P RODUCTS P LANNING AND P ROCESS S ELECTION - II Beni Asllani University of Tennessee at Chattanooga Copyright 2006 John Wiley & Sons, Inc. Prepared by

PRODUCTS PLANNİNG AND PROCESS SELECTİON - II

Prepared by Şevkinaz GümüşoğluPrepared by Şevkinaz Gümüşoğlu using different references about POM&QMusing different references about POM&QM

Process selection decisions are related with products and services planning.

If we want to select efficient process we need right process strategies.

Thesee strategies effect our facilities layout decisions.

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Copyright 2006 John W

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© 2011 Pearson E

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PROCESS STRATEGİES

The objective of a process strategy is to The objective of a process strategy is to build a production process that meets build a production process that meets customer requirements and product customer requirements and product specifications within cost and other specifications within cost and other

managerial constraintsmanagerial constraints

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PROCESS FLOW DİAGRAM

THE ASSEMBLY LINETESTING

28 tests

Oil tank work cell

Shocks and forks

Handlebars

Fender work cell

Air cleaners

Fluids and mufflers

Fuel tank work cell

Wheel work cell

Roller testing

Incoming parts

From Milwaukee on a JIT arrival

schedule

Engines and transmissions

Frame tube bending

Frame-building work cells

Frame machining

Hot-paint frame painting

Crating

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HOW CAN WE ACHİEVE THESE STRATEGİES?

Determine some properties about product & services design

Determine some inputs about these properties

Determine some operations about these parts, material & work-in-process

Apply all of these information for our process.

Design the best process for our objective 5-6

DESİGN PROCESS

Product design defines appearance

of product sets standards for

performance specifies which

materials are to be used

determines dimensions and tolerances

Service design specifies offering the

costumers; what physical items, sensual benefits, and psychological benefits from service

defines environment in which service will take place

DESİGN PROCESS

« Effective Design» can provide a competitive edgematches product or service characteristics

with customer requirementsensures that customer requirements are met

in the simplest and least costly mannerreduces time required to design a new product

or serviceminimizes revisions necessary to make a

design workable


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DESİGN PROCESS

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Pilot product run and

final tests

New product or service launch

Final designFinal design& process plans& process plans

Ideageneration

Feasibilitystudy

Product or Product or service conceptservice concept

Performance Performance specificationsspecifications

Functionaldesign

Form design

Production design

Revising and testing Revising and testing prototypesprototypes

Design Design specificationsspecifications

Manufacturing Manufacturing or delivery or delivery specificationsspecifications

SuppliersSuppliersR&DR&D

CustomersCustomers

MarketingMarketing CompetitorsCompetitors

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PROCESS, VOLUME, AND VARİETY

Process Focusprojects, job shops

(machine, print, hospitals, restaurants)

Izmir Kent Hospital

Repetitive(autos, motorcycles,

home appliances)Harley-Davidson

Product Focus(commercial baked goods, steel, glass,

beer)Frito-Lay

High Varietyone or few units

per run,(allows

customization)

Changes in Modules

modest runs, standardized

modules

Changes in Attributes (such as grade, quality,

size, thickness, etc.)

long runs only

Mass Customization(difficult to achieve, but

huge rewards)Dell Computer

Poor Strategy (Both fixed and

variable costs are high)

Low Volume

Repetitive Process

High Volume

VolumeFigure 7.1

PROCESSES AND TECHNOLOGYPROCESS SELECTİON REFERS TO STRATEGİC DECİSİON AND IT CAN BE CATEGORİZED AS FOLLOWS:

Converting process: For examples iron core convert the metal sheet. Fabrication process: Changing raw materials into some specific form.

For example, making sheet metal into a car fender or foming gold into a crown for a tooth.

Assembly process: assembling a fender to a car,putting toothpaste tubes into a box , or fastening a dental crown in somebody’s mouth.

