Item Design and Process Selection

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What is a Product?. An item is a bundle of:GoodsServicesExperiencesOngoing RelationshipsA item has:Tangible attributesIntangible traits. ExamplesAutomobileAirplane tripDiamond RingRestaurant MealDishwasherCollege EducationTax PreparationBasketball Game. Item Design Issues.

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

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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

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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

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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

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Process Selection

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

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Example: Job Shop

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Example: Batch Processing

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Example: Assembly Line Processing

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Example: Continuous Processing

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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?

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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?

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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

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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

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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

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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

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Break Even Analysis Graphical Answer

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