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MAKE OR BUY DECISION

1) Available capacity
2) Expertise
3) Quality consideration
4) The nature of the demand
5) Cost

6) Availability of suppliers
7) Desire to specialize in a particular field of manufacture
8) Control of design secrets
9) Availability of R&D facilities in- house.
10)Reliability of outside suppliers
11)Lead time for procurement versus lead time for in- house manufacture
12)Delivery schedules to me met.
13)Employee preference for particular nature of work.

When to make?
When to buy? 2
 PROCESS

A process is any part of an organization that takes input and transforms them into
outputs that, is are of greater value to the organization than the original outputs.

System

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 PROCESS PLANNING

PROCESS DESIGN OPERATION DESIGN

•PROCESS PLANNING is concerned with planning the conversion processes

needed to convert raw material to finished products

•PROCESS DESIGN is concerned with the overall sequence of operations required

to achieve the product specification.

•OPERATION DESIGN is concerned with the design of the individual manufacturing

operation . It examines the man machine relation ship

aswathappa
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 MAJOR PROCESS DECISION.

1) Process choice. Job shop/Batch process/ Repetitive

Process/Continuous process/Project process

2) Vertical Integration. (Make or buy)/Backward/forward

3) Resource flexibility. (Workmen's/ Machines)

4) Customer involvement. (Customization )

5) Capital Intensity. (Automation)

nn. See pg 70 Aswathappa

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 Russel & Taylor
PROCESS ANALYSIS
Analyzing a process allows some important question to be answered.

•How many customers can the process handle per hour.

•How long will it take to serve a customer
•What change is needed in the process to expand capacity
•How much the process cost

Process analysis is the systematic examination of all aspects of a process to improve

Its operation.
The basic tools of process analysis are

•Process flow charts.

•Diagrams
•Maps.

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TYPES OF PROCESS

Based on stages
Buffering
Blocking
•Single stage
Starving
•Multi stage
Bottle neck

Based on order

•Made to order
•Made to stock
•Hybrid
•ETO Engineered to order
•ATO Assembled to order

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 MEASURING PROCESS PERFORMANCE

Productivity Output/Input More

Utilization Time machine is in use/ Time it is available for use More
Efficiency Out put of process relative to some standard More
Run time Time required to produce a batch of products Less
Set up time Preparation for next input Less
Operation time Set time + Run time Less
Throughput time Time for which the product is being worked + Buffer Less
time
Throughput rate Out rate of the process is expected to produce over a More
period of time.
Process velocity Through put time /value added time Less
(Throughput ratio )
Value added time The Time useful work is being done on the unit More
Little’s Law Through put time = WIP/ Throughput rate Less

Chase and Aquilino 112 13

 Value Added by Tangible vs. Intangible
Elements in Goods and Services
Hi
Salt
Soft drinks
CD Player
Golf clubs
New car
Tangible Elements

Tailored clothing
Furniture rental
Fast food restaurant
Plumbing repair
Office cleaning
Health club
Airline flight
Retail banking
Insurance
Weather forecast
Lo Intangible Elements
14 Hi
 Levels of Customer Contact
with Service Organizations
Emphasizes encounters
High with service personnel
Nursing Home
HairCut
4-Star Hotel
Management Consulting
Good Restaurant
Telephone Banking
Airline Travel (Econ.)

Retail Banking Car Repair

Motel Insurance
Dry Cleaning
Fast Food
Movie Theater

Cable TV
Subway

• Internet Banking
Mail Based Repairs

Emphasizes encounters
with equipment
Internet-based
Services
Low
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 PROCESS THROUGHPUT TIME REDUCTION

1) Perform activities in parallel.

2) Change the sequence of activities.

3) Reduce interruption.

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 SYSTEM

System is a set of interacting or interdependent entities forming an integrated whole.

The concept of an 'integrated whole' can also be stated in terms of a system
embodying a set of relationships which are differentiated from relationships of the set
to other elements, and from relationships between an element of the set and
elements not a part of the relational regime.
.

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 Description Job Shop Batch process Repetitive (Assembly) Continuous Project Process
Process
Output characteristic Customized goods or Semi standardized Standardized goods or Highly standardized Highly customized
goods & services services goods services services goods or services services

E.g. Machine shop Bakery, class room Assembly line for Steel mill, chemical Dams , Buildings
automobile plant
Volume Low Low to moderate High Very high Very high
Variety Very high Moderate Low Very Low Extremely Low
Equipment flexibility Very high Moderate Low Very Low Low to high

Cost estimation Difficult Some what routine Routine Routine Complex

Cost per Unit High Moderate Low Low Very high
Equipment used General purpose General purpose Special purpose Special purpose Varied

Fixed cost Low Moderate High Very high Varied

Variable cost High Moderate Low Very Low High
Labor skills High Moderate Low Low Low- High
Scheduling Complex Moderately complex Routine Routine Complex subject to
change
WIP Inventory High High Low Low Varied
Advantages Able to handle a Flexibility Low unit cost, High Very efficient , very highSuitable for non-
wide variety of work volume , efficient volume routine time and cost
bound work

Disadvantages Slow, high cost per Moderate cost per Low flexibility high cost Very rigid, lack of Very difficult to plan
unit , complex unit , moderate of down time variety, cost to change, and control
planning and scheduling complexity very high cost of resources cost and
scheduling downtime 18
time of completion