Item Design and Process Selection

Presentation Transcript

Item Design and Process Selection Based on slides for Chase Acquilano and Jacobs, Operations Management, McGraw-Hill

What is a Product? An item is a bundle of : Goods Services Experiences Ongoing Relationships An item has: Tangible characteristics Intangible qualities Examples Automobile Airplane trip Diamond Ring Restaurant Meal Dishwasher College Education Tax Preparation Basketball Game

Product Design Issues Value examination/esteem building Obtain better execution at lower cost Two Design Approaches: Over the Wall Approach versus Simultaneous Engineering Complexity of outline Implications?? Unwavering quality How would it be able to be expanded? Institutionalization Advantages & inconveniences? Secluded outline Advantages & inconveniences? Ecological Implications

Exercise Pick a few items and show a few issues that should be considered in its plan and fabricate Include stylish, manufacturability, after-deals benefit issues among others Deliverable List and present to the class

Process Selection

Process Structures Continuous Processing Repetitive (sequential construction systems) Manufacturing cells Batch handling Job Shops Projects "persistent or semi-ceaseless" "irregular"

Example: Job Shop

Example: Batch Processing

Example: Assembly Line Processing

Example: Continuous Processing

Manufacturing

Break-Even Analysis Some administrative inquiries: How much would it be advisable for us to create to make back the initial investment? For a particular volume, would it be advisable for us to make the item ourselves, or outsource? For machine choices An and B, at what volumes would it be a good idea for us to utilize machine An and at what volumes, machine B?

Break-Even Analysis (illustration) Sale Price = $300 Option 1: Purchase = $200 * Demand Option 2: Lathe = $80,000 + $75 * Demand Option 3: Machine focus = $200,000 + $15 * Demand Purchase versus Machine? Machine versus Machining Center?

Calculations Purchase versus Lathe: $200 * Demand = $80,000 + $75 * Demand ($200 * Demand) - ($75 * Demand) = $80,000 $125 * Demand = $80,000 Demand = $80,000/$125 = 640 units so – under 640 units, buy; 640 of more prominent, utilize Lathe versus Machine Center: $80,000 + $75 *Demand = $200,000 + $15 * Demand Demand = $120,000/$60 = 2,000 units so – less that 2000 units utilize the Lathe; at least 2000 utilize the machining focus

Break Even Analysis Example You are beginning another business and your settled expenses are evaluated to be $500,000. Your item offers for $100 and costs you $50 to make. What is the breakeven point? On the off chance that you offer 15,000 units, what will be your benefit? Reply: Break Even Value is 10,000 and Profit is $250,000

Break Even Analysis Formulas Total Revenue = Total Cost P x = F + V x infers: BEP(x) = F/[P-V] Profit = TR-TC = (P-V) x – F Breakeven between two machines: F 1 + V 1 x and F 2 + V 2 x - expect F 2 > F 1 & V 2 < V 1 (F 2 – F 1)/(V 1 – V 2 ) Note: F = Fixed Cost; P = Price; V = Variable Cost

Break Even Analysis Example In your business you are thinking about two machines. Machine 1 costs $500,000 and has a variable for every unit cost of $50 per thing. Machine 2 has a settled cost of $200,000 and has a variable for each unit cost of $80 per thing. What is the make back the initial investment volume for the two machines. In the event that a companion instructs you to utilize Machine 2 if the volume is 5,000 things, would she say she is correct or off-base? Reply: Break Even Value is 10,000

Break Even Analysis Graphical Answer

Summary Production Strategies Process centered >>> Product centered Other choices: Project, Cellular Technology Break-even Analysis