Testing process: This is not strictly speaking a fundemental process, but it is so widely mentioned as a standalone major activity for completeness.

The process flow structure refers how the factory organizes material flow

using one or more of process tecnologies.Major process flow structures as; (Hayes & Wheelwright) Project production flow one-at-a-time production of a product to customer order Batch production flow (job shop)

systems process many different jobs at the same time in groups (or batches)

Mass production flow (assembly line)large volumes of a standard product for a mass market

Continuous production flowused for very high volume commodity products

TYPES OF PRODUCTİON/OPERATİONS PROCESSES

Effective production/operations process is essential to the company’s continuing success. Not only there are numerous types of production, there are also many ways of classifying or grouping them for descriptive purposes. Classifying production/operations processes by their characteristics can provide valuable insights into how they should be managed.

In general, the processes by which goods and services are produced can be categorised in two traditional ways. Firstly, we can identify continuous, repetitive, intermittent and job shop production process.

Job shop (jumbled flow ,Bath production). A wide variety of customized products are made by a highly skilled workforce using general-purpose equipment. These processes are referred to as jumbled-flow processes because there are many possible routings through the process. Examples: Home renovating firm, stereo repair shop, gourmet restaurant.

Intermittent (batch) flow. A mixture of general-purpose and special-purpose equipment is used to produce small to large batches of products.

Examples: clothing and book manufacturers, winery, caterer.

Repetitive flow (mass production). The product or products are processed in lots, each item of production passing through the same sequence of operations, i.e. several standardized products follow a predetermined flow through sequentially dependent work centers. Workers typically are assigned to a narrow range of tasks and work with highly specialised equipment. Examples: automobile and computer assembly lines, insurance home office.

Continuous flow (flow shop). Commodity like products flow continuously through a linear process. This type of process will theoretically run for 24 hrs/day, 7 days/week and 52 weeks/year and, whilst this is often the objective, it is rarely achieved.

Examples: chemical, oil, and sugar refineries, power and light utilities.

These four categories represent points on continuum of process organisations.

Processes that fall within a particular category share many characteristics that fundamentally influence how a process should be managed.

The second and similar classification divides production processes into;

Process,Jobbing Mass, Batch Production. Process Production. Processes that operate continually to produce a

very high volume of a standard product are termed “Processes”. This type of process involves the continuous production of a commodity , often by chemical rather than mechanical means, such as oil and gas. Extra examples of a continuous processes oil refinery, electricity production and steel making.

Jobbing Production (Project Type Production). Processes that produce high-variety and low-volume products are termed “jobbing”.Although strictly consisting of the manufacture of different products in unit quantities (in practice corresponds to the intermittent process mentioned above). This type of production assumes a one-of-a-kind production output, such as a new building or developing a new software application. The equipment are typically designed for flexibility and often general purpose, meaning it can be used for many different production requirements

Mass Production. Is conceptually similar to process production, except that discrete items such as motorcars and domestic appliances are usually involved. A single or a very small range of similar items is produced in very large numbers. In other words, processes that produce high-volume and low-variety products are termed line or mass processes. Because of the high volumes of product it is cost-effective to use specialised labour and equipment.

Batch Production. Processes that produce products of medium variety and medium volume are termed “batch processes”. Occurs where the number of discrete items to be manufactured in a period is insufficient to enable mass production to be used. Similar items are manufactured together in batches. In other words, batch processes cover a relatively wide range of volume and variety combination. Products are grouped into batches .

