7
Manufacturing
Processes
Learning Objectives
LO 7–1 Understand what a manufacturing process is.
LO 7–2 Explain how manufacturing processes are organized.
LO 7–3 Analyze simple manufacturing processes.
THREE-DIMENSIONAL PRINTING—TH E
TECHNO LOGY COULD BE USED TO
MAKE PARTS THAT PERFORM BETTER
AND CO ST LESS
The technology for printing three-dimensional objects has existed for
decades, but its application has been largely limited to novelty items
and specialized custom fabrication, such as making personalized prosthetics. The technology has now improved to the point where these
printers can make intricate objects out of durable materials, including
ceramics and metals (such as titanium and aluminum), with a resolution
This ratchet wrench
was made using a
3-D printer on the
International Space
Station in about four
hours.
© NASA/Sipa USA/
Newscom
on the scale of tens of micrometers.
The impact of advanced manufacturing technology on productivity is dramatic. Every year, U.S. manufacturing firms invest millions of
dollars to convert manufacturing plants into computerized environments in an effort
to improve the firm’s competitive position. Companies in other major manufacturing
countries such as Germany, Japan, and South Korea are making similar investments.
Chinese companies, though, are the productivity leaders, with the country’s combination of advanced technology and low labor costs.
148
Manufacturing Processes
149
Chapter 7
WHAT ARE MANUFACTURING PROCESSES?
In this chapter, we consider processes used to make tangible goods. Manufacturing processes
are used to make everything that we buy ranging from the apartment building in which we
live to the ink pens with which we write. The high-level view of what is required to make
something can be divided into three simple steps. The first step is sourcing the parts we need,
followed by actually making the item, and then sending the item to the customer. As discussed
in Chapter 1, a supply chain view of this may involve a complex series of players where subcontractors feed suppliers, suppliers feed manufacturing plants, manufacturing plants feed
warehouses, and finally warehouses feed retailers. Depending on the item being produced, the
supply chain can be very long with subcontractors and manufacturing plants spread out over
the globe (such as an automobile or computer manufacturer) or short where parts are sourced
and the product is made locally (such as a house builder).
Consider Exhibit 7.1, which illustrates the Source step where parts are procured from one
or more suppliers, the Make step where manufacturing takes place, and the Deliver step where
the product is shipped to the customer. Depending on the strategy of the firm, the capabilities
of manufacturing, and the needs of customers, these activities are organized to minimize cost
while meeting the competitive priorities necessary to attract customer orders. For example, in
the case of consumer products such as televisions or clothes, customers normally want these
products “on-demand” for quick delivery from a local department store. As a manufacturer of
these products, we build them ahead of time in anticipation of demand and ship them to the
retail stores where they are carried in inventory until they are sold. At the other end of the
spectrum are custom products, such as military airplanes, that are ordered with very specific
uses in mind and that need to be designed and then built to the design. In the case of an airplane, the time needed to respond to a customer order, called the lead time, could easily be
years compared to only a few minutes for the television.
A key concept in manufacturing processes is the customer order decoupling point which
determines where inventory is positioned to allow processes or entities in the supply chain to
operate independently. For example, if a product is stocked at a retailer, the customer pulls the
item from the shelf and the manufacturer never sees a customer order. Inventory acts as a
exhibit 7.1
Long
Source
Positioning Inventory in the Supply Chain
Customer Lead Time
Make
Short
Deliver
Make-to-Stock
Assemble-to-Order
Make-to-Order
Engineer-to-Order
Low
Inventory Investment
The inverted triangles represent customer order decoupling points.
High
LO 7–1
Understand what a
manufacturing process is.
Lead time
The time needed to
respond to a customer
order.
Customer order
decoupling point
Where inventory is
positioned in the
supply chain.
150
Section 2
Manufacturing and Service Processes
buffer to separate the customer from the manufacturing process. Selection of decoupling
points is a strategic decision that determines customer lead times and can greatly impact
A production environment
inventory investment. The closer this point is to the customer, the quicker the customer can be
where the customer is
served “on-demand” from
served. Typically, there is a trade-off where quicker response to customer demand comes at
finished goods inventory.
the expense of greater inventory investment because finished goods inventory is more expensive than raw material inventory. An item in finished goods inventory typically contains all
Assemble-to-order
the raw materials needed to produce the item. So, from a cost view it includes the cost of the
A production
material, plus the cost to fabricate the finished item.
environment where prePositioning of the customer order decoupling point is important to understanding manuassembled components,
facturing environments. Firms that serve customers from finished goods inventory are known
subassemblies, and
modules are put together
as make-to-stock firms. Those that combine a number of preassembled modules to meet
in response to a specific
a customer’s specifications are called assemble-to-order firms. Those that make the cuscustomer order.
tomer’s product from raw materials, parts, and components are make-to-order firms. An
­engineer-to-order firm will work with the customer to design the product, and then make it
Make-to-order
from
purchased materials, parts, and components. Of course, many firms serve a combination
A production environment
of
these
environments and a few will have all simultaneously. Depending on the environment
where the product is
built directly from raw
and the location of the customer order decoupling point, one would expect inventory concenmaterials and components
trated in finished goods, work-in-process (this is inventory in the manufacturing process),
in response to a specific
manufacturing raw material, or at the supplier as shown in Exhibit 7.1.
customer order.
The essential issue in satisfying customers in the make-to-stock environment is to balance
the level of finished inventory against the level of service to the customer. Examples
Engineer-to-order
of
products
produced by these firms include televisions, clothing, and packaged food prodHere the firm works with
ucts. If unlimited inventory were possible and free, the task would be trivial. Unfortunately,
the customer to design
the product, which is then
that is not the case. Providing more inventory increases costs, so a trade-off between the
made from purchased
costs of the inventory and the level of customer service must be made. The trade-off can
material, parts, and
be improved by better estimates (or knowledge) of customer demand, by more rapid transcomponents.
portation alternatives, by speedier production, and by more flexible manufacturing. Many
make-to-stock firms invest in lean manufacturing programs in order to achieve higher
Lean manufacturing
service levels for a given inventory investment. Regardless of the trade-offs involved, the
To achieve high customer
service with minimum
focus in the make-to-stock environment is on providing finished goods where and when the
levels of inventory
customers want them.
investment.
In the assemble-to-order environment, a primary task is to define a customer’s order in
terms of alternative components and options since it is these components that are carried in
inventory. A good example is the way Dell Computer makes desktop computers. The number of combinations that can be made may be nearly infinite (although some might not be
feasible). One of the capabilities required for success in the assemble-to-order environment
is an engineering design that enables as much flexibility as possible in combining components, options, and modules into finished products. Similar to make-to-stock, many assemble-to-order companies
have applied lean manufacturing principles to dramatically
decrease the time required to assemble finished goods. By
doing so, they are delivering customers’ orders so quickly
that they appear to be make-to-stock firms from the perspective of the customer.
