembly Line (ex. Automobile manufacturer)

Continuous Flow (ex. Thermal power plant)


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Product-Process Matrix

Process

structure

Process life

cycle stage

I

Low volume-low

standardization,

often one of a

kind

II

Multiple

products, low

volume

III

Few major

products,

higher volume

IV

High volume-high

standardization,

commodity

I

Job

Shop

II

Batch

III

Assemblyline

IV

Continuous

Effectiveness

measures:

Flexibility (high)

Unit cost (high)

Flexibility (low)

Unit cost (low)None (not

feasible)

Commercial printer

Restaurant

Heavy equipment

Coffee shop

Automobile assembly

Burger King

Sugar

refinery


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Break-Even Analysis

A standard approach to choosing among alternative

processes or equipment

Model seeks to determine the point in unitsproduced (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 (Continued)

Break-even Demand=

Purchase cost of process or equipment

Price per unit - Cost per unit

orTotal fixed costs of process or equipment

Unit price to customer - Variable costs per unit

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


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Break-Even Analysis (Continued)

Example: Suppose you want to purchase a new computer

that will cost s.50,000. It will be used to process written

orders from customers who will pay s.250 each for the

service. The cost of labor, electricity and the form used to

place the order is s.50 per customer. How many customerswill we need to serve to permit the total revenue to break-

even with our costs?

Break-even Demand:

= Total fixed costs of process or equip.

Unit price to customer Variable costs

=50,000/(250-50)

=250 customers

O.M.-manufacturing and Process Selection Design

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