Manufacturing and Process

Selection Design

Chapter 6

Types of Processes

Conversion

forming raw material (gold into jewelry)

Assembly

http://www.nucor.com/
products/locations/

Fabrication

iron ore into steel

fastening parts together to create product (bicycle)

Testing

for quality of products

LTL

UTL
2

Process Flow Structures

Job shop (or project)

Copy center making a single
copy of a student term paper

Batch (workcenter or cell)

Copy center making 10,000 copies
of an ad piece
for a business

Assembly Line

Continuous (Flow) Process

3

ProductProcess
Matrix
I.
Job Shop
(or Project)
II.
Batch
(W/C or Cell)

Low
Volume
One of a
Kind

Few
High
Multiple Major Volume,
Products, Products, High
Low
Higher StandardVolume Volume
ization

Air Force 1
Commercial Printer
French Restaurant

Delta 777 order/Southwest 757 order

Heavy Equipment
Coffee Shop

III.
Assembly
Line
IV.
Continuous
Flow

Flexibility (High)
Poor Strategy
(Fixed costs and Unit Cost (High)
cost changing to
other products
These are
are high)

Honda Trail-Bike
Automobile Assembly
Burger King

Poor Strategy
(High variable
costs)

Miller 12oz
Sugar Refinery

the major
stages of
product
and
process
life cycles

Flexibility (Low)
Unit Cost (Low)

Source: Modified from Robert Hayes and Steven Wheelwright, Restoring Our Competitive Edge: Competing through Manufacturing
(New York: John Wiley & Sons, 1984). p. 209.
4

Choice of Variable vs. Fixed Costs

Amount ($)

Cost-Volume Relationships

Fixed cost (FC)

0

Q (volume in units)
5

Amount ($)

Cost-Volume Relationships

Q (volume in units)
6

Amount ($)

Cost-Volume Relationships

BEP units
Q (volume in units)
7

Break-Even Problem with Step Fixed Costs

3 machines
2 machines
1 machine
Quantity
Step fixed costs and variable costs.
8

Break-Even Problem with Step Fixed Costs

BEP

TC

BEP2
TC
3
TC
2
1

Quantity
Multiple break-even points
9

Breakeven Analysis
Breakeven quantity =

Fixed Costs
Price - Variable Costs

10

Breakeven example
Thomas Manufacturing intends to increase
capacity by overcoming a bottleneck operation
through the addition of new equipment. Two
vendors have presented proposals as follows:
Proposal
A
B

Fixed Costs
$ 50,000
$ 70,000

Variable Costs
$12
$10

The revenue for each product is $20

What is the breakeven quantity for each
proposal?
11

Breakeven Solution
FC
BEQ =

P- VC

Feasibility?

Proposal A
BEQ =

$ 50,000

= 6250

$20 - 12
Proposal B
BEQ =

$ 70,000
$20 - 10

= 7000
12

Breakeven Analysis
In the previous example, at what capacity would
both plans incur the same cost?
Solution -consider total cost

Total cost = Fixed cost + Variable Cost (Q)

[A] $50,000 + $12Q = [B] $70,000 + $10 Q
Q = 10,000
[A] 50k + 12(9999)=169,988 or 50k + 12 (10001)=170,012 vs
[B] 70k + 10(9999)=169,990 or 70k + 10 (10001)=170,010

13

Process Flow Design

Defined

A process flow design can be defined as a

mapping/diagramming/documenting of the
specific processes that raw materials, parts,
and subassemblies follow as they move
through a plant .
[i.e. product/service as processed /delivered ]

The most common tools to conduct a process

flow design include assembly drawings,
assembly charts, and operation and route
sheets.
14

Process Flow Design

Assembly drawing

(see Exhibit 6.5)

an exploded view of the product

Assembly chart

(Gozinto) (Exhibit 6.6)

defines how parts go together

Operation

and route sheet (Exhibit 6.7)

specifies operations and routing

Process flowchart

(see Exhibit 6.8)

uses standard symbols to show what happens to

product as it flows through production process
15

Example: Assembly Drawing

16

Example: Assembly Chart

(Gozinto)
33
32
31
30

Wing-nut
Flat washer
Spring washer

SA-2

A-2

Guard halo
A-3
Component/Assembly Operation
Inspection
17

Example: Process Flow

Chart
Material
Received
from
Supplier

No,
Continue

Inspect
Material for
Defects

Defects
found?

Yes

Return to
Supplier for
Credit

18

Operations Technology

Hardware Systems

Software Systems

Computer Integrated Manufacturing

Technologies in Services

Benefits

Risks

19

Choices of Fixed Costs [vs Variable]

Hardware Systems
Numerically controlled
Machining
Industrial

centers

robots

Automated material
Flexible

(NC) machines

handling systems

manufacturing systems (FMS)

Scope economies

20

Software Systems
Computer-aided-design (CAD)
Automated manufacturing planning

and

control systems (MP & CS)

Enterprise Resource

Systems (ERP)

21

Computer Integrated
Manufacturing
Product

and process design

Planning

The

and control

manufacturing process

22

Benefits from Adopting New

Technologies
Labor

costs

Material

costs

Inventory

costs

Transportation or
Quality

distribution costs

costs

23

Other Benefits.
Increased product

variety

Improved product

features and quality

Shorter

cycle times

24

Risks
Technological risks
Organizational

risks

Environmental risks
Market

risks

25

Global Product Design and

Manufacturing
Joint

Ventures

Strategic Suppliers

Global

Product Design Strategy

26

Virtual Factory
Shift from centralized production to ....
.. an integrated network of capabilities
local, national, global

27

The best engineered part is

no part
NCR

has achieved or overcome the

following:
less

components
less suppliers
less assembly time
eliminating screws and fasteners
faster speed of concept to market
lower costs

28

Product Development in
Japan - Benefits
Employment throughout

the economy
easy to make design changes
many small innovative companies

29

Product Development in
Japan - weaknesses
Very

complex structure of companies

difficult

to understand
difficult to control
a

breakdown in a small company could

immobilize a large company like
Matsushita.

30