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    Production / Operations

    Management

    Production / Operations

    Management

    Edition 13

    By

    Dr. Prakash Mathure

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    Chapter 6Chapter 6Chapter 6Chapter 6

    Operations TechnologiesOperations Technologies

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    OverviewOverviewOverviewOverview

    IntroductionIntroduction

    Types of Manufacturing AutomationTypes of Manufacturing Automation

    Automated Production SystemsAutomated Production Systems

    Software Systems for AutomationSoftware Systems for Automation Automation in ServicesAutomation in Services

    Automation IssuesAutomation Issues

    Deciding Among Automation AlternativesDeciding Among Automation Alternatives WrapWrap--Up: What WorldUp: What World--Class Companies DoClass Companies Do

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    IntroductionIntroductionIntroductionIntroduction

    In the past, automation meant the replacement ofIn the past, automation meant the replacement of

    human effort with machine effort, to save labor costs.human effort with machine effort, to save labor costs.

    Today,Today, automationautomation means integrating a full range ofmeans integrating a full range of

    advanced information and engineering discoveriesadvanced information and engineering discoveriesinto operations processes for strategic purposes.into operations processes for strategic purposes.

    Today, automation is applied not only for labor costToday, automation is applied not only for labor cost

    savings, but also for:savings, but also for:

    Improved qualityImproved quality Faster production and delivery of products/servicesFaster production and delivery of products/services

    Increased flexibilityIncreased flexibility

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    Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation

    Machine AttachmentsMachine Attachments

    Inexpensive addInexpensive add--ons to machinesons to machines

    Represent oldest technology in automationRepresent oldest technology in automation

    Typically perform one or a few simple operationsTypically perform one or a few simple operations Examples:Examples:

    Strip feedersStrip feeders

    Quick centering and grasping devicesQuick centering and grasping devices

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    Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation

    Numerically Controlled (N/C) MachinesNumerically Controlled (N/C) Machines

    Have a control system that receives/readsHave a control system that receives/readsinstructions and translates them into machineinstructions and translates them into machineoperationsoperations

    N/C machines have evolved:N/C machines have evolved:

    CN/CCN/C computer numerically controlledcomputer numerically controlled

    DN/CDN/C direct numerically controlled (severaldirect numerically controlled (severalmachines controlled by a single computer)machines controlled by a single computer)

    Examples:Examples: Weaving machinesWeaving machines

    LathesLathes

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    Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation

    RobotsRobots

    HumanHuman--like machines performing production taskslike machines performing production tasks

    Brain of these machines is a microcomputerBrain of these machines is a microcomputer

    Have grippers (vacuum, magnetized, adhesive)Have grippers (vacuum, magnetized, adhesive) Have sensors (tactile, proximity, vision/optical)Have sensors (tactile, proximity, vision/optical)

    Can operate in environments hostile to humansCan operate in environments hostile to humans(heat, noise, dust, darkness, skin irritants, )(heat, noise, dust, darkness, skin irritants, )

    Perform precisely and repeatedly without fatiguePerform precisely and repeatedly without fatigue Weld, assemble,paint, inspect, transport, ..Weld, assemble,paint, inspect, transport, ..

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    Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation

    Automated Quality Control InspectionAutomated Quality Control Inspection

    Take physical dimensions of partsTake physical dimensions of parts

    Compare measurements to standardsCompare measurements to standards

    Determine if parts conform to specificationsDetermine if parts conform to specifications Also check performance (ex.Also check performance (ex. -- electronic circuits)electronic circuits)

    Making 100% inspection economically feasibleMaking 100% inspection economically feasible

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    Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation

    Automatic Identification Systems (AIS)Automatic Identification Systems (AIS)

    Sense and input data into computersSense and input data into computers

    Use bar codes, radio frequencies, magnetic stripes,Use bar codes, radio frequencies, magnetic stripes,optical character recognition, machine visionoptical character recognition, machine vision

