Process Planning Episode 11 pptx

Economics of process planning 395 Example 9.12 The Kleenezee Vacuum Company decide to analyse further the Supa-kleen model as detailed in Example 9.11. The variable cost is s the fixed costs are s per period and the selling price is s Determine the profit and contribution for this model for a range of production volumes from 250 to 1000 in increments of 250. Solution Volume Sales (s Fixed Variable Profit Profit: Contribution Cont.: costs (s costs (s (s Sales % (s Sales % 250 38.75 500 77.5 750 116.25 1000 155 32 11.75 (0.535) (1.38) 27 69.68 32 23.5 22 28.39 54 69.68 32 35.25 49 48.43 81 69.68 32 47 76 49.03 108 69.68 It can be seen from the above example that the profit/sales ratio increases as the sales volume increases. However, the contribution/sales ratio remains constant. 9.7 Manufacturing materials and costs As stated in Section 4.9, various factors will influence the selection of a suitable material for design and manufacture of a product. However, it is of prime importance that the selected material has appropriate properties that not only allow it to perform satisfactorily during service, but also to allow it to respond appropriately during manufacture (Edwards and Endean, 1990). The level of performance required for the material will vary according to the appli- cation area. For example, the level of performance expected of materials used in aerospace applications will be far greater than that of those used in house- hold appliances. In terms of cost, the higher the level of performance required, the greater the expense incurred. Therefore, the materials selection decision will generally be a compromise between performance and cost (Dieter, 2000). The cost of a particular material will be subject to the usual market forces of supply and demand. This may also be compounded further by the avail- ability of the material, particularly for materials that are naturally occurring, rare and/or difficult to process from mineral form. For example, a widely used material such as mild steel will have a low price compared with a rare mate- rial such as an industrial diamond. In addition, the selection of a particular material will limit the manufacturing options available and thus influence the manufacturing cost. This can also have an influence on the basic material cost in terms of the cost and energy required processing the raw material into a useful material form for manufacture. For example, steel in its basic form of pig iron is approximately a quarter of the cost of a cold-finished carbon steel bar (Dieter, 2000). Based on the relative costs of the two steel products 396 Process Planning mentioned above, another factor in the cost of material becomes apparent, namely the shape or form of the material. In solid form, most materials will be available as bar, sheet and plate. For example, consider the relative cost of brass (compared to mild steel = 1) in bar, sheet and plate form. Considering the cost per kilogram, it is cheapest in sheet form with a relative cost of 13.67 and slightly more expensive in plate form at 3.89 (see Table 9.4). However, in bar form it has a relative cost of 6.63 (see Table 9.5) which is almost twice the cost of sheet. The use of relative costs based on either cost per kilogram or cost per cubic metre allows the approximate relative cost increase or decrease to be estimated when changing from one material, or material form, to another for a particular product, as illustrated in Example 9.13. It is also preferable, as although the actual costs of material will fluctuate due to supply and demand, availability and quality over time, the relative cost ratio will remain fairly con- stant (Parker, 1984). The values in Tables 9.4-9.6, although useful should only be considered as approximate. They have been compiled from a number of charts from the British Standard PD6470:1981. TABLE 9.4 Relative costs for bar stock Material Cost/k g Cost/m s Mild steel (black) 1 10 Mild steel (bright) 1.25 12.9 Case hardened steel 1.38 14.3 Cast iron 2.75 18.6 Carbon steel 2.25 21.4 Manganese steel 2.50 24.3 Aluminium 8.50 35.7 Nickel-chromium Steel 4.63 42.9 Brass 6.63 72.9 Stainless steel 9.63 102.1 Phosphor bronze 16.00 124.3 Gun metal 17.88 140 TABLE 9.5 Material Relative costs for sheet and plate stock Sheet (0.04-3.25 mm thick) Plate (Over 3.50mm thick) Mild steel 1 10 1 10 Aluminium 5.11 21 4.89 17.1 Brass 3.67 42.9 3.89 46.7 Copper 5.89 70 5.11 61 Stainless steel 6.11 64.8 7.33 79 Cost/kg Cost/m 3 Cost/kg Cost/m 3 Economics of process planning 397 TABLE 9.6 Relative costs for castings Material Cost/kg Cost/m 3 Cast iron 1 10 SG iron 1.16 14.5 Aluminium 4.05 16.75 Brass 2.53 31 Aluminium bronze 6.95 36.5 Phosphor bronze 6.11 42 Example 9.13 In a bid to reduce the overall weight of an assembly, a cast component has come under scrutiny. What will the relative cost change be if the material is changed from cast iron to aluminium ? Solution Relative cost of cast iron = 10 Relative cost of aluminium = 16.75 Cost increase = 16.75/10 = 1.675 The material cost of the component will increase by 1.675. 