When assembling-to-order, there are significant advantages from moving the customer order decoupling point
from finished goods to components. The number of finished
products is usually substantially greater than the number
of components combined to produce the finished product.
Consider, for example, a computer for which there are four
processor alternatives, three hard disk drive choices, four
DVD alternatives, two speaker systems, and four monitors
Latasha Bell, a Dell Inc. employee, assembles a Dell
available. If all combinations of these 17 components are
OptiPlex desktop computer at the company’s facility in
valid, they can be combined into a total of 384 different
Lebanon, Tennessee.
© Harrison McClary/Bloomberg/Getty Images
final configurations. This can be calculated as follows.
Make-to-stock
Manufacturing Processes
151
Chapter 7
If Ni is the number of alternatives for component i, the total number of combinations of n
components (given all are viable) is:
Total number of combinations = ​N​1​× ​N​2​× . . . × ​N​n​
​
​     ​​​ ​[7.1]​​
Or 384 = 4 × 3 × 4 × 2 × 4 for this example.
It is much easier to manage and forecast the demand for 17 components than for 384 computers.
In the make-to-order and engineer-to-order environments, the customer order decoupling
point could be in either raw materials at the manufacturing site or possibly even with the supplier inventory. Boeing’s process for making commercial aircraft is an example of make-toorder. The need for engineering resources in the engineer-to-order case is somewhat different
than make-to-order because engineering determines what materials will be required and what
steps will be required in manufacturing. Depending on how similar the products are, it might
not even be possible to pre-order parts. Rather than inventory, the emphasis in these environments may be more toward managing capacity of critical resources such as engineering and
construction crews. Lockheed Martin’s Satellite division uses an engineer-to-order strategy.
HOW MANUFACTURING PROCESSES ARE ORGANIZED
Process selection refers to the strategic decision of selecting which kind of production processes
to use to produce a product or provide a service. For example, in the case of Toshiba notebook
computers, if the volume is very low, we may just have a worker manually assemble each computer by hand. In contrast, if the volume is higher, setting up an assembly line is appropriate.
The format by which a facility is arranged is defined by the general pattern of workflow;
there are five basic structures (project, workcenter, manufacturing cell, assembly line, and continuous process).
In a project layout, the product (by virtue of its bulk or weight) remains in a fixed location. Manufacturing equipment is moved to the product rather than vice versa. Construction
sites (houses and bridges) and movie shooting lots are examples of this format. Items produced with this type of layout are typically managed using the project management techniques described in Chapter 4. Areas on the site will be designated for various purposes,
such as material staging, subassembly construction, site access for heavy equipment, and a
management area.
In developing a project layout, visualize the product as the hub of a wheel, with materials
and equipment arranged concentrically around the production point in the order of use and
movement difficulty. Thus, in building commercial aircraft, for example, rivets that are used
throughout construction would be placed close to or in the fuselage; heavy engine parts, which
must travel to the fuselage only once, would be placed at a
more distant location; and cranes would be set up close to
the fuselage because of their constant use.
In a project layout, a high degree of task ordering is common. To the extent that this task ordering, or precedence,
determines production stages, a project layout may be
developed by arranging materials according to their assembly priority. This procedure would be expected in making a
layout for a large machine tool, such as a stamping machine,
where manufacturing follows a rigid sequence; assembly is
performed from the ground up, with parts being added to
the base in almost a building-block fashion.
A workcenter layout, sometimes referred to as a job
shop, is where similar equipment or functions are grouped
together, such as all drilling machines in one area and all Project Layout
stamping machines in another. A part being worked on © Ingram Publishing RF
LO 7–2
Explain how manufacturing
processes are organized.
Project layout
A setup in which the
product remains at one
location, and equipment is
moved to the product.
Workcenter
Often referred to as a job
shop, a process structure
suited for low-volume
production of a great
variety of nonstandard
products. Workcenters
sometimes are referred to
as departments and are
focused on a particular
type of operation.
152
Section 2
Manufacturing and Service Processes
travels, according to the established sequence of operations, from workcenter to workcenter, where the proper
machines are located for each operation.
The most common approach to developing this type of
layout is to arrange workcenters in a way that optimizes
the movement of material. A workcenter sometimes is
referred to as a department and is focused on a particular
type of operation. Examples include a workcenter for drilling holes, one for performing grinding operations, and a
painting area. The workcenters in a low-volume toy factory might consist of shipping and receiving, plastic molding and stamping, metal forming, sewing, and painting.
Parts for the toys are fabricated in these workcenters and
then sent to the assembly workcenter, where they are put
together. In many installations, optimal placement often
means placing workcenters with large amounts of interdeWorkcenter
partmental traffic adjacent to each other.
© David Parker/Science Source
A manufacturing cell layout is a dedicated area where
Manufacturing cell
products that are similar in processing requirements are produced. These cells are designed
Dedicated area where a
to perform a specific set of processes, and the cells are dedicated to a limited range of prodgroup of similar products
ucts. A firm may have many different cells in a production area, each set up to produce a
are produced.
single product or a similar group of products efficiently,
but typically at lower volume levels. These cells typically
are scheduled to produce “as needed” in response to current customer demand.
Manufacturing cells are formed by allocating dissimilar
machines to cells that are designed to work on products that
have similar shapes and processing requirements. Manufacturing cells are widely used in metal fabricating, computer chip manufacture, and assembly work.
An assembly line is where work processes are arranged
according to the progressive steps by which the product is
made. These steps are defined so that a specific production
rate can be achieved. The path for each part is, in effect, a
straight line. Discrete products are made by moving from
workstation to workstation at a controlled rate, following the sequence needed to build the product. Examples
Manufacturing Cell
include the assembly of toys, appliances, and automobiles.
Source: Official US Navy photo
These are typically used in high-volume items where the
specialized process can be justified.
The assembly line steps are done in areas referred to
as “stations,” and typically the stations are linked by some
form of material handling device. In addition, usually
there is some form of pacing by which the amount of time
allowed at each station is managed. Rather than develop
the process for designing assembly at this time, we will
devote the entire next section of this chapter to the topic
of assembly line design because these designs are used so
often by manufacturing firms around the world. A continuous or flow process is similar to an assembly line except
that the product continuously moves through the process.
Often, the item being produced by the continuous process
is a liquid or chemical that actually “flows” through the
system; this is the origin of the term. A gasoline refinery is
Assembly Line
© Jeff Kowalsky/Bloomberg/Getty Images
a good example of a flow process.
