Manufacturing Process Selection and Design

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CHAPTER 7
Manufacturing Process Selection and Design
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Overview

• Process Selection
• Types of Processes
• Process Flow Structures
• Product-Process Matrix
• Break-Even Analysis
• Manufacturing Process Flow Design

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Process Selection
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Process and Process Selection

• Process Any set of activities performed by an
  organization that takes inputs and transforms
  them into outputs ideally of greater value to the
  organization than the original inputs.
• Process selection refers to the strategic
  decision of selecting with which kind of
  production processes to have in the manufacturing
  plant.

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Process Selection

• Three primary questions
• How much variety in products or services will the
  system need to handle?
• What degree of equipment flexibility will be
  needed?
• What is the expected volume of output?

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Types of Processes

• Based on what they do
• Conversion process
• Iron ore ? steel sheets, ingredients of
  toothpaste ? toothpaste
• Fabrication process changing raw materials into
  some specific form
• Sheet metal ? car fender, gold ? a crown for a
  tooth, cloth ? clothes
• Assembly process
• Assemble parts to components, put toothpaste
  tubes into a box, fasten a dental crown into
  someones mouth
• Testing process
• For quality of products

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Process Types

• A process flow structure refers to how a
  factory organizes material flow using one or more
  of the process technologies.
• Job shop
• Batch shop
• Assembly Line
• Continuous Flow

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Job Shop

• Job shop A process structure suited for
  low-volume production of a great variety of
  nonstandard products.
• Each job may require a different set or sequence
  of processing steps
• High flexibility of equipment (General-purpose
  equipment )
• Skilled workers
• Examples commercial printing firms, copy center
  making a single copy of a student term paper,
  airplane manufacturers, machine tool shops,
  American Chopper

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Batch Shop

• Batch shop A process structure that produces a
  moderate variety of standard products at
  relatively low volumes.
• A somewhat standardized job shop
• Employed when a business has a relatively stable
  line of products
• The products are produced periodically in batches
  to reduce the impact of setup time on equipment
• The equipment need NOT be as flexible as in a job
  shop
• The skill level of workers need NOT to be as high
  as in a job shop
• Examples
• Bakeries make bread, cakes, cookies in batches
• Movie theatre shows movies to groups (batches)
  of people
• Airlines carry batches of people from airport to
  airport
• Other examples production of beer, book,
  magazine, etc

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Assembly Line

• Assembly line (Repetitive processing)
• A process structure designed to make discrete
  parts moving through a set of specially designed
  workstations at a controlled rate.
• High volume
• Standardized products
• Slight flexibility of equipment
• Skill of workers is usually low
• Examples manual assembly of toys and appliances,
  automatic assembly of components on a printed
  circuit board, production line (automobiles,
  computers, etc.)

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Example Production Line
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Continuous Flow

• Continuous flow An often automated process
  structure that converts raw materials into
  finished product in one continuous process.
• Highly standardized products, no variety
• Special-purpose equipment (no need for equipment
  flexibility)
• Skill of workers is low
• Examples petroleum, steel, sugar, flour, and
  salt

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Example Continuous Flow
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Product-Process Matrix

• Choice of process flow structure is based on two
  main considerations
• Varietyhow much the product changes from
  customer to customer
• Volume of demand.
• Product-process matrix Shows the relationship
  between process structures and product volume and
  variety characteristics.
• As volume increases and the product line narrows,
  specialized equipment and standardized material
  flows become economically feasible. (see next
  slide)

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Product-Process Matrix
Exhibit 7.1
High
Variety
Low
Low
Volume
High
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Break-Even Analysis
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Break-Even Analysis

• A standard approach to choosing among alternative
  processes or equipment.
• Most suitable when processes and equipment entail
  a large initial investment and fixed cost, and
  when variable costs are reasonably proportional
  to the number of units produced.
• Break-even Point (BEP)
• One option case determine the point in units
  (produced and sold) at which total cost total
  revenue.
• Multiple options case determine the points in
  units at which one option is indifferent to
  another.