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MASS CUSTOMİZATİON

Mass Customization

Effective scheduling techniques

Rapid throughput techniques

Repetitive FocusFlexible peopleand equipment

Process-FocusedHigh variety, low volume

Low utilization (5% to 25%)General-purpose equipment

Product-FocusedLow variety, high volume

High utilization (70% to 90%)Specialized equipment

Figure 7.3

Modular techniques

Accommodating Product and

Process DesignResponsive

Supply Chains

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Table 7.1

Vehicle models 140 286Vehicle types 18 1,212Bicycle types 8 211,000Software titles 0 400,000Web sites 0 162,000,000Movie releases per year 267 765New book titles 40,530 300,000Houston TV channels 5 185Breakfast cereals 160 340Items in supermarket 14,000 150,000 LCD TVs 0 102

Number of Choices Item

1970s 21st Century

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Many parts and component inputs

Many output versions(custom PCs and notebooks)

Many modules

(chips, hard drives, software, cases)

(high-volume, high-variety)

Dell Computer

PRODUCT-PROCESS MATRİX

Source: Source: Adapted from Robert Hayes and Steven Wheelwright, Adapted from Robert Hayes and Steven Wheelwright, Restoring the Competitive Restoring the Competitive Edge: Competing Through Manufacturing Edge: Competing Through Manufacturing (New York: John Wiley & Sons, 1984), p. 209(New York: John Wiley & Sons, 1984), p. 209


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ProjectConstruction of the aircraft carrier was a huge project that took almost 10 years to complete. Spacecraft, bridge, barrage

Batch ProductionAt Guitars bindings on the guitar frame are installed by hand and are wrapped with a cloth webbing until glue is dried. Piano, Tom Ford, Haute-couture, Dior

Mass Production Here in a clean room a worker performs quality checks on a computer assembly line.

Continuous ProductionA paper manufacturer produces a continuous sheet paper from wood pulp slurry, which is mixed, pressed, dried, and wound onto reels.

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CROSSOVER CHARTS

Fixed costs

Variable costs

$

High volume, low varietyProcess C

Fixed costs

Variable costs$

RepetitiveProcess B

Fixed costs

Variable costs$

Low volume, high varietyProcess A

Fixed cost Process A

Fixed cost Process B

Fixed cost Process C

Total

cost

Total cost

Total cost

V1(2,857) V2

(6,666)

400,000

300,000

200,000

Volume

$

Figure 7.4

SERVİCE STRATEGY:PROCESSES AND TECHNOLOGY

Professional servicehighly customized and very labor intensive

Service shopcustomized and labor intensive

Mass serviceless customized and less labor intensive

Service Factoryleast customized and least labor intensive


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SERVİCE-PROCESS MATRİXC

opyright 2006 John Wiley &

Sons, Inc.

Source: Source: Adapted from Roger Schmenner, “How Can Service Businesses Adapted from Roger Schmenner, “How Can Service Businesses Survive and Prosper?” Survive and Prosper?” Sloan Management Review Sloan Management Review 27(3):2927(3):29

© 2011 Pearson E


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Service Factory Service Shop

Degree of CustomizationLow High

Deg

ree

of L

abor

Low

High

Mass Service Professional Service

SERVİCE PROCESS MATRİX

Commercial banking

Private banking

General-purpose law firms

Law clinicsSpecialized hospitals

Hospitals

Full-service stockbroker

Limited-service stockbroker

Retailing

Boutiques

Warehouse and catalog stores

Fast-food restaurants

Fine-dining restaurants

Airlines

No-frills airlines

Figure 7.9

Digital orthodontics

Traditional orthodontics


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Professional ServiceA doctor provides personal service to each patient based on extensive training in medicine. Dentist, Consultant, Advisor, etc.

Service ShopAlthough a lecture may be prepared in advance, its delivery is affected by students in each class. YUSEM, TSE, English Akademy, etc.

Mass ServiceA retail store provides a standard array of products from which customers may choose.

Service FactoryElectricity is a commodity available continuously to customers.

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Cus

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Less

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SERVİCE DESİGN PROCESS


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Performance SpecificationsPerformance Specifications

Service

Delivery SpecificationsDelivery Specifications

Physical Physical itemsitems

Sensual Sensual benefitsbenefits

Psychological Psychological benefitsbenefits

Design SpecificationsDesign Specifications Service Provider

Customer

Customer Customer requirementsrequirements

Customer Customer expectationsexpectations

ActivitiesActivities FacilityFacility Provider Provider skillsskills

Cost Cost and and time time estimatesestimates

ScheduleSchedule DeliverablesDeliverables LocationLocation

Service ConceptService Concept Service PackageService Package

Desired service Desired service experienceexperience

Targeted Targeted customercustomer

IDEA GENERATİON SOURCES

Company’s own R&D department

Customer complaints or suggestions

Marketing research Suppliers

Salespersons in the field

Factory workers New technological

developments Competitors

FEASİBİLİTY STUDY

Market analysis Economic analysis Technical/strategic analysis Performance specifications


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FİNAL DESİGN AND PROCESS PLANS


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Final designdetailed drawings and specifications for new product or service

Process plansworkable instructions

necessary equipment and tooling

component sourcing recommendations

job descriptions and procedures

computer programs for automated machines

REDUCİNG TİME-TO-MARKET

Establish multifunctional design teams Make design decisions concurrently rather than

sequentially Design for manufacture and assembly Use technology in the design process Engage in collaborative design


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DESIGN TEAM AND CONCURRENT ENGİNEERİNG DESİGN


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A new approach to design that involves simultaneous design of products and processes by design teams

Improves quality of early design decisions

Involves suppliers Incorporates

production process Uses a price-minus

system Scheduling and

management can be complex as tasks are done in parallel

DESİGN FOR MANUFACTURE AND ASSEMBLY (DFMA)


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Design for manufacturedesign a product for easy and economical production

Design for assemblya set of procedures for:

reducing number of parts in an assembly

evaluating methods of assembly

determining an assembly sequence

DFM GUİDELİNES

Minimize number of parts and subassemblies

Use standard parts when possible and repeatable, well-understood processes

Design parts for many uses, and modules that can be combined in different ways

Design for ease of assembly, minimal handling, and proper presentation

TECHNOLOGY İN THE DESİGN PROCESS

Computer Aided Design (CAD) assists in creation, modification, and analysis of a

design includes

computer-aided engineering (CAE) tests and analyzes designs on computer screen

computer-aided manufacturing (CAM) ultimate design-to-manufacture connection


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IMPROVİNG QUALİTY OF DESİGN

Review designs to prevent failures and ensure value

Design for environment Measure design quality Use quality function deployment Design for robustness


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DESİGN REVİEW

Failure mode and effects analysis (FMEA) a systematic method of analyzing product failures

Fault tree analysis (FTA) a visual method for analyzing interrelationships

among failures Value analysis (VA)

helps eliminate unnecessary features and functions


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Failure

Mode

Cause of

Failure

Effect of

Failure

Corrective

ActionStale low moisture content

expired shelf lifepoor packaging

tastes badwon’t crunchthrown outlost sales

add moisture cure longerbetter package sealshorter shelf life

Broken too thintoo brittlerough handlingrough usepoor packaging

can’t dippoor displayinjures mouthchockingperceived as oldlost sales

change recipechange processchange packaging

Too Salty outdated receiptprocess not in controluneven distribution of salt

eat lessdrink morehealth hazardlost sales

experiment with recipeexperiment with processintroduce low salt version


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FMEA for Potato ChipsFMEA for Potato Chips

FAULT TREE ANALYSİS (FTA)


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VALUE ANALYSİS (VA), VALUE ENGINEERİNGVA was invented in 1947 by sales engineer

Lawrence D. Miles in General Electric. It was used in 1957 in England by USA Consultant firm. This approaches analyses;

Can we do without it? Does it do more than is required? Does it cost more than it is worth? Can something else do a better job? Can it be made by

a less costly method? with less costly tooling? with less costly material?

Can it be made cheaper, better, or faster by someone else?


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DESİGN FOR ENVİRONMENT

Design for environment designing a product from material that can be

recycled design from recycled material design for ease of repair minimize packaging minimize material and energy used during

manufacture, consumption and disposal

Extended producer responsibility holds companies responsible for their product even

after its useful life


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DESİGN FOR ENVİRONMENT (CONT.)


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•DESİGN FOR ROBUSTNESSThe other advance topics are;

Robust product Robust design Controllable factors Uncontrollable factors

Six sigmaTaguchi FunctionLean Production


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Stanford Design Thinking Process Video http://www.youtube.com/watch?v=JZH70qhm

Eso

Aircraft Manufacturing Process: http://www.youtube.com/watch?v=puJx6aq5i

_w

Airplane Model Production Process: http://www.youtube.com/watch?v=fmcfKl89D

cA


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© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e

CAPACİTY PLANNİNG

Establishes overall level of productive resources

Affects leadtime responsiveness, cost & competitiveness

Determines when and how much to increase capacity

CAPACITY UTILIZATION

Measures how much of the available capacity is actually being used:

Measures effectivenessUse either effective or design

capacity in denominator

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100%capacity

rateoutput actualnUtilizatio

EXAMPLES OF COMPUTİNG CAPACİTY UTİLİZATİON

1. Example:A bakery’s design capacity is 30 custom cakes per day. Currently the bakery is producing 28 cakes per day. What is the bakery’s capacity utilization relative to both design and effective capacity?

Design capacity:Maximum output rate under ideal

conditionsA bakery can make 30 custom cakes

per day when pushed at holiday timeEffective capacity:

Maximum output rate under normal (realistic) conditions

On the average this bakery can make 20 custom cakes per day

SOLUTİON:

The current utilization is only slightly below its design capacity and considerably above its effective capacity

The bakery can only operate at this level for a short period of time

93%(100%)30

28(100%)

capacity design

output actual nUtilizatio

140%(100%)20

28(100%)

capacity effective

output actual nUtilizatio

design

effective

2. Example:Your company has 4 machines which are staffed by 2 eight hours shifts 6 days a week. Lately information has shown that there are about 20 per week in which machines are not in use due to breakdowns. Calculate your companies machine utilization.

SOLUTİON:

Capacity = (# of shifts) x (# of hours a day) x (# of machines) x (# of days a

week)

Utilization = Hours available – hours down x 100

Hours available

Utilization = Hours worked x 100 Hours available

First step, the company’s machine hour capacity?Capacity = (# of shifts) x (# of hours a

day) x (# of machines) x (# of days a week)

Capacity = (2 shifts) x (8 hours a day) x (4 machines) x (6 days a week)

Capacity = 384 machine hours

Second Step:Utilization = Hours available – hours down x 100

Hours available

Utilization = (384 machine hours) – (20 hours down) x 100

384 machine hours

Utilization = 364 machine hours x 100 = .9479 x 100

384 machine hours

Utilization = 94.79 %

3. EXAMPLE:

During one week of production, a plant produced 83 units of a product. Its historic highest or best utilization recorded was 120 units per week. What is this plant’s capacity utilization rate?


CAPACİTY EXPANSİON

Volume & certainty of anticipated demand Strategic objectives for growth Costs of expansion & operation Incremental or one-step expansion


CAPACİTY EXPANSİON STRATEGİES

UnitsCapacity

Time

Demand

Units

Capacity

Time

Demand

Units

Capacity

Time

Demand

Units

Incrementalexpansion

Time

Demand

Capacity lead strategy Capacity lag strategy

Average capacity strategy Incremental vs. one-step expansion

One-step expansion


BEST OPERATİNG LEVELS WİTH ECONOMİES & DİSECONOMİES OF SCALE

250 roomhotel

Ave

rage

cos

t pe

r un

it

Best operating

level

500 roomhotel

1000 roomhotel

Best operating

levelBest

operating level

Economies of scale Diseconomies of scale


STRATEGİES FOR MEETİNG DEMAND

1. Use inventory to absorb fluctuations in demand (level production)

2. Hire and fire workers to match demand (chase demand)3. Maintain resources for high demand levels4. Increase or decrease working hours (over & undertime)5. Subcontract work to other firms6. Use part-time workers7. Provide the service or product at a later time period

(backordering)


AGGREGATE PRODUCTİON PLANNİNG (APP)

Matches market demand to company resources Plans production 6 months to 12 months in

advance Expresses demand, resources, and capacity in

general terms Develops a strategy for economically meeting

demand Establishes a companywide game plan for

allocating resources


INPUTS AND OUTPUTS TO AGGREGATE PRODUCTİON PLANNİNG

AggregateProductionPlanning

CompanyPolicies

FinancialConstraints

StrategicObjectives

Units or dollarssubcontracted,backordered, or

lost

CapacityConstraints

Size ofWorkforce

Productionper month

(in units or $)

InventoryLevels

DemandForecasts


STRATEGY DETAİLS

Subcontracting - useful if supplier meets quality & time requirements

Part-time workers - feasible for unskilled jobs or if labor pool exists

Backordering - only works if customer is willing to wait for product/services


LEVEL PRODUCTİON

Time

Production

Demand

Units


CHASE DEMAND

Time

Units

Production

Demand

CAPACİTY FLEXİBİLİTY

Flexible plants

Flexible processes

Flexible workers

EXAMPLE OF A DECİSİON TREE PROBLEM

A glass factory specializing in crystal is experiencing a substantial backlog, and the firm's management is considering

three courses of action:

A) Arrange for subcontracting,B) Construct new facilities.C) Do nothing (no change)

The correct choice depends largely upon demand, which may be low, medium, or high. By consensus, management

estimates the respective demand probabilities as .10, .50, and .40.

EXAMPLE OF A DECİSİON TREE PROBLEM: THE PAYOFF TABLE

0.1 0.5 0.4Low Medium High

A 10 50 90B -120 25 200C 20 40 60

The management also estimates the profits when choosing from the three alternatives (A, B, and C) under the differing probable levels of demand. These costs, in thousands of dollars are presented in the table below:

EXAMPLE OF A DECİSİON TREE PROBLEM: STEP 1. WE START BY DRAWİNG THE THREE DECİSİONS

A

B

C

EXAMPLE OF DECİSİON TREE PROBLEM: STEP 2. ADD OUR POSSİBLE STATES OF NATURE, PROBABİLİTİES, AND PAYOFFS

A

B

C

High demand (.4)

Medium demand (.5)

Low demand (.1)

$90k$50k

$10k

High demand (.4)

Medium demand (.5)

Low demand (.1)

$200k$25k

-$120k

High demand (.4)

Medium demand (.5)

Low demand (.1)

$60k$40k

$20k

EXAMPLE OF DECİSİON TREE PROBLEM: STEP 3. DETERMİNE THE EXPECTED VALUE OF EACH DECİSİON

High demand (.4)

Medium demand (.5)

Low demand (.1)

A

$90k$50k

$10k

EVA=.4(90)+.5(50)+.1(10)=$62k

$62k

EXAMPLE OF DECİSİON TREE PROBLEM: STEP 4. MAKE DECİSİON

High demand (.4)

Medium demand (.5)

Low demand (.1)

High demand (.4)

Medium demand (.5)

Low demand (.1)

A

B

CHigh demand (.4)

Medium demand (.5)

Low demand (.1)

$90k$50k

$10k

$200k$25k

-$120k

$60k$40k

$20k

$62k

$80.5k

$46k

Alternative B generates the greatest expected profit, so our choice is B or to construct a new facility.

THANKS!!!

Documents

P RODUCTS P LANNING AND P ROCESS S ELECTION - II Beni Asllani University of Tennessee at Chattanooga Copyright 2006 John Wiley & Sons, Inc. Prepared by