Manufacturing Processes
exhibit 7.2
Chapter 7
153
Product–Process Matrix: Framework Describing Layout Strategies
Low—
one-of-a-kind
Mass Customization
Project
Workcenter
Product
Standardization
Manufacturing
Cell
Assembly
Line
High—
standardized
commodity
product
Inefficient
Processes
Low
Product Volume
Continuous
Process
High
A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous (such as with liquids) rather than
discrete. Such structures are usually highly automated and, in effect, constitute one integrated
“machine” that may operate 24 hours a day to avoid expensive shutdowns and startups. Conversion and processing of undifferentiated materials such as petroleum, chemicals, and drugs
are good examples.
The relationship between layout structures is often depicted on a product–process matrix
similar to the one shown in Exhibit 7.2. Two dimensions are shown. The horizontal dimension
relates to the volume of a particular product or group of standardized products. Standardization is shown on the vertical axis and refers to variations in the product that is produced.
These variations are measured in terms of geometric differences, material differences, and so
on. Standardized products are highly similar from a manufacturing processing point of view,
whereas low standardized products require different processes.
Exhibit 7.2 shows the processes approximately on a diagonal. In general, it can be argued that
it is desirable to design processes along the diagonal. For example, if we produce nonstandard
products at relatively low volumes, workcenters should be used. A highly standardized product
(commodity) produced at high volumes should be produced using an assembly line or a continuous process, if possible. As a result of the advanced manufacturing technology available today,
we see that some of the layout structures span relatively large areas of the product–process
matrix. For example, manufacturing cells can be used for a very wide range of applications,
and this has become a popular layout structure that often is
employed by manufacturing engineers.
Assembly line
A setup in which an item is
produced through a fixed
sequence of workstations,
designed to achieve a
specific production rate.
Continuous process
A process that converts
raw materials into finished
product in one contiguous
process.
Product–process
matrix
A framework depicting
when the different
production process
types are typically
used, depending on
product volume and how
standardized the product is.
B r e a k- E ve n A na lys is
The choice of which specific equipment to use in a process
often can be based on an analysis of cost trade-offs. There
is often a trade-off between more and less specialized
equipment. Less specialized equipment is referred to as
“general-purpose,” meaning it can be used easily in many
different ways if it is set up in the proper manner. More
specialized equipment, referred to as “special-purpose,”
is often available as an alternative to a general-purpose
machine. For example, if we need to drill holes in a piece
of metal, the general-purpose option may be to use a simple hand drill. An alternative special-purpose drill is a drill
press. Given the proper setup, the drill press can drill holes
An Example of a Continuous Process
© Andrew Holt/Photographer’s Choice/Getty Images
154
Section 2
Manufacturing and Service Processes
much quicker than the hand drill can. The trade-offs involve the cost of the equipment (the
manual drill is inexpensive, and the drill press expensive), the setup time (the manual drill is
quick, while the drill press takes some time), and the time per unit (the manual drill is slow,
and the drill press quick).
A standard approach to choosing among alternative processes or equipment is break-even
analysis. A break-even chart visually presents alternative profits and losses due to the number
of units produced or sold. The choice obviously depends on anticipated demand. The method
is most suitable when processes and equipment entail a large initial investment and fixed cost,
and when variable costs are reasonably proportional to the number of units produced.
Misalkan produsen telah
mengidentifikasi opsi-opsi
berikut untuk memperoleh
komponen mesin: Pabrikan
dapat membeli komponen
tersebut dengan harga $200
per unit (termasuk bahan); ia
dapat membuat bagian
tersebut pada mesin bubut
semi-otomatis yang dikontrol
secara numerik dengan harga
$75 per unit (termasuk
bahan); atau dapat membuat
komponen tersebut di pusat
permesinan dengan harga
$15 per unit (termasuk
bahan). Ada biaya tetap yang
dapat diabaikan jika barang
tersebut dibeli; mesin bubut
semi-otomatis berharga
$80.000; dan pusat
permesinan berharga
$200.000.
SOLUSI Apakah kita
melakukan pendekatan
terhadap solusi masalah ini
sebagai minimalisasi biaya
atau maksimalisasi
keuntungan, sebenarnya
tidak ada bedanya selama
fungsi pendapatannya sama
untuk semua alternatif.
Gambar 7.3 menunjukkan titik
impas untuk setiap proses.
Jika permintaan diperkirakan
lebih dari 2.000 unit (titik A),
pusat mesin adalah pilihan
terbaik karena hal ini akan
menghasilkan total biaya
terendah. Jika permintaan
antara 640 (titik B) hingga
2.000 unit, mesin bubut semi
otomatis adalah yang
termurah. Jika permintaan
EXAMPLE 7.1: Break-Even Analysis
Suppose a manufacturer has identified the following options for obtaining a machined part: It
can buy the part at $200 per unit (including materials); it can make the part on a numerically
controlled semiautomatic lathe at $75 per unit (including materials); or it can make the part on
a machining center at $15 per unit (including materials). There is negligible fixed cost if the
item is purchased; a semiautomatic lathe costs $80,000; and a machining center costs $200,000.
The total cost for each option is
Purchase cost = $200 × Demand
Produce-using-lathe
cost​ =​ $80,000 + $75 ×​ Demand​ ​
​
Produce-using-machining-center cost = $200,000 + $15 × Demand
SOLUTION
Whether we approach the solution to this problem as cost minimization or profit maximization really makes no difference as long as the revenue function is the same for all alternatives.
Exhibit 7.3 shows the break-even point for each process. If demand is expected to be more
than 2,000 units (point A), the machine center is the best choice because this would result in
the lowest total cost. If demand is between 640 (point B) and 2,000 units, the semiautomatic
lathe is the cheapest. If demand is less than 640 (between 0 and point B), the most economical
course is to buy the product.
