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Supplement C

Operations Technology

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• Hardware Systems

• Software Systems

• Formula for Evaluating Robots

• Computer Integrated Manufacturing

• Technologies in Services

• Benefits

• Risks

OBJECTIVES

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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)

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Formula for Evaluating a Robot Investment

WhereP = Payback period in yearsI = Total capital investment required in robot and accessoriesL = 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 robotZ = Annual depreciationq = Fractional speedup (or slowdown) factor (in decimals). Example:

If robot produces 150 % of what the normal worker iscapable of doing, the fractional speedup factor is 1.5.

Z)q(LE-LP

IZ)q(LE-L

P

I

The payback formula for an investment in robots is:

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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)

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Software Systems

• Computer-aided-design (CAD)– Computer-aided engineering (CAE)– Computer-aided process planning (CAPP)

• Automated manufacturing planning and control systems (MP & CS)

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Computer Integrated Manufacturing (CIM)

• Product and process design

• Planning and control

• The manufacturing process

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Cost Reduction Benefits from Adopting New Technologies

• Labor costs

• Material costs

• Inventory costs

• Transportation or distribution costs

• Quality costs

• Other costs

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Other Benefits….

• Increased product variety

• Improved product features and quality

• Shorter cycle times

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Risks

• Technological risks

• Organizational risks

• Environmental risks

• Market risks

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Question BowlIn operations technology “NC” stands for

which of the following?a. No costb. Non-computerc. Numerically controlledd. All of the abovee. None of the above

Answer: c. Numerically controlled

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Question BowlIn operations technology “AMH” stands for

which of the following?a. Automated manufacturing handlingb. Automated materials handlingc. Automated managed handlingd. Automated manufacturing homee. None of the above

Answer: b. Automated materials handling

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Question BowlIn operations technology “FMS” stands for

which of the following?a. Fast management systemb. Flexibility in materials systemc. Flexibility in materials systemsd. Flexibility, management, and safetye. None of the above

Answer: e. None of the above (Correct answer is Flexible Manufacturing System.)

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Question BowlWhich 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 yearb. 2.4 yearsc. 3 yearsd. 4 yearse. None of the above

Answer: a. 1 year

Z)q(LE-LP

I

1)000,10000,30(2000,10000,30

000,100

P

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Question BowlWhich of the following is a production

Software System?a. CADb. CAPPc. CAEd. MP & CSe. All of the above

Answer: e. All of the above

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Question BowlWhich of the following is considered a benefit

of technology investments?a. Labor cost reductionb. Material cost reductionc. Inventory cost reductiond. Quality cost reductione. All of the above

Answer: e. All of the above (Correct answer can also include Maintenance Cost Reduction.)

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End of Supplement C