Published by:
Harvard Business Publishing
Length: 8 pages
Topics:
Manufacturing strategy; Order quantity
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Abstract
Changes in the application of computers have altered the manufacturing process. New capabilities include flexibility in product design and mix; rapid response to changes in market demand, output rates, and equipment scheduling; greater control, accuracy, and repeatability of processes; reduced waste, lower training and maintenance costs; greater predictability in all manufacturing operations; faster throughput; and distributed processing capability. Economies of scope exist where the same equipment can produce multiple products more cheaply in combination than separately. As the economic order quantity (EOQ) approaches 1 and as making the proper trade-off between changeover costs and inventory costs becomes a trivial problem, producers will find it as economical to manufacture one unit as to manufacture many. Computer-based technology reverses the trend toward specialized hardware by placing emphasis on specialized software instead.
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Abstract
Changes in the application of computers have altered the manufacturing process. New capabilities include flexibility in product design and mix; rapid response to changes in market demand, output rates, and equipment scheduling; greater control, accuracy, and repeatability of processes; reduced waste, lower training and maintenance costs; greater predictability in all manufacturing operations; faster throughput; and distributed processing capability. Economies of scope exist where the same equipment can produce multiple products more cheaply in combination than separately. As the economic order quantity (EOQ) approaches 1 and as making the proper trade-off between changeover costs and inventory costs becomes a trivial problem, producers will find it as economical to manufacture one unit as to manufacture many. Computer-based technology reverses the trend toward specialized hardware by placing emphasis on specialized software instead.