Copyright 2007 Thomson South-Western Chapter 4 Financial Decisions and Planning.
Chapter 4 & Chapter 5 Process Planning And Technology Decisions.
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Transcript of Chapter 4 & Chapter 5 Process Planning And Technology Decisions.
Chapter 4 & Chapter 5
Process Planning And
Technology Decisions
Process Strategy
Overall approach to producing goods & services
Defines:capital intensity
process flexibility
vertical integration
customer involvement
Types of Processes
Projects Batch production Mass production Continuous production
Project Batch(Job shop) Mass Continuous
Product Unique Made to order Made to stock Commodity
Customer Singly Few individuals Mass market Mass market
Demand Infrequent Fluctuates Stable Very stable
Volume Very low Low to med High Very high
Variety Infinite Many, high Low Very low
System Long-term Intermittent Flow lines Process industry
Equipment Varied General-purp. Special-purp. Highly automated
Type of work Contracts Fabrication Assembly Mix, treat, refine
Skills Experts Wide range Limited range Equipment
craftspeople monitors
Advantages Custom work Flexibility Efficiency Highly efficient
quality sped, low cost large capacity
Disadv. Non-repeating Costly, slow Capital invest. Difficult to change
Example Construction Printing, bakery Autos, TV’s Paint, oil, food
Process Planning
Make-or-buy decisions Process selection Specific equipment selection Process plans Process analysis
Process Planning: Process Selection With
Break-Even Analysis
Total cost = total fixed cost + total variable costTC = cf vcv
Total revenue = volume x priceTR =vp
Total profit = total revenue - total costZ = TR- TC
= vp - (cf vcv)cf = fixed costv = volumecv = variable cost per unitp =price per unit
Solving For Break-Even Volume
TR TC
vp vc
vp vc
v p c
vp c
v
v
v
v
( )
( )
c
c
c
c
f
f
f
f
Break-Even Example
v cf
p cv
200010 5
400 rafts
Fixed cost = cf =$2,000Variable cost = cv = $5 per raftPrice = $10 per raft
Break-Even Graph
$0
$1,000
$2,000
$3,000
$4,000
$5,000
400
Units
Dollars
Choosing Between Two Processes
$3v = $8,000
v = 2,667 rafts
$2,000 + $5v = $10,000 + $2v
Process A Process B
Below 2,667 choose AAbove 2,667 choose B
Graphical Solution To Process Selection
$0
$5,000
$10,000
$15,000
$20,000
$25,000
0 1000 2000 3000 4000
Units
Do
llars
A B
A
B
Point Of Indifference
Volume where cost of A = cost of B Rule for choosing process:
Above point of indifference choose process with lowest variable cost
Below point of indifference choose process with lowest fixed cost
Process Planning: Make-Or-Buy Decisions
1. Cost
2. Capacity
3. Quality
4. Speed
5. Reliability
6. Expertise
Process Planning: Specific Equipment Selection
1. Purchase cost
2. Operating cost
3. Annual savings
4. Revenue enhancement
5. Replacement analysis
6. Risk and uncertainty
7. Piecemeal analysis
Process Planning: Process Plans - documents used
Engineering drawings (Blueprints) Bill of material Assembly diagram Assembly chart / product structure diagram Operations process chart Routing sheet
Bill Of Material(unstructured)
No.Part No. Part name
1 51292 Outlet end
2 51284 Handle
3 52043 Switch
4 51576 Electric cord
5 51265 Rear housing
6 51268 Motor mounting plate
Product Structure Diagram
Upholstery tool
Crevice tool Hand-vac
Dusting tool Package
Packaged Hand-vac
Forward housing
assembly
Screw & lock washer
assembly
Rear housing
assembly
Operations Process Chart
Part name Table leg
Part no. 2410
Usage Table
Assembly No. 437
Oper No. Description Dept. Machine Time Tools
10 Saw to rough length 041
20 Plane to size 043
30 Saw to finished length 041
40 Measure dimensions 051
50 Sand 052
Process Flowchart Symbols
Operations
Inspection
Transportation
Delay
Storage
D
Process Flowchart
Ste
p
Ope
ratio
nT
rans
port
Insp
ect
Del
ayS
tora
ge
Dis
tanc
e(f
eet)
Tim
e(m
in)Description
ofprocess
1
2
3
4
5
6
7
8
9
10
11
Unload apples from truck