Break-Even Chart of Alternative Processes
exhibit 7.3
($000)
Buy at $200/unit
300
Revenue at $300/unit
C
Make on machine
center at $15/unit
250
A
200
150
D
B
100
Make on semiautomatic lathe at $75/unit
50
0
0
250
500
750
1,000
1,250
1,500
Number of units
1,750
2,000
2,250
2,500
Manufacturing Processes
pengaruh
ChapterPertimbangkan
7
155
The break-even point A calculation is
$80,000 + $75 × Demand = $200,000 + $15 × Demand
​      ​
Demand (point A) = 120,000/60 = 2,000 units
The break-even point B calculation is
$200 × Demand = $80,000 + $75 × Demand
​
​ ​
​
Demand (point B) = 80,000/125 = 640 units
Consider the effect of revenue, assuming the part sells for $300 each. As Exhibit 7.3 shows,
profit (or loss) is the vertical distance between the revenue line and the alternative process
cost at a given number of units. At 1,000 units, for example, maximum profit is the difference between the $300,000 revenue (point C) and the semiautomatic lathe cost of $155,000
(point D). For this quantity, the semiautomatic lathe is the cheapest alternative available. The
optimal choices for both minimizing cost and maximizing profit are the lowest segments of
the lines: origin to B, to A, and to the right side of Exhibit 7.3 as shown in green.
pendapatan, dengan asumsi
suku cadang tersebut dijual
seharga $300 per buah. Seperti
yang ditunjukkan pada Gambar
7.3, laba (atau rugi) adalah
jarak vertikal antara garis
pendapatan dan biaya proses
alternatif pada sejumlah unit
tertentu. Misalnya, pada 1.000
unit, keuntungan maksimum
adalah selisih antara
pendapatan $300.000 (titik C)
dan biaya mesin bubut
semi-otomatis sebesar
$155.000 (titik D). Untuk jumlah
ini, mesin bubut semi-otomatis
adalah alternatif termurah yang
tersedia. Pilihan optimal untuk
meminimalkan biaya dan
memaksimalkan keuntungan
adalah segmen garis terendah:
asal ke B, ke A, dan ke sisi
kanan Gambar 7.3 seperti yang
ditunjukkan dalam warna hijau.
MANUFACTURING PROCESS
FLOW DESIGN
Manufacturing process flow design is a method to evaluate the specific processes that raw
materials, parts, and subassemblies follow as they move through the plant. The most common
production management tools used in planning and designing the process flow are assembly
drawings, assembly charts, route sheets, and flow process charts. Each of these charts is a useful diagnostic tool and can be used to improve operations during the steady state of the production system. Indeed, the standard first step in analyzing any production system is to map
the flows and operations using one or more of these techniques. These are the “organization
charts” of the manufacturing system.
An assembly drawing (Exhibit 7.4) is simply an exploded view of the product showing
its component parts. An assembly chart (Exhibit 7.5) uses the information presented in
the assembly drawing and defines (among other things) how parts go together, their order
of assembly, and often the overall material flow pattern. An operation and route sheet
(Exhibit 7.6), as its name implies, specifies operations and process routing for a particular
part. It conveys such information as the type of equipment, tooling, and operations required
to complete the part.
exhibit 7.4
Plug Assembly Drawing
LO 7–3
Analyze simple
manufacturing processes.
156
Section 2
Manufacturing and Service Processes
Assembly (or Gozinto) Chart for Plug Assembly
exhibit 7.5
1
2
3
4
5
6
7
8
9
10
11
12
Key
Plug housing
Air outlet
Flange-air connection
Lock-ring
Component
or assembly
operation
Assemble
air outlet
SA-1
A-1 subassembly
to plug
Air outlet
housing
subassembly
Spacer, detent spring
Inspection
A-2
Assemble lock-ring
subassembly to
plug housing
A-3
Inspect
A-4
Retaining ring
to air outlet
Oxygen valve probe
A-5
Inspect
Probe washer
A-6 Assemble oxygen
valve probe to
plug housing
SA-2
Rivets (2)
Spring-detent
Retaining ring
Probe retaining ring
Cap
A-7
Cover air outlet
plug with cap plug
A-8
Final inspection
Operation and Route Sheet for Plug Assembly
exhibit 7.6
Material Specs
Purchased Stock Size
Pcs. Per Pur Size
Weight
Operation Description
Oper. No.
Plug Housing
Plug Assembly
TA 1279
Part Name
Usage
Assy. No.
Sub.Assy. No.
TA 1274
Dept.
Machine
Drill
Mach. 513
Drill
Drill
Mach. 510
Drill
Mach. D 109
lathe
Mach. 517
drill tap
2.0
180
H&H E107
3.0
158
L44 turret fixture
Hartford
Superspacer, pl. #45
holder #L46
FDTW-100, insert #21
chk. fixture
.3
175
Drill
E162
lathe
Mach. 507
drill
.4
91
Collect CR #179
1327 RPM
B87 fixture, L59 broach
tap. .875120 G-H6
Grind
Grinder
1.5
120
Grind
Grinder
1.5
120
20
Drill hole .32
+ .015
–.005
30
Deburr .312
+ .015
–.005
40
bore .878/.875 dia
Chamfer (2.009/875.
passes). bore .7600/7625 (1 pass)
Lathe
50
Tap hole as designated 1/4 min. full thread
Tap
60
Bore hole 1.33 to 1.138 dia.
Lathe
70
Deburr
.005 to.010 both sides,
hand feed to hard stop
Lathe
80
Broach keyway to remove thread burrs
90
Hone thread I.D. .822/ .828
95
Hone .7600/ .7625
dia. hole
Part No.
Date Issued
Date Supplied
Issued By
Setup Rate
Hr. Pc. Hr.
1.5
254
.1
424
1.0
44
Tools
Drill fixture L-76
Jig # 10393
Multitooth burring
tool
Ramet-1, TPG 221,
chamfer tool
Fixture #CR-353
tap. 4 Flute sp.
A process flowchart such as that shown in Exhibit 7.7 denotes what happens to the product
as it progresses through the productive facility. Process flowcharting is covered in Chapter 11.
The focus in analyzing a manufacturing operation should be the identification of activities
that can be minimized or eliminated, such as movement and storage within the process. As a
rule, the fewer the moves, delays, and storages in the process, the better the flow.
Manufacturing Processes
exhibit 7.7
Chapter 7
Process Flowchart for the Plug Housing (partial)
Material
received
from
supplier
Raw
material
storage
Inspect
.250 min/unit
Move to
drill press
40 feet
Move to finish
department
95 feet
Apply corrosive
treatment
.06 min/unit
Move to raw
material storage
60 feet
Set up deburr
machine
6 minutes
Operation 30
Set up
drill press
90 minutes
Operation 20
Deburr
.142 min/unit
Operation 30
Move to
lathe
65 feet
Drill holes
.236 min/hole
Operation 20
Move to
deburr machine
94 feet
EXAMPLE 7.2: Manufacturing Process Analysis
A process usually consists of (1) a set of tasks, (2) a flow of material and information that connects the set of tasks, and (3) storage of material and information.
1. Each task in a process accomplishes, to a certain degree, the transformation of input
into the desired output.
2. The flow in a process consists of material flow, as well as flow of information. The
flow of material transfers a product from one task to the next task. The flow of information helps in determining how much of the transformation has been done in the
previous task and what exactly remains to be completed in the present task.
3. When neither a task is being performed nor a part is being transferred, the part has to
be stored. Goods in storage, waiting to be processed by the next task, are often called
work-in-process inventory.
