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CHAPTER 7

Manufacturing Process
Selection and Design

Overview
Process Selection
Types of Processes
Process Flow Structures
Product-Process Matrix

Break-Even Analysis
Manufacturing Process Flow Design

Process Selection

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?

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

Job Shop
Job shop: A process structure suited for lowvolume 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

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

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

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High

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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Amount ($)

Cost-Volume Relationships (Total Cost)

To

l
a
t

=
t
s
o
c

VC

FC

)
C
V
(
t
s
co

le
b
ia
r
Va
Fixed cost (FC)

Q (Quantity in units)

Total cost (TC) = Fixed cost (FC) + Variable cost (VC)


= Fixed cost (FC) + Unit cost (v) X Quantity
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(Q)

Amount ($)

Revenue-Volume Relationships (Total Revenue)

r
l
ta
o
T

e
u
n
e
ev

Q (Quantity in units)

Total revenue = Revenue per unit (R) X Quantity (Q)


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Cost-Volume Relationships (BEP)

Amount ($)

e
u
fit
n
o
r
e
P
v
+
e
r
l
t
ta
s
o
o
c
T
l
a
Tot

s
Lo

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 *

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Example -- Multiple-Option Case (page 207)


500000

TC_buy

Minimum cost

TC_Lathe

400000

TC_Machine

TC_buy

300000

TC_Machin
e

200000

TC_Lathe

100000

0
0

300

600

900

1200

1500

1800

2100

2400

Demand < B Buy


B < Demand < A Semiautomatic Lathe
Demand >A 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

Product-process matrix

Process selection

Break-even point (BEP)

Types of processes
Process flow structures

One-option case
Multiple-option case

Job shop

Manufacturing process flow

Batch shop

design

Assembly line
Continuous flow

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