    Data read from products, documents, parts, andData read from products, documents, parts, andcontainerscontainers

    Used in warehouses, factory floors, retailing,Used in warehouses, factory floors, retailing,wholesalingwholesaling

    ExampleExample scanner at grocery store checkoutscanner at grocery store checkout

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    Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation

    Automated Process ControlsAutomated Process Controls

    Use sensors to obtain measures of performanceUse sensors to obtain measures of performance

    Compare measures to standardsCompare measures to standards

    Might use expert system to determine if/whatMight use expert system to determine if/whatprocess adjustment is necessaryprocess adjustment is necessary

    If necessary, change settings of processIf necessary, change settings of process

    Long used in chemical processing, petroleumLong used in chemical processing, petroleum

    refining, paper productionrefining, paper production

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    Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems

    Automation technology becoming more sophisticatedAutomation technology becoming more sophisticated

    Focus has shifted away from individual machinesFocus has shifted away from individual machines

    More common are whole systems of automatedMore common are whole systems of automated

    machines linked together for broader purposesmachines linked together for broader purposes

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    Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems

    Automated Flow LinesAutomated Flow Lines

    InIn--line, automated processing machines linked byline, automated processing machines linked by

    automated material transferautomated material transfer

    Perform without need for human attendancePerform without need for human attendance Used to produce an entire componentUsed to produce an entire component

    Also calledAlso called fixed automationfixed automation oror hard automationhard automation

    Used when product demand is high and stableUsed when product demand is high and stable

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    Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems

    Automated Assembly SystemsAutomated Assembly Systems

    Automated assembly machines linked byAutomated assembly machines linked by

    automated material transferautomated material transfer

    Operations are component insertion and joiningOperations are component insertion and joining Produce major assemblies or complete productsProduce major assemblies or complete products

    Often use standard (lower cost) robotsOften use standard (lower cost) robots

    Product design appropriate for assembly byProduct design appropriate for assembly by

    humans is not fitting for automated assemblyhumans is not fitting for automated assembly

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    Redesigning Products for Automated AssemblyRedesigning Products for Automated AssemblyRedesigning Products for Automated AssemblyRedesigning Products for Automated Assembly

    Reduce the amount of assembly requiredReduce the amount of assembly required

    Reduce the number of fasteners requiredReduce the number of fasteners required

    Design components to be automatically delivered andDesign components to be automatically delivered andpositionedpositioned

    Design products for layered assembly and verticalDesign products for layered assembly and verticalinsertion of partsinsertion of parts

    Design parts so that they are selfDesign parts so that they are self--aligningaligning

    Design products into major modules for productionDesign products into major modules for production Increase component quality to avoid machine jamsIncrease component quality to avoid machine jams

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    Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems

    Flexible Manufacturing Systems (FMS)Flexible Manufacturing Systems (FMS)

    Kits of materials/parts for a product are loaded onKits of materials/parts for a product are loaded onthe materialsthe materials--handling systemhandling system

    Code is entered into computer identifying productCode is entered into computer identifying productand its location in the sequenceand its location in the sequence

    Each production machine (without a worker):Each production machine (without a worker):

    Receives settings/instructions from computerReceives settings/instructions from computer

    Automatically loads/unloads required toolsAutomatically loads/unloads required tools Carries out its processing instructionsCarries out its processing instructions

    Product automatically transferred to next machineProduct automatically transferred to next machine

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    Flexible Manufacturing System (FMS)Flexible Manufacturing System (FMS)Flexible Manufacturing System (FMS)Flexible Manufacturing System (FMS)

    Machine 1Machine 1

    ToolsTools

    X

    X

    Machine 2Machine 2

    ToolsTools

    X

    X

    Machine 3Machine 3

    ToolsTools

    X

    X

    ComputerComputer

    WorkerWorker

    X

    X

    X

    X

    X

    X

    X

    UnloadUnloadLoadLoad

    PalletPalletTransferTransfer

    SystemSystem

    PartsParts

    Pallet withPallet with

    workpieceworkpiece

    attachedattached

    WorkpieceWorkpiece

    in queuein queue

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    Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems

    Automated Storage & Retrieval Systems (ASRS)Automated Storage & Retrieval Systems (ASRS)

    Receive orders for materials from anywhere inReceive orders for materials from anywhere in

    operationsoperations

    Collect the materials from locations in warehouseCollect the materials from locations in warehouse Deliver the materials to workstations in operationsDeliver the materials to workstations in operations

    Three major elements of ASRS are:Three major elements of ASRS are:

    Computers and communication systemsComputers and communication systems

    Automated materials handling/delivery systemsAutomated materials handling/delivery systems

    Storage and retrieval systems in warehouseStorage and retrieval systems in warehouse

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    Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems

    Automated Storage & Retrieval Systems (ASRS)Automated Storage & Retrieval Systems (ASRS)

    Main benefits of ASRS are:Main benefits of ASRS are:

    Increased storage capacityIncreased storage capacity

    Increased system throughputIncreased system throughput Reduced labor costsReduced labor costs

    Improved product qualityImproved product quality

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    Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation

    Three complex computerThree complex computer--based systemsbased systems

    ComputerComputer--Aided Design and ComputerAided Design and Computer--AidedAided

    Manufacturing (CAD/CAM)Manufacturing (CAD/CAM)

    ComputerComputer--Integrated Manufacturing (CIM)Integrated Manufacturing (CIM) Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP)

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    Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation

    ComputerComputer--Aided Design and ComputerAided Design and Computer--AidedAidedManufacturing (CAD/CAM)Manufacturing (CAD/CAM)

    CAD/CAM is a merger of two systems, CAD andCAD/CAM is a merger of two systems, CAD and

    CAM (described next)CAM (described next)

    It is the automation of the transition from productIt is the automation of the transition from product

    design to manufacturingdesign to manufacturing

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    Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation

    ComputerComputer--Aided Design (CAD)Aided Design (CAD) Concerned with the automation of certain phasesConcerned with the automation of certain phases

    of product designof product design

    Use of computer in interactive engineeringUse of computer in interactive engineering

    drawing and storage of designsdrawing and storage of designs

    CAD systems are installed to:CAD systems are installed to:

    Increase designers productivityIncrease designers productivity

    Improve the quality of designsImprove the quality of designs

    Improve product standardizationImprove product standardization

    Improve design documentationImprove design documentation

    Create a manufacturing databaseCreate a manufacturing database

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    Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation

    ComputerComputer--Aided Manufacturing (CAM)Aided Manufacturing (CAM)

    CAM capability progressing slower than CADCAM capability progressing slower than CAD

    Concerned with automating the planning andConcerned with automating the planning and

    control of production:control of production: Plan productionPlan production

    Prepare product routingsPrepare product routings

    Generate N/C programsGenerate N/C programs

    Fix the settings of machineryFix the settings of machinery Prepare production schedulesPrepare production schedules

    Control the operationControl the operation

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    Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation

    ComputerComputer--Integrated Manufacturing (CIM)Integrated Manufacturing (CIM)

    All of the firms operations related to productionAll of the firms operations related to production

    are incorporated in an integrated computer systemare incorporated in an integrated computer system

    to assist, augment, or automate the operations.to assist, augment, or automate the operations.