Process analysis involves adjusting the capacities and balance among different parts of the
process to maximize output or minimize the costs with available resources. Our company supplies a component from our emerging plant to several large auto manufacturers. This component
is assembled in a shop by 15 workers working an eight-hour shift on an assembly line that moves
at the rate of 150 components per hour. The workers receive their pay in the form of a group
incentive amounting to 30 cents per completed good part. This wage is distributed equally among
the workers. Management believes that it can hire 15 more workers for a second shift if necessary.
Parts for the final assembly come from two sources. The molding department makes one
very critical part, and the rest come from outside suppliers. There are 11 machines capable of
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molding the one part done in-house; however, historically, one machine is being overhauled
or repaired at any given time. Each machine requires a full-time operator. The machines
could each produce 25 parts per hour, and the workers are paid on an individual piece rate
of 20 cents per good part. The workers will work overtime at a 50 percent increase in rate, or
for 30 cents per good part. The workforce for molding is flexible; currently, only six workers are on this job. Four more are available from a labor pool within the company. The raw
materials for each part molded cost 10 cents per part; a detailed analysis by the accounting
department has concluded that 2 cents of electricity is used in making each part. The parts
purchased from the outside cost 30 cents for each final component produced.
This entire operation is located in a rented building costing $100 per week. Supervision,
maintenance, and clerical employees receive $1,000 per week. The accounting department
charges depreciation for equipment against this operation at $50 per week.
The following process flow diagram describes the process. The tasks have been shown as
rectangles and the storage of goods (inventories) as triangles.
Inputs
Mold parts
XYZ Component Operation
Purchase parts
from vendors
Purchased parts
inventory
Molded parts
inventory
Final assembly
Finished
goods
Components
SOLUTION
a. Determine the capacity (number of components produced per week) of the entire
­process. Are the capacities of all the processes balanced?
Capacity of the molding process:
Only six workers are employed for the molding process, each working as a full-time operator for one machine. Thus, only 6 of the 11 machines are operational at present.
​Molding capacity = 6 machines × 25 parts per hour per machine × 8 hours per day ×
5 days per week
= 6,000 parts per week​
Capacity of the assembly process:
​Assembly capacity = 150 components per hour × 8 hours per day × 5 days per week
= 6,000 components per week​
Because capacity of both the tasks is 6,000 units per week, they are balanced.
b. If the molding process were to use 10 machines instead of 6, and no changes were to be
made in the final assembly task, what would be the capacity of the entire process?
Molding capacity with 10 machines:
​Molding capacity = 10 machines × 25 parts per hour per machine × 8 hours per day ×
5 days per week
= 10,000 parts per week​
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Chapter 7
Because no change has been made in the final assembly task, the capacity of the assembly process remains 6,000 components per week. Thus, even though the molding capacity is
10,000 per week, the capacity of the entire process is only 6,000 per week because in the long
run the overall capacity cannot exceed the slowest task.
c. If our company went to a second shift of eight more hours on the assembly task, what
would be the new capacity?
A second shift on the assembly task:
As calculated in the previous section, the molding capacity is 10,000.
​Assembly capacity = 150 components per hour × 16 hours per day × 5 days per week
= 12,000 components per week​
Here, even though the assembly capacity is 12,000 per week, the capacity of the entire process remains at 10,000 per week because now the slowest task is the molding process, which
has a capacity of 10,000 per week. Thus, we can note here that capacity of a process is not a
constant factor; it depends on the availability of inputs and the sequence of tasks. In fact, it
depends on several other factors not covered here.
d. Determine the cost per unit output when the capacity is (1) 6,000 per week or
(2) 10,000 per week.
1. Cost per unit when output per week = 6,000
First, we calculate the cost of producing all the 6,000 parts per week:
Item
Raw material for molding
Parts purchased from outside
Electricity
Molding labor
Assembly labor
Rent
Supervision
Depreciation
Total cost
Calculation
Cost
$0.10 per part × 6,000 =
$0.30 per component × 6,000 =
$0.02 per part × 6,000 =
$0.20 per part × 6,000 =
$0.30 per part × 6,000 =
$100 per week
$1,000 per week
$50 per week
$ 600
1,800
120
1,200
1,800
100
1,000
50
$6,670
Total cost per week
$6,670
_________________________
​Cost per unit =
​   ​ = _____
​
​ = $1.11​
Number of units produced per week
6,000
2. Cost per unit when output per week = 10,000
Next, we calculate the cost of producing all the 10,000 parts per week:
Item
Raw material for molding
Parts purchased from outside
Electricity
Molding labor
Assembly labor
Rent
Supervision
Depreciation
Total cost
Calculation
$0.10 per part × 10,000 =
$0.30 per component × 10,000 =
$0.02 per part × 10,000 =
$0.20 per part × 10,000 =
$0.30 per part × 10,000 =
$100 per week
$1,000 per week
$50 per week
Cost
$ 1,000
3,000
200
2,000
3,000
100
1,000
50
$10,350
Total cost per week
$10,350
_________________________
​Cost per unit =
​   ​ = ______
​
​ = $1.04​
10,000
Number of units produced per week
As you can see, our cost per unit has been reduced by spreading the fixed cost over a greater
number of units.
Such process analysis calculations are required for many production decisions discussed
throughout this book.
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Concept Connections
LO 7–1 Understand what a manufacturing process is.
Summary
∙ Manufacturing processes are used to make tangible
items.
∙ At a high level, these processes can be divided into
three steps: (1) sourcing the parts needed, (2) making
the item, and (3) sending the item to the customer.
∙ In order to allow parts of the process to operate independently, inventory is strategically positioned in the
process. These places in the process are called decoupling points.
∙ Positioning the decoupling points has an impact on
how fast a customer can be served, the flexibility the
firm has in responding to specific customer requests,
and many other trade-offs.
Key Terms
Lead time The time needed to respond to a customer order.
Customer order decoupling point Where inventory is
positioned in the supply chain.
Make-to-stock A production environment where the
customer is served “on-demand” from finished goods
inventory.
Assemble-to-order A production environment where
pre-assembled components, subassemblies, and modules
are put together in response to a specific customer order.
Make-to-order A production environment where
the product is built directly from raw materials and
­components in response to a specific customer order.
Engineer-to-order Here the firm works with the
­customer to design the product, which is then made
from purchased material, parts, and components.
Lean manufacturing To achieve high customer service
with minimum levels of inventory investment.
Key Formulas
​[7 . 1]​​ ​
​Total number of combinations ​= ​N​1​ × ​N​2​ × · · · × ​N​n​
Or 384 = 4 × 3 × 4 × 2 × 4 for this example.​
LO 7–2 Explain how manufacturing processes are organized.
