Assignment #2
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Bakersfield College *
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Course
B89B
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
docx
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2
Uploaded by everlastboxerV
Assignment #2
1. Define the four different basic types of manufacturing processes.
Design-to-Order Strategy
– In this manufacturing process, a customer orders something very
specific in which the manufacturing process takes longer as it requires more detail to meet
exactly what the customer requested. It’s basically making a new product from scratch that
requires a new design of its own. A good example of this manufacturing process would of the
fashion industry such as designer dresses or other clothing to where a highly customized product
was produced to a customer’s unique request. These products are usually a lot more expensive
than other products that are mass produced.
Make-to-Order Strategy
– In a make-to-order strategy, manufacturers produce a product that is
highly customized, but only a few are produced based off the standard version of the product. A
great example of this would be the relationship between automakers and dealerships along with
the customers that buy the cars. Auto-makers mass produce their vehicles in a standard form.
However, there are some that can be highly customized with a lot more features than a standard
version of the vehicle. If a customer prefers to customize their vehicle by choosing the specific
features they want and then placing the order rather than buying a standard version of the car
that’s already available in the dealership’s lot, then the dealership would need to have the
manufacturer make the specific order then deliver it to the dealership to get it to the customer.
Assemble-to-Order Strategy
– With this manufacturing process, a wide variety of products are
produced from very few subassemblies and components. However, products are not assembled
or fabricated until they first receive the customer’s order. By using this strategy, manufacturers
avoid stocking inventory of finished products and will only assemble and finish those products
when a customer places a specific order. The way I see this strategy is kind of like a restaurant.
They have the raw materials on-hand, but they will not make your food until you place your
order and pay for it first. Same concept for this strategy in my opinion.
Make-to-Stock Strategy
– In my opinion, this is the most cost-effective and time-saving
manufacturing process there is. The reason why is because products are massively produced with
this strategy, so essentially, nothing changes in the production line. There are some
manufacturers that are even automated to manufacture these products so very little employees
are required since the assembly line’s machines are doing most, if not, all of the work. Having
products in stock and ready to go are also better for faster delivery to its customers.
2. Describe the differences among make-to-order, assemble-to-order, and make-to-stock
strategies from the producer's and from the customer's perspective.
From a customer’s perspective, the main difference from the three manufacturing processes and
perhaps one of the most important things for the customers are the delivery times. Sometimes,
they want or need something right away, so they will prefer a vendor that primarily operates a
make-to-stock strategy because the item would be ready for them to purchase and have it
delivered right away. However, there are also some customers that would prefer something more
to their liking, unique, and of higher quality, so they would rather wait for their product to be
customized from a make-to-order process. Assemble-to-order falls somewhere in between.
However, production will not begin until the customer places the order for the products. For the
customer, it really depends on their needs at the time. From a producer’s perspective, the main
differences among the three strategies are production times, cost of goods sold, and the amount
of sales using each strategy. Companies use a lot of measuring techniques to analyze their
production process and are able to make adjustments. I think that for producers to choose the
right manufacturing process really depends and what product they are producing.
3. Your small business locally manufactures canned coconut juice. You currently purchase
a part used in your production process from an outside supplier, and have decided to begin
making this part in-house. You have two equipment options for moving production in-
house: special-purpose equipment and general-purpose equipment. Cost information for
these two options is as follows:
ALTERNATIVE
FIXED COST
VARIABLE COST
Special-Purpose Equipment
$200,000 per year
$15 per unit
General-Purpose Equipment
$50,000 per year
$20 per unit
Use the chart to answer this question. What are total costs under the Special-Purpose
Equipment option for an annual quantity of 40,000 units?
For this scenario, and to find the total costs under the Special-Purpose Equipment, we can use the
following formula: Total Cost = (Variable Cost x Number of Units) + Fixed Cost. Since there are
40,000 units and each is $15, then ($15 x 40,000) = $600,000 + $200,000. Total Cost is
$800,000
.
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