Process Selection

a set of transformations of input elements into products with

specific properties, characterized by transformation parameters:
process

Types

Continuous Process

 The set-up time for starting such processes is usually very

long, and once started they continue for a long duration.

 Products are highly standardized with almost no variety.

Continuous
For e.g., Urea, chemicals, steel, sugar , plastic etc. Semi-co
Semi- Continuous Process
(rep
Process
 They produce high volume of output and the products
produced have little variety. assemb
For e.g., Automobile, electronic items etc

 These processes require highly specialized machines, semi-

skilled workers, and result in low cost per unit.

 Intermittent Process

 These processes stop at regular intervals of time because

the product requires processing on a variety of machines.

 And are of two types:

 Batch Process :

 This Process is adopted when batches or lot of items are to

be produced using the same set of machines in the same
sequence.

 For eg., bakery , a batch of salted biscuits may be made in

oven.

Job shop :

 This process can handle a larger variety of products than the

batch process.

 Products may be so different from each other that their

processing requirements may be varied processes, on
different machines, in different sequences and with different
processing times.

For eg., in restaurant every customer gives a different order of

dishes, which are prepared by different cooks using different
utensils, ovens etc.

Projects
  Projects are processes that handle very complex and unique
sets of activities or tasks, which have to be completed in a
limited span of time.

For eg., R&D projects, construction of plants, building complexes,

implementation of specialized software in an organization, etc.

T he Pro d uct/ p ro c

Photocopier
m anufacturers Autom obile
and retailers
service providers
Autom obile
Product-Process Mix R esta
m anufacturers
 One of the components of marketing mix is product-process
mix, which helps the manufacturer in understanding how and
why they should change their production process.
  Changes in products, market requirement and competition
will cause change in equipments, process, procedures and
human resources.

 If process changes are not carried out to accommodate

process life cycles, products and processes will become
incompatible which will result in competitive disadvantage.

Deciding among processing alternatives

Factors on which type of production process for a product line to

be adopted are:

 Batch Size and Product variety

Type of process design depends on the number of product

designs and the size of the batches to be produced in a production
system.

Single product dedicated organization will have low production

cost per unit and the system is rather very inflexible as compared
to organization where the number of product design increase and
the batch size reduces but flexibility increases.

So, we can also conclude that Product lifecycles and process life
cycles are interdependent and each effects the other.

The production processes affect production costs, quality and

volume ,which in turn affects the volume of products to be sold.
Similarly, the volume of products that are sold affects the type of
production processes that can be justified.

Capital requirements for Process design

 Amount of capital required for the production system

depends on the type of production processing organization.
  It is best suited for the product focused and dedicated
systems whereas less suitable for product focused batch
systems and cellular manufacturing systems.

Economic Analysis of Production Processes

As fixed and variable costs tend to differ from one form of

production process to another. Hence economic analysis is used
for comparing alternative processing plans.

 Cost function of processing Alternatives: Amount of capital

required for each type of process design is different which
depends on fixed and variable cost incurred.

 Operating Leverage

It is the measure of relationship between a firm’s annual cost

and its annual sales.

Cost can also be defined as,

Total Cost = Fixed cost + Variable cost

So, Operating leverage can be done by comparing Fixed cost and

Total Cost. Or, Fixed cost

 So it depend on sales: if the unit variable cost is constant,

then as sales increase, operating leverage (as measured by
fixed costs to total costs or variable costs) decreases and
vice versa.

 Break even Analysis

It is based that profits arise when there is excess of total

revenue over total costs.

 Financial Analysis

It involves methods as payback periods, net present value,

internal rate of return, profitability index and like.

Considerations while selecting a production process

  All specifications for the product are met while maintaining a
desirable quality standard.

 The cost of production is feasible to produce the product.

 The process is sustainable; it is dependable to produce for

the sustained duration.

 All government and environmental regulations are followed.

Hence, the process has to be such so the product remains

competitive in pricing and does offers the expected qualities too.

Variety and Volume

Production process has to take into consideration the variety

and volume of the product

Lead time

An effective management shall be such which formulates and

chooses the most effective production process which is capable to
produce the product in required quantity n quality at an acceptable
cost within the stipulated time frame.

 Efficiency

 Flexibility and scalability

 Reusability