Chapter V The challenges of Planning Service Capacity 3 important factors in planning service capacity 1.

The need to be near customers 2. Inability to store services Speed of delivery and customer waiting time becomes a major concern in service capacity planning 3. Degree of volatility of demand Higher in service than goods Demand management- strategy used to offset capacity limitations (i.e. pricing, promotions and discounts) Evaluating Alternatives 1. Cost-Volume analysis Focuses on relationships between cost, revenue and volume of output Purpose- estimate income of the organization under different operating conditions Identify fixed costs, variable costs(labor and materials) TC= FC+VC VC=Q*v (Q=quantity ; v=variable cost per unit) Total Revenue=R*Q Break-even Point- volume of output at which total costs and total revenue are equal Volume is lower that break-even point=loss Volume is greater than break-even point=profit P= TR-TC=R*Q-(FC+v*Q) P=Q(R-v)-FC Qbep= P+FC/ R-v

Chapter VI Process selection- deciding in the way production of goods and services will be organized Process Strategy: Capital intensity: the mix of equipment and labor that will be used by the org. Process flexibility: the degree to which the system can be adjusted to changes in processing requirements

Technology application of scientific discoveries to the dev. and impr. Of products and services and operations processes Technology innovation- discovery and improvement of new or improved products, services or processes for producing them 3 kinds of technology 1. 2. 3. Product and service technology Discovery of new products and services Process technology Methods, procedures and equipment Information technology Science and use of PCs and other electronic equipment to store, process and send information

Advantges: 1. Help increase market share and generate substantial profits eg. Cellphones 2. Help in increasing quality, lowering costs, increasing productivity, and expanding processing capabilities eg. Laser technology, internet connecticon Technology Acquisition Process technology can have enormous benefits, but it can create substantial risk if particular technology is not fully understood both the downside as well as the upside of a particular technology.

Process Selection 1. Process Types Job shop- operates on a relatively small scale ; processing is intermittent ; generalpurpose equipment and high-skilled workers are important Batch- moderate volume of goods and services is desired; skills need not to be high as job shop Repetitive- higher volumes of more standardized goods and services are needed; slight flexibility of equipment : skills are low Continuous- high volume of nondiscrete, highly standardized goods and services; no variety in output, no need of equipment flexibility, worker skills lower

Project - used for work that is nonroutine, with a unique set of objectives to be accomplished in a limited time frame. Product and Service Profiling- linking key product or service requirements to process capabilities -Can be used to avoid any inconsistencies -Identifies key product or service dimensions and then selecting appropriate processes Sustainable Production of Goods and Services -Sustainable Production is the creation of goods and services using processes and systems that are: Non polluting Conserving of energy and natural resources Economically efficient Safe and healthful workers, communities, and consumers Socially and creatively rewarding for all people Lean Process Design - Guided by general principles - Focuses on variance reduction in workload over the entire process to achieve level production and thereby improve process flow - Successful Lean Design leads to: Reduce inventory and floor space Quicker response times Reduce defects, rework and scrap Increase productivity Lean Process Design - Guided by general principles - Focuses on variance reduction in workload over the entire process to achieve level production and thereby improve process flow; - Successful Lean Design leads to: Reduce inventory and floor space Quicker response times Reduce defects, rework and scrap Increase productivity Automation -Machinery that has sensing and control devices that enable it to operate automatically Eg. Automated Teller Machines(ATM) -Offers a number of advantages over human labor -frequently touted as a strategy necessary for competitiveness -has certain disadvantages and limitations compared to human labor

Three kinds of automation: 1. Fixed Automation - Most rigid of all types - Detroit automation - It uses high-cost general purpose equipment for a fixed sequence of operations - Low cost and high volume (primary advantages) - Minimal variety and the high-cost of making major changes (limitations) 2. Programmable Automation - Use of high-cost, general-purpose equipment controlled by a program that provides both the sequence of operations and specific details about each operations - Has the capability of economically producing a fairly wide variety of low-volume products in small batches - Numerically controlled(N/C) machines and robots are applications of programmable automation programmed to follow a set of processing instructions based on mathematical relationships - Limitations: higher skill levels needed to program the machines and inability to detect tool wear and material variation - Computer-aided manufacturing (CAM) -refers to the use of computers in process control - Robot- consists of three parts: Mechanical arm Power supply Controller - Industrial Robots are less glamorous and less mobile 3. Flexible Automation - evolved from programmable automation - uses equipment that is more customized than that of programmable automation - Key difference: flexible automation requires significantly less change over time Manufacturing cell- consists of closely located workstations dedicated to the production of a limited number of part families, thereby requiring a narrow range of Flexible manufacturing system (FMS)- operation group of machines designed to handle intermittent processing requires and produce a variety of similar products Computer-integrated manufacturing(CIM)- system for linking a broad range of manufacturing activities through an integrating computer system Facilities Layout Configurations of departments, work centers, and equipment with particular emphasis on movement of work through the system Importance: Requires substantial investments of money and effort Involves long-term commitments Has significant impact on cost and efficiency of short-term operations 3 basic layout types 1. Repetitive Processing: Product layouts- Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow Assembly lines/production lines- standardized layout arranged according to a fixed sequence of production tasks

Preventive maintenance- periodic inspection and replacement of worn out during parts, reduce probability of breakdowns during operations Advantages: High rate of output Low unit cost Labor specialization Low material handling cost High utilization of labor and equipment Established routing and scheduling Routing accounting and purchasing Disadvantages: High rate of output Low unit cost Labor specialization Low material handling cost High utilization of labor and equipment Established routing and scheduling Routing accounting and purchasing U-shaped Layouts -permits communication among workers because theyre clustered

2. Nonrepetitive Processing: Process Layouts -Layout that can handle varied processing requirements Advantages: Can handle a variety of processing requirements Not particularly vulnerable to equipment failures Equipment used is less costly Possible to use individual incentive plans Disadvantages: In-process inventory costs can be high Challenging routing and scheduling Equipment utilization rates are low Material handling slow and inefficient Complexities often reduce span of supervision Special attention for each product or customer Accounting and purchasing are more involved 3. Fixed-position layouts - Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed 4. Cellular Layout Cellular Production -Layout in which machines are grouped into a cell that can process items that have similar processing requirements

Group Technology -The grouping into part families of items with similar design or manufacturing characteristics