PRODUCTION & OPERATIONS MANAGEMENT

PRODUCTION
The Process by which raw materials & other inputs are converted into finished products. Production is the creation of goods and services. Production means application of processes to the raw material to add the use and economic values to arrive at desired product by the best method, with out sacrificing the desired quality.

Production & Manufacturing

Manufacturing refers to the process of producing only tangible goods.

Production includes the creation of both tangible goods & intangible services.

Angles of Manufacturing Function

1.Production as a System

2.Production as an Organizational Function

3.Decision Making in Production

Production as a System a) Production System

b) Conversion Sub- System c) Control Sub- System

Production System Concepts

Production System: A system which converts a set of inputs into a set of desired outputs. Conversion Sub- System: A sub-system of the larger production system where, inputs are converted into outputs. Control Sub- System: A sub-system of the larger production system where, a portion of the output is monitored for feedback signals to provide corrective action.

Production System Model

INPUTS
ENVIRONMENT Legal/Political Social, Economic Technological
MARKET Competition Product Information Customer Desires

Conversion Sub- System

OUTPUT

PRIMARY RESOURCES
Materials & Supplies Personnel, Capital Assets, Capital, Utilities

Physical (Manufacturing, Mining) Locational Services (Transportation) Exchange Services (Retailing / Wholesaling) Storage Services (Warehousing) Other Private Services (Insurance, Finance, Utilities, RE, Health, Business & Personal Services) Government Services
Control Sub- System

Goods/ Services

Feedback Information

Production as an Organizational Function

Conversion Sub- System is the Core/ Heart of Production System. Every Organization irrespective of its purpose, has a production function where departments and personnel play a central role in achieving the objectives of the organization.

Decision Making in Production

General Categories Of Decision Making:1. Strategic Decisions : Relating to products, processes & manufacturing facilities. 2. Operating Decisions : Relating to planning production to meet demand. 3. Control Decisions: Relating to planning & controlling operations, these decisions concern the day-to-day activities of workers, quality of products & services, production & overhead costs & maintenance of machines.

Type of decisions Strategic Decision s(Plannin g products, Processes , and Facilities)

Area of Involvement

Nature of Activities

1. Production Processes Developing long range production plans including process design 2. Production Selecting & managing Technology production technology 3. Facility Layout Planning the arrangement of facilities 4. Allocating resources Planning for the optimal to strategic distribution of scarce resources alternatives among product lines 5. Long range capacity Answering how much & planning & facility where about long range location production capacity

Type of Area of Involvement decisions Operating 1. Production Decisions Planning Systems (Planning productio 2. Independent n to meet demand Inventory demand) Systems 3. Resource requirements planning systems 4. Shop floor planning & control 5. Material Management

Nature of Activities Aggregate planning & master production scheduling Planning & controlling finished goods inventories

Planning materials & capacity requirements

Short range decisions about what to produce & when to produce at each work Centre Managing all facts of materials system

Type of decisions Control Decision s(Plannin g& Controlli ng operatio ns)

Area of Involvement 1. Productivity & Employees

Nature of Activities Planning for the effective & efficient use of HR in operations

2. Total Quality Control

3. Project planning & Control Techniques 4. Maintenance Management & Reliability

Planning & controlling the quality of products & services

Planning & controlling projects Planning for managing the machines & facilities of production

IMPORTANCE OF PRODUCTION FUNCTION

Production helps achieve Competitive Advantage

1. 2. 3. 4. 5. 6. 7.

Shorter new product- lead time More Inventory turns Shorter Manufacturing Lead Time Higher Quality Greater Flexibility Better Customer Service Reduced Wastage

Production Management
Production Management refers to the application of management principles to the production factory. It involves application of planning, organizing, directing, & controlling to the production process.

Production

management

is

defined

as

management function which plans, organizes, coordinates, directs and controls the material supply and Processing activities of an enterprise, so that specified products are produced by specified methods to meet an approved sales programme.

Application of Management to the field of Production Result of 3 Developments:1. Development of Factory system of Production

2. Development of large corporation.hire

people

3. Value=> Performance & Profit=> Techniques

OPERATIONS MANAGEMENT

Productive systems are those that convert or transform resource inputs into useful goods & services as outputs. Such productive systems are generally referred to as Operations Systems. POM relates to the management of such systems. Operations Management is the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities.

