Recall from Chapter 5 that a process usually consists of (1) a set of tasks, (2) a flow of material and information that connects the set of tasks, and (3) storage of material and information. 1. Each task in a process accomplishes, to a certain degree, the transformation of input into the desired output. 2. The flow in a process consists of material flow as well as flow of information. The flow of mater- ial transfers a product from one task to its next task. The flow of information helps in determining how much of the transformation has been done in the previous task and what exactly remains to be completed in the present task. 3. When neither a task is being performed nor a part is being transferred, the part has to be stored. Goods in storage, waiting to be processed by the next task, are often called work-in-process inventory.

Process analysis involves adjusting the capacities and balance among different parts of the process to maximize output or minimize the costs with available resources. Our company supplies a component to several large auto manufacturers.? This component is assembled in a shop by 15 workers working an eight-hour shift on an assembly line that moves at the rate of 150 components per hour. The workers receive their pay in the form of a group incentive amounting to 30 cents per completed good part. This wage is distributed equally among the workers. Management believes that it can hire 15 more workers for a second shift if necessary. Parts for the final assembly come from two sources. The molding department makes one very criti- cal part and the rest come from outside suppliers. There are 11 machines capable of molding the one part done in-house; but historically, one machine is being overhauled or repaired at any given time. Each machine requires a full-time operator. The machines could each produce 25 parts per hour, and the workers are paid on an individual piece rate of 20 cents per good part. The workers will work overtime at a 50 percent increase in rate, or for 30 cents per good part. The workforce for molding is flexible; cur- rently, only six workers are on this job. Four more are available from a labor pool within the company. The raw materials for each part molded cost 10 cents per part; a detailed analysis by the accounting department has concluded that 2 cents of electricity is used in making each part. The parts purchased from the outside cost 30 cents for each final component produced. This entire operation is located in a rented building costing $100 per week. Supervision, maintenance, and clerical employees receive $1,000 per week. The accounting department charges depreciation for equipment against this operation at $50 per week. The process flow diagram just below describes the process. The tasks have been shown as rectangles and the storage of goods (inventories) as triangles.

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Mold parts Molded parts inventory Inputs XYZ Component Operation Purchase parts from vendors Purchased parts inventory Final assembly Finished goods Components