Summary
∙ Manufacturing layouts are designed based on the nature
of the product, the volume needed to meet demand, and
the cost of equipment.
∙ The trade-offs are depicted in the product–process
matrix, which shows the type of layout relative to
product volume and the relative standardization of the
product.
∙ Break-even analysis is useful for understanding the
cost trade-offs between alternative equipment choices.
Key Terms
Project layout A setup in which the product remains at
one location, and equipment is moved to the product.
Workcenter Often referred to as a job shop, a process
structure suited for low-volume production of a great
variety of nonstandard products. Workcenters sometimes are referred to as departments and are focused on a
particular type of operation.
Manufacturing cell Dedicated area where a group of
similar products are produced.
Assembly line A setup in which an item is produced
through a fixed sequence of workstations, designed to
achieve a specific production rate.
Continuous process A process that converts raw materials into finished product in one contiguous process.
Product–process matrix A framework depicting when
the different production process types are typically used,
depending on product volume and how standardized the
product is.
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Chapter 7
161
LO 7–3 Analyze simple manufacturing processes.
Summary
∙ Visual charts can be used to document manufacturing process flows. Some common charts are assembly drawings, assembly charts, route sheets, and
flowcharts.
∙ Flowcharts are often very informative in business
endeavors. They provide a simple but insightful analysis of the capacity of a process and the variable cost to
produce each unit of product.
Solved Problems
LO 7–1
SOLVED PROBLEM 1
An automobile manufacturer is considering a change in an assembly line that should save
money by reducing labor and material cost. The change involves the installation of four new
robots that will automatically install windshields. The cost of the four robots, including installation and initial programming, is $400,000. Current practice is to amortize the initial cost of
robots over two years on a straight-line basis. The process engineer estimates that one fulltime technician will be needed to monitor, maintain, and reprogram the robots on an ongoing
basis. This person will be paid approximately $60,000 per year. Currently, the company uses
four full-time employees on this job and each makes about $52,000 per year. One of these
employees is a material handler, and this person will still be needed with the new process. To
complicate matters, the process engineer estimates that the robots will apply the windshield
sealing material in a manner that will result in a savings of $0.25 per windshield installed.
How many automobiles need to be produced over the next two years to make the new robots
an attractive investment? Due to the relatively short time horizon, do not consider the time
value of money.
Solution
The cost of the current process over the next two years is just the cost of the four full-time
employees.
​$52,000/employee × 4 employees × 2 years = $416,000​
The cost of the new process over the next two years, assuming the robot is completely costed
over that time, is the following:
​($52,000/material handler + $60,000/technician) × 2 + $400,000/robots − $0.25 × autos​
Equating the two alternatives:
​$416,000 = $624,000 − $0.25 × autos​
Solving for the break-even point:
​− $208,000/ − $0.25 = 832,000 autos​
This indicates that, to break even, 832,000 autos would need to be produced with the robots
over the next two years.
LO 7–3
SOLVED PROBLEM 2
A contract manufacturer makes a product for a customer that consists of two items, a cable
with standard RCA connectors and a cable with a mini-plug, which are then packaged together
as the final product (each product sold contains one RCA and one mini-plug cable). The manufacturer makes both cables on the same assembly line and can only make one type at a time:
either it can make RCA cables or it can make mini-plug cables. There is a setup time when
switching from one cable to the other. The assembly line costs $500/hour to operate, and this
rate is charged whether it is being set up or actually making cables.
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Current plans are to make 100 units of the RCA cable, then 100 units of the mini-plug
cable, then 100 units of the RCA cable, then 100 units of the mini-plug cable, and so on,
where the setup and run times for each cable are given as follows.
Component
Setup/Changeover Time
Run Time/Unit
RCA cable
Mini-plug cable
5 minutes
10 minutes
0.2 minute
0.1 minute
Assume the packaging of the two cables is totally automated and takes only two seconds
per unit of the final product and is done as a separate step from the assembly line. Since the
packaging step is quick and the time required does not depend on the assembly-line batch size,
its cost does not vary and need not be considered in the analysis.
What is the average hourly output in terms of the number of units of packaged product
(which includes one RCA cable and one mini-plug cable)? What is the average cost per unit
for assembling the product? If the batch size were changed from 100 to 200 units, what would
be the impact on the assembly cost per unit?
Solution
The average hourly output rate when the batch size is 100 units is calculated by first calculating
the total time to produce a batch of cable. The time consists of the setup + the run time for a batch:
​5 + 10 + 0.2(100) + 0.1(100) = 15 + 30 = 45 minutes/100 units​
So if we can produce 100 units in 45 minutes, we need to calculate how many units can be
produced in 60 minutes; we can find this with the following ratio:
​45/100 = 60/X​
Solving for X:
​X = 133.3 units/hour​
The cost per unit is then
​$500/133.3 = $3.75/unit​
If the batch size were increased to 200 units:
5 + 10 + 0.2(200) + 0.1(200) = 15 + 60 = 75 minutes/200 units
75/200
​​
​  =​  60/X​ ​  ​​​
X = 160/hour
$500/160 = $3.125/unit
Discussion Questions
LO 7–1
LO 7–2
LO 7–3
1. What is meant by a process? Describe its important features.
2. What is a customer order decoupling point? Why is it important?
3. What’s the relationship between the design of a manufacturing process and the firm’s strategic competitive dimensions (Chapter 2)?
4. What does the product–process matrix tell us? How should the kitchen of a Chinese restaurant be structured?
5. It has been noted that, during World War II, Germany made a critical mistake by having
its formidable Tiger tanks produced by locomotive manufacturers, while the less formidable U.S. Sherman tank was produced by American car manufacturers. Use the product–­
process matrix to explain that mistake and its likely result.
6. How does the production volume affect break-even analysis?
7. What is meant by manufacturing process flow?
8. Why is it that reducing the number of moves, delays, and storages in a manufacturing process is a good thing? Can they be completely eliminated?
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163
Objective Questions
LO 7–1
LO 7–2
1. What is the first of the three simple steps in the high-level view of manufacturing?
2. The customer order decoupling point determines the position of what in the supply chain?
3. Dell Computer’s primary consumer business takes orders from customers for specific
configurations of desktop and laptop computers. Customers must select from a certain
model line of computer and choose from available parts, but within those constraints they
may customize the computer as they desire. Once the order is received, Dell assembles
the computer as ordered and delivers it to the customer. What type of manufacturing process is described here?
4. What term is used to mean manufacturing designed to achieve high customer satisfaction
with minimum levels of inventory investment?
5. How would you characterize the most important difference for the following issues when
comparing a workcenter (job shop) and an assembly line?
