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A facility (plant) is a place where men, materials, money, machinery and equipment, etc., are brought together for manufacturing a product Location selection: Region ->Locality ->Site Necessity?
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New venture Expansion Market changes Inputs or Cost changes Government policy Organizational policy.
3.
4.
5.
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Got long term impacts Influences plant layout and facilities needed Influences capital investment and operating costs Irreversible Determines competitive strength.
Availability & cost of land Availability & cost of raw material Nearness to Market Transport & Communication facilities Availability & cost of labour Availability of fuel, power, water Soil characteristics
11.
12.
13.
14.
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Natural factors Industrial atmosphere Government subsidies and policies Infrastructure facilities e.g. housing, banks, schools, hospitals and recreation Political climate Organization policy Social acceptability.
6.
Factor rating technique Total cost technique Break even analysis technique Dimensional analysis technique Brown & Gibson model Transportation method.
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Tax advantages Suitability of labor skills Proximity to customers Proximity to suppliers Adequacy of water Receptivity of community Educational facilities Rail/air transportation Suitability of climate Availability of power Total Score
Loc.-B Score (W x R)
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Tax advantages Suitability of labor skills Proximity to customers Proximity to suppliers Adequacy of water Receptivity of community Educational facilities Rail/air transportation Suitability of climate Availability of power Total Score
Loc.-B Score (W x R)
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Tax advantages Suitability of labor skills Proximity to customers Proximity to suppliers Adequacy of water Receptivity of community Educational facilities Rail/air transportation Suitability of climate Availability of power Total Score
Loc.-B Score (W x R)
40 15 6 10 3 20 4 15 14 16
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Tax advantages Suitability of labor skills Proximity to customers Proximity to suppliers Adequacy of water Receptivity of community Educational facilities Rail/air transportation Suitability of climate Availability of power Total Score
Loc.-B Score (W x R)
40 15 6 10 3 20 4 15 14 16 143
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Tax advantages Suitability of labor skills Proximity to customers Proximity to suppliers Adequacy of water Receptivity of community Educational facilities Rail/air transportation Suitability of climate Availability of power Total Score
Total Cost = Fixed Cost + Operational Cost Fixed cost include expenditure on land, building, machines and other equipments etc. Operational costs are the expenditure incurred on inputs, transformation process and the distribution of output. Selection Criteria : Select the site with lowest total cost.
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3-Material
4-Construction 5-Distribution
Total costs
5 4 3 2 1
3
2 1
A
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B Locations
Building*
Location taxes Wages per unit
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130 lakh
10 lakh 0.90
110 lakh
7 lakh 1.00
140 lakh
13 lakh 1.40
3. Breakeven Analysis
(Location Analysis Techniques)
Labor
Transportation
Material
Costs
Total Fixed Costs
Volume of Units
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3. Breakeven Analysis
(Location Analysis Techniques) E
B C A D
Total Costs
A D E C
Volume of Output
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3. Breakeven Analysis
(Location Analysis Techniques) E
B C Cost curves A D
Costs/ A Sales D E C
Sales curve
Volume of Output
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3. Breakeven Analysis
(Location Analysis Techniques) E
B C A D
Costs/ A Sales D E C
BEPD
Volume of Output
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4. Dimensional Analysis
(Location Analysis Techniques)
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Costs can be tangible or intangible also Intangible costs are difficult to be expressed in absolute terms Dimensional analysis considers costs in relative terms Costs can be either in absolute terms or in relative terms Weights of various factors are in power (index).
4. Dimensional Analysis
(Location Analysis Techniques)
MA
[CA1] [CB1]
[CA2] [CB2]
MB
.
2
[CA n] [CB n]
If
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MA MB
4. Dimensional Analysis
(Location Analysis Techniques)
Costs Site
Labour
Power
M
N Weightage
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Rs. 2,00,000
Rs. 1,00,000 1
Rs. 40,00,000
Rs. 20,00,000 1
4
8 2
2
4 2
Critical factors
Must 0 or 1 Can be put in monetary terms Absolute costs Can only be put in qualitative terms Relative ratings
2.
Objective factors
3.