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Cost-Volume Relationships (Total Cost)
Amount ()
Total cost VC FC
Variable cost (VC)
Fixed cost (FC)
0
Q (Quantity in units)
Total cost (TC) Fixed cost (FC) Variable cost
(VC) Fixed cost (FC) Unit cost
(v) X Quantity (Q)
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Revenue-Volume Relationships (Total Revenue)
Total revenue
Amount ()
0
Q (Quantity in units)
Total revenue Revenue per unit (R) X Quantity
(Q)
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Cost-Volume Relationships (BEP)
Profit
Total revenue
Amount ()
Total cost
- Loss
0
BEP
Q (volume in units)
Break-even point (BEP) the quantity of output at
which total cost and total revenue are equal.
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One-Option Case
Find out the quantity that makes
Total Revenue (TR) Total Cost (TC)
Total Revenue Total Fixed Cost Total
Variable Cost Unit Revenue Units Total
Fixed Cost Unit Cost Units
R Q FC v Q Break Even Quantity
QBEP FC / (R v)
Profit (margin) Total Revenue Total Cost
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Example -- One-Option Case

• Suppose you want to purchase a new computer
  that will cost 5,000. It will be used to
  process written orders from customers who will
  pay 25 each for the service. The cost of labor,
  electricity and the form used to place the order
  is 5 per customer.
• How many customers will we need to serve to
  permit the total revenue to break-even with our
  costs?
• FC 5,000, R 25/customer, v
  5/customer
• Break-even quantity QBEP
• FC /(R-v) 5,000/(25-5)
• 250 customers
• How many customers should we serve to make a
  profit of 1,000?
• Profit Total Revenue Total Cost
• R Q (FC v Q) (R-v) Q - FC
  
• 1,000 (25-5) Q 5,000
• Q 300 customers

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Example -- Multiple-Option Case (page 207)
Suppose a manufacturer has identified the
following options for obtaining a machined part
1. purchase the part 200/unit, no
fixed cost 2. make the part on a semiautomatic
lathe 75/unit, fixed cost
80,000 3. make the part on a machining center
15/unit, fixed cost 200,000
Which option should the manufacturer choose?
TC_buy 200 Q
TC_lathe 80,000 75 Q
TC_machine 200,000 15 Q
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Example -- Multiple-Option Case (page 207)
Demand lt B ? Buy B lt Demand lt A ? Semiautomatic
Lathe Demand gtA ? Machine center
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Example -- Multiple-Option Case (page 207)

• Break-even point B
• Total cost of buy Total cost of Make
  on lathe
• 200 x Demand 80,000 75 x
  Demand
• DemandB 80,000/(200-75) 640
  units
• Break-even point A
• Total cost of Make on lathe Total cost
  of Make on machine
• 80,000 75 x Demand 200,000 15 x
  Demand
• DemandA (200,000- 80,000)/(75-15)
  2,000 units

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Manufacturing Process Flow Design
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Manufacturing Process Flow Design

• 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, operation and route sheets, and process
  flowcharts.

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Assembly Drawing

• An assembly drawing is simply an exploded view of
  the product showing its component parts.

Plug assembly drawing
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Assembly Chart

• An assembly chart uses the information presented
  in the assembly drawing and defines how parts go
  together, their order of assembly, and often the
  overall material flow pattern.

Assembly chart for plug assembly
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Operation and Route Sheet

• An operation and route sheet specifies operations
  and process routing for a particular part. It
  conveys such information as the type of
  equipment, tooling, and operations required to
  complete the part.

Operation and route sheet for plug assembly
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Process Flowchart

• A process flowchart denotes what happens to the
  product as it processes through the productive
  facility.

Process flowchart for plug housing
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Recap

• Process
• Process selection
• Types of processes
• Process flow structures
• Job shop
• Batch shop
• Assembly line
• Continuous flow

• Product-process matrix
• Break-even point (BEP)
• One-option case
• Multiple-option case
• Manufacturing process flow design