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8/8/2019 Ch07 Operations Technologies
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Production / Operations
Management
Production / Operations
Management
Edition 13
By
Dr. Prakash Mathure
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Chapter 6Chapter 6Chapter 6Chapter 6
Operations TechnologiesOperations Technologies
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OverviewOverviewOverviewOverview
IntroductionIntroduction
Types of Manufacturing AutomationTypes of Manufacturing Automation
Automated Production SystemsAutomated Production Systems
Software Systems for AutomationSoftware Systems for Automation Automation in ServicesAutomation in Services
Automation IssuesAutomation Issues
Deciding Among Automation AlternativesDeciding Among Automation Alternatives WrapWrap--Up: What WorldUp: What World--Class Companies DoClass Companies Do
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IntroductionIntroductionIntroductionIntroduction
In the past, automation meant the replacement ofIn the past, automation meant the replacement of
human effort with machine effort, to save labor costs.human effort with machine effort, to save labor costs.
Today,Today, automationautomation means integrating a full range ofmeans integrating a full range of
advanced information and engineering discoveriesadvanced information and engineering discoveriesinto operations processes for strategic purposes.into operations processes for strategic purposes.
Today, automation is applied not only for labor costToday, automation is applied not only for labor cost
savings, but also for:savings, but also for:
Improved qualityImproved quality Faster production and delivery of products/servicesFaster production and delivery of products/services
Increased flexibilityIncreased flexibility
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Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation
Machine AttachmentsMachine Attachments
Inexpensive addInexpensive add--ons to machinesons to machines
Represent oldest technology in automationRepresent oldest technology in automation
Typically perform one or a few simple operationsTypically perform one or a few simple operations Examples:Examples:
Strip feedersStrip feeders
Quick centering and grasping devicesQuick centering and grasping devices
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Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation
Numerically Controlled (N/C) MachinesNumerically Controlled (N/C) Machines
Have a control system that receives/readsHave a control system that receives/readsinstructions and translates them into machineinstructions and translates them into machineoperationsoperations
N/C machines have evolved:N/C machines have evolved:
CN/CCN/C computer numerically controlledcomputer numerically controlled
DN/CDN/C direct numerically controlled (severaldirect numerically controlled (severalmachines controlled by a single computer)machines controlled by a single computer)
Examples:Examples: Weaving machinesWeaving machines
LathesLathes
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Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation
RobotsRobots
HumanHuman--like machines performing production taskslike machines performing production tasks
Brain of these machines is a microcomputerBrain of these machines is a microcomputer
Have grippers (vacuum, magnetized, adhesive)Have grippers (vacuum, magnetized, adhesive) Have sensors (tactile, proximity, vision/optical)Have sensors (tactile, proximity, vision/optical)
Can operate in environments hostile to humansCan operate in environments hostile to humans(heat, noise, dust, darkness, skin irritants, )(heat, noise, dust, darkness, skin irritants, )
Perform precisely and repeatedly without fatiguePerform precisely and repeatedly without fatigue Weld, assemble,paint, inspect, transport, ..Weld, assemble,paint, inspect, transport, ..
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Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation
Automated Quality Control InspectionAutomated Quality Control Inspection
Take physical dimensions of partsTake physical dimensions of parts
Compare measurements to standardsCompare measurements to standards
Determine if parts conform to specificationsDetermine if parts conform to specifications Also check performance (ex.Also check performance (ex. -- electronic circuits)electronic circuits)
Making 100% inspection economically feasibleMaking 100% inspection economically feasible
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Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation
Automatic Identification Systems (AIS)Automatic Identification Systems (AIS)
Sense and input data into computersSense and input data into computers
Use bar codes, radio frequencies, magnetic stripes,Use bar codes, radio frequencies, magnetic stripes,optical character recognition, machine visionoptical character recognition, machine vision
Data read from products, documents, parts, andData read from products, documents, parts, andcontainerscontainers
Used in warehouses, factory floors, retailing,Used in warehouses, factory floors, retailing,wholesalingwholesaling
ExampleExample scanner at grocery store checkoutscanner at grocery store checkout
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Types of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing AutomationTypes of Manufacturing Automation
Automated Process ControlsAutomated Process Controls
Use sensors to obtain measures of performanceUse sensors to obtain measures of performance
