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Chapter 6

Chapter 6. Manufacturing Processes. Types of Processes. Conversion (ex. Iron to steel) Fabrication (ex. Cloth to clothes) Assembly (ex. Parts to components) Testing (ex. For quality of products). Process Flow Structures.

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Chapter 6

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  1. Chapter 6 Manufacturing Processes

  2. Types of Processes • Conversion (ex. Iron to steel) • Fabrication (ex. Cloth to clothes) • Assembly (ex. Parts to components) • Testing (ex. For quality of products)

  3. 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)

  4. Job Shop • Facilities are organized around specific activities or processes • General purpose equipment and skilled personnel • High degree of product flexibility • Typically high costs and low equipment utilization • Product flows may vary considerably making planning and scheduling a challenge

  5. Batch Shop • Standardized job shop • Stable line of products • Few products with higher volume than job shop • Common flows through facility make planning and scheduling somewhat easier than job shops

  6. Assembly Line • Facilities often organized as assembly lines • Characterized by modules with parts and assemblies made previously • Modules may be combined for many output options • Less flexibility than job shops facilities but more efficient

  7. Continuous Flow • Facilities are organized by product • High volume but low variety of products • Long, continuous production runs enable efficient processes • Typically high fixed cost but low variable cost • Generally less skilled labor

  8. Few Major Products, Higher Volume High Volume, High Standard- ization Exhibit 6.10 Low Volume, One of a Kind Multiple Products, Low Volume Flexibility (High) Unit Cost (High) I. Job Shop Commercial Printer French Restaurant These are the major stages of product and process life cycles II. Batch Heavy Equipment III. Assembly Line Automobile Assembly Burger King IV. Continuous Flow Sugar Refinery Flexibility (Low) Unit Cost (Low)

  9. Break-Even Analysis • 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

  10. Break-Even Analysis (Continued) This formula can be used to find any of its components algebraically if the other parameters are known Break-even Demand= Purchase cost of process or equipment Price per unit - Cost per unit or Total fixed costs of process or equipment Unit price to customer - Variable costs per unit

  11. Break-Even Analysis (Continued) • Example: 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? • Break-even Demand: = Total fixed costs of process or equip. Unit price to customer – Variable costs =5,000/(25-5) =250 customers

  12. Fixed cost Variable cost $ $ $ Process A Process B Process C Total process C costs Total process A costs Total process B costs $ 400,000 300,000 Fixed cost – Process C Fixed cost – Process B 200,000 Fixed cost – Process A V1(2,857) V2 (6,666) Volume Crossover Charts

  13. Customer Purchasing (order inks, paper, other supplies) Customer sales representative take order Vendors Prepress Department (Prepare printing plates and negatives) Receiving Accounting Printing Department Warehousing (ink, paper, etc.) Gluing, binding, stapling, labeling Collating Department Information flow Material flow Polywrap Department Shipping Production Process Flow Diagram

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