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Process selection refers to the strategic decisions of selecting the kind of production process to have in a manufacturing plant. The process flow in an organization refers to how a factory organizes material flow using one or more of the process technologies including the job shop, batch shop, assembly line, and continuous flows. The process chosen depends on the customization of the product as well as the volume required in the market. | Chapter 6 Manufacturing and Process Selection Design Types of Processes Conversion (ex. Iron to steel) Fabrication (ex. Cloth to clothes) Assembly (ex. Parts to components) Testing (ex. For quality of products) 11 Process Flow Structures Job shop (ex. Copy center making a single copy of a student term paper) Batch shop (ex. Copy center making 10,000 copies of an ad piece for a business) Assembly Line (ex. Automobile manufacturer) Continuous Flow (ex. Petroleum manufacturer) 12 IV. Continuous Flow III. Assembly Line II. Batch I. Job Shop Low Volume, One of a Kind Multiple Products, Low Volume Few Major Products, Higher Volume High Volume, High Standard- ization Commercial Printer French Restaurant Heavy Equipment Automobile Assembly Burger King Sugar Refinery Flexibility (High) Unit Cost (High) Flexibility (Low) Unit Cost (Low) Exhibit 6.10 These are the major stages of product and process life cycles 13 Break-Even Analysis A standard approach to choosing among alternative processes or | Chapter 6 Manufacturing and Process Selection Design Types of Processes Conversion (ex. Iron to steel) Fabrication (ex. Cloth to clothes) Assembly (ex. Parts to components) Testing (ex. For quality of products) 11 Process Flow Structures Job shop (ex. Copy center making a single copy of a student term paper) Batch shop (ex. Copy center making 10,000 copies of an ad piece for a business) Assembly Line (ex. Automobile manufacturer) Continuous Flow (ex. Petroleum manufacturer) 12 IV. Continuous Flow III. Assembly Line II. Batch I. Job Shop Low Volume, One of a Kind Multiple Products, Low Volume Few Major Products, Higher Volume High Volume, High Standard- ization Commercial Printer French Restaurant Heavy Equipment Automobile Assembly Burger King Sugar Refinery Flexibility (High) Unit Cost (High) Flexibility (Low) Unit Cost (Low) Exhibit 6.10 These are the major stages of product and process life cycles 13 Break-Even Analysis A standard approach to choosing among alternative processes or equipment Model seeks to determine the point in units produced (and sold) where we will start making profit on the process or equipment Model seeks to determine the point in units produced (and sold) where total revenue and total cost are equal 14 Break-Even Analysis (Continued) This formula can be used to find any of its components algebraically if the other parameters are known Break-even Demand= Purchase cost of process or equipment Price per unit - Cost per unit or Total fixed costs of process or equipment Unit price to customer - Variable costs per unit 14 Break-Even Analysis (Continued) Example: Suppose you want to purchase a new computer that will cost $5,000. It will be used to process written orders from customers who will pay $25 each for the service. The cost of labor, electricity and the form used to place the order is $5 per customer. How many customers will we need to serve to permit the total revenue to break-even with our costs? Break-even Demand: = Total fixed costs .
