Week 5

Manufacturing Process

Product & Process Design

 Designing a customer-pleasing product is an
ART.
 Building the product is a SCIENCE.
 Moving the product from design to customer
is MANAGEMENT

 Key: TEAMWORK

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 Situation #1
 When Xerox Corporation began
manufacturing photocopiers, the marketing
people were disappointed by poor sales

Situation #1, cont.

 Faced with the capacity to manufacture
more machines than they were selling, the
people at Xerox came up with an innovative
marketing strategy

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 Situation #1, cont.
 Instead of selling the machines, they offered
to place their machines in businesses that
were willing to pay a few cents for each copy
produced
 The marketing innovation was so successful
that the company came to prefer it over
selling their machines

Situation #1, concl.

 Bottom line
– Traditional approaches are not always the most
effective

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 Canon vs Xerox, who won the game?

Creativity

Only 2% of adults are using their creative ability.

This contrasts with 10% of 7 year olds and 90%

of 5 year olds.

Professor Jerry Bank – Georgia Tech

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 Creativity

58% of top executives say that being creative is

more important than being smart.

28% take the other view.

Professor Jerry Bank – Georgia Tech

Creativity

Upon graduation from college, most creative

ability has disappeared.

The only way to revive it is through training in

creative thinking and creative thinking exercises.

Professor Jerry Bank – Georgia Tech

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 Various Forces to which Cargo is Subjected

Source: Contemporary Logistics, Johnson et al. Prentice Hall, 1998

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 Innovator’s DNA Models for Generating Innovative Ideas

Courage to Behavioral Cognitive Skills

Innovate Skills to Synthesize

Jeffrey H. Dyer, Hal B. Gregersen and Clayton M. Christensen

https://www.hbs.edu/faculty/Pages/item.aspx?num=41229#:~:text=In%20The%20I
nnovator's%20DNA%2C%20the,scrutinizing%20the%20behavior%20of%20custo
mers%2C 13

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Questioning

Are You Willing to Look Stupid?

The two great inhibitors to questions are:

(1)not wanting to look stupid
(2) not willing to be viewed as uncooperative or disrespectful.

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 Questioning

Why aren’t schools performing as well as they should?

We’ve been asking the wrong question.

If we asked instead, “Why aren’t students learning?” we might discover

things that others do not yet perceive. A key reason why so many students
languish unmotivated in school or don’t come to class at all is that
education isn’t a job that they are trying to do.

They mainly want to feel successful and to have fun with friends, meeting
important social and emotional needs each day.

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The MET school, a charter school in Providence, Rhode Island, designed a project‐
based curriculum where students work together each day on various projects
(containing elements of the Montessori method which provides “hands on”
interactive learning experiences). This approach gives students an opportunity to
have fun with friends while feeling a sense of accomplishment because they can see
how their efforts move a project toward completion.

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Production Processes
 Production
processes are used
to make any
manufactured item
– Step 1 – Source the
parts needed
– Step 2 – Make the
product
– Step 3 – Deliver the
product

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 Production Process Terms
 Lead time – the time needed to respond to a
customer order
 Order decoupling point – where inventory is
positioned to allow entities in the supply
chain to operate independently
 Lean manufacturing – a means of achieving
high levels of customer service with minimal
inventory investment

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Types of Firms
Make-to-Stock
• Serve customers “on demand” from finished goods inventory

Assemble-to-Order
• Combine a number of preassembled modules to meet a
customer’s specifications
Make-to-Order
• Make the customer’s product from raw materials, parts, and
components
Engineer-to-Order
• Work with the customer to design and then make the product

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 Types of Firms
Make-to-Stock
• Serve customers “on demand” from finished goods inventory

Assemble-to-Order
• Combine a number of preassembled modules to meet a
customer’s specifications
Make-to-Order
• Make the customer’s product from raw materials, parts, and
components
Engineer-to-Order
• Work with the customer to design and then make the product

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Types of Firms
Make-to-Stock
• Serve customers “on demand” from finished goods inventory

Assemble-to-Order
• Combine a number of preassembled modules to meet a
customer’s specifications
Make-to-Order
• Make the customer’s product from raw materials, parts, and
components
Engineer-to-Order
• Work with the customer to design and then make the product

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 Types of Firms
Make-to-Stock
• Serve customers “on demand” from finished goods inventory

Assemble-to-Order
• Combine a number of preassembled modules to meet a
customer’s specifications
Make-to-Order
• Make the customer’s product from raw materials, parts, and
components
Engineer-to-Order
• Work with the customer to design and then make the product

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Which type of firm?