Subjective factors
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6. Transportation Method
(Location Analysis Techniques)
Transportation method of linear programming seeks to minimize costs of shipping n units to m destinations or its seeks to maximize profit of shipping n units to m destinations
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6. Transportation Method
(Location Analysis Techniques)
Exercise: Agri-Products Company has two factories, one at Bathinda and one at Amritsar. There are four warehouses. The company is thinking of locating an additional factory either at Ambala or at Ludhiana. Following matrix gives details of shipping costs, manufacturing capacities and warehouse requirements. Which location would you select?
Place Bathinda Amritsar 25 10 15 10 100 Solan 9 8 2 5 150 Karnal 10 6 3 7 300 Jammu Chandigarh 20 5 10 5 250 CAPACITY (units) 200 400 200 200
Ambala Ludhiana
REQUIRED (units)
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Facility Layout
Also known as Plant layout or Facility design Layout is concerned with overall arrangement of production processes, support facilities and all other facilities required for facilitating the production of goods or services.
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Facilitate pre-determined manufacturing process Minimization of material handling and material movement Elimination of bottlenecks through balancing of plant capacities Higher material turnover through shorter operating cycle Effective utilization of installed capacity so as to maximize ROI
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1. 2. 3. 4.
5.
Better productivity Reduced cost of manufacturing Better quality Ease of working Maximum safety and minimum health hazards
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1. 2. 3.
4.
5. 6.
Product and Material Specification Location and Site of the Plant Manufacturing Process Material Handling Storage of in-process Inventory Plant personnel and employee facilities
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7.
8. 9. 10. 11.
12.
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1. Process Layout
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Similar to job shop type production Equipment performing similar operations are grouped together Depending upon the process requirements, a product travels to specific process shops Useful when volume is low and variety is more Gives flexibility in sequence of operations Machine break-downs do not result in stoppage of line High WIPs; Operations are not balanced Requires complex PPC.
Receiving
Forming
Welding Assembly
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2. Product Layout
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Equipment are laid out in sequence of operation along the flow lines Also referred as Line layout Material flow continuously at a uniform rate Useful when volume and standardization is high Operations are balanced Does not offer flexibility in sequence of operations Machine break-downs do result in stoppage of line Low WIPs; simple PPC.
FG Assembly Inspection
B Sawing
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Inspection Drilling
Grinding
3. Combined Layout
Combination of the process and product layout for batch productions Each process is setup as a unit and these units are arranged into a product layout.
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The major equipment or the product remains in a fixed position All tools, machines, men and material are brought to it Examples: ship building, aircraft manufacture or overhaul.
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Machines
Labor
Ship-building Material
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Tools
Work Study
Work study is simply the study of work to ensure best possible use of human and material resources It is the analysis of work into smaller parts followed by rearrangement of these parts to give the same effectiveness at lesser cost It examines both the method and duration of the work involved in a process
1. 2.
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Productivity
Productivity is the ratio between the amount produced and the amount of resources used in the course of production Productivity is a measure of how efficiently inputs are converted to outputs Productivity = output/input Measure of Process Improvement.
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Exercise 1: Productivity
Two workers paint twenty-four tables in eight hours. What is their productivity?
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Better basic education of work force Better diet and refreshment Better infrastructure Better labor utilization Training and motivation Well planned investments on equipment and timely maintenance Research & Development Controlling unproductive activities and wastages Exploitation of information technologies Learn from failures and accumulated knowledge Empower people Encourage creativity.
Can be used to compare a processs productivity at a given time (P2) to the same process productivity at an earlier time (P1)
P2 P 1 Growth Rate P 1
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Last week a company produced 150 units using 200 hours of labor This week, the same company produced 180 units using 250 hours of labor
150 units P 0.75 units / hour 1 200 hours P2 180 units 0.72 units / hour 250 hours
2. Record
relevant facts about the present methods by direct observation process flow charts
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Transport
Storage
Delay
Inspection
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Inspect assembly
Check quality
Send to FG Store
FG Store
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5. Define
the new method so that it can always be identified
6. Install
implement method as standard practice
7. Maintain
by regular routine checks.
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Determining the work content and thereby setting wages and incentives Arriving at cost standard per unit of output Comparing the work efficiencies of various operators Manpower planning Aiding in Method Study.
1.
2. 3. 4. 5. 6. 7.
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Subdivide the job into observable and distinct elements Choose acceptable operator for study Make direct observations of the work elements Performance rate each element and record Calculate the normal time Establish allowances Compute the standard time.
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