    Covers the chain of events from sales order toCovers the chain of events from sales order to

    product shipmentproduct shipment

    Output of one activity becomes the input to theOutput of one activity becomes the input to the

    next activitynext activity

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    Computer Integrated Manufacturing (CIM)Computer Integrated Manufacturing (CIM)Computer Integrated Manufacturing (CIM)Computer Integrated Manufacturing (CIM)

    Incorporates all manufacturingIncorporates all manufacturing--related functionsrelated functions

    ProcessProcess

    ControlsControls

    MRP IIMRP II

    ASRSASRS

    CAD/CAMCAD/CAM

    AutomatedAutomated

    AssemblyAssemblyGTGT

    SystemsSystems

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    Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation

    Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP)

    Five leading ERP software companies are:Five leading ERP software companies are:

    SAP ( their R/3 software is top seller)SAP ( their R/3 software is top seller)

    OracleOracle J.D. EdwardsJ.D. Edwards

    PeopleSoftPeopleSoft

    BaanBaan Can take several years and $millions to implementCan take several years and $millions to implement

    (Chevron spent $160 million over five years)(Chevron spent $160 million over five years)

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    Automation in ServicesAutomation in ServicesAutomation in ServicesAutomation in Services

    ExampleExample

    AirlinesAirlines air traffic control, passenger reservationair traffic control, passenger reservation

    BanksBanks ATMs, computerized bank statementsATMs, computerized bank statements

    Gas StationsGas Stations automated payment (payautomated payment (pay--atat--thethe--pump)pump) Health CareHealth Care MRI system, AGVS for waste disposalMRI system, AGVS for waste disposal

    Grocery StoreGrocery Store selfself--service checkout stationsservice checkout stations

    Real EstateReal Estate web based houseweb based house--forfor--sale tour videosale tour video

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    Automation in ServicesAutomation in ServicesAutomation in ServicesAutomation in Services

    Trend developing toward moreTrend developing toward more--standardized servicesstandardized servicesand less customer contact.and less customer contact.

    Service standardization brings tradeService standardization brings trade--offs:offs:

    -- Service not customService not custom--designed for each customerdesigned for each customer + Price of service reduced, or at least contained+ Price of service reduced, or at least contained

    Banking industry is becoming increasingly automatedBanking industry is becoming increasingly automated

    Service firm can have a manual/automated mix:Service firm can have a manual/automated mix:

    ManualManual -- front room operationsfront room operations

    AutomatedAutomated -- back room operationsback room operations

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    Degree ofCustomer Contact in ServicesDegree ofCustomer Contact in Services

    and the Use of Automated Equipmentand the Use of Automated Equipment

    Degree ofCustomer Contact in ServicesDegree ofCustomer Contact in Services

    and the Use of Automated Equipmentand the Use of Automated Equipment

    Degree ofDegree ofCustomer ContactCustomer Contact

    CapitalCapitalIntensityIntensity

    HighHigh

    HighHigh

    LowLow

    LowLow

    Manual OperationsManual Operations

    Mechanized OperationsMechanized Operations

    AutomatedAutomatedOperationsOperations

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    Automation IssuesAutomation IssuesAutomation IssuesAutomation Issues

    Not all automation projects are successful.Not all automation projects are successful.

    Automation cannot make up for poor management.Automation cannot make up for poor management.

    Economic analysis cannot justify automation of someEconomic analysis cannot justify automation of some

    operations.operations. Not technically feasible to automate some operations.Not technically feasible to automate some operations.

    Automation projects may have to wait in small andAutomation projects may have to wait in small and

    startstart--up businesses.up businesses.

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    Automation QuestionsAutomation QuestionsAutomation QuestionsAutomation Questions

    What level of automation is appropriate?What level of automation is appropriate?

    How would automation affect the flexibility of anHow would automation affect the flexibility of an

    operation system?operation system?

    How can automation projects be justified?How can automation projects be justified? How should technological change be managed?How should technological change be managed?

    What are some of the consequences of implementingWhat are some of the consequences of implementing

    an automation project?an automation project?

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    Building Manufacturing FlexibilityBuilding Manufacturing FlexibilityBuilding Manufacturing FlexibilityBuilding Manufacturing Flexibility

    Manufacturing flexibility has become the cornerstoneManufacturing flexibility has become the cornerstoneof operations strategy in the 2000s.of operations strategy in the 2000s.