Compare measures to standardsCompare measures to standards
Might use expert system to determine if/whatMight use expert system to determine if/whatprocess adjustment is necessaryprocess adjustment is necessary
If necessary, change settings of processIf necessary, change settings of process
Long used in chemical processing, petroleumLong used in chemical processing, petroleum
refining, paper productionrefining, paper production
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Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems
Automation technology becoming more sophisticatedAutomation technology becoming more sophisticated
Focus has shifted away from individual machinesFocus has shifted away from individual machines
More common are whole systems of automatedMore common are whole systems of automated
machines linked together for broader purposesmachines linked together for broader purposes
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Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems
Automated Flow LinesAutomated Flow Lines
InIn--line, automated processing machines linked byline, automated processing machines linked by
automated material transferautomated material transfer
Perform without need for human attendancePerform without need for human attendance Used to produce an entire componentUsed to produce an entire component
Also calledAlso called fixed automationfixed automation oror hard automationhard automation
Used when product demand is high and stableUsed when product demand is high and stable
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Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems
Automated Assembly SystemsAutomated Assembly Systems
Automated assembly machines linked byAutomated assembly machines linked by
automated material transferautomated material transfer
Operations are component insertion and joiningOperations are component insertion and joining Produce major assemblies or complete productsProduce major assemblies or complete products
Often use standard (lower cost) robotsOften use standard (lower cost) robots
Product design appropriate for assembly byProduct design appropriate for assembly by
humans is not fitting for automated assemblyhumans is not fitting for automated assembly
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Redesigning Products for Automated AssemblyRedesigning Products for Automated AssemblyRedesigning Products for Automated AssemblyRedesigning Products for Automated Assembly
Reduce the amount of assembly requiredReduce the amount of assembly required
Reduce the number of fasteners requiredReduce the number of fasteners required
Design components to be automatically delivered andDesign components to be automatically delivered andpositionedpositioned
Design products for layered assembly and verticalDesign products for layered assembly and verticalinsertion of partsinsertion of parts
Design parts so that they are selfDesign parts so that they are self--aligningaligning
Design products into major modules for productionDesign products into major modules for production Increase component quality to avoid machine jamsIncrease component quality to avoid machine jams
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Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems
Flexible Manufacturing Systems (FMS)Flexible Manufacturing Systems (FMS)
Kits of materials/parts for a product are loaded onKits of materials/parts for a product are loaded onthe materialsthe materials--handling systemhandling system
Code is entered into computer identifying productCode is entered into computer identifying productand its location in the sequenceand its location in the sequence
Each production machine (without a worker):Each production machine (without a worker):
Receives settings/instructions from computerReceives settings/instructions from computer
Automatically loads/unloads required toolsAutomatically loads/unloads required tools Carries out its processing instructionsCarries out its processing instructions
Product automatically transferred to next machineProduct automatically transferred to next machine
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Flexible Manufacturing System (FMS)Flexible Manufacturing System (FMS)Flexible Manufacturing System (FMS)Flexible Manufacturing System (FMS)
Machine 1Machine 1
ToolsTools
X
X
Machine 2Machine 2
ToolsTools
X
X
Machine 3Machine 3
ToolsTools
X
X
ComputerComputer
WorkerWorker
X
X
X
X
X
X
X
UnloadUnloadLoadLoad
PalletPalletTransferTransfer
SystemSystem
PartsParts
Pallet withPallet with
workpieceworkpiece
attachedattached
WorkpieceWorkpiece
in queuein queue
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Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems
Automated Storage & Retrieval Systems (ASRS)Automated Storage & Retrieval Systems (ASRS)
Receive orders for materials from anywhere inReceive orders for materials from anywhere in
operationsoperations
Collect the materials from locations in warehouseCollect the materials from locations in warehouse Deliver the materials to workstations in operationsDeliver the materials to workstations in operations
Three major elements of ASRS are:Three major elements of ASRS are:
Computers and communication systemsComputers and communication systems
Automated materials handling/delivery systemsAutomated materials handling/delivery systems
Storage and retrieval systems in warehouseStorage and retrieval systems in warehouse
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Automated Production SystemsAutomated Production SystemsAutomated Production SystemsAutomated Production Systems