1. PM is more used for a system where tangible goods are produced, OM is more frequently used where various inputs are transformed into intangible services. It Covers Service organizations such as Banks, Airlines, Utilities, Production Control Agencies, Super Bazars, Educational Institutions, Libraries, Consultancy firms & Police Depts. 2. Evolution of the Subject. i.e. PM precedes OM in the historical growth of the subject.

Difference Between Production Management & Operation Management

Functional Areas in a Business Organization

FINANCE

PRODUCTION

FIRM

PERSONNEL

MARKETING

 Marketing Function: Aims to promote its products among customers

Finance Function: Controls all other subsystems to utilize money more effectively.
Personnel Function: Plans and provides manpower to all other subsystem. Production Function: Step by Step conversion of one form of materials into another.

Views of Operations Management

Traditional view
A system that is involved with the manufacture and production of goods and services. Modern View A system designed to deliver value.

Approaches to Operations Management

1. Transformation Approach 2. Value Driven Approach

Transformation Approach
OM is the business function that manages that part of business that transforms RM into goods & services of higher value
Inputs Transformation Output

Inputs

Process

Output

Performance Measurement

Value Driven Approach-Core Process Model

Supporting Business Processes
Determine Customer Needs Monitor Competitive Environment Market products and Provide after sales services Measure Customer Satisfaction Understand Customers, Market Segments and Competitors Develop new products

Core Processes

Develop Product Strategy

Evaluate Product Concept Operations Planning and Control Processes Manage Human Resource

Create new product design or product improvements Manage Product Transformation Processes

Build and test prototypes

Secure Processes and Materials to satisfy Demand

Manage Business Logistics

Manage the Supply Chain Process

Manage Strategic Planning Processes

Manage Information Systems

Manage Financial Resources

Enterprise Management & Business Support Activities

Value Driven Concept of Operations Management FEEDBACK

Inputs
Suppliers Material Capital Equipment People Information

PROCESS

Output
Goods (Tangible) Services (Intangible)
Customers

Operations Management

Porters Value Chain

Interfaces between the production system other functional Areas

Human Resource Development: Attract best talent and help the manufacturing function Enhance the capabilities of the people through training. Create coherence between the peoples attitudes and organizations objectives. Marketing Provide relevant market feedback Marketing Strategy may lead to companys technology strategy Manufacturing strategy should provide backup for the customer service goals. Research and Development R&D functions helps in bringing additional flexibility in the design of new processes and in the design of new products in the existing operational facilities. Finance and Accounting Raise appropriate finance through an aggressive finance strategy The accounting, budgeting and control system should be supportive to the manufacturing strategy.

Inter Linkages between the Functions

Unsatisfied Customer

Excellent Marketing

Poor Sales

Low Production

Unsatisfied Customer

Excellent Marketing

Poor Supply Of Working Capital (Finance)

Full Capacity Production

Unsatisfied Customer

Excellent Marketing

Lack of
Personnel

Full Capacity Production

Availability of sufficient Working Capital

Scope of Production & Operations Management

Selection of location, acquisition of land, constructing building, procuring & installing machinery, purchasing & storing RM and converting them into saleable products. Quality management, maintenance management, production planning & control, methods improvement and work simplifications.

Evolution of Production Function

1. 2. 3. 4. 5. The Industrial Revolution Scientific Management The Human Relations Movement Operations Research Computers & Advanced Production Technology 6. The Service Revolution

The Industrial Revolution

Production System prior to 1700s are referred to as the Cottage System From 1770- early 1800- England 2 Major Developments: a) Substitution of machine power for human power b) Establishment of the factory system Advanced further with the development of the Gasoline engine and Electricity in the 1800s Cottage System of production had been replaced by the Factory System Missing..? Management

Scientific Management
A Philosophy which was propounded by business leaders, consultants, Educators and researchers. Contributors: 1. F.W. Taylor-time study, methods analysis,standards,planning & control 2. Frank B. Gilbreth-motion study,methods,construction,contracting, consulting, 3. Lillan M. Gilbreth-fatigue studies,human factor in work,employee selection & training 4. Henry L. Gantt-incentive,humanistic approach,training 5. Carl G. Barth-math analysis,consulting to automobile ind 6. Harrington Emerson-principles of efficiency 7. Morris L. Cooke-SM its application to education & govt.

