1. Chapter 7 Process Design

2. Introduction Designing the process to meet product specifications.
Process planning includes:
Selection of operations
Selection of facilities
Selection of sequences.

3. Selection of Operations
Based on the design characteristics of product
Engineering drawings give specifications for:
Each part
Quantity required per assembly
Bill of materials (cost)
Used to develop routing slips - (list of operations required by each assembly to manufacturing each part)

4. Selection of Facilities
Selection of equipment depends list of required operations and anticipated levels of demand.
Specialized products require design of new equipments

5. Selection of Sequence
Logical flow of materials through productive process.
Depends on x’tics of product and expected demand.
Two types of material flow:
Continuous system a.k.a. line production
Intermittent system a.k.a workshop or job production

6. Physical Facilities Layout
After deciding appropriate location of plant, layout is key.
Plant layout - concerned with appropriate internal set up of an enterprise.
Dynamic issue – dependent on prodn. experience (continuous mfg) and tech improvements that require immediate changes in prodn. designs and processes.

7. Plant Layout – Defined
Morris E. Hurley - Dev’t of physical r’ship among building, equipment and prodn. operations to achieve efficiency in manufacturing process. Sprigal and Lansburg - Technique of locating machines, processes and plant services within factory to achieve greatest possible quantity and quality at least possible cost. George R. Terry - Arrangement of machines, work areas and service areas within a factory.

8. Plant Layout Involves the determination or arrangement of: Machines
Material handling devices
Service facilities
Offices
All requisite physical facilities for effective operations.

9. Plant Layout Complex task – integrates expertise in: Engineering
Architecture
Project management
Economics
Business administration
I.T etc.
To ensure smooth operations without hitches

10. Plant Layout
Instances requiring critical consideration of plant layout issues
Building a new plant : fitting new plant within existing premises.
Changes in Demand: when increases call for the installation of additional plants
Human Factors: when workers complain of discomfort hence ineffectiveness caused by present layout. E.g. heat, noise, vibration, accidents, health issues.

11. Plant Layout
Reduction in costs: as an attempt to reduce operational costs instanced upon changes in: raw materials; handling, devices, methods etc.
Introduction of new products or changes in design of existing products
Introduction of new production processes

12. Objectives of Plant Layout
Primary objectives:
To maximize value creation in operations through optimizing arrangement of: machines, manpower, materials, support service facilities, etc.
To satisfy the needs of workers, managers and to meet statutory standard requirements.

13. Objectives of Plant Layout
General objectives:
Make room for flexibility: Enables easy alteration of machines and operations as equipments are compartmentalized.
Efficient utilization of labour force: Layout decisions enhance specialisation and division of labour.
Minimizing material handling: minimizes movement hence time and costs

14. Objectives of Plant Layout
General objectives (con’t)
Utilization of available space: Layout plans and maximizes the use of available space
Morale booster: Creates a favourable environment that boosts employee morale.
Minimizing interference from machine: interferences such as noise, dust, vibration are minimized, to enable free flow of work

15. Basic Types of Layouts
Two basic types of layouts relevant to two major production systems.
Intermittent Production / Process / Functional Layout
Processes or functions determine arrangement of: materials, machines, manpower and support services facilities.
Appropriate for producing varieties of unrelated products. Used in job order industries like: ship building, printing, carpentry workshops etc.

16. Basic Types of Layouts
Continuous Production Layout/ Product or Line Layout
Sequence of operations determines location of materials, labour, equipment and supporting services facilities.
Appropriate for industries where work started continues till completed. i.e. raw materials entered and only finished products received . Different production lines maintained for different products. E.g. Petroleum refinery, paint manufacturing, mass production

17. Layout – Factors to Consider
Materials: Consider nature and size of materials and ensure easy flow
Employees: Consider nature of operations and ensure a safe and comfortable working environment for them.
Machines: Consider the types of machines to be used and how they must be arranged to enhance effective and efficient performance.

18. Material Handling/Management
Very crucial in OM. Depending on industry and company type, could account for 25% to 75% of total operations cost.
Risks of Inefficient Material Handling
Attraction of penalty payment: Delays in loading or offloading shipped materials may breach legal and contractual terms and attract (demurrage).
Wasting of machine running hours: Insufficient material supplies, improper timing or placement of materials will result in inefficiencies.

19. Material Handling/Management
Risks of Inefficient Material Handling (cont’d)
Inventory accumulation: Slow movement of materials risk hiked inventory and associated costs.
Poor product quality: Poor material handling system can cause damages, thus lower quality.
Customer dissatisfaction: Poor material handling can cause damages, delays, etc.
Employee safety and survival: These may be at risk

20. Useful Principles for Mat. Handling
Materials must be moved over the shortest possible distance
The terminal (waiting) time should be kept as short as possible
Payloads should be carried both ways whenever possible
Avoid partial load as much as possible

21. Useful Principles for Mat. Handling
Choose mechanical over manual handling whenever feasible.
Apply inexpensive methods in moving scraps.
A.M.A.P use gravity to move materials. It’s the cheapest energy source.
A.M.A.P move materials in straight lines.
Materials should be clearly marked or labeled.

22. Materials Handling Devices
Conveyors
Cranes
Pipelines
Trucks
Others

23. Make or Buy Decisions
OM managers’ 1st step in process planning - choose to make or buy (parts or entire products for assembly and onward sale). Both qualitative and quantitative factors considered include:
Availability of capacity
Expertise
Quality considerations
The nature of demand
Cost and other non financial factors

24. Make or Buy Decisions
Major factor: ‘differential’ costs of ‘make’ and ‘buy’ alternatives & use of idle capacity if any.
MAKE - variable costs: direct mat. direct lab. var. overheads and avoidable fix costs.
BUY - purchase price and incidental costs e.g. ordering costs, shipment etc.

25. Example: Armstrong Ltd.
Armstrong Ltd – standard cost of manufacturing a component. GHC Direct materials 40 Direct wages 48 Variable production overhead 16 Depreciation of plant and machinery 12 Other fixed cost 20 Total cost 136 Other fixed costs – 60% - unavoidable sup. Salaries; 40% - avoidable. Mighty man Ltd offers for GHS118 if 600 units are ordered. Make or Buy?

26. Armstrong Ltd: Solution
Comments:
Depreciation – Irrelevant as cost is already sunk and depn. Will be done anyway.
Supervisor’s salary which is unavoidable is irrelevant to decision making.

27. Self Assessment Questions
1.Why is the facility/plant location decision important to an organization?
2.Explain the term “make or buy decision”
3.Explain four risks of inefficient material handling
4.Explain the following terms:
Intermittent production layout
Continuous production layout

28. Self Assessment Questions
5.State and explain any four instances that may compel management to critically consider issues concerning the layout of its physical facilities.
6.Plant layout is the placement or the arrangement of machines to facilitate the production process. An organization may adopt different methods of plant layout.  

29. Self Assessment Questions
Explain the following methods of plant
layout:
Fixed layout
Product layout
Identify and explain four (4) advantages of product layout.