Move to inspection station
Weigh, inspect, sort
Move to storage
Wait until needed
Move to peeler
Apples peeled and cored
Soak in water until needed
Place in conveyor
Move to mixing area
Weigh, inspect, sort
TotalPage 1 0f 3 480
30
5
20
15
360
30
20
190 ft
20 ft
20 ft
50 ft
100 ft
Date: 9-30-95
Analyst: TLR
Location: Graves Mountain
Process: Apple Sauce
Process Planning: Process Analysis
Continuous improvementbasic tool is process flowchart
Reengineeringbasic tool is process map
Process ReengineeringCustomer
requirements data
Strategic directive
Goals & specifications for process performance
High-level process map
Detailed process map
Pilot study of new design
Full-scale implementation
Benchmark data
Design principles
Key performance
measures
Baseline analysis
Innovative ideas
Model validation
High-level Process Map
Input OutputPerformance
Goal
Subprocess Subprocess
Subprocess Subprocess
Design Principles For Reengineering
1. Organize around outcomes, not tasks
2. Capture information once, at the source
3. Centralize resources with info. tech.
4. Link parallel sub-processes
5. Design to do work right the first time
6. Remove complexity
7. Identify information & technology levers
Information Technology in Manufacturing Processes
Management information system (MIS)move large amounts of data
Decision support system (DSS)add decision making support
Expert systemrecommend decision based on expert knowledge
Decision Support System
Information:reportsmodel resultswhat if? analysis
Computersystem:dataprocessing
Data
Quantitativetechniques
Personnel
Accounting
Production
Marketing
Distribution
Other areas
Decisions
Management Information System
What -if? analysis
ManagementDecision Support System
Artificial Intelligence
Neural networksemulate interconnections in brain
Genetic algorithmsbased on adaptive capabilities in nature
Fuzzy logicsimulate human ability to deal with ambiguity
Advanced Communications
Electronic data interchange (EDI) Internet Wireless communications Teleconferencing & telecommuting Bar coding Virtual reality
Manufacturing Technology
Numerically controlled (NC) machinescontrolled by punched tape
Computer numerical controlled (CNC)controlled by attached computer
Direct numerical control (DNC)several NC machines controlled by single
computer
Automated Material Handling
Conveyors Automated guided vehicle (AGV) Automated storage & retrieval system
(ASRS)
Flexible Manufacturing Systems (FMS)
Programmable machines Controlled by common computer network Combines flexibility with efficiency Reduces setup & queue times
Flexible Manufacturing System
PartsFinishedgoods
Load Unload
Computercontrolroom
Terminal
Machine Machine
Tools
Conveyor
Pallet
Robotics
Programmable manipulators Follow specified path Better than humans with respect to
hostile environments
long hours
consistency
Robot Parts
Controllerhardware, software, power source
Manipulatorrobot arm
End-effector“hand”
Computer Integrated Manufacturing (CIM)
Integration of design, manufacture & delivery via computer technology
CAD - uses software to create & modify designs
CAM - uses programmable automation in manufacturing CAE - links functional design to CAD form design CAPP - creates processing instructions for CAM
GT- classifies designs to benefit from prior experience
Components Of CIM
CIM
Productdesign
Manufacture
Processplanning
Systemsmanagement
RoboticsFMSNC/CNC/
DNCCells
and centersAutomatedinspection
AGV,ASRS
JIT/kanban
DSS/ES/AI
LAN, TOP,satellites
TQM
Bar codes,EDI
MRP
GTCAECADIGES,PDES,DMIS
DFM
Cellularmanufacturing
MAP,STEP
CAD/CAM
CAPP
Adoption Of Technology
Technology Readiness Need well-designed products & efficient processes
Technology Design Know what to automate
Technology Selection Choose the right level
Technology Integration Have a strategy for incremental automation
Reminder: Process Analysis Measurement
Review process performance metrics -- see pages 109 through 110