Essential Principles
1. Developing a science for each element of a persons work which would replace the old Ruleof-Thumb method 2. Selecting workers scientifically & training and developing them 3. Cooperating with workers to ensure that the work is done according to the principles of science that have been developed 4. Dividing work & responsibility equally between management & workers

The Human Relations Movement

Refers to the ways in which managers interact with their employees. Better work done by the employees, organization has an effective human relations When morale & efficiency deteriorates, human relations are said to be ineffective. Factory workers- uneducated, in disciplined, unskilled Factory managers developed rigid controls to force the workers to work hard-1800s-early 1990s

Operations Research
Characteristics 1. Approaches problem solving & decision making from the total systems perspective 2. Draws on techniques from varied disciplines & applies the appropriate technique from each field to the system being studied 3. Does not experiment with the system but constructs a model of the system 4. Primary focus is in decision making 5. Computers are used extensively

Computers & Advanced Production Technology

In the beginning computers were used for clerical duties- payroll, billing cost reports, inventory transaction etc.. Today- used as Decision Support System(DSS), Expert Systems and artificial Intelligence

The Service Revolution

It is a challenge for manufacturing managers, that they should evolve strategies and actions to manage service areas for better productivity, quality and competitiveness.

Characteristics of Modern POM

1. Manufacturing as competitive advantage
2. Services orientation

3. Disappearance of Smokestacks
4. Small has become beautiful

Duties & Responsibilities of Production Managers

1. 2. 3. 4. 5. 6. 7. 8. 9. Planning the geographical location of the factory Purchasing production equipment Layout of equipment within the factory Capacity planning Production Control Inventory management Supply chain management Quality control Designing production processes and equipment

Emerging Role of P&O Manager

1. Take part in the strategic decision making of the company 2. Take part in the implementation & use of ERP in the company 3. Automate processes as per the requirements of the company 4. Enhance R&D effort in developing selfrelevant new technologies 5. Protect environment by implementing environment & pollution norms

Recent Trends in POM

1. Global Market Place 2. Production/ operations strategy 3. Total Quality Management 4. Flexibility 5. Time Reduction 6. Technology 7. Worker Involvement 8. Re- engineering 9. Environmental Issues 10. Corporate Downsizing(or Right Sizing) 11. Supply chain Management 12. Lean Production

Challenges in Operations Management

1. 2. 3. a) b) c) d) e) Using Operations to Compete Managing Processes Managing Supply Chains Location Inventory Management Forecasting Operations Planning & Scheduling Resource Planning

Systematic Approach to Process Analysis

Identify the Opportunity Define the Scope Document the Process Evaluate Performance Redesign the Process Implement the Changes

Operations Strategy
Strategy is an organizations action plan to achieve the mission. Each functional area has a strategy for achieving its mission & for helping the organization reach the overall mission. These strategies exploit opportunities & Strengths, neutralize threats and avoid weaknesses. It is concerned with setting broad policies & plans for using the resources of a firm to best support its long term competitive strategy. It involves a decisions that relate to the design of a process & the infrastructure needed to support the process.

 Operational strategies can be viewed as a part of a planning process that coordinates operational goals with those of the larger organization. Since the goals of the larger organization change over time, the operations strategy must be designed to anticipate future needs. Firms achieve missions in 3 conceptual ways: 1. Differentiation 2. Cost Leadership 3. Response i.e., operations managers have to deliver goods & services that are a)Better or at least different, b) cheaper, c) more responsive

Ten Strategic OM Decisions

Differentiation Low Cost Response
Can be achieved when managers make effective decisions in 10 areas of OM

These are collectively called as Operations Decisions

1. Goods & service design:

Transformation Process Determines Cost, Quality & Human Resource

Decisions Designs determine the lower limits of cost & the upper limits of quality

2. Quality:

The customers quality expectations must be

determined & policies & procedures established to identify & achieve that quality

3. Process& Capacity Design:

Process options are available for products & services. Process decisions commit management to specific tech, quality, HR use & maintenance. These expenses & capital commitments determine much of the firms basic cost structure.
4. Location Selection:

Facility location decision for both manufacturing & service organizations may determine the firms ultimate success. Errors made at this juncture may overcome other efficiencies.

5. Layout Design:

Material flows, capacity needs, personnel levels, technology decisions & inventory requirements influence layout.

6. Human Resources & Job Design:

People are an integral & expensive part of the total system design. Therefore, the quality of work life provided, the talent & skills required & their costs must be determined.

