Amrinder Kaur

Process Selection

Process a set of transformations of input elements into

products with specific properties, characterized by

transformation parameters

Types of Processes

Continuous Process

Semi-continuous (repetitive/

assembly process )

Intermittent process Project

Batch Process Job shop

Continuous Process The set-up time for starting such processes is

usually very long, and once started they continue for a long duration.

Products are highly standardized with almost no variety.

For e.g., Urea, chemicals, steel, sugar , plastic etc.

Semi- Continuous Process

They produce high volume of output and the products produced have little variety.

For e.g., Automobile, electronic items etc

These processes require highly specialized machines, semi-skilled workers, and result in low cost per unit.

Intermittent Process

These processes stop at regular intervals of time because the product requires processing on a variety of machines.

And are of two types:

Batch Process : This Process is adopted when batches or lot of

items are to be produced using the same set of machines in the same sequence.

For eg., bakery , a batch of salted biscuits may be made in oven.

Job shop : This process can handle a larger variety of

products than the batch process.

Products may be so different from each other that their processing requirements may be varied processes, on different machines, in different sequences and with different processing times.

For eg., in restaurant every customer gives a different order of dishes, which are prepared by different cooks using different utensils, ovens etc.

Projects Projects are processes that handle very complex

and unique sets of activities or tasks, which have to be completed in a limited span of time.

For eg., R&D projects, construction of plants, building complexes, implementation of specialized software in an organization, etc.

The Product/ process Continuum

Productorientation

Process Orientation

Automobile manufacturers

Photocopier manufacturers and service providers

Automobile retailers

RestaurantsBanks

Airlines

Consultancies

Undertakers

In the product and process continuum two extremes show ‘pure’ manufacturing and ‘pure’ service industries. And Restaurants in the mid deal with product and process both.

Product-Process Mix One of the components of marketing mix is product-

process mix, which helps the manufacturer in understanding how and why they should change their production process.

Changes in products, market requirement and competition will cause change in equipments, process, procedures and human resources.

If process changes are not carried out to accommodate process life cycles, products and processes will become incompatible which will result in competitive disadvantage.

Deciding among processing alternatives

Factors on which type of production process for a product line to be adopted are:

Batch Size and Product variety Type of process design depends on the number of

product designs and the size of the batches to be produced in a production system.

Single product dedicated organization will have low production cost per unit and the system is rather very inflexible as compared to organization where the number of product design increase and the batch size reduces but flexibility increases.

So, we can also conclude that Product lifecycles and process life cycles are interdependent and each effects the other.

The production processes affect production costs, quality and volume ,which in turn affects the volume of products to be sold. Similarly, the volume of products that are sold affects the type of production processes that can be justified.

Capital requirements for Process design

Amount of capital required for the production system depends on the type of production processing organization.

It is best suited for the product focused and dedicated systems whereas less suitable for product focused batch systems and cellular manufacturing systems.

Economic Analysis of Production Processes

As fixed and variable costs tend to differ from one form of production process to another. Hence economic analysis is used for comparing alternative processing plans.

Cost function of processing Alternatives: Amount of capital required for each type of process design is different which depends on fixed and variable cost incurred.

Operating Leverage It is the measure of relationship between a firm’s

annual cost and its annual sales.Cost can also be defined as, Total Cost = Fixed cost + Variable cost

So, Operating leverage can be done by comparing Fixed cost and Total Cost. Or, Fixed cost

So it depend on sales: if the unit variable cost is constant, then as sales increase, operating leverage (as measured by fixed costs to total costs or variable costs) decreases and vice versa.

Total cost

Break even Analysis It is based that profits arise when there is excess

of total revenue over total costs.

Financial Analysis It involves methods as payback periods, net

present value, internal rate of return, profitability index and like.

Considerations while selecting a production process

All specifications for the product are met while maintaining a desirable quality standard.

The cost of production is feasible to produce the product.

The process is sustainable; it is dependable to produce for the sustained duration.

All government and environmental regulations are followed.

Hence, the process has to be such so the product remains competitive in pricing and does offers the expected qualities too.

Variety and Volume Production process has to take into consideration the

variety and volume of the product

Lead time An effective management shall be such which

formulates and chooses the most effective production process which is capable to produce the product in required quantity n quality at an acceptable cost within the stipulated time frame.

Efficiency Flexibility and scalability Reusability