1. OPSM 301 Operations Management Class 3: Process selection Koç University Zeynep Aksin zaksin@ku.edu.tr

2. Process Selection Video

3. Back to Shouldice wrap-up from last class

4. Classification of Processes by process architecture  Project  Job Shop  Batch  Line flow  Continuous Flow Job Shop Process-focused Flow Shop Product-focused

5. Process Flexibility Jumbled Flow. Process segments loosely linked. Disconnected Line Flow/Jumbled Flow but a dominant flow exists. JOB SHOP (Commercial Printer, Architecture firm) BATCH (Heavy Equipment, Auto Repari) LINE FLOWS (Auto Assembly, Car lubrication shop) CONTINUOUS FLOW (Oil Refinery) Product Variety Low Low Standardization One of a kind Low Volume Many Products Few Major Products High volume High Standardization Commodity Products Connected Line Flow (assembly line) Continuous, automated, rigid line flow. Process segments tightly linked. Opportunity Costs Out-of-pocket Costs High Low High Matching Process Choice with Strategy: Product-Process Matrix

6. Organization of Production Processes  Project: the product remains in a fixed location –Manufacturing equipment is moved to the product  Job shop (Workcenter): similar equipment or functions are grouped together  Assembly line: work processes are arranged according to the progressive steps by which the product is made  Continuous process: assembly line, only the flow is continuous such as with liquids

7. Project Layout One of a kind products are produced

8. The Job Shop Process  Process Layout  One of a Kind Build –(To Customer Order)  Absence of Rigid Flow Pattern  Usually High Product Mix

9. The Job shop similar equipment or functions are grouped together High variety, low volume production High variety, low volume production Routing matrix based upon flow of parts

10. Process Layout Lathe#1 Lathe#2 Lathe#3 Lathe#4 Product #1735B: Start of Production Drill Press #1 Drill Press #2 Paint Machine Packaging Machine #1 Packaging Machine #2 Finish Production

11. 11 Job-Shop Process Examples (Also called process focused) Bank © 1995 Corel Corp. Machine Shop © 1995 Corel Corp. Hospital © 1995 Corel Corp.

12. Process Focused Strategy - Pros & Cons  Advantages –Greater product flexibility –More general purpose equipment –Lower initial capital investment  Disadvantages –High variable costs –More highly trained personnel –More difficult production planning & control –Low equipment utilization (5% to 25%)

13. The Flow Line Process  Product Layout  Discrete Parts  Rigid Flow Pattern  Product Mix of Standard Products

14. Product Layout Product #1735B Lathe Start Production Drill Press #2 Paint Machine Drill Press #1 Packaging Machine #2 Finish Production

15. Product-Focused Strategy Pros & Cons  Advantages –Lower variable cost per unit –Lower but more specialized labor skills –Easier production planning and control –Higher equipment utilization (70% to 90%)  Disadvantages –Lower product flexibility –More specialized equipment –Usually higher capital investment

16. Positioning Inventory in the Supply Chain SUPPLIER CLIENT Make-to-Stock Assemble-to-Order Make-to-Order Engineer-to-Order Raw MaterialComponentsSemifinishedFinished Forecast Order

17. Production Processes Terms  Lead time: the time needed to respond to a customer order  Customer order decoupling point: where inventory is positioned to allow entities in the supply chain to operate independently

18. Types of Firms  Make-to-stock firms: Firms that serve customers from finished goods inventory  Assemble-to-order firms: firms that combine a number of preassembled modules to meet a customer’s specifications  Make-to-order firms: that make the customer’s product from raw materials, parts, and components  Engineer-to-order firm: firm that will work with the customer to design and then make the product

19. Make to Stock  Examples of products –Televisions –Clothing –Packaged food products  Essential issue in satisfying customers is to balance the level of inventory against the level of customer service –Easy with unlimited inventory but inventory costs money –Trade-off between the costs of inventory and level of customer service must be made

20. Assemble-to-Order  A primary task is to define a customer’s order in terms of alternative components since these are carried in inventory –An example is the way Dell Computer makes their desktop computers  One capability required is a design that enables as much flexibility as possible in combining components  There are significant advantages from moving the customer order decoupling point from finished goods to components

21. Make-to-Order and Engineer-to-Order  Boeing’s process for making commercial aircraft is an example  Customer order decoupling point could be in either raw materials at the manufacturing site or the supplier inventory  Depending on how similar the products are it might not even be possible to pre- order parts

22. Assignment 1 from Universal Pulp and Paper case-individual assignment  Read the Universal Pulp and Paper (UPP) case from the course pack (available at the photocopy center)  What are the main products of UPP?  Identify the four product attributes for each product type. Explain each attribute with facts from the case  Which process type is appropriate for each product type? Support your argument with facts from the case and process attributes you need for each product type.