    The ability to improve/maintain market share becauseThe ability to improve/maintain market share because

    Customer orders can be delivered soon afterCustomer orders can be delivered soon afterreceipt of the orderreceipt of the order

    Production can quickly be shifted from product toProduction can quickly be shifted from product toproductproduct

    Production capacity can be increased rapidlyProduction capacity can be increased rapidly New products can be developed and introducedNew products can be developed and introduced

    into production quickly and inexpensivelyinto production quickly and inexpensively

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    Justifying Automation ProjectsJustifying Automation ProjectsJustifying Automation ProjectsJustifying Automation Projects

    Payback period, NPV, IRR, and other conventionalPayback period, NPV, IRR, and other conventionalapproaches alone are inadequate tools on which toapproaches alone are inadequate tools on which to

    base product/process design/redesign decisionsbase product/process design/redesign decisions

    Product/process technology must be seen as a longProduct/process technology must be seen as a long--

    term strategic choiceterm strategic choice

    Returns on investment include:Returns on investment include:

    Improved product/service qualityImproved product/service quality

    Faster order deliveryFaster order delivery Increased flexibilityIncreased flexibility

    Reduced production costReduced production cost

    Increased market shareIncreased market share

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    Managing Technological ChangeManaging Technological ChangeManaging Technological ChangeManaging Technological Change

    Have a master plan for automation.Have a master plan for automation.

    Recognize the risks in automating.Recognize the risks in automating.

    Establish a new production technology departmentEstablish a new production technology department

    Allow ample time for completion of automation.Allow ample time for completion of automation. Do not try to automate everything at once.Do not try to automate everything at once.

    People are the key to making automation successful.People are the key to making automation successful.

    Dont move too slowly in adopting new technology.Dont move too slowly in adopting new technology.

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    Worker Displacement and Training/ RetrainingWorker Displacement and Training/ RetrainingWorker Displacement and Training/ RetrainingWorker Displacement and Training/ Retraining

    One result of automation is the elimination of jobsOne result of automation is the elimination of jobs

    Some say that new jobs are created in engineering,Some say that new jobs are created in engineering,

    manufacturing, programming, selling, and servicingmanufacturing, programming, selling, and servicing

    the newthe new--technology productstechnology products

    Many firms realize they cannot afford NOT to trainMany firms realize they cannot afford NOT to train

    and retrain their current workersand retrain their current workers

    Firms are providing more training than ever beforeFirms are providing more training than ever before

    Still, US firms spend little on training compared to,Still, US firms spend little on training compared to,say, German firms (4% of payroll cost on training)say, German firms (4% of payroll cost on training)

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    Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives

    Economic factorsEconomic factors

    Effect on market shareEffect on market share

    Effect on product/service qualityEffect on product/service quality

    Effect on manufacturing flexibilityEffect on manufacturing flexibility Effect on labor relationsEffect on labor relations

    Amount of time required for implementationAmount of time required for implementation

    Effect of implementation on ongoing productionEffect of implementation on ongoing production

    Amount of capital requiredAmount of capital required

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    Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives

    Economic AnalysisEconomic Analysis

    Economic analysis will always be an important, ifEconomic analysis will always be an important, if

    not a predominant, factor in deciding amongnot a predominant, factor in deciding among

    alternativesalternatives

    Frequently used approaches are:Frequently used approaches are:

    BreakBreak--even analysiseven analysis

    Financial analysisFinancial analysis

    By using only economic analysis, other importantBy using only economic analysis, other importantfactors are ignoredfactors are ignored

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    Example: Valley HospitalExample: Valley HospitalExample: Valley HospitalExample: Valley Hospital

    Economic AnalysisEconomic Analysis

    Valley Hospital is planning to install a new linenValley Hospital is planning to install a new linen

    retrieval system. Two alternatives being consideredretrieval system. Two alternatives being considered

    are: a continuous vacuum (CV) system and a batchare: a continuous vacuum (CV) system and a batch

    robotic/chute (BR/C) system. The followingrobotic/chute (BR/C) system. The following

    estimates were prepared:estimates were prepared:

