Manufacturing

Processes

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7–1
 Production Processes

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reserved.
• Production
processes are
used to make any
manufactured
item.
– Step 1 – Source
the parts needed
– Step 2 – Make the
product
– Step 3 – Deliver
the product

7–2
 Production Process

Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights
reserved.
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

• Lean manufacturing – a means of

achieving high levels of customer service
with minimal inventory investment
7–3
 Types of Firms

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reserved.
Make-to-Stock

• Serve customers from finished goods inventory

Assemble-to-Order

• Combine a number of preassembled modules to meet a

customer’s specifications

Make-to-Order

• Make the customer’s product from raw materials, parts, and

components

Engineer-to-Order

• Work with the customer to design and then make the product

7–4
 Make-to-Stock

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• Examples of products include the following:
– 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.
• Use lean manufacturing to achieve higher service
levels for a given inventory investment.
7–5
 Assemble-to-Order

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• A primary task is to define a customer’s order
in terms of alternative components because
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.

7–6
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Make-to-Order/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 preorder
parts.

7–7
How Production Processes

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are Organized
• Project: the product remains in a fixed location
– Manufacturing equipment is moved to the product.
• Workcenter (job shop): similar equipment or
functions are grouped together
• Manufacturing cell: a dedicated area where
products that are similar in processing requirements
are produced
• 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
7–8
 Strategies
Product–Process Matrix:
Framework Describing Layout

7–9

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 Production System

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reserved.
Design
Project Layout
• The product remains in a fixed location.
• A high degree of task ordering is common.
• A project layout may be developed by arranging materials
according to their assembly priority.

Workcenter
• Most common approach to developing this type of layout
is to arrange workcenters in a way that optimizes the
movement of material.
• Optimal placement often means placing workcenters with
large interdepartmental traffic adjacent to each other.
• Sometimes is referred to as a department and is focused
on a particular type of operation.

7–10
Production System

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reserved.
Design
Manufacturing Cell
• Formed by allocating dissimilar machines
to cells that are designed to work on
similar products (shape, processing, etc.)

Assembly Line and

Continuous Layout
• Designed for the special purpose of
building a product by going through a
series of progressive steps

7–11
 Break-Even Analysis

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• Defined as standard approach to choosing
among alternative processes or equipment.
• Model seeks to determine the point in units
produced where a company will start making
profit on the process.
• Model seeks to determine the point in units
produced where total revenue and total cost are
equal. Purchase cost of process or equipment
Breakeven Demand 
Price per unit - Cost per unit
or
Total fixed costs of process or equipment

Unit price to customer - Variable cost per unit

7–12
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reserved.
Manufacturing Process Flow Design

• Manufacturing process flow design –

a method to evaluate the specific
processes that material follow as they
move through the plant
• Focus should be on the identification of
activities that can be minimized or
eliminated
– Movement and storage
– The fewer the moves, delays, and storage,
the better the flow 7–13
 Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights
reserved.
The Charts
• Assembly drawing: an exploded view of the
product showing its component parts

• Assembly chart: defines how parts go together,

their order of assembly, and overall flow pattern

• Operation and route sheet: specifies

operations and process routing

• Process flowchart: denotes what happens to

the product as it progresses through the
production facility
7–14
 Sample Assembly Drawing

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 Sample Assembly Chart

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 Route Sheet
Sample Operation and

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7–17

reserved.
 e

art
Sampl

Flowch

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 Analysis
Manufacturing Process

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 Analysis
Manufacturing Process

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reserved.
 Example 7.2:

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Manufacturing Process
Analysis
• 15 workers, eight-hour shift

• Incentive pay of 30¢ per good part

• Can hire 15 more workers for second shift

if needed

• All but molding from outside vender

7–21
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reserved.
Example 7.2: Molding
• 11 Machines
– One usually down
– One operator per machine
• 25 parts per hour
• Paid 20¢ per part
• Overtime is 30¢ per part
• Employment is flexible
– Currently 6 employees
– 4 more available

7–22
 Example 7.2:

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Remaining Costs
• Raw materials are 10¢ per part

• Electricity is 2¢ per part

• Purchased parts cost 30¢ per component

• Other weekly expenses

– Rent is $100
– Other employees receive $1,000
– Accounting depreciation is $50
7–23
 Example 7.2:

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Questions to Answer
• Determine the capacity of the process. Are
the capacities balanced?
• If the molding process were to use 10
machines instead of 6, what would be the
capacity of the entire process?
• If the company went to a second shift, what
would be the new capacity?
• Determine the cost per unit output when
the capacity is 6,000 per week or 10,000
per week. 7–24
 Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights
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Example 7.2: Capacity of Entire
Process

• Molding Capacity
6 x 25 x 8 x 5 = 6,000

• Assembly Capacity
150 x 8 x 5 = 6,000

• The capacities are balanced.

7–25
 Example 7.2: Increasing

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Molding to 10 Machines
• Molding Capacity
10 x 25 x 8 x 5 = 10,000

• Assembly capacity has not changed

from 6,000.

• The capacities are no longer

balanced.

7–26
 Example 7.2: Increasing

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Assembly Capacity
• Molding Capacity
10 x 25 x 8 x 5 = 10,000

• Assembly Capacity
150 x 16 x 5 = 12,000

• New capacity is 10,000.

7–27
 Example 7.2: Cost for
6,000 Parts per Week

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 Example 7.2: Cost for
10,000 Parts per Week

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 Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights
reserved.
Mantra of the day
Start where you are. Use what you
have. Do what you can- Arthur Ashe

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