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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.
Doctors 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
e
)
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

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