Production &

operations management

Chapter 6
Process Planning &
design
 Process Planning &
design
™Process planning is concerned with planning the
conversion or transformation processes needed to
convert the materials into finished products.
™Process planning consists of two parts – Process
design and Operations design.
™Process Design is concerned with the overall
sequences of operations required to achieve the
product specifications.
™Process planning specifies the type of work stations
that are to be used, the machines and the
equipments necessary & the quantities in which
each is required.
 Process Planning &
design
™Process planning is concerned with planning the
conversion or transformation processes needed to
convert the materials into finished products.
™Process planning consists of two parts – Process
design and Operations design.
™Process Design is concerned with the overall
sequences of operations required to achieve the
product specifications.
™Process planning specifies the type of work stations
that are to be used, the machines and the
equipments necessary & the quantities in which
each is required.
 Operations design

™The sequence of operations in a manufacturing

process.
1) Nature of the product.
2) Materials used.
3) Quantities being produced.

Operations Design
™Operations Design is concerned with the design of
the individual manufacturing operation.
™It consists of examining man-Machine relationship
in the manufacturing process for converting the raw
materials into finished or semi finished product
 Framework for process
design
™The design of the transformation process requires
to answer following questions:
™What are the characteristics of the product or
services being supplied or offered to customers?
™What is expected value of output?
™What kind of equipment or machinery are
available?
™Equipment or machinery custom built?
™What types of labor skills are available?
™How much money can be spent on manufacturing
process?
™How best to handle materials?
 Systems approach to process
Planning & design
Inputs:
™Product/Service information.
™Product system information.
™Operation strategy.
Conversion process:
™Selection of the type of process coordinated with
operation strategies.
™Vertical integration studies consisting of major
minor technological steps.
™Equipment studies
™Production process studies
™Facilities studies
 Systems approach to process
Planning & design
Outputs:
™Technological processes:Design of specific
processes & linkage among process
™Facilities:Building design,layout of
facilities and selection of equipment
™Personal Estimates:Skill level
requirement,Number of employees,Training &
retaining requirement,supervision
requirement
 Linkage between Product &
Process Planning
™Product Planning serves as an input to process
design.
™Responsibility for product planning and
development rests with marketing department &
R&D department.
™Basic Product planning must begin during the
product design stages where selection of material&
initial form as casting,forging,die casting & plastic
moldings takes place
 Process Planning Linked to n
Product Planning
Product Planning

New technology Product Final Design

Process R&D Process design

Work Station Process Design
Selection
Operations Design
Operations Content Operations Methods
 Distinction between Process
Planning & facilities planning
™Process planning blends with the layout of
physical facilities.
™The process plans manifested by documents such
as route sheets and operation sheets are regarded as
input to the development of layout of physical
facilities.
™Figure shown on next slide shows overall
conceptual framework of process planning
 Diagram of overall development of process plans
Design Sales forecast
Specification Customers Orders

Functional Design
Process
design
Production Design

Drawing

Product Analysis

Buy Make or Buy

Make

Process decision
Workplace design
Process
Route sheets Manufacturing
planning
Modification
Of process plans
 Scope of Process Design

™Design of manufacturing of the product starts

with the receipt of product specification and ends
with the final plan for the manufacture of the
product.The steps involved in the process design
are.
™A careful review of the product design & product
specification to ensure economical production is
feasible.
™Determination of the methods of manufacture
that will result in the optimum manufacture
 Scope of Process Design

