Process selection is not an easy task there are many cost that
we need to consider before selecting a process. Major cost factors
considered in process selection are:-
- Labor Costs:- Labor cost is related to the
human resources that are used to perform a process. As per the
process there can be many alternatives available so we need to
select the process accordingly.
- Materials Costs:- These costs are related to
the product and services needed for the end users and
customers.
- Equipment Costs:- To complete the aspects of a
process there will be the cost of machinery, components and other
related items.
- Facilities Costs:- There cost are related to
the infrastructure, utilities used to run the building and other
maintenance cost to keep the process on track.
Breakeven analysis used for process
selection:-
- It is a standard approach of choosing among alternative process
or equipment.
- Breakeven analysis seeks to determine the points in units
produced where we will start making profit on the equipment or
process.
- This analysis seeks to determine the points in units produced
where total revenue and total cost are equal.
- This is the best method to find total cost, total revenue and
profit of the related process.