7. Supply Chain Management: Determine what is to be made & what is to be purchased. Consideration is given to quality, delivery & innovation at a satisfactory price. Mutual trust between buyer & supplier is necessary for effective purchasing. 8. Inventory:

These decisions can be optimized only when customer satisfaction, suppliers, production schedules & HR planning are considered.

9. Scheduling:

Feasible & efficient schedules of production must be developed; the demands on human resources & facilities must be determined & controlled.
10. Maintenance:

Decisions must be made regarding desired levels of reliability& stability, & systems must be established to maintain that reliability & stability.

Ex: To provide outstanding French fine dining for the people of Chicago
HIGH

VARIETY OF PRODUCTS

Process focused JOB SHOPS (Print Shops, emergency rooms, machine shop, fine dining restaurant)
Repetitive Focus ASSEMBLY LINE

Mass Customization Customization at High Volume (Dell Computers PC, Cafeteria)

MODERATE

(Cars, appliances, TVs, Fast food Restaurants)

Product Focused CONTINUOUS

LOW

(Steel, paper, bread, Institutional Kitchen)

LOW
MODERATE VOLUME HIGH

Global Operations Strategy Options

1. 2. 3. 4. International Strategy Multi domestic Strategy Global Strategy Transnational Strategy

International Strategy
A strategy in which global markets are penetrated using exports and licenses. Least advantageous with little local responsiveness & little cost advantage Little local responsiveness because of exporting & licensing a good from the home country Cost advantage may be few because of the usage of the existing production process at some distance from the new market Easiest- as exports can require little change in existing operations, & licensing agreements often leave much of the risk to the licensee Example: U.S. Steel, Harley- Davidson

Multi domestic Strategy

A strategy in which operating decisions are decentralized to each country to enhance local responsiveness Typically subsidiaries, JV, franchises with substantial independence Advantage- maximizing a competitive response for the local market No/little cost advantage Many food producers use this strategy to accommodate local taste because global integration of the production process is not critical Concept- we are successful in the home market, lets export the mgt talent & processes, not necessarily the product, to accommodate another market. Example: Heinz, McDonald's, The Body Shop

Global Strategy
A strategy in which operating decisions are centralized & head quarters coordinates the standardization & learning between facilities, thus generating economies of scale Appropriate when the strategic focus is cost reduction but has little recommend it when the demand for local responsiveness is high End products are similar throughout the world Example: Texas Instruments, Caterpillar

Transnational Strategy
A strategy that combines the benefits of global scale efficiencies with the benefits of local responsiveness, by recognizing that core competence does not reside in just the Home country but can exist anywhere in the organization Describes a condition in which material, people & ideas cross /transgress national boundaries These firms have potential to pursue all 3 operational strategies- Differentiation, low cost, response Key activities are neither centralized nor decentralizedeach subsidiary can carry out its own tasks on a local basis

HIGH

Cost Reduction Considerations

Standardized Product Economies of Scale Cross cultural learning

Global Strategy

Transnational Strategy Move material,people, ideas across national boundaries Economies of Scale Cross cultural learning
Ex: Coca Cola

International Strategy Import/ Export or license existing product Ex: U.S. Steel Harley- Davidson

Multi domestic Strategy Use existing domestic model globally Franchise, Joint Ventures, Subsidiaries

LOW LOW Local Responsiveness Considerations

HIGH

It is an organizations approach to transforming resources into goods & services. The objective of a process strategy is to build a production process that meets customer requirements & product specifications within cost and other managerial constraints. Every good/service is made by using some variation of one of four process strategies: 1. Process Focus 2. Repetitive Focus 3. Product Focus 4. Mass Customization

Process Strategy

PROCESS FOCUS
A production facility organized around processes to facilitate low- volume, high variety production. The majority of global production is devoted to making low volume , high variety products in places called job shops. Such facilities are organized around specific activities / processes. Factory, Office, Bakery Such facilities are process focused in terms of equipment, layout & supervision Provide high degree of product flexibility as products move intermittently b/w processes. Each process is designed to perform a wide variety of activities & handle frequent changes- Intermittent Process

REPETITIVE FOCUS

Falls b/w the product & the process focus Use modules- are parts/ components of a product previously prepared , often in a continuous process Repetitive process line is the classic assembly line. Widely used in automobiles & household appliances Ex: fast food firms

PRODUCT FOCUS

High volume, low variety processes are product focused. The facilities are organized around products. They are also called continuous processes bcoz they have very long, continuous production runs. Ex: glass, paper, tin sheets, light bulbs, bolts are made via continuous process Specialized nature of the facility requires a high fixed cost but low variable costs reward high facility utilization.

