After reading the material in this chapter, you should be able to: Demonstrate how production processes are organized, describe the product-process matrix, provide an overview of how the different types of production processes are designed, understand how to design and analyze an assembly line.
Trang 1Break-Even Analysis
Trang 2 The choice of specific equipment to use in
production processes can be based upon an analysis of cost trade-offs
Often the choice is between specialized and general equipment
Specialized equipment may require a higher initial investment, but can perform more efficiently over the long run
General equipment often has a lower initial
investment, but lacks the efficiency of a
specialized machine
Trang 3Break-Even Analysis
One means of choosing between two options
is a break-even analysis
Understanding how profits (and losses) change
for each option as the total number of units varies
This is particularly suitable when processes
have a significant initial investment (fixed cost) and when production costs vary in proportion
to the number of units produced (variable
costs)
Trang 4Example 6A.1
A manufacturer is considering three options for obtaining a machined part
Buy the part from a supplier for $200 per unit (no fixed cost)
Make the part on a semi-automatic lathe for $75 per unit (fixed costs of $80,000)
Make the part with a machining center for $15 per unit (fixed costs of $200,000)
Trang 5Example 6A.1- Calculate
Break-Even Points
Break-even point A – set total cost for option 2 equal to total cost for option 3 and solve for D
Break-even point B – set total cost for option 1 equal to total cost for option 2 and solve for D
Trang 6Example 6A.1- Chart the
Alternatives
Break-even point
A Machine center becomes efficent
Break-even point
B Semiautomatic lathe becomes efficent
Break-even point between machine center
and buy option is not relevant