Process Selection.pdf

Process Selection
Chapter 4
Types of Product Flows
• Batch flow
- Job Shop
- Batch flow (Somewhat standardized job shop)
• Line flow
- Assembly line (assembly industries)
- Continuous flow (process industries)
• Project flow
Classify the following types of processes as
line, batch or project.
• Doctor’s office
• Automatic car wash
• College curriculum
• Studying for an exam
• Electric utilities
Classification of Process by Type of Order
• Make to Stock (MTS)
• Make to Order (MTO)
• Assemble to Order (ATO)
Make to Stock
• Produce finish goods; customer buys from inventory
• Advantage: smooth production, faster service and lower
cost
• Disadvantage: inventory cost
• Key performance measures:
- Service level (% orders filled from inventory)
- Inventory turnover (sales/avg. inventory)
- Time it takes to fill backorders
- Inventory accuracy
- Time to replenish
- Others: shrinkage rate, capacity utilization
Make to Order
• Start production when customer places order
• Advantage: no finished goods inventory, high
flexibility
• Disadvantage: intermittent production, slower
delivery, higher costs
• Key performance measures
- speed of service
- inventory levels
- quality of product and service
Process Characteristics Matrix
Processing
plants
Buildings Speculative
homes
Project
Restaurant
Machine shop Machine shop Batch flow
Cafeteria
Auto assembly line Cannery Line flow
Make to Order/Assemble
to Order
Make to Stock
Factors Affecting Process Choice
• Market conditions
• Capital requirements
• Availability and cost of labor
• Chances new technology will make process
obsolete
Product Life Stages
• Low-volume low-standardization, one of a kind
• Multiple products, low volume
• Few major products, higher volume
• High-volume high-standardization commodity
product
Process Life Cycle Changes
• Jumbled flow (job shop)
• Disconnected line flow (batch)
• Connected line flow (assembly line)
• Continuous flow
PRODUCT-PROCESS MATRIX (Figure 4.4)
I
Low volume-low
standardization, one
of a kind
Commercial
Printer
Heavy
Equipment
Automobile
assembly
Sugar
Refinery
II
Multiple products,
low volume
III
Few major products
higher volume
III
High volume-high
standardization,
commodity products
PRODUCT STRUCTURE (Product Life Cycle)
P
R
O
C
E
S
S

S
T
R
U
C
T
U
R
E

(
P
r
o
c
e
s
s

L
i
f
e

C
y
c
l
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)
I
Jumbled flow
(job shop)
II
Disconnected
line flow
(batch)
III
Connected
line flow
(assembly
line)
IV
Continuous
flow
NONE
NONE
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.
Mass Customization
• 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.
Question
• Suppose that a firm is considering moving from a batch process to a
line process to better meet evolving market needs. What concerns
might the following functions have about this proposed change?
- Marketing
- Human services
- Accounting
- Information systems
Question
• A new business is considering starting up a new plant to
produce low-volume, standard products. They are
hoping that the business will grow and the products will
eventually become successful and sell high volumes.
a. How should the business configure its process so that
it can meet both current and future needs?
b. What are the financial and human resource
implications of your answer to part a?
Address for course homepage
• http://www.apec.umn.edu/faculty/veidman/4821.html