MASS CUSTOMIZATION

Rapid, low cost production that caters to constantly changing unique customer desires. It is not just about variety, it is about making precisely what the customer wants when the customer wants it economically. Mass customization brings us the variety of products traditionally provided by low- volume manufacture(process focus) at the cost of standardized high volume(product- focused) production.

PROCESS DESIGN
The transformation process is used to convert inputs into desired outputs

Types of Process Design

Types of Processes

Continuous Process

Semi- Continuous Process(Repetitive/ Assembly

Intermittent Process

Project

Batch Process

Job Shop

Continuous Process
Continuous in nature The set- up time for starting such processes is usually very long Once started, they continue for a long duration Products produced by such a process are highly standardized with almost no variety & are measured on a continuous basis rather than in terms of discreet units. Ex: Steel, Plastic, Sugar, Textiles, Detergents

Semi- Continuous Process(Repetitive/ Assembly Repetitive in Nature They produce high volume of output Products produced have little variety These processes require highly specialized machines, semi- skilled workers Low cost per unit Ex: Automobiles, electronic items,

Intermittent Process
This process is very suitable for a large variety of output, each output taking a different route and hence operations, with different time requirements and sequence. Stops at regular interval of time because the product requires processing on a variety of machines. The products produced are of different varieties, thus makes the production process slow in comparison to the other processes

The characteristics of intermittent process

1. It is suitable when the output variety is large and the volumes are low. 2. It is flexible in approach since it uses general purpose machines for a variety of outputs.

3. The transformation process is organized around standard operations in the intermittent form ( e.g. in a bank we have saving accounts counter, current account counter, cash counter, advances and time deposits departments etc). Here each functional group is a specialist group.
4. Material handling here depends upon standard operations, and there is a work in process (WIP) inventory.

Types of Intermittent Process

1. Batch Process: adapted when batches or lots of items are to be produced using the same set of machines in the same sequence. Ex: Biscuits to be made in oven( Salted, Chocolate, batch of bread) 2. Under the intermittent manufacturing system, the production is done for stock or according to a customers order. When the manufacturing is carried on according to the specifications of the customers order, it is popularly known as job lot manufacturing.

Job Shop handles a larger variety of products than the batch. The products may be different from each other

that their processing requirements may be varied

processes, on different machines, different sequences, different processing times. The items produced may vary in size Ex: In a restaurant orders given by the customers Job shop results in low volume of output at a given time & thus costlier.

Project
Projects are processes that handle very complex and unique sets of activities which have to be completed in a limited span of time.

Example: R&D projects, Construction of plants,

Building Complexes, implementation of specialized

software in an organization.

Trends in Operations Management

1. Productivity Improvement

2. Global Competition
3. Ethical Workforce Diversity and Environmental

Issues

Theory of Constraints
A Constraint is any factor that limits the performance of a system and restricts its output. When constraint exist at any step, capacity can

become imbalanced- too high in some departmentstoo low in others. As a result, the overall performance of the system suffers.

 The theory was developed 3 decades ago by Eli Goldratt, a business system analyst.

The TOC is a systematic management approach that

focuses on actively managing those constraints that impede a firms progress toward its goals of maximizing profits & effectively using its resources. It outlines a deliberate process for identifying &

overcoming constraints.

Toc methods increase the firms profits more effectively by

making materials flow rapidly through the entire system. They help firms to know how process can be improved to increase overall workflow & how inventory & work force levels can be reduced while still effectively utilizing critical

resources.
It is important to understand the relevant performance & capacity measures at the operational level & their relationship with the financial measures at the firm level.

Capacity Related Terminology What is a Constraint?

Any factor that limits system performance and restricts its output.

