McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 7
Manufacturing Processes

7-3

Basic work flow structures

Project layout
Workcenter
Manufacturing cell
Assembly Line
Continuous process

7-4

Process Flow Structures

Job shop (ex. Copy center making a single

copy of a student term paper)
Batch shop (ex. Copy center making 10,000
copies of an ad piece for a business)
Assembly Line (ex. Automobile manufacturer)
Continuous Flow (ex. Petroleum
manufacturer)

7-5

Product-Process Matrix

7-6

Break-Even Analysis

A standard approach to choosing among

alternative processes or equipment
Model seeks to determine the point in
units produced (and sold) where we will
start making profit on the process or
equipment
Model seeks to determine the point in
units produced (and sold) where total
revenue and total cost are equal

7-7

Break-Even Analysis (Continued)

Break-even
Break-evenDemand=
Demand=
Purchase
Purchasecost
costof
ofprocess
processor
orequipment
equipment
Price
Priceper
perunit
unit --Cost
Costper
perunit
unit
or
or
Total
Totalfixed
fixedcosts
costsof
ofprocess
processor
orequipment
equipment
Unit
Unitprice
priceto
tocustomer
customer --Variable
Variablecosts
costsper
perunit
unit

This formula can be used to find any

of its components algebraically if
the other parameters are known

7-8

Break-Even Analysis (Continued)

Example:
Example: Suppose
Supposeyou
you want
want to
topurchase
purchase aanew
new
computer
computerthat
thatwill
willcost
cost $5,000.
$5,000. ItIt will
willbe
beused
usedto
to
process
processwritten
writtenorders
ordersfrom
fromcustomers
customerswho
whowill
willpay
pay
$25
$25each
each for
for the
the service.
service. The
Thecost
cost of
of labor,
labor,electricity
electricity
and
andthe
the form
formused
usedto
toplace
placethe
the order
order is
is$5
$5per
per
customer.
customer. How
How many
manycustomers
customerswill
willwe
weneed
need to
to serve
serve
to
topermit
permit the
thetotal
total revenue
revenueto
tobreak-even
break-evenwith
withour
our
costs?
costs?

Break-even
Break-even Demand:
Demand:
== Total
Total fixed
fixed costs
costs of
of process
process or
or equip.
equip.
Unit
Unit price
price to
to customer
customer Variable
Variable costs
costs
=5,000/(25-5)
=5,000/(25-5)
=250
=250 customers
customers

7-9

Manufacturing Process Flow Design

A process flow design can be defined as

a mapping of the specific processes that
raw materials, parts, and subassemblies
follow as they move through a plant

The most common tools to conduct a

process flow design include assembly
drawings, assembly charts, and operation
and route sheets

7-10

Example: Assembly Chart (Gozinto)

4
5
6
7

From
FromExhibit
Exhibit5.14
5.14

Lockring
Spacer, detent spring

SA-2

Rivets (2)

A-2

Spring-detent
A-5
Component/Assy Operation
Inspection

7-11

Example: Process Flow Chart

Material
Received
from
Supplier

No,
Continue

Inspect
Material for
Defects

Defects
found?

Yes

Return to
Supplier for
Credit

7-12

Question Bowl

What is the break-even in demand for

a new process that costs $25,000
to install, will generate a service
product that customers are willing
to pay $500 per unit for, and whose
labor and material costs for each
unit is $100?
a. 400 units
b. 250 units
c. 100 units
Answer: d. 62.5
d. 62.5 units
units (25,000/(500e. None of the above

100)=62.5)

7-13

Question Bowl

Which of the following is an

example of a Continuous Flow
a.
b.
c.
d.
e.

type of process flow structure?

Fast food
Grocery
Hospitals
Chemical company
None of the above

Answer: d. Chemical company

7-14

End of Chapter 7