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Chapter 7


The manufacturing organization buys materials and converts those materials into products according to the product and process specifications developed by the engineering organization. Manufacturing is measured on its ability to do this in a cost-effective, high-quality, and timely fashion. A major portion of this effort is the management of raw materials and finished goods, which is a balancing act. Enough of each must be on hand to give the company flexibility in dealing with fluctuations in the order rate, but not so much that it feels a financial impact from having excess inventory

The importance of manufacturing varies with the business in which a particular high-tech venture is engaged. For example, manufacturing operations in a software company primarily involve the reproduction of magnetic storage media and manuals. This process requires little capital investment, and the cash value of the work in progress is low. At the opposite extreme is semiconductor manufacture, especially that involving an advanced process. Here, the capital investment is huge and the work in progress more valuable. The following is a spectrum (in ascending order) of manufacturing complexity and expense for various computer-related products:


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