Unit 2 Manufacturing Operations

Sections:
1. Manufacturing Industries and Products
2. Manufacturing Operations
3. Production Facilities
4. Product/Production Relationships
5. Lean Production
6. Manufacturing Metrics
Manufacturing Lead Time
Rate of Production
Production Capacity
Work in Progress
Design Times
Utilisation/Availability
Industrial Automation
Architecture

Enterprise
Level 4 Control
Business Information
(Business Office)
Level 3 Plant Control

Level 2 Cell Control

Level 1 Machine Controller

Industrial Automation
(Shop Floor)
Level 0 Device Control
(Sensors/Actuators)

Raw Part or
Material Transformation Process Product

Scrap or
Power Waste
Tools
Machines
Labour
 Manufacturing Lead Time

Raw Work in Finished

Materials Progress Goods
Machine
Group

Transport Stores Inspect

Operating Times
Non-operating Times
 Manufacturing Lead Time
30% 70%
Cutting Positioning, Loading

e.g.
Set-up Time

5% 95%
On Machine Moving and Waiting

Time
1.5% of total time - adds value
 Manufacturing Lead Time

n1 n2 n3

Time

Operation Time
Non-operation Time

To = Operation Time per Machine

Tno = Non-operation Time per Machine
nm = Number of Machines

MLT = nm ( To + Tno )
 Manufacturing Lead Time

n1 n2 n3

Pallet of six parts

Q = Number of parts

MLT = nm ( QTo + Tno )

 Manufacturing Lead Time

n1 n2 n3

Pallet of six parts

Tsu = Set-up Time

MLT = nm ( QTo + Tno + Tsu )

 Manufacturing Lead Time

Order #1

Order #2

Process Plan (Routing)

 Manufacturing Lead Time

In practice

Q, Tsu, To, Tno and nm will vary considerably

for different order quantities, process routing to find average or aggregate
values before carrying out analysis. e.g.:

nq

Q i
Q i1
nQ
 Operation Times

Operation time has three elements:

Tm = Actual Machining Time

Th = Workpiece Handling Time
Tth = Tool Handling Time

To = Tm + Th + Tth
 Rate of Production

Total Batch Time per Machine

Tsu + QTo

Average Production Time per Part

Tp = Tsu + QTo
Q

Rate of Production

Rp = 1/Tp
 Lead Times

nq

MLT (Tsui QT oi Tnoi )

i1
MLT (Tsu QTo Tno)nm
Job Shop (Q -> 1)
MLT (Tsu To Tno )nm

Mass Production (Tsu + Tno -> 0)

MLT nmQT o
MLT nm (TransferTime Longest(To ))
 Production Capacity

Production Capacity, Pc

Pc = WSwHRp

W = number of work centres

Sw = Number of shifts per week
H = Hours per shift
Rp = Rate of production (units per hour)

If process plan requires Nm machines:

Pc = WSwHRp / Nm
Demand Rate

Weekly Demand Rate

Dw = WSwHRp / Nm

WSwH = DwNm/ Rp

Three ways of adjusting capacity

W (number of work centres)

Sw (number of shifts per week)
H (number of hours per shift i.e. overtime)
 Work In Progress

WIP : Amount of product currently located

in the factory that is either being processed
or is in between processing operations

Generally:

WIP = PC U (MLT) / Sw H
 WIP Ratio

WIP Ratio = WIP / Number of Machines Processing

PC U (MLT)
Sw H
WIP Ratio =
QTo
WU
Tsu + QTo

Ideal ratio: 1:1

 Worked Problem
The average part produced in a certain batch manufacturing plant must
be processed sequentially through six machines on average. Twenty
(20) new batches of parts are launched each week. Average
operation time = 6 min., average setup time = 5 hours, average batch
size = 25 parts, and average non-operation time per batch = 10
hr/machine. There are 18 machines in the plant working in parallel.
Each of the machines can be set up for any type of job processed in
the plant. The plant operates an average of 70 production hours per
week. Scrap rate is negligible. Determine (a) manufacturing lead time
for an average part, (b) plant capacity, (c) plant utilization. (d) How
would you expect the nonoperation time to be affected by the plant
utilization?
 Solution

