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Chap004

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Information about Chap004
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Published on August 13, 2012

Author: aneeshattri5

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PROCESS SELECTION: PROCESS SELECTION Chapter 4 INTRODUCTION to Operation Management 4e, Schroeder Copyright © 2008 by The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Chapter Outline: 4- 2 Chapter Outline Product-Flow Characteristics Classification by Type of Customer Order Process Selection Decisions Product-Process Strategy Focused Operations Mass-customization Cross Functional Decision Making Product-Flow Characteristics: 4- 3 Product-Flow Characteristics Types of Product Flow Continuous process Assembly/job shop Line Batch Project Product-Flow Characteristics Continuous Process: 4- 4 Product-Flow Characteristics Continuous Process Process industries (beer, paper, oil, etc .) Highly standardized and automated High volumes of production Commodity products Low cost is the ‘order winner’ Flexibility limited Product-Flow Characteristics Assembly Line Flow: 4- 5 Product-Flow Characteristics Assembly Line Flow Linear sequence of operations Discrete products (autos, appliances, etc .) High-volume, standardized products Inflexibility in product and volume Very efficient Large capital investment Assembly Line Flow (metal bracket, see fig. 4.1): 4- 6 Assembly Line Flow (metal bracket, see fig. 4.1) paint drill bend Task or work station Product flow cut Product-Flow Characteristics Batch Flow: 4- 7 Product-Flow Characteristics Batch Flow Production of batches or lots Batches flow from one work center to another Low volume products Many different types of products Flow is jumbled and intermittent Flexible labor and equipment Batch Flow (three metal brackets, see fig. 4.2): 4- 8 Batch Flow (three metal brackets, see fig. 4.2) Cut Paint Task or work station Product flows Bend Drill Batch A Batch B Batch C Classification by Type of Customer Order: 4- 9 Classification by Type of Customer Order Make to Stock (MTS) Make to Order (MTO) Assemble to Order (ATO) Make to Stock (MTS): 4- 10 Make to Stock (MTS) Produce finished goods; customer buys from inventory Advantage: smooth production Disadvantage: inventory Key performance measures (next slide) MTS Performance Measures: 4- 11 MTS Performance Measures Service level (orders filled when requested) Inventory turnover (sales/avg. inventory) Back order fill rate Inventory accuracy Time to replenish Others, such as shrinkage rate Make to Order (MTO): 4- 12 Make to Order (MTO) Start production when customer orders. Advantage: no finished goods inventory Disadvantage: intermittent production Key performance measures Lead time Orders completed on time (or late) Quality measures Assemble to Order (ATO): 4- 13 Assemble to Order (ATO) Make parts and subassemblies; finish when customer places order. Advantages: less inventory, faster service Disadvantage: some WIP inventory Key performance measures speed of service inventory levels quality of product and service MTS and MTO Comparison: 4- 14 MTS and MTO Comparison PowerPoint Presentation: 4- 15 Make-to-Stock (Figure 4-3) customer Forecast orders Production Finished Goods Inventory Product Customer Order Product PowerPoint Presentation: 4- 16 Make-to-Order (Figure 4-3) customer Production Product Customer Order PowerPoint Presentation: 4- 17 Assemble-to-Order (Figure 4-3) customer Forecast orders Production of Subassemblies Inventory of Subassemblies Customer order Product Assembly of the Order Subassembly PowerPoint Presentation: 4- 18 Customization Point (Figure 4-4) Distribution Assembly Fabrication Supplier MTO MTO ATO MTS ∇ ------------------ ∇ ∇ ∇ Process Selection Decisions: 4- 19 Process Selection Decisions Process characteristics matrix Factors affecting process choice Process Characteristics Matrix (Table 4.3): 4- 20 Process Characteristics Matrix (Table 4.3) Factors Affecting Process Choice: 4- 21 Factors Affecting Process Choice Market conditions and competition Capital requirements Labor supply and cost State of technology Product-Process Strategy: 4- 22 Product-Process Strategy Strategy must consider not only the product or service, but also how to produce it. As many industries move through their product life cycles, they also move through a process life cycle. e.g. the traditional bread bakery vs. the modern automated bakery. Product Life Cycle Stages: 4- 23 Product Life Cycle Stages 1. Unique, one of a kind 2. Low volume, low standardization 3. Low volume, multiple products 4. Higher volume, few major products 5. High volume, high standardization, commodity Process Life Cycle Stages: 4- 24 Process Life Cycle Stages 1. Project 2. Job shop 3. Batch 4. Assembly line 5. Continuous PowerPoint Presentation: 4- 25 PRODUCT-PROCESS MATRIX (Figure 4.5) Low volume, low standardization Printing Heavy Equipment Auto assembly Sugar Refinery Low volume, Multiple products Higher volume few major products High volume, high standardization, commodity Job Shop Batch Assembly line Continuous NONE NONE Unique, one of a kind product Project Building Focused Operations: 4- 26 Focused Operations Company may have products or services with different volumes and levels of standardization. Mixing them in the same operation can cause significant problems. Focus involves separating different products or services in the same facility into PWPs. Types of Focus: 4- 27 Types of Focus Product focus Process type Technology Volume of sales Make-to-stock and make-to-order New products and mature products Mass Customization: 4- 28 Mass Customization A strategy to provide products in lot sizes of one in high volume. Possible because of flexible manufacturing. Based on economies of scope instead of economies of scale, i.e. a high variety of products from a single process . Forms of Mass Customization: 4- 29 Forms of Mass Customization Modular production & ATO (e.g. Dell) Fast changeover (e.g. Motorola) Postponement of options (e.g. Hewlett-Packard) Cross-Functional Decision Making or, who has a stake in process choice?: 4- 30 Cross-Functional Decision Making or, who has a stake in process choice? Marketing wants fast response to customer demand Finance must find the funds to configure the process HR must provide the properly skilled workers IT must serve different data requirements Accounting must be flexible in setting performance measures Summary: 4- 31 Summary Product-Flow Characteristics Classification by Type of Customer Order Process Selection Decisions Product-Process Strategy Focused Operations Mass-customization Cross Functional Decision Making PowerPoint Presentation: 4- 32 End of Chapter Four

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