Chp.%204%20Mfg%20Processes%20

Chp.%204%20Mfg%20Processes%20 - Chapter 4: Manufacturing...

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Chapter 4: Manufacturing Processes
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Organization of Production Processes Project Workcenter Manufacturing Cell Assembly Line Continuous Process
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Workcenter Manufacturing Cell Assembly Line Continuous Process Product Volume High Low Project Product-Process Matrix: Framework Describing Layout Strategies Product Standardization Low - one-of-a-kind High - standardized commodity product
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Break-Even Analysis A standard approach to choosing among alternative processes or equipment Model seeks to determine the point in units produced (and sold) where we will start making profit on the process or equipment Model seeks to determine the point in units produced (and sold) where total revenue and total cost are equal
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Break-Even Analysis (Continued) This formula can be used to find any of its components algebraically if the other parameters are known Break-even Demand= Purchase cost of process or equipment Price per unit - Cost per unit or Total fixed costs of process or equipment Unit price to customer - Variable costs per unit
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Break-Even Analysis (Continued) Example: Suppose you want to purchase a new computer that will cost $5,000. It will be used to process written orders from customers who will pay $25 each for the service. The cost of labor, electricity and the form used to place the order is $5 per customer. How many customers will we need to serve to permit the total revenue to break-even with our costs? Break-even Demand: = Total fixed costs of process or equip . Unit price to customer – Variable costs =5,000/(25-5) =250 customers
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What is the break-even in demand for a new process that costs $25,000 to install, will generate a service product that customers are willing to pay $500 per unit for, and whose labor and material costs for each unit is $100? a.
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Chp.%204%20Mfg%20Processes%20 - Chapter 4: Manufacturing...

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