Capacity is the available time for production Bottleneck is what happens if capacity is less than demand placed on resource Non bottleneck is what happens when capacity is greater than demand placed on resource Capacity-constrained resource (CCR) is a resource where the capacity is close to demand placed on the resource

Operational Measures
Inventory(I)

TOC view
All the money invested in the system in purchasing things that it intends to sell

Relationship to financial measures

A decrease in I leads to an increase in net profit, ROI & cash flow

Throughput(T)

Rate at which a system generates money through sales

An increase in T leads to an increase in net profit, ROI & cash flow

A decrease in OE leads to an increase in net profit, ROI & cash flow An increase in U at the bottleneck leads to an increase in net profit, ROI and cash flows

Operating Expenses(OE) All the money a system spends to turn inventory into throughput Utilization(U) The degree to which equipment, space, or workforce is currently being used & is measured as the ratio of average output rate to maximum capacity expressed as a percentage

According to the TOC view, every capital

investment in the system, including machines &

WIP materials, represents inventory because they

could all potentially be sold to make money.

Producing a product/ service that does not lead to

a sale will not increase a firms throughput, but will increase its inventory & operating expenses

Kinds of Constraints
Constraints can occur up or down the supply chain, with
either the firms suppliers or customers or within one of the firms processes like service/product development or order fulfillment. Physical machine, labor, work station capacity, material

shortage, space, quality

Market- demand is less than capacity Managerialpolicy metrics, mind set that creates constraints that impede work flow.

Seven Key Principles of TOC

1. The focus should be on balancing flow, not on balancing capacity 2. Maximizing the output & efficiency of every resource may not maximize the throughput of the entire system 3. An hour lost at a bottleneck or a constrained resource is an hour lost for the whole system. In contrast an hour saved at a non bottleneck resource is a mirage because it does not make the whole system more productive.

4. Inventory is needed only in front of the bottlenecks in order to prevent them from sitting idle, and in front of assembly & shipping points in order to protect customer schedules. Building inventory else where should be avoided. 5.Work should be released into the system only as frequently as the bottlenecks need it. Bottleneck flows should be equal to the market demand. Pacing everything to the slowest resource minimizes inventory and operating expenses.

6. Activation of non-bottleneck resources cannot increase throughput, nor promote better performance on financial measures. 7. Every capital investment must be viewed from the perspective of its global impact on overall throughput (T), inventory (I), and operating expense (OE).

Practical application of TOC involves the implementation of following steps:

1. Identify the system bottlenecks 2. Exploit the bottlenecks 3. Subordinate all other decisions to step2 4. Elevate the bottlenecks 5. Do not let the inertia set in

Bottleneck
Special type of a constraint that relates to the capacity shortage of a process. Defined as any resource whose available capacity limits the organizations ability to meet the service or product volume, product mix or fluctuating requirements demanded by the market place.

Identification & Management of Bottlenecks

Bottlenecks can be both internal or External to the firm. They Represent a process, a step or a work station with the lowest capacity. Throughput time is the total elapsed time from the start to the finish of a job or a customer being processed at one or more work centers. A workstation in a process is a bottleneck ifa) It has the highest total time/unit processed b) It has the highest average utilization & workload c) A reduction of even a single minute in its processing time would reduce the average throughput time for the entire process.

Managing Bottlenecks in Service Process

Check for credit rating (15 min) Complete paper work for new loan(10 min) Enter loan application into the system(12 min)

Check loan documents & put them in order(15 min)

Categorize loans (20min)

Identifying the Bottleneck

Product A

$5

Step 1 at workstation V (30 min)

Step 2 at workstation Y (10 min)

$5

Raw materials

Finish with step 3 at workstation X (10 min)

Purchased parts

Product: A Price: $75/unit Demand: 60 units/wk

Product B $3

Step 1 at workstation Y (10 min)

$2

Raw materials Product C $2

Finish with step 2 at workstation X (20 min)

Purchased parts

Product: B Price: $72/unit Demand: 80 units/wk

Step 1 at workstation W (5 min)

Step 2 at workstation Z (5 min)

Step 3 at workstation X (5 min)

$3

Raw materials Product D $4

Finish with step 4 at workstation Y (5 min)

Purchased parts

Product: C Price: $45/unit Demand: 80 units/wk

Step 1 at workstation W (15 min)

Step 2 at workstation Z (10 min)

$6

Raw materials

Finish with step 3 at workstation Y (5 min)

Purchased parts

Product: D Price: $38/unit Demand: 100 units/wk

Flowchart for Products A, B, C, and D Overhead Costs: $8,500; Labor Costs: $18/hr (8hrs/day; 40 hrs/week)