Issue
Workcenter (Job Shop)
Assembly Line
Number of setups/job changeovers
Labor content of product
Flexibility
6. The product–process matrix is a convenient way of characterizing the relationship
between product volumes (one-of-a-kind to continuous) and the processing system
employed by a firm at a particular location. Characterize the nature of the intersection
between the type of shop (column) and process dimension (row) in the following table.
Workcenter
Assembly Line
Engineering emphasis
General workforce skill
Facility layout
WIP inventory level
7. For each of the following variables, explain the differences (in general) as one moves
from a workcenter to an assembly line environment.
a. Throughput time (time to convert raw material into product)
b. Capital/labor intensity
c. Bottlenecks
8. A book publisher has fixed costs of $300,000 and variable costs per book of $8.00. The
book sells for $23.00 per copy.
a. How many books must be sold to break even?
b. If the fixed cost increased, would the new break-even point be higher or lower?
c. If the variable cost per unit decreased, would the new break-even point be higher or lower?
9. A manufacturing process has a fixed cost of $150,000 per month. Each unit of product
being produced contains $25 worth of material and takes $45 of labor. How many units are
needed to break even if each completed unit has a value of $90? (Answer in Appendix D)
10. Assume a fixed cost of $900, a variable cost of $4.50, and a selling price of $5.50.
a. What is the break-even point?
b. How many units must be sold to make a profit of $500.00?
c. How many units must be sold to average $0.25 profit per unit? $0.50 profit per unit?
$1.50 profit per unit?
11. Aldo Redondo drives his own car on company business. His employer reimburses him
for such travel at the rate of 36 cents per mile. Aldo estimates that his fixed costs per
­year—­such as taxes, insurance, and depreciation—are $2,052. The direct or variable
costs—such as gas, oil, and maintenance—average about 14.4 cents per mile. How many
miles must he drive to break even?
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12. A firm is selling two products—chairs and bar stools—each at $50 per unit. Chairs have
a variable cost of $25, and bar stools $20. The fixed cost for the firm is $20,000.
a. If the sales mix is 1:1 (one chair sold for every bar stool sold), what is the break-even
point in dollars of sales? In units of chairs and bar stools?
b. If the sales mix changes to 1:4 (one chair sold for every four bar stools sold), what is
the break-even point in dollars of sales? In units of chairs and bar stools?
13. Owen Conner works part-time packaging software for a local distribution company in Indiana. The annual fixed cost is $10,000 for this process, direct labor is $3.50 per package,
and material is $4.50 per package. The selling price will be $12.50 per package. How much
revenue do we need to take in before breaking even? What is the break-even point in units?
14. AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of
$.50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000. Current sales
volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would
increase to $.60, but sales volume should jump to 50,000 units due to a higher-quality
product. Should AudioCables buy the new equipment?
15. The Goodparts Company produces a component that is subsequently used in the aerospace
industry. The component consists of three parts (A, B, and C) that are purchased from
outside and cost 40, 35, and 15 cents per piece, respectively. Parts A and B are assembled
first on assembly line 1, which produces 140 components per hour. Part C undergoes a
drilling operation before being finally assembled with the output from assembly line 1.
There are, in total, six drilling machines, but at present only three of them are operational.
Each drilling machine drills part C at a rate of 50 parts per hour. In the final assembly,
the output from assembly line 1 is assembled with the drilled part C. The final assembly
line produces at a rate of 160 components per hour. At present, components are produced
eight hours a day and five days a week. Management believes that if the need arises, it can
add a second shift of eight hours for the assembly lines.
The cost of assembly labor is 30 cents per part for each assembly line; the cost of drilling labor is 15 cents per part. For drilling, the cost of electricity is one cent per part. The
total overhead cost has been calculated as $1,200 per week. The depreciation cost for
equipment has been calculated as $30 per week.
a. Draw a process flow diagram and determine the process capacity (number of components produced per week) of the entire process.
b. Suppose a second shift of eight hours is run for assembly line 1 and the same is done
for the final assembly line. In addition, four of the six drilling machines are made
operational. The drilling machines, however, operate for just eight hours a day. What is
the new process capacity (number of components produced per week)? Which of the
three operations limits the capacity?
c. Management decides to run a second shift of eight hours for assembly line 1, plus
a second shift of only four hours for the final assembly line. Five of the six drilling
machines operate for eight hours a day. What is the new capacity? Which of the three
operations limits the capacity?
d. Determine the cost per unit output for questions (b) and (c).
e. The product is sold at $4.00 per unit. Assume that the cost of a drilling machine (fixed
cost) is $30,000 and the company produces 8,000 units per week. Assume that four
drilling machines are used for production. If the company had an option to buy the
same part at $3.00 per unit, what would be the break-even number of units?
16. The following diagram represents a process where two components are made at stations
A1 and A2 (one component is made at A1 and the other at A2). These components are
then assembled at station B and moved through the rest of the process, where some additional work is completed at stations C, D, and E.
Assume that one and only one person is allowed at each station. Assume that the times
given for each station represent the amount of work that needs to be done at that station
by that person, with no processing time variation. Assume that inventory is not allowed to
build in the system.
Manufacturing Processes
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165
A1
0.3 min.
A2
B
C
D
E
0.75 min.
0.65 min.
0.60 min.
0.55 min.
0.4 min.
What is the average hourly output of the process when it is in normal operation? (Answer
in Appendix D)
17. A certain custom engraving shop has traditionally had orders for between 1 and 50 units
of whatever a customer orders. A large company has contacted this shop about engraving “reward” plaques (which are essentially identical to each other). It wants the shop to
place a bid for this order. The volume is expected to be 12,000 units per year and will
most likely last four years. To successfully bid (low enough price) for such an order, what
will the shop likely have to do?
Case: Circuit Board Fabricators, Inc.
Circuit Board Fabricators, Inc. (CBF), is a small manufacturer of circuit boards located in California near San
Jose. Companies such as Apple Computer and HewlettPackard use the company to make boards for prototypes
of new products. It is important that CBF give quick and
very high-quality service. The engineers working on
the new products are on a tight schedule and have little
patience with sloppy work or missed delivery dates.
Circuit boards are a rigid flat surface where electronic components are mounted. Electronic components
such as integrated circuits, resistors, capacitors, and
diodes are soldered to the boards. Lines called “traces”
are etched on the board and electronically connect the
components. Since the electronic traces cannot cross,
holes through the circuit board are used to connect traces
on both sides of the boards, thus allowing complex circuits to be implemented. These boards often are designed
with 40 to 50 components that are connected through
hundreds of traces on a small four-by six-inch board.
CBF has developed a good business plan. It has four
standard-size board configurations and has automated
much of its process for making these standard boards.
