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1 Chapter 7 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) 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 4 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 5 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 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 7 8 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) 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) 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 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 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 13 14 End of Chapter 6