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Process Analysis and Strategy: Instructor: Mujtaba Khalid

This document outlines a lecture on process analysis and strategy. It discusses what a process is, reasons for process decisions, types of production processes including project, batch, mass and continuous processes. It also covers break-even analysis for process selection and using net present value to select equipment. The document gives examples of how technology is used in various service industries and emphasizes the importance of considering ethics and developing environmentally friendly processes.

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Amir Zahid
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© Attribution Non-Commercial (BY-NC)
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Download as PPTX, PDF, TXT or read online on Scribd
38 views

Process Analysis and Strategy: Instructor: Mujtaba Khalid

This document outlines a lecture on process analysis and strategy. It discusses what a process is, reasons for process decisions, types of production processes including project, batch, mass and continuous processes. It also covers break-even analysis for process selection and using net present value to select equipment. The document gives examples of how technology is used in various service industries and emphasizes the importance of considering ethics and developing environmentally friendly processes.

Uploaded by

Amir Zahid
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Process Analysis and Strategy

INSTRUCTOR : MUJTABA KHALID

Lecture Outline
What is a Process? Reasons for Process decisions Types of Production Processes

Process Selection through Break-Even Analysis


Selection of Equipment through NPV Technology in Services Examples Ethics and Environmentally Friendly Processes

What is a Process?
A logical set of steps A number of inputs are given A number of resources are utilized A number of constraints are adhered to Goods and/or services are produced as output(s) Constraints

Inputs

Process

Output(s)

Resources

Process Decisions
A number of important decision have to be made in order to produce quality products in cost effective, efficient, and flexible manner
Capital intensity

mix of capital (i.e., equipment, automation) and labor resources used in production process ease with which resources can be adjusted in response to changes in demand, technology, products or services, and resource availability

Process flexibility

Vertical integration

extent to which firm will control inputs and produce outputs of each stage of production process
role of customer in production process

Customer involvement

Reasons for Process Decisions


A new or substantially modified product or service is being offered Quality must be improved Competitive priorities have changed Demand for a product or service is changing Current performance is inadequate The cost or availability of inputs has changed Competitors are gaining by using a new process; or New technologies are available

Types of Production Processes

Projects one-of-a-kind production of a product to customer order Batch production systems process many different jobs through the system in groups or batches

Mass production produces large volumes of a standard product for a mass market
Continuous production used for very-high volume commodity products

Relationship Between Volume and Standardization

Types of Processes

PROJECT

BATCH

MASS

CONT.

Type of product Type of customer

Unique One-at-atime

Made-toorder
(customized)

Made-tostock
(standardized )

Commodity

Few individual customers Fluctuates

Mass market

Mass market

Product demand

Infrequent

Stable

Very stable

Types of Processes (cont.)


PROJECT BATCH MASS CONT.

Demand volume Number of different products

Very low Low to medium Infinite variety

High

Very high

Many, varied Few

Very few

Production Long-term system project

Continuous, Discrete, job Repetitive, process shops assembly lines industries

Types of Processes (cont.)


PROJECT BATCH MASS CONT.

Equipment

Varied

Generalpurpose

Specialpurpose

Highly automated Mixing, treating, refining

Primary Specialized type of work contracts Worker skills Experts, craftspersons

Fabrication

Assembly

Wide range of Limited range Equipment skills of skills monitors

Types of Processes (cont.)


PROJECT BATCH MASS
Efficiency, speed, low cost Capital investment; Inflexible Automobiles, televisions, computers, fast food

CONT.
Highly efficient, large capacity, ease of control Difficult to change, far-reaching errors, limited variety

Advantages

Custom work, latest technology

Flexibility, quality

Disadvantages

Non-repetitive, small customer base, expensive Construction, shipbuilding, spacecraft

Costly, slow, difficult to manage Machine shops, print shops, bakeries, education

Examples

Paint, chemicals, foodstuffs

Break Even Analysis


Cost

Fixed costs - constant regardless of the number of units produced Variable costs - vary with the volume of units produced Revenue - price at which an item is sold Total revenue - price times volume sold Profit - difference between total revenue and total cost

Total cost = fixed cost + total variable cost Total revenue = volume x price Profit = total revenue - total cost

TC = cf + vcv TR = vp Z = TR TC = vp - (cf + vcv)

Break Even Analysis

Break Even Analysis

Break Even Analysis

Process Selection
Process A Process B

$2,000 + $5v = $10,000 + $2v $3v = $8,000 v = 2,667 unit

Below 2,667 choose A Above 2,667 choose B

Net Present Value


NPV = The difference between an investments present value of all future inflows and its cost

An investment should be accepted if the NPV is positive, and rejected otherwise Example

Technology in Services
Service Industry Financial Services Hotels Wholesale/retail trade Example Debit cards, electronic funds transfer, ATMs, Internet stock trading Electronic check-in/check-out, electronic key/lock system ATM-like kiosks, point-of-sale (POS) terminals, ecommerce, electronic communication between store and supplier, bar coded data Automatic toll booths, satellite-directed navigation systems Online patient-monitoring, online medical information systems, robotic surgery Ticketless travel, scheduling, Internet purchases

Transportation Health care Airlines

Ethics and Environmentally Friendly Processes


Reduce the negative impact on the environment

Encourage recycling
Efficient use of resources Reduction of waste by-products Use less harmful ingredients Use less energy

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