™Selection or development & procurement of all

machines ,tools ,jigs,and fixtures.
™Layout of production areas and auxiliary
spaces& installation of the manufacturing
facilities.
™Planning for and establishing the necessary
control of materials.,machines & man power to
ensure effective utilization of manufacturing
facility for economical production of product
 Factors affecting Process
Design
™ Volume of product to be manufactured.
™ Required quality of the product.
™ Equipment that is available.
Major Factors affecting process Design Decision
™Nature of product demand.
™Degree of vertical integration.
™Level of product/service quality.
™Degree of automation
™Level of product/Service Quality
™Degree of customer contact
 Factors affecting Process
Design
™ Ultimately the supply of virtually all "industrial"
products and services is dependent upon consumer demand.
™ We say, therefore, that Industrial Demand is DERIVED
DEMAND. That is, it is derived from Consumer demand.
So it follows that demand for a company's products will be
affected by the demand for some ultimate consumer product
or service - no matter how far removed the company might
be from the consumer market.
™As we move further back in the "chain" from the
consumer, the number of companies in a particular industry
reduces.
 Factors affecting Process
Design
™ For example, there are relatively few steel
manufacturers, yet steel is bought and processed by many
companies until there are thousands of companies
producing consumer goods that incorporate steel in some
way. Similarly, there are relatively few oil extracting
companies, but many companies further down the "chain"
that produce goods derived from oil products.
™The effects of all this are significant to companies that
manufacture or supply industrial goods or services:
(a) The company needs to be aware of what is happening in
its customers' markets (and those of its customers'
customers) even though the company does not have direct
access to these markets
 Factors affecting Process
Design
™ (b) Price manipulation, and other gimmicks, are not
likely to have much effect on the total demand for industrial
products. If there is little consumer demand, there will be a
low level of industrial demand that cannot readily be
stimulated by price - cutting.
™Also, because there are relatively few suppliers in the
industrial markets, any attempt at a "price war" is likely to
attract price retaliation. The net effect will then be to reduce
profits all round.
™(c) Following on from (a) above, sales forecasts must be
largely based on customers' assessments of demand, rather
than wholly upon the suppliers' assessments.
 Types of Process Design

™Process focused production system:In this type

the production processing the production department
are organized according to the type of
product/services being produced.
™ Product focused production system:This is a form
of production system in which production operations
are grouped according to the type of process.
™ Group-technology/cellular manufacturing
system:This form has recently developed.In group
technology ,the products or components are placed
in families or groups and separate manufacturing
cells are used to manufacture these groups
™
 Types of Process Design

™ Group-technology/cellular manufacturing
system:Advantages
™ Improved material flow
wReduced queuing time
wReduced inventory
wImproved use of space
wImproved team work
wReduced waste
wIncreased flexibility
 Process Technology

™ Group-technology/cellular manufacturing
system:Advantages
™ Improved material flow
wReduced queuing time
wReduced inventory
wImproved use of space
wImproved team work
wReduced waste
wIncreased flexibility
 Process Technology
Life Cycle
™ Process Technology Life cycle are related to
product Life cycles as shown in fig.
™Over the period of time manufacturing cost per
unit diminishes in mature products
™The product life cycle starts from from the stage
of “Start up”and ends up with “decline”
Manufacturing
Cost per unit

Continuous
Batch Assembly
flow
line
Job Shop

Time
 Product Process Matrix
™ The product/process matrix (PPM)
™This is a simple tool for mapping whether or not
proposed strategic choices lie in the firm's area of
experience.
™Step 1 involves plotting two axes, one for the
product families which the firm currently make and
one for the processes which it uses. This effectively
defines the area within which the firm is operating in
terms of its technological competence.
™Step 2 involves asking whether the new proposal fits
somewhere within this space or lies outside it, in other
words, somewhere which will require the acquisition of
new competence.
 Product Process Matrix
™ If it does, then it implies that the new
development will require new combinations of
existing knowledge and the challenge is one of
internal learning. But if it lies outside current
competence, then it will be necessary to think about
how the gap will be closed, and whether it represents
a high risk jump into completely new territory or an
incremental advance in the firm's knowledge base.
™Much innovation involves progress along one axis,
keeping the other constant. For example, developing
a new product family using processes with which the
firm is familiar is relatively low in risk.
 Product Process Matrix
™ Similarly employing a new process to make a well-
understood product is relatively low risk. Where the
change involves both product and process, the risks are
high.
™The basic principle can be applied in a number of
ways. First the axes can be changed, for example, to
explore the space around products and markets, or
processes and materials.
™And the matrix can be extended to three, four or five
dimensions, although by this time it becomes difficult to
work with. But in each case the principle is the same,
the axes represent 'knowledge space' within which the
firm has experience.
Product Process Matrix
 Batch size & Productivity