9.8 Manufacturing processes and costs Just as competing manufacturing materials are evaluated as outlined in Section 9.7, so too are competing manufacturing processes. This can take the form of the type of relative evaluation outlined in Section 9.7 for materials. However, it may be the case that a more detailed cost comparison is required between competing manufacturing processes. A simple method for doing this is outlined below. This is a combination of two approaches known as the Production cost formula and break-even analysis (Hawkes and Abinett, 1984), both of which are useful in their own right and are briefly introduced. 9.8.1 Relative surface finish costs When costing products, the cost of a component will depend as much on the method of manufacture as the material it is made from. Each process has an inherent ability to produce to within certain limits of dimensional and geometric accuracy and surface finish. For example, if a surface finish of 0.4 Ixm is required for a component, then it can be seen from Fig. 9.4 that there are a number of processes that can provide this. However, in general the tighter the specifica- tion is for both accuracy and surface finish, the more expense is incurred in the processing. This is illustrated in the chart in Fig. 9.5, which clearly shows that the cost increases as the surface finish moves from rough machining through grinding to super finishing. Using the charts in Figs 9.4 and 9.5, the most eco- nomic and suitable process can be selected as illustrated in Example 9.14. 398 Process Planning Figure 9.4 Surface finishes for some common manufacturing processes (adapted from Hawkes, B. and Abinett, R., 9 1984, reprinted by permission of Pearson Education Limited) Example 9.14 Preman Ltd are a sub-contracting firm. They have been instructed by a customer to improve the surface finish of a turned part, which they are producing with finish turning, from 1.6 to 0.4 txm. Determine the relative increase in cost of changing the surface finish and determine if finish turning is still suitable. If not, suggest an alternative. Solution Relative cost of 1.6 p~m surface finish = 5.5* Relative cost of 0.4 p~m surface finish = 8.5* Cost increase = 8.5/5.5 = 1.5 * Values determined from Fig. 9.5. Economics of process planning 399 20 .i-, o} 0 a~ 15 > .i,-, tl:i Q) N 11 E x ~ 8.5 < 6.5 5.5 5 3 2 1 ~.~I/Super finish ~j /Polished Ground ~ ,,,,,,Smooth finish 4 i~/ I .c ~ ,,,,, Fine m/c 7 Medium m/c ~~ ~. j Semi-r :)ugh m/c ~ Rough m/c r 0.1 0.4 0.8 1.6 3.2 6.3 12.5 25 Surface finish (l~m) Figure 9.5 Surface finish and relative cost (adapted from Hawkes, B. and Abinett, R., 9 1984, reprinted by permission of Pearson Education Limited) Finish turning operates between 0.2 and 6.3 I~m and therefore is still suitable to produce the part. From the above it is clear that care must be taken in selecting an appropriate manufacturing process for the given material and required surface finish. Even more importantly, care must be taken when specifying surface finish require- ments as this has the biggest influence on manufacturing costs. It is, therefore, important to consider both the correct manufacturing process and surface finish. 9.8.2 Production cost formula In Section 9.8.1, we considered the relative costs of processes in terms of surface finish requirements and the effects of changing surface finish specifications and/or processes. In the case where a more detailed cost com- parison is required between competing processes, the production cost for- mula provides a simple method of doing so. As described in Section 9.5, the production cost is usually calculated as the sum of the prime cost and the production overheads. However, this may also be expressed as the formula: C T= o+ U where T is the total unit cost of manufacture of component, C the set-up cost, Q the batch size and U the unit cost of manufacture (direct labour + direct material per unit). In the above equation, the set-up cost is a fixed cost and the unit cost is the variable cost. It is important to note that although the set-up cost is fixed in 400 Process Planning this case it can be variable when large batch sizes demand multiple set-ups. The cost per unit incurred may also change if the batch sizes vary. Using these costs and the batch size, the total unit cost for a particular combination of materials and process can be assessed. This is best illustrated through a worked example. Example 9.15 A large computer manufacturer requires 1200 printed circuit board (PCB) carriers every month for the production of the PCBs themselves. Within their tool room, they have a variety of machining processes available and the carriers are produced on a conventional milling machine. The following information relates to the PCB carrier manufacture: Set-up time I h 20 min Machining time 39 min Material cost~unit s Machinist's hourly rate s Solution Set-up cost C = 1 h 20min @ s = s Labour cost/unit = s x 39/60- s Material cost/unit - s Unit cost U = s Take the batch size Q = 1200 C T=-~+ U T = s + s 1200 T = s 9.8.3 Break-even analysis The simplest and clearest way of relating cost, volume and profit is through the use of a break-even chart. A typical chart is shown in Fig. 9.6. It is used Figure 9.6 Break-even chart Economics of process planning 401 to demonstrate for a particular product, with associated fixed and variable costs, that a certain number of products must be sold before a profit is made. The chart plots costs and expected income against quantity produced. It can be described, in relation to labelled lines and points, as follows: AB - this represents the fixed costs which are unaffected by production volume. BF- this represents the variable costs associated with production volume. AE- this represents the variation in income against sales volume. The assumption is that everything produced is sold. C- this is the point at which break-even is achieved, that is, sales income = total cost, and is known as the break-even point. D - extrapolating down from point C to the x-axis gives the quantity at which break-even is achieved, that is, the break-even quantity. The production of parts before point C results in a loss, that is, the shaded area. Any parts produced after point C results in a profit, that is, the differ- ence between AF and AE. The use of break even is best illustrated by a worked example. The break-even quantity can also be calculated using the fixed costs, variable costs and selling price as follows: Fixed costs Break-even quantity = Selling price - Variable costs The use of the formula is illustrated in Example 9.16. Example 9.16 Using the data from Example 9.12, determine the break-even quantity for the Supa-kleen model. Solution Fixed costs Break-even quantity = Selling price - Variable costs 32 000 Break-even quantity = 155 - 47 Break-even quantity = 297 9.8.4 Detailed cost comparison The 'profitability' of a product is particularly affected by the amount manu- factured and can be investigated by comparing costs incurred against income expected as was shown in Section 9.8.3 using a break-even chart. However, the break-even chart can also be used to compare the cost of two or more production methods for a given product. Consider the bush shown in Fig. 9.7 below. This could be produced on either a centre lathe or a CNC lathe. 402 Process Planning 60 L~ o 9 -~ s Ir & Cost / u, I CA QAB Quantity Figure 9.8 Break-even chart for cost comparison Figure 9.7 Brass bush This could be represented on a break-even chart as illustrated in Fig. 9.8. As would be expected, the fixed costs for the centre lathe will be less than that of the CNC lathe. These will be based on the machine set-up costs CA and Ca. However, the variable costs are less for the CNC machine than for the centre lathe and this is indicated by the gradient of the lines UA and UB. These are typically based on the direct labour and materials. These can be stated in the format of the production cost formula. For the centre lathe: CA rX = ~ + Vx For the CNC lathe: c~ r~=-ff+v~ Referring to Fig. 9.8, the cost break-even point is reached when the lines cross at the quantity QAB. Below this quantity, it is cheaper to produce on the centre lathe. However, above this quantity it is more cost effective to use the CNC lathe. The break-even point occurs when: CB _~. UB_ ~ CA Q AB -Q-~AB + U A C~ CA "Q~=uA-uB In other words, the break-even quantity is calculated by dividing the dif- ference in set-up costs by the difference in unit costs. This type of approach can be used for selecting between various methods of fabricating, casting, moulding, etc. It can also be used to choose between various categories of manufacturing processes, as is illustrated in Example 9.17. Example 9.17 The PCB carrier from Example 9.15 is usually made on a conventional milling machine. However, it has been decided to investigate if there is any significant cost advantage of producing these on a CNC milling machine. Determine which machine is the most suitable for producing the PCB carriers at the current rate of 1200 per month. Economics of process planning 403 Solution Method (a): Conventional milling machine Set-up time I h 20 min Machining time 39 min Material cost/unit s Machinist's hourly rate s Set-up cost C = I h 20 min @ s = s 13.13 Labour cost/unit = s • 39/60 = s Material cost/unit = s Unit cost U = s Take the batch size Q = 1200 C T=-~+ U s T- + s 1200 T = s Method (b): CNC milling machine Set-up time 2 h 55 min Machining time 28 min Material cost/unit s Machinist's hourly rate s Set-up cost Ca = 2h 55 min @ s = s Labour cost/unit = s x 28/60 = s Material cost/unit = s Unit cost UB = s Take the batch size Q = 1200 CB TB =-0 + U a s TB = 120 O + s TB = s Break-even analysis C~ - CA QAB=UA UB s s QAa = s s = 50 The quantity of PCB carriers at which it becomes economical to produce them on a CNC milling machine, as opposed to producing them on a conventional milling machine, is 50. This can also be represented graphically as a break-even Chart as shown in Fig. 9.9, although it is not to scale. 