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What To Remember

The document discusses pegging which allows tracing requirements backward from components to identify parent items that generated those requirements. It also discusses combination layouts that combine advantages of process and product layouts by arranging machinery in a process layout but grouping the processes in a sequence to manufacture different types and sizes of products. The document also discusses process design as a continuous activity and how much money should be spent on improvements based on marginal benefits exceeding marginal costs. Small improvements in continuous processes can yield large cost savings.

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bhatti19
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8 views

What To Remember

The document discusses pegging which allows tracing requirements backward from components to identify parent items that generated those requirements. It also discusses combination layouts that combine advantages of process and product layouts by arranging machinery in a process layout but grouping the processes in a sequence to manufacture different types and sizes of products. The document also discusses process design as a continuous activity and how much money should be spent on improvements based on marginal benefits exceeding marginal costs. Small improvements in continuous processes can yield large cost savings.

Uploaded by

bhatti19
Copyright
© © All Rights Reserved
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Pegging refers to the ability to work backward from component requirements to id

entify
the parent item, or items that generated those requirements. For example, suppos
e an automobile
manufacturer learned that some of the brake materials (already used in productio
n) were defective.
The where used pegging file would allow production analysts to trace requirements
upward in the
product structure tree to determine what end-item models contained the defective
components.A combination of process and product layouts combines the advantages
of both types of layouts.
A combination layout is possible where an item is being made in different types
and sizes. Here
machinery is arranged in a process layout but the process grouping is then arran
ged in a sequence
to manufacture various types and sizes of products. It is to be noted that the s
equence of
operations remains same with the variety of products and sizes. Figure 4.7 shows
a combination
type of layout for manufacturing different sized gears.
Process design, then, should be a continuous activity not one which is precipitate
d only when
new products or services are introduced. Since it is continuous, the question of
how much money to
spend in its pursuit is of utmost importance. The amount which should be spend d
epends, of course,
upon the benefits accured. At the limit, effort should continue as long as the m
arginal benefits from
the improvement are greater than the marginal costs. Again we use the word margi
nal, since it is
only those costs that change which are relevant. Fixed costs and some semivariab
le costs, to the
extent that they are not affected by the redesign, are irrelevant.
For firms at the continuous-process end of the spectrum, considerable effort can
be channeled
in this direction. Small improvements made in the process are magnified when the
volume going
through each stage is large. Cost savings in the automotive industry, for exampl
e, are measured in
fractions of a cent per unit. In the service industries, on the other hand, savi
ngs are usually measured
in dollars, but the volume through each station is, of course, much less.
If redesign requires investment, it seems reasonable to subject the investment t
o the review of
the capital-budgeting process. Therefore, this investment, along with all the ot
her which the firm is
considering, must face the final selection process in which only the most profit
able survive.

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