Automated Storage & Retrieval Systems (ASRS)Automated Storage & Retrieval Systems (ASRS)
Main benefits of ASRS are:Main benefits of ASRS are:
Increased storage capacityIncreased storage capacity
Increased system throughputIncreased system throughput Reduced labor costsReduced labor costs
Improved product qualityImproved product quality
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Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation
Three complex computerThree complex computer--based systemsbased systems
ComputerComputer--Aided Design and ComputerAided Design and Computer--AidedAided
Manufacturing (CAD/CAM)Manufacturing (CAD/CAM)
ComputerComputer--Integrated Manufacturing (CIM)Integrated Manufacturing (CIM) Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP)
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Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation
ComputerComputer--Aided Design and ComputerAided Design and Computer--AidedAidedManufacturing (CAD/CAM)Manufacturing (CAD/CAM)
CAD/CAM is a merger of two systems, CAD andCAD/CAM is a merger of two systems, CAD and
CAM (described next)CAM (described next)
It is the automation of the transition from productIt is the automation of the transition from product
design to manufacturingdesign to manufacturing
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Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation
ComputerComputer--Aided Design (CAD)Aided Design (CAD) Concerned with the automation of certain phasesConcerned with the automation of certain phases
of product designof product design
Use of computer in interactive engineeringUse of computer in interactive engineering
drawing and storage of designsdrawing and storage of designs
CAD systems are installed to:CAD systems are installed to:
Increase designers productivityIncrease designers productivity
Improve the quality of designsImprove the quality of designs
Improve product standardizationImprove product standardization
Improve design documentationImprove design documentation
Create a manufacturing databaseCreate a manufacturing database
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Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation
ComputerComputer--Aided Manufacturing (CAM)Aided Manufacturing (CAM)
CAM capability progressing slower than CADCAM capability progressing slower than CAD
Concerned with automating the planning andConcerned with automating the planning and
control of production:control of production: Plan productionPlan production
Prepare product routingsPrepare product routings
Generate N/C programsGenerate N/C programs
Fix the settings of machineryFix the settings of machinery Prepare production schedulesPrepare production schedules
Control the operationControl the operation
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Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation
ComputerComputer--Integrated Manufacturing (CIM)Integrated Manufacturing (CIM)
All of the firms operations related to productionAll of the firms operations related to production
are incorporated in an integrated computer systemare incorporated in an integrated computer system
to assist, augment, or automate the operations.to assist, augment, or automate the operations.
Covers the chain of events from sales order toCovers the chain of events from sales order to
product shipmentproduct shipment
Output of one activity becomes the input to theOutput of one activity becomes the input to the
next activitynext activity
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Computer Integrated Manufacturing (CIM)Computer Integrated Manufacturing (CIM)Computer Integrated Manufacturing (CIM)Computer Integrated Manufacturing (CIM)
Incorporates all manufacturingIncorporates all manufacturing--related functionsrelated functions
ProcessProcess
ControlsControls
MRP IIMRP II
ASRSASRS
CAD/CAMCAD/CAM
AutomatedAutomated
AssemblyAssemblyGTGT
SystemsSystems
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Software Systems for AutomationSoftware Systems for AutomationSoftware Systems for AutomationSoftware Systems for Automation
Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP)
Five leading ERP software companies are:Five leading ERP software companies are:
SAP ( their R/3 software is top seller)SAP ( their R/3 software is top seller)
OracleOracle J.D. EdwardsJ.D. Edwards
PeopleSoftPeopleSoft
BaanBaan Can take several years and $millions to implementCan take several years and $millions to implement
(Chevron spent $160 million over five years)(Chevron spent $160 million over five years)
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Automation in ServicesAutomation in ServicesAutomation in ServicesAutomation in Services
ExampleExample
AirlinesAirlines air traffic control, passenger reservationair traffic control, passenger reservation
BanksBanks ATMs, computerized bank statementsATMs, computerized bank statements
Gas StationsGas Stations automated payment (payautomated payment (pay--atat--thethe--pump)pump) Health CareHealth Care MRI system, AGVS for waste disposalMRI system, AGVS for waste disposal
Grocery StoreGrocery Store selfself--service checkout stationsservice checkout stations
Real EstateReal Estate web based houseweb based house--forfor--sale tour videosale tour video
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Automation in ServicesAutomation in ServicesAutomation in ServicesAutomation in Services
Trend developing toward moreTrend developing toward more--standardized servicesstandardized servicesand less customer contact.and less customer contact.