    CVCV BR/CBR/C

    Annual Fixed Costs ($000)Annual Fixed Costs ($000) $2,690$2,690 $975$975Average Variable Cost per Ton $1,660Average Variable Cost per Ton $1,660 $2,590$2,590

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    Example: Valley HospitalExample: Valley HospitalExample: Valley HospitalExample: Valley Hospital

    Economic AnalysisEconomic Analysis

    At a forecast annual operating level of2,000 tonsAt a forecast annual operating level of2,000 tons

    of linen, which alternative should be chosen basedof linen, which alternative should be chosen based

    only on total annual cost?only on total annual cost?

    TCTCCVCV = 2,690,000 + 1,660(2,000) = $6,010,000= 2,690,000 + 1,660(2,000) = $6,010,000

    TCTCBR/CBR/C = 975,000 + 2,590(2,000) = $6,155,000= 975,000 + 2,590(2,000) = $6,155,000

    The continuous vacuum (CV) alternative has a lowerThe continuous vacuum (CV) alternative has a lowertotal annual cost.total annual cost.

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    Example: Valley HospitalExample: Valley HospitalExample: Valley HospitalExample: Valley Hospital

    Economic AnalysisEconomic Analysis

    The annual volume of linen has to increase orThe annual volume of linen has to increase or

    decrease to what level in order for the BR/Cdecrease to what level in order for the BR/C

    alternative to be favored?alternative to be favored?

    TCTCCVCV = TC= TCBR/CBR/C2,690,000 + 1,660(Q) = 975,000 + 2,590(Q)2,690,000 + 1,660(Q) = 975,000 + 2,590(Q)

    830Q = 1,715,000830Q = 1,715,000

    Q = 1,844.1 tonsQ = 1,844.1 tons

    Annual volume must decrease to 1,844 tons or less.Annual volume must decrease to 1,844 tons or less.

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    Example: Security BankExample: Security BankExample: Security BankExample: Security Bank

    Economic AnalysisEconomic Analysis

    Security is considering the installation of an ATMSecurity is considering the installation of an ATM

    and has estimated the cost of the machine, effects onand has estimated the cost of the machine, effects on

    revenue, savings in taxes from depreciation, and laborrevenue, savings in taxes from depreciation, and labor

    savings.savings.

    The machine is estimated to have an initial cost ofThe machine is estimated to have an initial cost of

    $250,000 and an expected life of five years. The$250,000 and an expected life of five years. The

    afterafter--tax cash inflows for years 1tax cash inflows for years 1--5

    are estimated to5

    are estimated tobe: $87,500; $79,600; $75,300; $71,600; andbe: $87,500; $79,600; $75,300; $71,600; and

    $69,400. Compute the after$69,400. Compute the after--tax payback period.tax payback period.

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    Example: Security BankExample: Security BankExample: Security BankExample: Security Bank

    Economic AnalysisEconomic AnalysisCumulativeCumulative

    AfterAfter--TaxTax After After--TaxTaxYearYear Cash InflowCash Inflow Cash InflowCash Inflow

    11 $87,500$87,500 $ 87,500$ 87,50022 79,60079,600 167,100167,10033 75,30075,300 242,400242,40044 71,60071,600 314,000314,00055 69,40069,400 383,400383,400

    Payback period = 3 + (250,000Payback period = 3 + (250,000 242,400)/71,600242,400)/71,600= 3.106 years= 3.106 years

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    Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives

    Rating Scale ApproachRating Scale Approach

    Automation alternatives are rated using, say, a 5Automation alternatives are rated using, say, a 5--pointpoint

    scale on a variety of factors such as:scale on a variety of factors such as:

    Economic measuresEconomic measures

    Effect on market shareEffect on market share

    Effect on product qualityEffect on product quality

    Effect on manufacturing flexibilityEffect on manufacturing flexibility

    Effect on labor relationsEffect on labor relations

    Amount of time required for implementationAmount of time required for implementation

    Effect on ongoing productionEffect on ongoing production

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    Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives

    RelativeRelative--AggregateAggregate--Scores ApproachScores Approach

    Similar to Rating Scale Approach, but weightsSimilar to Rating Scale Approach, but weights

    are formally assigned to each factor which permitsare formally assigned to each factor which permits

    the direct calculation of an overall rating for eachthe direct calculation of an overall rating for each

    alternative.alternative.

