1

2

MAKE OR BUY DECISION

1) Available capacity2) Expertise3) Quality consideration4) The nature of the demand 5) Cost

6) Availability of suppliers7) Desire to specialize in a particular field of manufacture8) Control of design secrets9) Availability of R&D facilities in- house.10)Reliability of outside suppliers11)Lead time for procurement versus lead time for in- house manufacture12)Delivery schedules to me met.13)Employee preference for particular nature of work.

When to make? When to buy?

3

System

PROCESS

A process is any part of an organization that takes input and transforms them into outputs that, is are of greater value to the organization than the original outputs.

4

PROCESS PLANNING

PROCESS DESIGN OPERATION DESIGN

•PROCESS DESIGN is concerned with the overall sequence of operations required to achieve the product specification.

aswathappa

•PROCESS PLANNING is concerned with planning the conversion processes needed to convert raw material to finished products

•OPERATION DESIGN is concerned with the design of the individual manufacturing operation . It examines the man machine relation ship

5

MAJOR PROCESS DECISION.

1) Process choice. Job shop/Batch process/ Repetitive Process/Continuous process/Project process

2) Vertical Integration. (Make or buy)/Backward/forward

3) Resource flexibility. (Workmen's/ Machines)

4) Customer involvement. (Customization )

5) Capital Intensity. (Automation)

See pg 70 Aswathappa nn.

6

7

8

9

10

PROCESS ANALYSIS Russel & Taylor

Process analysis is the systematic examination of all aspects of a process to improve Its operation.

The basic tools of process analysis are

•Process flow charts.•Diagrams•Maps.

Analyzing a process allows some important question to be answered.

•How many customers can the process handle per hour.•How long will it take to serve a customer•What change is needed in the process to expand capacity•How much the process cost

11

12

TYPES OF PROCESS

Based on stages

•Single stage •Multi stage

Based on order

•Made to order•Made to stock•Hybrid •ETO Engineered to order•ATO Assembled to order

Buffering BlockingStarving Bottle neck

13

MEASURING PROCESS PERFORMANCE

Chase and Aquilino 112

Productivity Output/Input More

Utilization Time machine is in use/ Time it is available for use More

Efficiency Out put of process relative to some standard More

Run time Time required to produce a batch of products Less

Set up time Preparation for next input Less

Operation time Set time + Run time Less

Throughput time Time for which the product is being worked + Buffer time

Less

Throughput rate Out rate of the process is expected to produce over a period of time.

More

Process velocity (Throughput ratio )

Through put time /value added time Less

Value added time The Time useful work is being done on the unit More

Little’s Law Through put time = WIP/ Throughput rate Less

14

Value Added by Tangible vs. Intangible Elements in Goods and Services

Fast food restaurantPlumbing repair

Office cleaningHealth club

Airline flightRetail banking

InsuranceWeather forecast

Salt

Soft drinksCD Player

Golf clubsNew car

Tailored clothingFurniture rental

Lo Hi

Hi

Ta n

gi b

l e E

l em

ents

Intangible Elements

15

Levels of Customer Contact with Service Organizations

Emphasizes encounters with service personnel

Emphasizes encounters with equipment

High

Low

Management Consulting

Car Repair

InsuranceMotel

Fast Food

Nursing Home

Airline Travel (Econ.)

Cable TV

Telephone Banking

HairCut

Good Restaurant

4-Star Hotel

Dry Cleaning

Retail Banking

Mail Based Repairs

Internet-basedServices

Movie Theater

• Internet Banking

Subway

16

PROCESS THROUGHPUT TIME REDUCTION

1) Perform activities in parallel.

2) Change the sequence of activities.

3) Reduce interruption.

17

SYSTEM System is a set of interacting or interdependent entities forming an integrated whole.The concept of an 'integrated whole' can also be stated in terms of a system embodying a set of relationships which are differentiated from relationships of the set to other elements, and from relationships between an element of the set and elements not a part of the relational regime..

18

Description Job Shop Batch process Repetitive (Assembly) Process

Continuous Project Process

Output characteristic goods & services

Customized goods or services

Semi standardized goods services

Standardized goods or services

Highly standardized goods or services

Highly customized services

E.g. Machine shop Bakery, class room Assembly line for automobile

Steel mill, chemical plant

Dams , Buildings

Volume Low Low to moderate High Very high Very high

Variety Very high Moderate Low Very Low Extremely Low

Equipment flexibility

Very high Moderate Low Very Low Low to high

Cost estimation Difficult Some what routine Routine Routine Complex

Cost per Unit High Moderate Low Low Very high

Equipment used General purpose General purpose Special purpose Special purpose Varied

Fixed cost Low Moderate High Very high Varied

Variable cost High Moderate Low Very Low High

Labor skills High Moderate Low Low Low- High

Scheduling Complex Moderately complex Routine Routine Complex subject to change

WIP Inventory High High Low Low Varied

Advantages Able to handle a wide variety of work

Flexibility Low unit cost, High volume , efficient

Very efficient , very high volume

Suitable for non-routine time and cost bound work

Disadvantages Slow, high cost per unit , complex planning and scheduling

Moderate cost per unit , moderate scheduling complexity

Low flexibility high cost of down time

Very rigid, lack of variety, cost to change, very high cost of downtime

Very difficult to plan and control resources cost and time of completion