(a) MLT = 6(5 + 25(0.1) + 10) = 105 hr

(b) Tp = (5 + 25 x 0.1)/25 = 0.30 hr/pc, Rp = 3.333 pc/hr.
PC = 70(18)(3.333)/6 = 700 pc/week
(c) Parts launched per week = 20 x 25 = 500 pc/week.
Utilization U = 500/700 = 0.7143 = 71.43%
(d) As utilization increases towards 100%, we would expect
the nonoperation time to increase. When the workload in
the shop grows, the shop becomes busier, but it usually
takes longer to get the jobs out. As utilization decreases,
we would expect the nonoperation time to decrease.
 Utilisation

Utilisation, U = Output/Capacity

Q
Utilization: U =
PC
where
Q = quantity actually produced
PC = plant capacity
 Availability

MTBF MTTR
Availability: A = MTBF

where MTBF = mean time between failures, and

MTTR = mean time to repair
 Costs of Manufacturing Operations

Fixed costs - remain constant for any output level

Variable costs - vary in proportion to production output
level
Adding fixed and variable costs
TC = FC + VC(Q)
where
TC = total costs
FC = fixed costs (e.g., building, equipment, taxes)
VC = variable costs (e.g., labor, materials, utilities)
Q = output level
Breakeven Point

Method 1:
Manual
Costs
Method 2:
Automated
FC2

Breakeven Point

FC1

Quantity, Q
 Manufacturing Costs

Alternative classification of manufacturing costs:

1. Direct labor - wages and benefits paid to workers
2. Materials - costs of raw materials
3. Overhead - all of the other expenses associated with
running the manufacturing firm
Factory overhead
Corporate overhead
 Overhead Rates

Factory overhead rate:

FOHC
FOHR =
DLC

Corporate overhead rate:

COHC
COHR =
DLC

where
DLC = direct labor costs
 Cost of Equipment Usage

Hourly cost of worker-machine system:

Co = CL(1 + FOHRL) + Cm(1 + FOHRm)

where
Co = hourly rate, /hr
CL = labor rate, /hr
FOHRL = labor factory overhead rate
Cm = machine rate, /hr
FOHRm = machine factory overhead rate
 Worked Problem
The break-even point is to be determined for two production methods,
one a manual method and the other automated. The manual method
requires two workers at 9.00/hr each. Together, they produce at a
rate of 36 units/hr. The automated method has an initial cost of
125,000, a 4-year service life, no salvage value, and annual
maintenance costs = 3000. No labour (except for maintenance) is
required to operate the machine, but the power required to run the
machine is 50 kW (when running). Cost of electric power is
0.05/kWh. If the production rate for the automated machine is 100
units/hr, determine the break-even point for the two methods, using a
rate of return = 25%. The solution requires familiarity with the Uniform
Annual Cost (UAC) method of determining an annual amount payable
(A) on a principle sum (P).
 Solution
Manual method: variable cost = (2 workers)(9.00/hr)/(36 pc/hr) = 0.50/pc
Total cost as a function of Q is TC = 0.50 Q assuming no fixed costs.
Automated method: (A/P,25%,4) = = (0.4234)
UAC = 125,000(A/P,25%,4) + 3000 = 125,000(0.4234) + 3000 = 55,930/yr
Variable cost = = 0.025/pc
Total cost as a function of Q = 55,930 + 0.025 Q
Break even point: 0.50 Q = 55,930 + 0.025 Q, 0.475Q = 55,930, Q = 117,747
pc/yr
Hours of operation per year: Manual: H = = 3270.76 hr/yr.
Comment: This would require two shifts.
Automated: H = = 1177.47 hr/yr.
Comment: Plenty of additional capacity in one shift beyond the break-even
point.