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    Example: Brownell CleanersExample: Brownell CleanersExample: Brownell CleanersExample: Brownell Cleaners

    RelativeRelative--AggregateAggregate--Scores ApproachScores Approach

    An analyst at Brownell Cleaners is consideringAn analyst at Brownell Cleaners is considering

    two alternatives for a new garment conveyor system,two alternatives for a new garment conveyor system,

    GCS1 and GCS2.GCS1 and GCS2.

    He has interviewed several managers in the firmHe has interviewed several managers in the firm

    and conducted extensive analysis of the problem. Heand conducted extensive analysis of the problem. He

    has collected the information shown on the next slide.has collected the information shown on the next slide.

    Which alternative do you recommend, based onWhich alternative do you recommend, based onthe relativethe relative--aggregateaggregate--scores approach?scores approach?

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    Example: Brownell CleanersExample: Brownell CleanersExample: Brownell CleanersExample: Brownell Cleaners

    RelativeRelative--AggregateAggregate--Scores ApproachScores Approach

    FactorFactor

    Automation FactorsAutomation Factors WeightWeight GCS1GCS1 GCS2GCS2

    Economic factorsEconomic factors

    Annual savingsAnnual savings .30.30 $21,600$21,600 $26,700$26,700Other factorsOther factors ScoreScore ScoreScore

    Market shareMarket share .30.30 .700.700 .800.800

    Service qualityService quality .15.15 .600.600 .700.700

    Labor relationsLabor relations .15

    .15

    .5

    00.5

    00 .8

    00.8

    00Implementation time .10Implementation time .10 .700.700 .600.600

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    Example: Brownell CleanersExample: Brownell CleanersExample: Brownell CleanersExample: Brownell Cleaners

    RelativeRelative--AggregateAggregate--Scores ApproachScores Approach

    GCS1GCS1 GCS2GCS2

    FactorFactor Wgt.Wgt. Wgt.Wgt.

    Automation FactorsAutomation Factors WeightWeight ScoreScore ScoreScore ScoreScore ScoreScore

    Economic factorsEconomic factorsAnnual savingsAnnual savings .30 1.000 .300 .809 .243.30 1.000 .300 .809 .243

    Other factorsOther factors

    Market shareMarket share .30 .700 .210.30 .700 .210 .800 .240.800 .240

    Service qualityService quality .15 .600 .090.15 .600 .090 .700 .105.700 .105

    Labor relationsLabor relations .15 .500 .075.15 .500 .075 .800 .120.800 .120

    Implementation time .10Implementation time .10 .700 .070.700 .070 .600 .060.600 .060

    Total Aggregate ScoreTotal Aggregate Score .745.745 .768.768

    21,600/26,70021,600/26,700

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    WrapWrap--Up: WorldUp: World--Class PracticeClass PracticeWrapWrap--Up: WorldUp: World--Class PracticeClass Practice

    WorldWorld--Class companies utilize the latestClass companies utilize the latesttechnologies/practices. For example:technologies/practices. For example:

    Design products to be automationDesign products to be automation--friendlyfriendly

    Use CAD/CAM for designing productsUse CAD/CAM for designing products

    Convert fixed automation to flexible automationConvert fixed automation to flexible automation

    Move towards smaller batch sizesMove towards smaller batch sizes

    Plan for automationPlan for automation

    Build teams to develop automated systemsBuild teams to develop automated systems Justify automation based on multiple factorsJustify automation based on multiple factors

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    End ofChapter 6End ofChapter 6