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 Which type of firm?

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Which type of firm?

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 Which type of firm?

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Which type of firm?

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 Which type of firm?

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Which type of firms?

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 Which type of firm?

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Which type of firm?

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 Make-to-Stock
 Examples of products
– Televisions
– Clothing
– Packaged food products
 Essential issue in satisfying customers is to balance the
level of inventory against the level of customer service
– Easy with unlimited inventory but inventory costs money
– Trade-off between the costs of inventory and level of customer
service must be made
 Use lean manufacturing to achieve higher service levels
for a given inventory investment

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Assemble-to-Order
 A primary task is to define a customer’s order in terms of
alternative components since these are carried in inventory
– An example is the way Dell Computer makes their desktop
computers
 One capability required is a design that enables as much
flexibility as possible in combining components
 There are significant advantages from moving the
customer order decoupling point from finished goods to
components
 Wide variety of finished goods combinations can be built
from a set of components

𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐶𝑜𝑚𝑏𝑖𝑛𝑎𝑡𝑖𝑜𝑛𝑠 𝑁 𝑁 ⋯ 𝑁 𝑁

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 Where is the decoupling point?

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Make-to-Order/Engineer-to-Order
 Boeing’s process for making commercial
aircraft is an example
 Customer order decoupling point could be in
either raw materials at the manufacturing
site or the supplier inventory
 Depending on how similar the products are it
might not even be possible to pre-order parts

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 Make-to-Stock Process Map
 Material is purchased and staged in raw material
inventory
 Material is used and the product is fabricated
 Product is put into finished goods inventory
 Product is shipped according to orders from customers

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Q: Types of Inventory

 Raw materials
 Work-in-progress or Work-in-process (WIP)
 Finished goods
 Goods in transit

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 Inventory Measures
 Total average value of inventory - the sum of the value
(at cost) of the raw material, work-in process, and
finished goods inventory
– Commonly tracked in accounting systems and reported in
financial statements
 Inventory turn - the cost of goods sold divided by the
average inventory value
– Not particularly useful for evaluating the performance of a
process
 Days of supply - the inverse of inventory turns scaled to
days

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Little’s Law
 The flow of items through a production
process can be described using Little’s Law
 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡 𝑟𝑎𝑡𝑒 𝑥 𝐹𝑙𝑜𝑤 𝑡𝑖𝑚𝑒
– Throughput – long term average rate of flow
through the process
– Flow time – time for a single unit to traverse the
entire process
– Inventory – materials held by the firm for future
use

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 Example
 A car manufacturing plant purchases batteries from China
 Cost of each battery: $45
 It takes 12 hours to make a car
 The plant produces 200 cars per 8 hours shift (assume one
shift per day)
 Batteries – Raw material inventory: 8000 pcs

 Find the total number of batteries in the plant on average

 How much are these battery worth?
 How many days of supply are held in raw material inventory
on average?

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Work-in-process inventory (WIP)

 Inventory = throughput x flow time
 Throughput = 200 cars/8 hrs = 25 cars/hr
 One car one battery, ie: 25 batteries/hr
 Flow time = 12 hours
 WIP = 25 x 12 batteries = 300 batteries
 Total inventory = 8,000 + 300 batteries
 Worth : $ 8,300x 45 = $373,000
 Days of inventory (raw material) =
$8,000/200 = 40 days
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 Organization of Production Processes

 Project

 Workcenter

 Manufacturing Cell

 Assembly Line

 Continuous Process

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Organization of Production Processes

Manufacturing cell - a
Project – the product Workcenter (job shop) - dedicated area where
remains in a fixed similar equipment or products that are similar
location, equipment is functions are grouped in processing
moved to the product together requirements are
produced

Assembly line - work

processes are arranged Continuous process -
according to the assembly line only the
progressive steps by flow is continuous such
which the product is as with liquids
made

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 Project

The product remains in a fixed location. Manufacturing

equipment is moved to the product.
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Project

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 Work Center

Similar equipment or functions are group together 47

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What are the advantages & disadvantages?

