0% found this document useful (0 votes)
19 views

Chap 004

chapter
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
19 views

Chap 004

chapter
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 34

INTRODUCTION

to
Operations Management
Chapter 4, Process Selection

5e, Schroeder
McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Outline
Product-Flow Characteristics
Approaches to Order Fulfillment
Product-Process Strategy
Focused Operations
Mass Customization
Environmental Concerns
Cross-Functional Decision Making
4-2

Product-Flow Characteristics
Types of Product Flow

Continuous process
Assembly line
Batch
Job shop
Project

4-3

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

4-4

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

4-5

Assembly Line Flow


(metal bracket, see Fig. 4.1)

cut

drill

bend

paint

Task or work station


Product flow

4-6

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

4-7

Batch Flow
(three metal brackets, see Fig. 4.2)
Bend
Paint

Cut

Batch A
Batch B
Batch C

Drill
Task or work station

Product flows

4-8

Product-Flow Characteristics
Job Shop
Production of small batches or lots
Orders are customized for particular customer
orders
Low volume products
Many different types of products
Flow is jumbled and intermittent
Flexible labor and equipment
4-9

Product-Flow Characteristics
Project
Production of customized single products
Labor and materials brought to site
Planning, scheduling challenges
Unique (one of a kind) products
Little automation
Flexible labor and equipment

4-10

Approaches to Order Fulfillment


Make-to-Stock (MTS)
Make-to-Order (MTO)
Assemble-to-Order (ATO)

4-11

Make-to-Stock (MTS)
Produce finished goods; customer buys
from inventory
Advantage: smooth production
Disadvantage: inventory
Key performance measures (next slide)

4-12

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

4-13

Make-to-Order (MTO)
Start production after customer orders
Advantage: no finished goods inventory
Disadvantage: intermittent production
Key performance measures
Lead time
Orders completed on time (or late)
Quality measures

4-14

Assemble-to-Order (ATO)
Produce 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

4-15

MTS and MTO Comparison


Characteristics

Make-to-Stock

Make-to-Order

Product

Producer-specified
Low variety
Inexpensive

Customer-specified
High variety
Expensive

Objectives

Balance inventory,
capacity, and service

Manage delivery lead


times and capacity

Main operations
problems

Forecasting
Planning production
Control of invenntory

Delivery promises
Delivery time

4-16

Make-to-Stock (Figure 4.3)


Forecast orders

customer

Production
Customer Order
Product

Product
Finished Goods
Inventory

4-17

Make-to-Order (Figure 4.3)

customer
Customer Order
Product
Production

4-18

Assemble-to-Order

(Figure

4.3)
Forecast orders

customer

Production of
Subassemblies
Customer order

Product
Assembly of
the Order

Subassembly
Inventory
of Subassemblies

4-19

Order Penetration Point


(Figure 4.4)
MTO

MTO

ATO

------------------
Supplier

Fabrication

MTS

Assembly

Distribution

4-20

Process Selection Decisions


Process characteristics matrix

MTS vs. MTO/ATO


Continuous/discrete, batch & project

Factors affecting process choice

Market conditions
Capital requirements
Availability and cost of labor
State of technology
4-21

Process Characteristics Matrix

(Table 4.3)

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.

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

4-24

Process Life Cycle Stages


1. Project
2. Job shop
3. Batch
4. Assembly line
5. Continuous

4-25

PRODUCT-PROCESS MATRIX (Figure


4.5)

Low volume,
Unique, one of Low volume,
Higher volume
Multiple
a kind
low
few major
products
product
standardization
products

Project

Building

NONE

Job Shop

Printing

Heavy
Equipment

Batch

Auto
assembly

Assembly
line

Continuous

High volume, high


standardization,
commodity

NONE

Sugar
Refinery

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.

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

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.

4-29

Forms of Mass Customization


Modular production & ATO (e.g. Dell)
Fast changeover (e.g. Motorola)
Postponement of options (e.g. HewlettPackard)

4-30

Environmental Concerns
Technologies for Pollution Prevention
Technologies for Pollution Control
Infrastructure Systems and Practices
Other concerns
Recycling outputs
Recycling inputs
Remanufacturing
4-31

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

4-32

Summary
Product-Flow Characteristics
Approaches to Order Fulfillment
Product-Process Strategy
Focused Operations
Mass Customization
Environmental Concerns
Cross-Functional Decision Making

4-33

End of Chapter Four

4-34

You might also like