OPSM 301 Operations Management

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OPSM 301 Operations Management
Koç University

• Class 3
• Process selection

Zeynep Aksin zaksin_at_ku.edu.tr
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• Process Selection Video

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Back to Shouldice wrap-upfrom last class
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Classification of Processes by process
architecture

• Project
• Job Shop
• Batch
• Line flow
• Continuous Flow

Job Shop Process-focused
Flow Shop Product-focused
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Matching Process Choice with Strategy Product-Pr
ocess Matrix
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Organization of Production Processes

• Project the product remains in a fixed location
• Manufacturing equipment is moved to the product
• Job shop (Workcenter) similar equipment or
  functions are grouped together
• Assembly line work processes are arranged
  according to the progressive steps by which the
  product is made
• Continuous process assembly line, only the flow
  is continuous such as with liquids

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Project LayoutOne of a kind products are produced
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The Job Shop Process

• Process Layout
• One of a Kind Build
• (To Customer Order)
• Absence of Rigid Flow Pattern
• Usually High Product Mix

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The Job shopsimilar equipment or functions are
grouped together

• High variety, low volume production

Routing matrix based upon flow of parts
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Process Layout
Lathe1
Lathe2
Drill Press 1
Paint Machine
Lathe3
Packaging Machine 1
Finish Production
Drill Press 2
Lathe4
Packaging Machine 2
Product 1735B Start of Production
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Job-Shop Process Examples (Also called process
focused)
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Process Focused Strategy - Pros Cons

• Advantages
• Greater product flexibility
• More general purpose equipment
• Lower initial capital investment
• Disadvantages
• High variable costs
• More highly trained personnel
• More difficult production planning control
• Low equipment utilization (5 to 25)

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The Flow Line Process

• Product Layout
• Discrete Parts
• Rigid Flow Pattern
• Product Mix of Standard Products

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Product Layout
Product 1735B
Start Production
Drill Press 1
Lathe
Packaging Machine 2
Drill Press 2
Paint Machine
Finish Production
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Product-Focused Strategy Pros Cons

• Advantages
• Lower variable cost per unit
• Lower but more specialized labor skills
• Easier production planning and control
• Higher equipment utilization (70 to 90)
• Disadvantages
• Lower product flexibility
• More specialized equipment
• Usually higher capital investment

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Positioning Inventory in the Supply Chain
Raw Material
Components
Semifinished
Finished
Make-to-Stock
Assemble-to-Order
SUPPLIER
CLIENT
Make-to-Order
Engineer-to-Order
Order
Forecast
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Production Processes Terms

• Lead time the time needed to respond to a
  customer order
• Customer order decoupling point where inventory
  is positioned to allow entities in the supply
  chain to operate independently

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Types of Firms

• Make-to-stock firms Firms that serve customers
  from finished goods inventory
• Assemble-to-order firms firms that combine a
  number of preassembled modules to meet a
  customers specifications
• Make-to-order firms that make the customers
  product from raw materials, parts, and components
• Engineer-to-order firm firm that will work with
  the customer to design and then make the product

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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

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Assemble-to-Order

• A primary task is to define a customers 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

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Make-to-Order and Engineer-to-Order

• Boeings 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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Assignment 1 from Universal Pulp and Paper
case-individual assignment

• Read the Universal Pulp and Paper (UPP) case from
  the course pack (available at the photocopy
  center)
• What are the main products of UPP?
• Identify the four product attributes for each
  product type. Explain each attribute with facts
  from the case
• Which process type is appropriate for each
  product type? Support your argument with facts
  from the case and process attributes you need for
  each product type.