Service standardization brings tradeService standardization brings trade--offs:offs:
-- Service not customService not custom--designed for each customerdesigned for each customer + Price of service reduced, or at least contained+ Price of service reduced, or at least contained
Banking industry is becoming increasingly automatedBanking industry is becoming increasingly automated
Service firm can have a manual/automated mix:Service firm can have a manual/automated mix:
ManualManual -- front room operationsfront room operations
AutomatedAutomated -- back room operationsback room operations
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Degree ofCustomer Contact in ServicesDegree ofCustomer Contact in Services
and the Use of Automated Equipmentand the Use of Automated Equipment
Degree ofCustomer Contact in ServicesDegree ofCustomer Contact in Services
and the Use of Automated Equipmentand the Use of Automated Equipment
Degree ofDegree ofCustomer ContactCustomer Contact
CapitalCapitalIntensityIntensity
HighHigh
HighHigh
LowLow
LowLow
Manual OperationsManual Operations
Mechanized OperationsMechanized Operations
AutomatedAutomatedOperationsOperations
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Automation IssuesAutomation IssuesAutomation IssuesAutomation Issues
Not all automation projects are successful.Not all automation projects are successful.
Automation cannot make up for poor management.Automation cannot make up for poor management.
Economic analysis cannot justify automation of someEconomic analysis cannot justify automation of some
operations.operations. Not technically feasible to automate some operations.Not technically feasible to automate some operations.
Automation projects may have to wait in small andAutomation projects may have to wait in small and
startstart--up businesses.up businesses.
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Automation QuestionsAutomation QuestionsAutomation QuestionsAutomation Questions
What level of automation is appropriate?What level of automation is appropriate?
How would automation affect the flexibility of anHow would automation affect the flexibility of an
operation system?operation system?
How can automation projects be justified?How can automation projects be justified? How should technological change be managed?How should technological change be managed?
What are some of the consequences of implementingWhat are some of the consequences of implementing
an automation project?an automation project?
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Building Manufacturing FlexibilityBuilding Manufacturing FlexibilityBuilding Manufacturing FlexibilityBuilding Manufacturing Flexibility
Manufacturing flexibility has become the cornerstoneManufacturing flexibility has become the cornerstoneof operations strategy in the 2000s.of operations strategy in the 2000s.
The ability to improve/maintain market share becauseThe ability to improve/maintain market share because
Customer orders can be delivered soon afterCustomer orders can be delivered soon afterreceipt of the orderreceipt of the order
Production can quickly be shifted from product toProduction can quickly be shifted from product toproductproduct
Production capacity can be increased rapidlyProduction capacity can be increased rapidly New products can be developed and introducedNew products can be developed and introduced
into production quickly and inexpensivelyinto production quickly and inexpensively
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Justifying Automation ProjectsJustifying Automation ProjectsJustifying Automation ProjectsJustifying Automation Projects
Payback period, NPV, IRR, and other conventionalPayback period, NPV, IRR, and other conventionalapproaches alone are inadequate tools on which toapproaches alone are inadequate tools on which to
base product/process design/redesign decisionsbase product/process design/redesign decisions
Product/process technology must be seen as a longProduct/process technology must be seen as a long--
term strategic choiceterm strategic choice
Returns on investment include:Returns on investment include:
Improved product/service qualityImproved product/service quality
Faster order deliveryFaster order delivery Increased flexibilityIncreased flexibility
Reduced production costReduced production cost
Increased market shareIncreased market share
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Managing Technological ChangeManaging Technological ChangeManaging Technological ChangeManaging Technological Change
Have a master plan for automation.Have a master plan for automation.
Recognize the risks in automating.Recognize the risks in automating.
Establish a new production technology departmentEstablish a new production technology department
Allow ample time for completion of automation.Allow ample time for completion of automation. Do not try to automate everything at once.Do not try to automate everything at once.
People are the key to making automation successful.People are the key to making automation successful.
Dont move too slowly in adopting new technology.Dont move too slowly in adopting new technology.