404 Process Planning s ~ s .t , O o ~ = s CA = s - I I QAB = 50 Quantity Q = 1200 * Total cost of batch = Set-up cost + Batch cost = C+ (Ox U) Figure 9.9 Cost comparison represented on a break-even chart 9.9 The 'make or buy?' decision 9.9.1 What is a 'make or buy?' decision? Any manufactured product will normally consist of a combination of a number of parts, sub-assemblies and assemblies. All of these can either be made by the organization or bought in as completed items. Thus, the choice is basically to use an internal or external supplier. Therefore, in its broadest sense, make or buy decisions are about the sourcing of materials or parts. In manufacturing, if the decision is to buy in the parts this is referred to as sub- contracting. This tends to fall into one of four categories of subcontracting work (Bailey et al., 1994): 9 processing of material provided by the buyer (often referred to as free issue material) which is returned once processing is complete; 9 manufacture of a part, sub-assembly or assembly designed by the buyer; 9 provision of a complete manufacturing solution where the buyer does not have local facilities; 9 provision of a manufacturing service outside the normal scope of the buyer's activities. Although not strictly classified as subcontracting, many manufacturing com- panies also purchase many standard parts, for example, nuts, bolts, screws, etc. In fact, purchased parts, materials and subcontracted items can represent up to 70 per cent of a product cost (Tanner, 1996). 9.9.2 Why do companies buy? There are any number of reasons why a company will buy in a part, sub-assembly or assembly. The reasons for doing so will differ depending on [...]... considered based on the documented process plan Aims and objectives The aim of this chapter is to demonstrate the complete process planning cycle from drawing interpretation to finished process planning documentation, that is, from design to manufacture On completion of this chapter, the student should be able to: 10.2 9 9 complete the necessary documentation for a process plan; 9 Organization carry... The layout of the assembly and test area is given in Fig 10.6 Materials The processes outlined above are the main limiting factor with regards to which materials the company can process Based on these processes the company have the capability of processing a variety of materials However, in terms of the materials that are processed these are generally aluminium, aluminium alloy, brass, carbon steel,... identified 10.6 Process selection and sequencing In selecting a suitable manufacturing process or processes there is a number of considerations The first is to ensure that the process selected can actually produce the part to the design specifications with regards to both surface From design to manufacture 429 finish and dimensional accuracy The next most important consideration is ensuring the process is... Machining time per unit 198 h 2 min 15 s Economics of process planning 413 60 ~ C3 03 ~ C3 i Figure Q9 .11 Sketch of brass bush Determine: (a) the direct material cost; (b) the prime cost; (d) the total cost; (e) the cost per unit; (f) 12 the direct labour cost; (c) the selling price if the profit has to be 15 per cent For the component detailed in problem 11, the company have decided to use mild steel instead... with the cost of buying it This could be achieved in a similar manner to that used in Example 9.17 4 0 6 Process Planning Figure 9.10 Flow chart for 'make or buy?" decision process (adapted from Tompkins, J.A., White, J.A., Bozer, YA., Frazelle, E.H., Tanchoco, J.M.A and Trevino, J Facilities Planning, 2nd edn, 9 1996 Reprinted by permission of John Wiley & Sons, Inc.) Example 9.18 After having decided... with responsibility for stores of raw materials, components, sub-assemblies for manufacture; material planning and control; production and process planning; the manufacture of the product; final assembly and test of the pump packages Production Q u a l i t y - with responsibility for vendor rating, process improvement, statistical quality control, commissioning and calibration; liaising with engineering... product will then be TABLE 10.1 Foundryprocess capabilities Process Weight (kg) Typical tolerance (mm) Sand casting Investment casting Impression forging Open die forging 1-50 0.1-100 0.1-100 0.1-500 _ 1.0 _0.05 _+0.5 _ 0.5 Surface finish (Ixm) 3.2-25 0.4-3.2 1.0-25 3.2-25 EOQ . 10 Aluminium 5 .11 21 4.89 17.1 Brass 3.67 42.9 3.89 46.7 Copper 5.89 70 5 .11 61 Stainless steel 6 .11 64.8 7.33 79 Cost/kg Cost/m 3 Cost/kg Cost/m 3 Economics of process planning 397 TABLE. eco- nomic and suitable process can be selected as illustrated in Example 9.14. 398 Process Planning Figure 9.4 Surface finishes for some common manufacturing processes (adapted from Hawkes,. based on costs? Economics of process planning 409 2. Describe the main costs associated with manufacturing. 3. Which of these is most appropriate to process planning and why? 3. What are