3. Process Fit: Volume vs. Variety Process focus: job shops,(machine, print, carpentry) Repetitive (autos, motorcycles) Harley Davidson Product focus (paper, steel, glass) High Variety One or few units per run (customization) Medium Variety (Change product with standardized modules) Low Variety (Similar products with minor changes) Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Poor strategy (High variable cost) Low-Volume (Intermittent) Medium-Volume (Modular) High-Volume (Continuous)

4. Types of Process Strategies Classify the process strategies by the level continuum : Repetitive-Focused Product-Focused Process-Focused Continuum

6. Process-Focused Strategy Examples Bank © 1995 Corel Corp. Machine Shop © 1995 Corel Corp. Hospital © 1995 Corel Corp.

11. Product-Focused Examples © 1995 Corel Corp. Light Bulbs (Discrete) Paper (Continuous) © 1984-1994 T/Maker Co. © 1995 Corel Corp. Soft Drinks (Continuous, then Discrete)

12. Product Focused Process

15. Repetitive-Focused Strategy - Examples Truck © 1995 Corel Corp. Clothes Dryer © 1995 Corel Corp. Fast Food McDonald’s over 95 billion served © 1984-1994 T/Maker Co.

17. Harley-Davidson

18. Process Fit: Volume vs. Variety Process focus: job shops,(machine, print, carpentry) Repetitive (autos, motorcycles) Harley Davidson Product focus (paper, steel, glass) High Variety One or few units per run (customization) Medium Variety (Change product with standardized modules) Low Variety (Similar products with minor changes) Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Poor strategy (High variable cost) Low-Volume (Intermittent) Medium-Volume (Modular) High-Volume (Continuous)

20. Repetitive Focus Assembly line Modular Design Flexible equipment Mass Customization Process focus Intermittent process High variety, low volume Product focus Continuous Process Low variety, high volume Modular techniques Scheduling techniques Rapid throughput

24. Computer Integrated Manufacturing (CIM)

27. Time Function Map Customer Sales Production control Plant A Warehouse Plant B Transport Order Product Process Order Print Extrude Receive product Wait Move Wait Wait Wait Move Order Order WIP WIP WIP WIP Product Product Product 12 days 1 day 1 day 1 day 1 day 13 days 4 days 10 days 9 days

28. Process Chart Example SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description  D  Write order    On desk 75    D  To buyer  D  Examine  = Operation;  = Transport;  = Inspect; D = Delay;  = Storage

30. Crossover Chart Fixed cost - Process A Fixed cost - Process B Fixed cost - Process C Total cost - Process C Total cost - Process B Total cost - Process A Process A: low volume, high variety Process B: Repetitive Process C: High volume, low variety Process C Process B Process A Lowest cost process

32. Definition and Measures of Capacity Capacity: Designed Capacity: Effective capacity: The maximum output of a system in a given period The maximum capacity that can be achieved under ideal conditions The percent of design capacity actually expected

35. Capacity Planning Process (Apply to Examples) Forecast Demand Compute Needed Capacity Compute Effective Capacity Evaluate Capacity Plans Implement Best Plan Qualitative Factors (e.g., Skills) Select Best Capacity Plan Develop Alternative Plans Quantitative Factors (e.g., Cost)

36. Approaches to Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity leads demand with an incremental expansion

37. Approaches to Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity lags demand with an incremental expansion

38. Approaches to Capacity Expansion Expected Demand Time in Years Demand New Capacity Attempts to have an average capacity, with an incremental expansion

39. Breakeven Analysis Technique for evaluating process & equipment alternatives Objective: Find the point ($ or units) at which total cost equals total revenue Fixed costs: costs that continue even if no units are produced: depreciation, taxes, debt, mortgage payments Variable costs: costs that vary with the volume of units produced: labor, materials, portion of utilities

40. Breakeven Chart Fixed cost Variable cost Total cost line Total revenue line Profit Breakeven point Total cost = Total revenue Volume (units/period) Cost in Dollars (Thousands) Loss

41. Crossover Chart Fixed cost - Process A Fixed cost - Process B Fixed cost - Process C Total cost - Process C Total cost - Process B Total cost - Process A Process A: low volume, high variety Process B: Repetitive Process C: High volume, low variety Process C Process B Process A Lowest cost process

43. Complementary Products Time (Months) Sales (Units) Jet Skis Snow-mobiles Total 0 1,000 2,000 3,000 4,000 5,000 J M M J S N J M M J S N J