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Worker Displacement and Training/ RetrainingWorker Displacement and Training/ RetrainingWorker Displacement and Training/ RetrainingWorker Displacement and Training/ Retraining
One result of automation is the elimination of jobsOne result of automation is the elimination of jobs
Some say that new jobs are created in engineering,Some say that new jobs are created in engineering,
manufacturing, programming, selling, and servicingmanufacturing, programming, selling, and servicing
the newthe new--technology productstechnology products
Many firms realize they cannot afford NOT to trainMany firms realize they cannot afford NOT to train
and retrain their current workersand retrain their current workers
Firms are providing more training than ever beforeFirms are providing more training than ever before
Still, US firms spend little on training compared to,Still, US firms spend little on training compared to,say, German firms (4% of payroll cost on training)say, German firms (4% of payroll cost on training)
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Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives
Economic factorsEconomic factors
Effect on market shareEffect on market share
Effect on product/service qualityEffect on product/service quality
Effect on manufacturing flexibilityEffect on manufacturing flexibility Effect on labor relationsEffect on labor relations
Amount of time required for implementationAmount of time required for implementation
Effect of implementation on ongoing productionEffect of implementation on ongoing production
Amount of capital requiredAmount of capital required
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Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives
Economic AnalysisEconomic Analysis
Economic analysis will always be an important, ifEconomic analysis will always be an important, if
not a predominant, factor in deciding amongnot a predominant, factor in deciding among
alternativesalternatives
Frequently used approaches are:Frequently used approaches are:
BreakBreak--even analysiseven analysis
Financial analysisFinancial analysis
By using only economic analysis, other importantBy using only economic analysis, other importantfactors are ignoredfactors are ignored
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Example: Valley HospitalExample: Valley HospitalExample: Valley HospitalExample: Valley Hospital
Economic AnalysisEconomic Analysis
Valley Hospital is planning to install a new linenValley Hospital is planning to install a new linen
retrieval system. Two alternatives being consideredretrieval system. Two alternatives being considered
are: a continuous vacuum (CV) system and a batchare: a continuous vacuum (CV) system and a batch
robotic/chute (BR/C) system. The followingrobotic/chute (BR/C) system. The following
estimates were prepared:estimates were prepared:
CVCV BR/CBR/C
Annual Fixed Costs ($000)Annual Fixed Costs ($000) $2,690$2,690 $975$975Average Variable Cost per Ton $1,660Average Variable Cost per Ton $1,660 $2,590$2,590
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Example: Valley HospitalExample: Valley HospitalExample: Valley HospitalExample: Valley Hospital
Economic AnalysisEconomic Analysis
At a forecast annual operating level of2,000 tonsAt a forecast annual operating level of2,000 tons
of linen, which alternative should be chosen basedof linen, which alternative should be chosen based
only on total annual cost?only on total annual cost?
TCTCCVCV = 2,690,000 + 1,660(2,000) = $6,010,000= 2,690,000 + 1,660(2,000) = $6,010,000
TCTCBR/CBR/C = 975,000 + 2,590(2,000) = $6,155,000= 975,000 + 2,590(2,000) = $6,155,000
The continuous vacuum (CV) alternative has a lowerThe continuous vacuum (CV) alternative has a lowertotal annual cost.total annual cost.
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Example: Valley HospitalExample: Valley HospitalExample: Valley HospitalExample: Valley Hospital
Economic AnalysisEconomic Analysis
The annual volume of linen has to increase orThe annual volume of linen has to increase or
decrease to what level in order for the BR/Cdecrease to what level in order for the BR/C
alternative to be favored?alternative to be favored?
TCTCCVCV = TC= TCBR/CBR/C2,690,000 + 1,660(Q) = 975,000 + 2,590(Q)2,690,000 + 1,660(Q) = 975,000 + 2,590(Q)
830Q = 1,715,000830Q = 1,715,000
Q = 1,844.1 tonsQ = 1,844.1 tons
Annual volume must decrease to 1,844 tons or less.Annual volume must decrease to 1,844 tons or less.
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Example: Security BankExample: Security BankExample: Security BankExample: Security Bank
Economic AnalysisEconomic Analysis
Security is considering the installation of an ATMSecurity is considering the installation of an ATM
and has estimated the cost of the machine, effects onand has estimated the cost of the machine, effects on
revenue, savings in taxes from depreciation, and laborrevenue, savings in taxes from depreciation, and labor
savings.savings.
The machine is estimated to have an initial cost ofThe machine is estimated to have an initial cost of
$250,000 and an expected life of five years. The$250,000 and an expected life of five years. The
afterafter--tax cash inflows for years 1tax cash inflows for years 1--5
are estimated to5
are estimated tobe: $87,500; $79,600; $75,300; $71,600; andbe: $87,500; $79,600; $75,300; $71,600; and
$69,400. Compute the after$69,400. Compute the after--tax payback period.tax payback period.
