Chapter 4: Manufacturing Processes. Learning Objectives. How production processes are organized Trade-offs to be considered when designing a production process The product-process matrix Break-even analysis Designing stations for an assembly line. Organization of Production Processes.
Framework Describing Layout Strategies
This formula can be used to find any of its components algebraically if the other parameters are known
Purchase cost of process or equipment
Price per unit - Cost per unit
Total fixed costs of process or equipment
Unit price to customer - Variable costs per unit
In formula terms: BEP(x) = F/[P-V]
= Total fixed costs of process or equip.
Unit price to customer – Variable costs
$80,000 + $75 * Demand
= $200,000 + $15 * Demand
Purchase vs. A? A vs. B?
Purchase versus A:
$200 * Demand = $80,000 + $75 * Demand
($200 * Demand) - ($75 * Demand) = $80,000
$125 * Demand = $80,000
Demand = $80,000/$125 = 640 units
so – less than 640 units, purchase; 640 of greater, use Machine A
Machine A versus Machine B:
$80,000 + $75 *Demand = $200,000 + $15 * Demand
Demand = $120,000/$60 = 2,000 units
so – less that 2000 units use Machine A; 2000 or more use Machine B
Note: F = Fixed Cost; P = Price; V = Variable Cost
Nicole is considering starting a business to manufacture greeting cards and is investigating two alternatives. Alternative 1 involves purchasing a computer and printing system for $10,000. The system can produce a card for 0.50 a card. Alternative 2 is to use a vendor who will make the cards for her and charge her $0.90 per card. If she plans to sell each card for $2.50, answer the following questions.
How should we allocate steps to stations?
Cycle time = Daily Prod time available / Daily required output
Min stations = Sum of task times / cycle time
Allocation method: Use # successors and task times