Work Center
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 Manufacturing Cell Development
1. Group parts into Workcenter layout –
families that follow similar machines
a common grouped together
sequence of steps.
2. Identify dominant
flow patterns for
each part family
3. Machines and the
associated
processes are
physically
regrouped into
cells

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Regrouped Machines

Manufacturing
cell layout –
dissimilar
machines grouped
together by
product

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 Manufacturing Cell
 Is a dedicated cell where products that are
similar in processing requirements are
produced.
 These cells are designed to perform a
specific set of processes, and the cells are
dedicated to a limited range of products.

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Assembly Line

Work processes are arranged according to the progressive steps

by which the product is made. 52

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 Assembly Line

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Assembly Line

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 Q

 The Sherman was the primary tank utilized

by the United States army during World War
Two. It also became the main tank of the
other Allied countries, except for Russia. The
popularity of the Sherman was not due to its
superior design, but its availability and mass
production.
http://archives.library.illinois.edu/blog/poor-defense-sherman-tanks-ww2/

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Continuous Plant

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 Continuous Process

Similar to an assembly line but the flow is continuous not

discrete. 57

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Product-Process Matrix

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 What is the capacity of worker A?
Which stage is the bottle neck?

B C
A

I II III

Worker A: 60 seconds
Worker B: 75 seconds
Worker C: 55 seconds

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What is the efficiency of this production line?

B C
A

I II III

Worker A: 60 seconds
Worker B: 75 seconds
Worker C: 55 seconds

Sum of task times (T)

Efficiency =
Actual number of workstations (Na) x Cycle time (C)

= (60+75+55)/(75*3) = 0.84
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 How can you improve this production line?
B C
A

I II III

Worker A: 60 seconds
Worker B: 75 seconds
Worker C: 55 seconds

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Process Design

 Assembly Line balancing

Why line balancing is important?

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Example of Line Balancing:
Precedence Diagram
Question: Which process step defines the maximum rate of
production?

2 1 1
A B G 1.4
H

C D E F
3.25 1.2 .5 1
Answer: Task C is the cycle time of the line and
therefore, the maximum rate of production.

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Assembly Line Balancing

 The Model J Wagon is to be assembled on a
conveyor belt
 500 wagons are required per day
 Production time 420 minutes

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 Assembly-Line Balancing
1. Specify the sequential relationships among tasks using a precedence
diagram.
2. Determine the required workstation cycle time (C).
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑡𝑖𝑚𝑒 𝑝𝑒𝑟 𝑑𝑎𝑦
𝐶
𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑜𝑢𝑡𝑝𝑢𝑡 𝑝𝑒𝑟 𝑑𝑎𝑦 𝑖𝑛 𝑢𝑛𝑖𝑡𝑠
3. Determine the theoretical minimum number of workstations (𝑁 ).
𝑆𝑢𝑚 𝑜𝑓 𝑡𝑎𝑠𝑘 𝑡𝑖𝑚𝑒𝑠 𝑇
𝑁
𝐶𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒 𝐶
4. Select a primary rule to assign tasks to workstations and a secondary
rule to break ties.
5. Assign tasks (on at a time) to the first workstation until no more tasks
can be added (due to cycle time or sequencing constraints). Repeat
for all subsequent workstations until all tasks are assigned.
6. Evaluate the efficiency of the balance
𝑆𝑢𝑚 𝑜𝑓 𝑡𝑎𝑠𝑘 𝑡𝑖𝑚𝑒𝑠 𝑇
𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦
𝐴𝑐𝑡𝑢𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑟𝑘𝑠𝑡𝑎𝑡𝑖𝑜𝑛𝑠 𝑁 𝑊𝑜𝑟𝑘𝑠𝑡𝑎𝑡𝑖𝑜𝑛 𝑐𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒 𝐶
7. If efficiency is unsatisfactory, rebalance using a different rule.