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Example: Security BankExample: Security BankExample: Security BankExample: Security Bank
Economic AnalysisEconomic AnalysisCumulativeCumulative
AfterAfter--TaxTax After After--TaxTaxYearYear Cash InflowCash Inflow Cash InflowCash Inflow
11 $87,500$87,500 $ 87,500$ 87,50022 79,60079,600 167,100167,10033 75,30075,300 242,400242,40044 71,60071,600 314,000314,00055 69,40069,400 383,400383,400
Payback period = 3 + (250,000Payback period = 3 + (250,000 242,400)/71,600242,400)/71,600= 3.106 years= 3.106 years
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Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives
Rating Scale ApproachRating Scale Approach
Automation alternatives are rated using, say, a 5Automation alternatives are rated using, say, a 5--pointpoint
scale on a variety of factors such as:scale on a variety of factors such as:
Economic measuresEconomic measures
Effect on market shareEffect on market share
Effect on product qualityEffect on product quality
Effect on manufacturing flexibilityEffect on manufacturing flexibility
Effect on labor relationsEffect on labor relations
Amount of time required for implementationAmount of time required for implementation
Effect on ongoing productionEffect on ongoing production
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Deciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation AlternativesDeciding Among Automation Alternatives
RelativeRelative--AggregateAggregate--Scores ApproachScores Approach
Similar to Rating Scale Approach, but weightsSimilar to Rating Scale Approach, but weights
are formally assigned to each factor which permitsare formally assigned to each factor which permits
the direct calculation of an overall rating for eachthe direct calculation of an overall rating for each
alternative.alternative.
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Example: Brownell CleanersExample: Brownell CleanersExample: Brownell CleanersExample: Brownell Cleaners
RelativeRelative--AggregateAggregate--Scores ApproachScores Approach
An analyst at Brownell Cleaners is consideringAn analyst at Brownell Cleaners is considering
two alternatives for a new garment conveyor system,two alternatives for a new garment conveyor system,
GCS1 and GCS2.GCS1 and GCS2.
He has interviewed several managers in the firmHe has interviewed several managers in the firm
and conducted extensive analysis of the problem. Heand conducted extensive analysis of the problem. He
has collected the information shown on the next slide.has collected the information shown on the next slide.
Which alternative do you recommend, based onWhich alternative do you recommend, based onthe relativethe relative--aggregateaggregate--scores approach?scores approach?
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Example: Brownell CleanersExample: Brownell CleanersExample: Brownell CleanersExample: Brownell Cleaners
RelativeRelative--AggregateAggregate--Scores ApproachScores Approach
FactorFactor
Automation FactorsAutomation Factors WeightWeight GCS1GCS1 GCS2GCS2
Economic factorsEconomic factors
Annual savingsAnnual savings .30.30 $21,600$21,600 $26,700$26,700Other factorsOther factors ScoreScore ScoreScore
Market shareMarket share .30.30 .700.700 .800.800
Service qualityService quality .15.15 .600.600 .700.700
Labor relationsLabor relations .15
.15
.5
00.5
00 .8
00.8
00Implementation time .10Implementation time .10 .700.700 .600.600
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Example: Brownell CleanersExample: Brownell CleanersExample: Brownell CleanersExample: Brownell Cleaners
RelativeRelative--AggregateAggregate--Scores ApproachScores Approach
GCS1GCS1 GCS2GCS2
FactorFactor Wgt.Wgt. Wgt.Wgt.
Automation FactorsAutomation Factors WeightWeight ScoreScore ScoreScore ScoreScore ScoreScore
Economic factorsEconomic factorsAnnual savingsAnnual savings .30 1.000 .300 .809 .243.30 1.000 .300 .809 .243
Other factorsOther factors
Market shareMarket share .30 .700 .210.30 .700 .210 .800 .240.800 .240
Service qualityService quality .15 .600 .090.15 .600 .090 .700 .105.700 .105
Labor relationsLabor relations .15 .500 .075.15 .500 .075 .800 .120.800 .120
Implementation time .10Implementation time .10 .700 .070.700 .070 .600 .060.600 .060
Total Aggregate ScoreTotal Aggregate Score .745.745 .768.768
21,600/26,70021,600/26,700
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WrapWrap--Up: WorldUp: World--Class PracticeClass PracticeWrapWrap--Up: WorldUp: World--Class PracticeClass Practice
WorldWorld--Class companies utilize the latestClass companies utilize the latesttechnologies/practices. For example:technologies/practices. For example:
Design products to be automationDesign products to be automation--friendlyfriendly
Use CAD/CAM for designing productsUse CAD/CAM for designing products
Convert fixed automation to flexible automationConvert fixed automation to flexible automation
Move towards smaller batch sizesMove towards smaller batch sizes
Plan for automationPlan for automation
Build teams to develop automated systemsBuild teams to develop automated systems Justify automation based on multiple factorsJustify automation based on multiple factors
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End ofChapter 6End ofChapter 6