Transcript Slide 1
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Chapter 7
Manufacturing
Processes
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Types of Processes
Conversion (ex. Iron to steel)
Fabrication (ex. Cloth to clothes)
Assembly (ex. Parts to
components)
Testing (ex. For quality of
products)
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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)
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
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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
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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
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
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Exhibit
6.10
I.
Job
Shop
II.
Batch
III.
Assembly
Line
IV.
Continuous
Flow
Low
Volume,
One of a
Kind
Few
High
Multiple
Major
Volume,
Products, Products,
High
Low
Higher StandardVolume Volume
ization
Flexibility (High)
Unit Cost (High)
Commercial
Printer
French
Restaurant
Heavy
Equipment
These are
the major
stages of
product
and
process
life cycles
Automobile
Assembly
Burger King
Sugar
Refinery
Flexibility (Low)
Unit Cost (Low)
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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
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Break-Even Analysis (Continued)
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
This formula can be used to find any of its
components algebraically if the other
parameters are known
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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
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Crossover Charts
Fixed cost
$
Variable cost
$
Process A
$
Process B
Process C
$
400,000
300,000
200,000
V1(2,857) V2 (6,666)
Fixed cost –
Process A
Volume
Fixed cost –
Process B
Fixed cost –
Process C
Production Process Flow
Diagram
Customer
Customer sales
representative
take order
Purchasing
(order inks, paper,
other supplies)
Vendors
Accounting
Receiving
Warehousing
(ink, paper, etc.)
Prepress Department
(Prepare printing plates
and negatives)
Printing Department
Gluing, binding,
stapling, labeling
Collating
Department
Information flow
Material flow
Polywrap
Department
Shipping
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End of Chapter 6