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Precedence Diagram

Production Time per Day 60 sec min 420 min. 25,200 sec
𝐶 𝑐𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒 50.4 sec wagon
Output per Day 500 wagons 500 wagons

𝑇 195 seconds
𝑁 𝑁𝑜. 𝑜𝑓 𝑤𝑜𝑟𝑘 𝑠𝑡𝑎𝑡𝑖𝑜𝑛𝑠 3.87 ⟹ 4
𝐶 50.4 seconds

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 Assembly Line Balancing
• Prioritize based on the number of following tasks.
• Select a primary rule to assign tasks to
workstations and a secondary rule to break ties.
• Assign tasks

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Assembly Line Balancing

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 Assembly Line Balancing
 Determine the workstation cycle time

C= Production time per day

Output per day

= 60 sec. x 420 minutes

500

= 50.4

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Assembly Line Balancing

 Determine the theoretical minimum number

of workstations required (N), (the actual
number may be greater)
 T = Sum of task times= 195 sec
 N = T/C = 195 sec/50.4 sec

 = 3.87
= 4 (round up)
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 Precedence Graph for Model J Wagon

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Efficiency Calculation
Sum of task times (T)
Efficiency =
Actual number of workstations (Na) x Cycle time (C)

 Efficiency = T/N*C
 = 195/(5*50.4)
 = 0.77 or 77%

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 Assembly Line Balancing
 Specify the sequential relationships among
tasks
 Determine the required workstation cycle
time
 Determine the theoretical minimum number
of workstations
 Assign tasks, one a time, until the sum of
the tasks is equal to the workstation cycle
time
 Evaluate the efficiency of the balance
 Rebalance if needed

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Reducing Task Time Requirements

 Split the task
 Share the task
 Use parallel workstations
 Use a more skilled worker
 Work overtime
 Redesign
 …

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 Production Line Layouts

Problem – operators Solution – remove

trapped in “cages” barriers to operators
prevents sharing can trade work and
work among them operators can be
added or removed
as needed

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Production Line Layouts

Problem – operators
“birdcaged” with no
opportunity to share
work or add third
Solution – operators
operator
can help each other
and third operator
can be added if
needed
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 Production Line Layouts

Problem – straight
line is difficult to
balance Solution – U-shaped
line gives better
operator access and
may reduce need for
operators

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Please comment this Process

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 Please comment this Process

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Please comment this Process

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 Please comment this Process

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Break-Even Analysis
 A standard approach to choosing among
alternative processes or equipment is a
break-even analysis
 The method is most suitable when
processes and equipment entail a large
initial investment and fixed cost, and when
variable production costs are reasonably
proportional to the number of units produced

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 Break – Even Analysis
 A car manufacturer is considering a change in an
assembly line.
 The change involved installation of 4 new robots
that will automatically install windshields.
 The cost of the 4 robots including installation is
$400,000.
 Current practice is to amortize the initial cost of
robot in 2 years
 One full time engineer will be needed to monitor
and maintain the robots, that is going to cost
$60,000 per year.
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Current Practice
 Uses 4 full time employees on this job, and
each cost $ 52,000 per year.

 One of these employees is a material

handler, and this person will still be needed
with the new process.

 It is estimated the new process will save

$0.25 sealing materials per windshield
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 Break – Even Analysis
 Cost of current process over the next 2
years:
=$52,000 * 4 * 2 = $416,000

The cost of new process over the next 2 years

= ($52,000 +60,000) * 2 +$40,000 – $0.25* x
(cars)

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Break – Even Analysis

 Equating the 2 alternatives:

 $416,000 = $624,000 - $0.25 x

 x = 832,000 cars

 The break-even point is 832,000 cars

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 Thank You

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