Factors affecting Process Design - Nature of Product
The operations management has to design the production systems to produce products/ service of the kind that customers want when they want them and at a cost that follow the firm to be profitable.
Production process must have adequate capacity to produce the volume of products. Service that customer wants. The demand forecast (seasonality of demand, growth trends and other patterns of demand) for the products/ Service can be the basis for determining type production capacity needed in the future period or the time horizon of the demand forecast.
The volume of demand is related to the price of the product Service. The price volume relationship can be illustrated by means of price volume curve.
It can be seen from figure aside that when price is set a high level consumers tend to buy lower volumes of products services and vice versa. Concepts implicit in price volume curves having important implications for designing production processes are: