Chapter 3 Process Strategy

 149. Sketch and discuss the product-process matrix for manufacturing.

Chapter 3· Process Strategy

155

Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 3· Process Strategy

150. Define economies of scope, and identify how they relate to flexible automation.

151. What is the meaning of process reengineering and how can it be applied to a major process with which you are familiar? Be as complete as time permits.

PROBLEMS

152. A firm of four departments has the following trip matrix and current block plan of all departments:

				Trips		Between
				Departments
Dept. Name	A	B	C	D
A	---	14	6	9
B		---	7	16
C			---	2
D				---
	A	B
	D	C

a. What is the weighted-distance score for the current layout? (Assume rectilinear distance and that the distance between departments A and B is one unit of distance.)

b. What would be the weighted-distance score for the following layout?

A	C
D	B

156

Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 3· Process Strategy

153. A firm of six departments has the following trip matrix and current block plan of all departments:

Dept. Name

A

B

C

D

E

F

A	B	C
D	E	F

Closeness Factor
A	B	C	D	E	F
---	7	8	9	0	2
	---	6	3	0	10
		---	2	12	0
			---	3	0
				---	6
					---

a. What is the weighted–distance score for the current layout? (Assume rectilinear distance and that the distance between departments A and B is one unit of distance.)

b. What would be the weighted–distance score for the following layout?

157

Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 3· Process Strategy

A	C	E
D	B	F

158

Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 3· Process Strategy

159

Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 3· Process Strategy

154. A department store chain is designing a layout for a new store. The store manager wants to provide as much convenience as possible for her customers. Based on historical data, the number of trips between departments per hour is given in the following closeness matrix. A block plan showing a preliminary layout is also shown.

		Closeness Factors (Trips per hour)
		1/O	2/S	3/H	4/T	5/A	6/E
1.	Office Supplies (O)	---	40	100	50	20	10
2.	Sporting Goods (S)		---	100	80	60	80
3.	Hardware (H)			---	70	100	50
4.	Toys (T)				---	70	90
5.	Automotive (A)					---	60
6.	Electronics (E)						---

1. OFFICE SUPPLIES

2. SPORTING GOODS3. HARDWARE

4. TOYS

5. AUTOMOTIVE

6. ELECTRONICS

Customer travel between departments is restricted to the aisles shown in the block plan as dotted lines.

160

Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 3· Process Strategy

CALCULATIONS TABLE:

Dept. Pair	Closeness	Original		Revision	#1
	Factor (w)	Distance (dO)	w ´ dO	Distance (d1)	w ´ d1
1 – 2
1 – 3
1 – 4
1 – 5
1 – 6
2 – 3
2 – 4
2 – 5
2 – 6
3 – 4
3 – 5
3 – 6
4 – 5
4 – 6
5 – 6
TOTAL

a. What is the total expected weighted-distance score between Office Supplies and Hardware?

b. What is the total weighted-distance score between Hardware and Toys?

c. What is the total weighted-distance score for the entire store?

d. A suggestion has been made to switch Hardware and Automotive. What would the total weighted-distance score for the entire store if these two departments were switched?

e. Based on your calculations, would you recommend that Hardware and Toys be switched?

155. Two manufacturing processes are being considered for making a new product. Process #1 is less capital intensive, with fixed costs of $50,000 per year and variable costs of $700 per unit. Process #2 has fixed costs of $400,000 annually, with variable costs of $200 per unit.

a. What is the break-even quantity for the two processes?

b. If annual sales are expected to be 600 units, which process should be selected?

c. If lowest overall costs per year is your overall objective, for what range of annual production quantities should you select the first process? the second process?

d. Operations and Engineering have found a way to reduce the cost of the second process,

such that the fixed costs for this process decrease from $400,000 to $300,000 annually. All other costs remain the same (1^st process fixed = $50,000 / year, 1^st process variable = $700 / unit, 2^nd process variable = $200 / unit). What is the new break even quantity between the two processes?

e. Does this change the process selection for the annual sales volume of 600 units? If so, for what range of annual production quantities should you select the first process? the second process?