Fabricating the boards requires CBF’s numerically controlled (NC) equipment to be programmed. This is largely
an automated process that works directly from engineering
drawings that are formatted using industry standard codes.
Currently, the typical order is for 60 boards. Engineers at customer companies prepare a computer-aided
design (CAD) drawing of the board. This CAD drawing
precisely specifies each circuit trace, circuit pass-through
holes, and component mounting points on the board. An
electronic version of the drawing is used by a CBF process engineer to program the NC machines used to fabricate the boards.
Due to losses in the system, CBF has a policy of
increasing the size of an order by 25 percent. For example, for a typical order consisting of 60 boards, 75 boards
would be started through the process. Fifteen percent
of the boards are typically rejected during an inspection that occurs early in the manufacturing process and
another 5 percent of the remaining boards are rejected in
the final test.
Board Fabrication Process
CBF purchases circuit board blanks from a vendor. These
boards are made from woven fiberglass cloth that is
impregnated with epoxy. A layer of copper is laminated
onto each side to form a blank board. The blank board
comes from the vendor trimmed to the standard sizes that
CBF’s numerically controlled equipment can handle.
The following is a description of the steps involved
in processing an order at CBF:
1. Order acceptance. Check to verify that the
order fits within the specification of boards that
can be produced with CBF equipment. The process engineer at CBF works with the customer
engineer to resolve any problems with the order.
2. NC machine programming. CAD information
is used to program the machines to produce the
order.
3. Board fabrication.
a. Clean. Each board is manually loaded into
this machine by an operator. The machine then
cleans the boards with a special chemical. Each
board is then automatically transferred to the
coating machine.
b. Coat. A liquid plastic coating is deposited on
both sides of the board. Following this process,
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Section 2
an operator places the boards on a cart. Each
cart, with a complete order of boards, is then
moved immediately to the “clean room.”
c. Expose. This photographic process makes
the exposed plastic coating resistant to dissolving in the areas where the copper traces are
needed. An operator must attend to this machine
100 percent of the time, and load and unload
each individual board.
d. Develop. Each board is manually loaded onto
this machine. The boards are dipped by the
machine, one-at-a-time, in a chemical bath that
dissolves the plastic and the underlying copper
in the proper areas. After dipping, the machine
places each board on a conveyor.
e. Inspect. Each board is picked from the conveyor as it comes from the developer. The board
is optically checked for defects using a machine
similar to a scanner. Approximately 15 percent
of the boards are rejected at this point. Boards
that pass inspection are placed back on the conveyor that feeds the bake oven. Two inspectors
are used at this station.
f. Bake. Boards travel through a bake oven that
hardens the plastic coating, thus protecting the
traces. Boards are then manually unloaded and
Circuit Board Fabricators—Process Data
exhibit 7.8
Required output per shift
Average job size (boards)
Production hours per day
Working days per week
Process/Machine
placed on a cart. When all the boards for an order
are on the cart, it is moved to the drilling machines.
g. Drilling. Holes are drilled using an NC
machine to connect circuits on both sides of
the board. The boards are manually loaded and
unloaded. The machines are arranged so that one
person can keep two machines going simultaneously. The cart is used to move the boards to the
copper plate bath.
h. Copper plate. Copper is deposited inside
the holes by running the boards through a special copper plating bath. This copper connects
the traces on both sides of the board. Each
board is manually loaded on a conveyor that
passes through the plating bath. Two people
are needed for this process, one loading and a
second unloading the conveyor. On completion
of plating, boards are moved on the cart to the
final test machines.
i. Final test. Using a special NC machine, a
final electrical test of each board is performed
to check the integrity of the circuits. On average, approximately 5 percent of the boards fail
this test. The boards are manually loaded and
unloaded. One person is needed to operate each
machine and sort the good and bad boards. The
1,000
60
7.5
5
Number of Machines
Number of Employees
Setup (minutes per job)
Run (minutes per part)
Load
1
1
5
0.33
Clean
1
0.5
Coat
1
0.5
Unload
1
1
Expose
5
5
15
1.72
Load
1
1
5
0.33
Develop
1
Inspect
2
Bake
1
Unload
1
1
Drilling
6
3
15
1.5
Copper plate
1
2
5
0.2
Final test
6
6
15
2.69
0.33
0.33
2
0.5
0.33
0.33
Manufacturing Processes
cart is used to move the good boards to the
shipping area. The bad boards are scrapped.
4. Shipping. The completed order is packed and
shipped to the customer.
The plant was designed to run 1,000 boards per day
when running five days a week and one eight-hour shift
per day. Unfortunately, to date, it has not come near that
capacity, and on a good day it is able to produce only
about 700 boards. Data concerning the standard setup
and run times for the fabrication process are given in
Exhibit 7.8. These times include allowances for morning and afternoon breaks, but do not include time for the
half-hour lunch period. In addition, data on current staffing levels also are provided. The CBF process engineer
insists that the capacity at each process is sufficient to
run 1,000 boards per day.
Chapter 7
167
In order to help understand the problem, CBF hired a
consulting company to help solve the problem.
Questions
CBF hired you to help determine why it is not able to
produce the 1,000 boards per day.
1. What type of process flow structure is CBF using?
2. Diagram the process in a manner similar to
Exhibit 7.7.
3. Analyze the capacity of the process.
4. What is the impact of losses in the process in the
inspection and final test?
5. What recommendations would you make for a
short-term solution to CBF’s problems?
6. What long-term recommendations would you
make?
Practice Exam
In each of the following, name the term defined or answer
the question. Answers are listed at the bottom.
1. A firm that makes predesigned products directly to fill
customer orders has this type of production environment.
2. A point where inventory is positioned to allow the
production process to operate independently of the
customer order delivery process.
3. A firm that designs and builds products from scratch
according to customer specifications would have this
type of production environment.
4. If a production process makes a unit every two hours
and it takes 42 hours for the unit to go through the entire
process, what is the expected work-in-process equal to?
5. A finished goods inventory, on average, contains
10,000 units. Demand averages 1,500 units per week.
Given that the process runs 50 weeks a year, what is
the expected inventory turn for the inventory? Assume
that each item held in inventory is valued at about the
same amount.
6. This is a production layout where similar products are
made. Typically, it is scheduled on an as-needed basis
in response to current customer demand.
7. The relationship between how different layout structures are best suited depending on volume and product
variety characteristics is depicted on this type of graph.
Answers to Practice Exam 1. Make-to-order. 2. Customer order decoupling point. 3. Engineer-to-order. 4. 21 units = 42/2.
5. 7.5 turns = (1,500 × 50)/10,000. 6. Manufacturing cell. 7. Product–process matrix.