A
Product
Focused B.
Dedicated
Batch Size

system Product
Focused batch C
System Cellular D
manufacturing
Process Focused
Job Shop
Number of product Design
 Product Mix
™ At point there is a single product having a large
demand.In this case a product focused organization
dedicated to single product would be appropriate
which gives low production cost per unit.
™As the number of product design increases & as the
batch size decreases say at point B,a product focused
batch becomes appropriate
™At point D the production of many one –off- a kind
products ,a job shop producing unique products in
batches of a single item
™At point C ,the number of product decreases and
the batch size of products increases as compared to
point D
 Cost Requirement for
Planning Designs
™The amount of Capital required for the production
System depends on the type of production processing
organization
™It is greatest for production processing organization
and diminishes for the product focused batch system
Economic Analysis of production process
™Because fixed & variable costs tend to differ from
one form of production process to another ,economic
analysis is used for comparing alternative processing
plans for production of products
™When deciding among the types of production
processing organization,it is important to consider the
cost of each alternative
 Cost Requirement for
Planning Designs
™Cost Function of processing Alternative
™The amount of Capital required for each type of
process design tend to be different
™Capital charges are fixed charges that occur every
month.This fixed cost will be greater when initial
cost of the equipment building & other assets are
high.The variable cost which vary with volume is
different
™Automated assembly line has highest fixed cost.
 Cost Requirement for
Planning Designs
ho p
S
Job
fg .
B r M
Automated Assy. ell ula
C
C
Annual cost of Prod.

QA QC
Volume of products
 Break-Even Point
™The break even point for a product is the point
where total revenue received equals total costs
associated with the sale of the product (TR=TC).
™A break even point is typically calculated in order
for businesses to determine if it would be profitable
to sell a proposed product, as opposed to attempting
to modify an existing product instead so it can be
made lucrative.
™ Break-Even Analysis can also be used to analyze
the potential profitability of an expenditure in a
sales-based business
 Break-Even Point
™In unit sales
™If the product can be sold in a larger quantity than
occurs at the break even point, then the firm will
make a profit; below this point, a loss. Break-even
quantity is calculated by:
™Total fixed costs / (selling price - average
variable costs).
Explanation - in the denominator, "price minus
average variable cost" is the variable profit per
unit, or contribution margin of
ach unit that is sold.
 Break-Even Point
™This relationship is derived from the
profit equation: Profit = Revenues - Costs where
Revenues = (selling price * quantity of product)
and
Costs = (average variable costs * quantity) + total
fixed costs.
™Therefore,Profit=(selling price*quantity)-
(average variable costs*quantity+total fixed
costs).
™Solving for Quantity of product at the
breakeven point when Profit equals zero,
the quantity of product at breakeven is Total fixed
 Break-Even Point
™Firms may still decide not to sell low-profit
products, for example those not fitting well into their
sales mix.
™Firms may also sell products that lose money - as a
loss leader, to offer a complete line of products, etc.
But if a product does not break even, or a potential
product looks like it clearly will not sell better than
the break even point, then the firm will not sell, or
will stop selling, that product.
™An example:
™Assume we are selling a product for $2 each.
 Break-Even Point
™Assume that the variable cost associated with
producing and selling the product is 60 cents.
™Assume that the fixed cost related to the product
(the basic costs that are incurred in operating the
business even if no product is produced) is $1000.
™In this example, the firm would have to sell
(1000/(2.00 - 0.60) = 714) 714 units to break even.
in that case the margin of safety value of nil and the
value of bep is not profitable or not gaining loss.
 Break-Even Point
™By inserting different prices into the formula, you
will obtain a number of break even points, one for
each possible price charged. If the firm changes the
selling price for its product, from $2 to $2.30, in the
example above, then it would have to sell only
(1000/(2.3 - 0.6))= 589 units to break even, rather
than 714.
™To make the results clearer, they can be graphed.
To do this, you draw the total cost curve (TC in the
diagram) which shows the total cost associated with
each possible level of output,
Break-Even Point
 Break-Even Point
™the fixed cost curve (FC) which shows the costs
that do not vary with output level, and finally the
various total revenue lines (R1, R2, and R3) which
show the total amount of revenue received at each
output level, given the price you will be charging.
™The break even points (A,B,C) are the points of
intersection between the total cost curve (TC) and a
total revenue curve (R1, R2, or R3).
 Break-Even Point
™The break even quantity at each selling price can
be read off the horizontal, axis and the break even
price at each selling price can be read off the vertical
axis.
™The total cost, total revenue, and fixed cost curves
can each be constructed with simple formulae. For
example, the total revenue curve is simply the
product of selling price times quantity for each
output quantity.
 Break-Even Point
™The data used in these formulae come either from
accounting records or from various estimation
techniques such as regression analysis.
™The total cost, total revenue, and fixed cost curves
can each be constructed with simple formulae. For
example, the total revenue curve is simply the
product of selling price times quantity for each
output quantity.
™ The data used in these formulae come either from
accounting records or from various estimation
techniques such as regression analysis.
 Limitations
of Break-Even Analysis

