1. © The McGraw-Hill Companies, Inc., 2004 1

2. 2 Supplement C Operations Technology

3. © The McGraw-Hill Companies, Inc., 2004 3 Hardware Systems Software Systems Formula for Evaluating Robots Computer Integrated Manufacturing Technologies in Services Benefits Risks OBJECTIVES

4. © The McGraw-Hill Companies, Inc., 2004 4 Hardware Systems Numerically controlled (NC) machines Machining centers Industrial robots Automated material handling (AMH) systems –Automated Storage and Retrieval Systems (AS/AR) –Automate Guided Vehicle (AGV) Flexible manufacturing systems (FMS)

5. © The McGraw-Hill Companies, Inc., 2004 5 Formula for Evaluating a Robot Investment Where P = Payback period in years I = Total capital investment required in robot and accessories L = Annual labor costs replaced by the robot (wage and benefit costs per worker times the number of shifts per day) E = Annual maintenance cost for the robot Z = Annual depreciation q = Fractional speedup (or slowdown) factor (in decimals). Example: If robot produces 150 % of what the normal worker is capable of doing, the fractional speedup factor is 1.5. The payback formula for an investment in robots is:

6. © The McGraw-Hill Companies, Inc., 2004 6 Example of Evaluating a Robot Investment Suppose a company wants to buy a robot. The bank wants to know what the payback period is before they will lend them the $120,000 the robot will cost. You have determined that the robot will replace one worker per shift, for a one shift operation. The annual savings per worker is $35,000. The annual maintenance cost for the robot is estimated at $5,000, with an annual depreciation of $12,000. The estimated productivity of the robot over the typical worker is 110%. What is the payback period of this robot? P = I = 120,000 =1.47years L–E+q(L + Z) 35,000–5,000+1.1(35,000+12,000)

7. © The McGraw-Hill Companies, Inc., 2004 7 Software Systems Computer-aided-design (CAD) –Computer-aided engineering (CAE) –Computer-aided process planning (CAPP) Automated manufacturing planning and control systems (MP & CS)

8. © The McGraw-Hill Companies, Inc., 2004 8 Computer Integrated Manufacturing (CIM) Product and process design Planning and control The manufacturing process

9. © The McGraw-Hill Companies, Inc., 2004 9 Cost Reduction Benefits from Adopting New Technologies Labor costs Material costs Inventory costs Transportation or distribution costs Quality costs Other costs

10. © The McGraw-Hill Companies, Inc., 2004 10 Other Benefits…. Increased product variety Improved product features and quality Shorter cycle times

11. © The McGraw-Hill Companies, Inc., 2004 11 Risks Technological risks Organizational risks Environmental risks Market risks

12. © The McGraw-Hill Companies, Inc., 2004 12 Question Bowl In operations technology “NC” stands for which of the following? a.No cost b.Non-computer c.Numerically controlled d.All of the above e.None of the above Answer: c. Numerically controlled

13. © The McGraw-Hill Companies, Inc., 2004 13 Question Bowl In operations technology “AMH” stands for which of the following? a.Automated manufacturing handling b.Automated materials handling c.Automated managed handling d.Automated manufacturing home e.None of the above Answer: b. Automated materials handling

14. © The McGraw-Hill Companies, Inc., 2004 14 Question Bowl In operations technology “FMS” stands for which of the following? a.Fast management system b.Flexibility in materials system c.Flexibility in materials systems d.Flexibility, management, and safety e.None of the above Answer: e. None of the above (Correct answer is Flexible Manufacturing System.)

15. © The McGraw-Hill Companies, Inc., 2004 15 Question Bowl Which of the following is the Payback in years for a robot that costs $100,000, annual labor reduction $30,000, annual maintenance costs $10,000, fraction speedup of 200%, and annual depreciation $10,000? a.1 year b.2.4 years c.3 years d.4 years e.None of the above Answer: a. 1 year

16. © The McGraw-Hill Companies, Inc., 2004 16 Question Bowl Which of the following is a production Software System? a.CAD b.CAPP c.CAE d.MP & CS e.All of the above Answer: e. All of the above

17. © The McGraw-Hill Companies, Inc., 2004 17 Question Bowl Which of the following is considered a benefit of technology investments? a.Labor cost reduction b.Material cost reduction c.Inventory cost reduction d.Quality cost reduction e.All of the above Answer: e. All of the above (Correct answer can also include Maintenance Cost Reduction.)

18. © The McGraw-Hill Companies, Inc., 2004 18 End of Supplement C