Manufacturing Process Selection and Design Chapter 6 Manufacturing Process Selection and Design

OBJECTIVES Process Selection Break-Even Analysis Types of processes Process flow structures Product-process matrix Break-Even Analysis Manufacturing Process Flow Design 2

Types of Processes Conversion (e.g., Iron ore to steel) Converts natural resources to raw materials Provides inputs to others Fabrication (e.g., Changes sheet metal to car fenders) Changes raw materials into a specific form Assembly (e.g., Assembles the fender into cars) Assembles final products Testing (e.g., For quality of products) 3

Process Flow Structures Job shop (e.g., Copy center making a single copy of a student term paper) Small batches of a large number of different products Batch shop (e.g., Copy center making 10,000 copies of an ad piece for a business) Standardized job shop, products follow the same flow pattern Assembly Line (e.g., Automobile manufacturer) Discrete parts manufactured on a line, following a sequence Continuous Flow (e.g., Petroleum manufacturer) Production of undifferentiated materials (foods, chemicals) Often runs 24 hours/day 4

Product-Process Matrix IV. Continuous Flow III. Assembly Line II. Batch I. Job Shop Low Volume, One of a Kind Multiple Products, Volume Few Major Higher High Standard- ization Commercial Printer French Restaurant Heavy Equipment Automobile Burger King Sugar Refinery Flexibility (High) Unit Cost (High) Flexibility (Low) Unit Cost (Low) Exhibit 6.2 These are the major stages of product and process life cycles 5

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 14

Break-Even Analysis Visually presents alternative profit/losses As a function of units produced/sold Choice depends on anticipated demand Most suitable when alternative entails large fixed costs Variable costs are proportional to number of units produced

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 14

Break-Even Analysis TR $ PROFIT BEP VC TC FC LOSS Q* Quantity

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 equipment Unit price to customer – Variable costs = 5,000/(25-5) = 250 customers 14

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, and operation and route sheets 15

Process Flow Design Assembly drawing Assembly chart Exploded view of the product Shows its component parts Assembly chart Uses information in assembly drawing Defines how parts go together Shows their order of assembly Operation and route sheet Specifies operations and process routing Shows types of equipment/tools requirements

Example: Assembly Chart (Gozinto) From Exhibit 6.6 A-2 SA-2 4 5 6 7 Lockring Spacer, detent spring Rivets (2) Spring-detent A-5 Component/Assy Operation Inspection 16

Example: Process Flow Chart Material Received from Supplier No, Continue… Inspect Material for Defects Defects found? Yes Return to Supplier for Credit 4

Global Product Design and Manufacturing Strategies Joint Ventures Two companies form a third independent company For example, GM/Toyota Facilitates globalization Strategic Suppliers Suppliers with operations matching parent company’s foreign operation Provide materials and manufacturing know-how Global Product Design Strategy Develop standard modules common to all units sold globally (Honda Accord chassis) 17