™Break-even analysis is only a supply side (ie.:

costs only) analysis, as it tells you nothing about
what sales are actually likely to be for the product at
these various prices.
™It assumes that fixed costs (FC) are constant
™It assumes average variable costs are constant per
unit of output, at least in the range of likely
quantities of sales.
 Limitations
of Break-Even Analysis

™It assumes that the quantity of goods produced is

equal to the quantity of goods sold (i.e., there is no
change in the quantity of goods held in inventory at
the beginning of the period and the quantity of
goods held in inventory at the end of the period.
™In multi-product companies, it assumes that the
relative proportions of each product sold and
produced are constant (i.e., the sales mix is constant)
 Process Planning Aids

Time planning
™It is important to allocate a predicted amount of
time to specific tasks in the design and make process
so that you share the time allocated for the whole
project among the time requirements of various
tasks.
™ Remember, some parts of the design process will
take up more time than others so you must consider
this in the distribution of the time available.
™If you want your project to flow smoothly, it is a
good idea to start your planning with the production
of a flow chart
 Process Planning Aids

™This flow chart will reflect the design process but

will be specifically based on the type of project you
are undertaking.
Although the flow chart will help you organize the
sequence of operation for your project, you still
need to allocate specific time to each activity.
Commercial designers use planning charts to help
them map out the tasks they have to complete
against the time allocated. These charts are no
different to a geographical map in the sense that
 Process Planning Aids

they provide an overview of the project very much

like a geographical map shows an overview of the
land. To designers and engineers these are called
Gannt charts. You may have used them previously.
There are many ways of laying out a Gannt chart but
whichever way you decide you will need to
construct the chart logically. Based on the student-
completed Gannt chart shown, a method that you
could use is:
™Determine how long you need or want to take to
complete the project.
 Process Planning Aids

™Decide on the unit of time you will use across the

top of the chart under the heading of date/period:
this could be hours, days or weeks.
™Consider the advantages and disadvantages of
each unit of time.
™Decide how long you will need to complete each
of the project stages indicated on the left of the
chart.
™You will need to base this on previous project
experience or talk to your teacher for advice.
.
 Sample Painting Process Flow Chart

™In this example, a hypothetical manufacturing operation

has flow charted its painting operation. The example was
kept relatively simple, concentrating only on paint-related
wastes and releases. Only enough sections have been
completed to illustrate the procedure and end points. Many
sections have been left incomplete.
™Plant Painting Material Consumption and Wastes
The following are examples of information that might be
easily measured on a plant-wide basis.
™Paint purchase 2,430 gpy (30% solids)
™Thinner purchase 570 gpy
™Wash solvent purchase 490 gpy
 Sample Painting Process Flow Chart

™Wash solvent purchase 490 gpy

™Paint hazardous waste 560 gpy
™Paint filter 100 lb/yr
™Painted parts scrapped 3%
™Painted parts reworked 9%
™Transfer efficiency 45 %
™Process Flow
A process flow diagram might look as follows with waste
streams identified. Measuring the liquid and solid waste
collected would be relatively easy at this level of detail. But,
estimating evaporation for paint preparation and cleanup
would be difficult.
Sample Painting Process Flow Chart
 Flow Process Chart

The Flow Process Chart

™In analyzing processes, particular actions along the way
are often significant, especially if you are looking to
eliminate sources of waste (or muda, as the Japanese call it)
such as having documents piling up in in-trays or materials
being moved from pillar to post.
™How it works
The Flow process Chart is a simple half-text, half-picture
method of showing the steps in a process, using symbols to
indicate the type of action being taken and text to give
details of the action. The chart can selectively be used to
show what happens to selected people, materials or
equipment.
 Flow Process Chart

•Selecting and sequencing operations is vital

to efficient production.
•Proper analysis of product drawings is the
first step.
•Description of the operations is the second
step.
•Flow Process Charts
•Operation Process Charts
•Flow Diagram
Flow Process Chart
 Flow Process Chart

How to do it
1. Identify the process to be charted and the objective for
charting it.
2. Identify the symbol set to be used.
3. Record the steps of the process as it happens, starting at
the top of the page, with symbols on the left overlaying a
vertical line with appropriate notes about what is happening
to the right. Try to record significant activities which are
generally of approximately equal size (unless the problem is
at the detail level, do not try to capture too much detail).
You can also make the diagram more useful by such tricks
as numbering the different action types in sequence
Flow Process Chart
Flow Process Chart

Slide 7 of 11
Flow Process Chart
Flow Process Chart
Flow Process Chart
 Process Planning &
design

End Of

Chapter 6