Unit II - Prod. Mgt. 2a

7/28/2019 Unit II - Prod. Mgt. 2a

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UNIT - II

SEMESTER - II


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Designing the Operations :

Strategic Level

Technology

CapacityWork

SystemsLocation

Process

Design

Product

DesignFacility Layout


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Product Design Strategies

Design a Product accordingto the market needs and then,

try to adapt the processes

Design products accordingto the limits of our processes and

then, find a market

Sell what the

market wants

Sell only what

we can make

Find the right balance : a simultaneous evolution of products and processes,

taking into account the needs of the market and distinctive competencies.


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A multi - functional approach

Human

Resources

OM

Marketing

EngineeringR&D

Finance

Other

Partners

Customers

Suppliers

Multi-functional

Team


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Factors affects the Products and Processes

In Constant Evolution

Design mistakes / Customer complaints

Customer needs / Opportunities

Maturity of actual product line

Competitive pressures

Innovation strategy

New technology

Too much capacity

Social and legal pressures

Product design

Design for manufacturing (DFM)

Design for assembly (DFA)

Design for recycling (DFR)

Remanufacturing

Design for disassembly (DFD)

Robust design


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6

Product DesignDesign for manufacturing (DFM) is design based on minimizing the cost of production

and/or time to market for a product, while maintaining an appropriate level of quality. The

strategy in DFM involves minimizing the number of parts in a product and selecting the

appropriate manufacturing process.Design For Assembly (DFA) involves making attachment directions and methods simpler.

"Design for recycling is a method that implies the following requirements of a product: easy

to dismantle, easy to obtain 'clean' material-fractions, that can be recycled (e.g. iron and

copper should be easy to separate), easy to remove parts/components, that must be treated

separately, use as few different materials as possible, mark the materials/polymers in order

to sort them correct, avoid surface treatment in order to keep the materials 'clean'.

Design for disassembly(DFD) involves designing a product to be disassembled for easier

maintenance, repair,

recovery and reuse of components/materials

Remanufacturing is the process of disassembly and recovery at the module level and,

eventually, at the component level. It requires the repair or replacement of worn out

or obsolete components and modules

Robust product design is a concept from the teachings of Dr. Genichi Taguchi, a Japanese

quality guru. It is defined as reducing variation in a product without eliminating the causes of

the variation. In other words, making the product or process insensitive to variation. This

variation (sometimes called noise) can come from a variety of factors and can be classifiedinto three main types: internal variation, external variation, and unit to unit variation.
http://en.wikipedia.org/wiki/Obsolescencehttp://en.wikipedia.org/wiki/Obsolescence


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Product Life Cycle

D

emand

Time

Introductionresearch / product

development

process modification and

enhancement

supplier developmentGrowth

Product design begins to

stabilize

Effective forecasting of

capacity becomes necessary

Adding or enhancing

capacity may be necessary

MaturityCompetitors now

established

High volume, innovative

production may be needed

Improved cost control,reduction in options, paring

down of product line

DeclineUnless product makes a

special contribution, must

plan to terminate offering


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Product Life Cycle, Sales, Cost, and Profit

S

ales,

Cost&

Pro

fit

.

Introduction Maturity DeclineGrowth

Cost of

Development

& ManufactureSales Revenue

TimeCash flowLoss

Profit


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Idea Generation Sources

Companys own R&D department

Customer complaints or suggestions Marketing research / Perceptual Maps

Visual comparison of customer

perceptions

Suppliers

Salespersons in the field Factory workers

New technological developments

Competitors / Reverse engineering

Dismantling competitors product

to improve your own product Benchmarking

Comparing product/service against

best-in-class

Standardized product

One size fits all

Intended to satisfy majority of

customers

Produced in large quantities

Planning is simple

Make-to-stock

Customized product

Unique product for each

customer

Produced in small quantities

Planning is difficult

Make-to- Order

Types of products


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Product Design Process

Simplification

reducing number ofparts, assemblies, or

options in a product

Standardization

using commonly

available and

interchangeable

parts

Modularity

combiningstandardized

building blocks, or

modules, to create

unique finished

products

A prototype is an

early sample or

model built to test aconcept or process or

to act as a thing to be

replicated or learned

from.Engineering is the discipline, art, skill,

profession and technology of acquiring and

applyingscientific, mathematical, economic,

social, and practical knowledge, in order to

design and build structures, machines,

devices, systems, materials and processes
http://en.wikipedia.org/wiki/Sciencehttp://en.wikipedia.org/wiki/Sciencehttp://en.wikipedia.org/wiki/Mathematicshttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Designhttp://en.wikipedia.org/wiki/Process_(engineering)http://en.wikipedia.org/wiki/Process_(engineering)http://en.wikipedia.org/wiki/Designhttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Mathematicshttp://en.wikipedia.org/wiki/Science


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Production Design Strategies1. Simplification Design

Reducing number of parts, assemblies, or options in a product

2. Standardization Design using commonly available and interchangeable parts

3. Modularity Design

Modular design is a form of standardization in which component parts aresubdivided into modules that are easily replaced or interchanged.

4. Robust Design

Design that results in products or services that can function over a broad rangeof conditions

5. Concurrent Engineering

Concurrent engineering is bringing together of engineering design andmanufacturing personnel early in the design phase

6. Computer-Aided Design Computer-Aided Design (CAD) is product design using computer graphics.

increases productivity of designers, 3 to 10 times

7. Product Life Cycles


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(b) Revised design

One-piece base &

elimination of

fasteners

(c) Final design

Design for

push-and-snap

assembly

(a) Original design

Assembly using

common fasteners

1. Simplification Design

24 parts

84 seconds to assemble

4 parts


2 parts


12


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2. Standardization

Fewer parts to deal with

in inventory &

manufacturing

Reduced training costs

and time

More routine purchasing,

handling, and inspection

procedures

Orders fillable from

inventory

Opportunities for long

production runs and

automation

Need for fewer parts

justifies increased

expenditures on

perfecting designs and

improving quality control

procedures.

Advantages: Difficult to develop

a product that

must satisfy theneed of many

different

customers.

Designs may be

frozen with toomany

imperfections

remaining.

High cost of design

changes increases

resistance to

improvements.

Decreased variety

results in less

consumer appeal.

Disadvantages


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3. Modular Design Modular design is a form of

standardization in which

component parts are

subdivided into modulesthat are easily replaced or

interchanged.

It allows:

easier diagnosis and

remedy of failures

easier repair and

replacement

simplification of

manufacturing and

assembly Lower training costs

But higher replacement

cost (as you have to

replace the wholemodule) Modular kitchen design accessories


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Modular vs. Integral Design

One-to-one mapping between functional elements and components

Interfaces

Complex mapping from functional elements to components

Modular design

Integral design

integralmodular 15


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Robust Design: Design that

results in products or services that canfunction over a broad range of conditions

4. Robust Design


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5. Concurrent Engineering : Principles

Design and Operations personnel are reunited, very early in the design phase, to

simultaneously design products and processes.

We include people from Operations, Purchasing, Marketing. Customers and suppliers

are also invited to participate in certain stages of development.

Traditional

Approach

Concurrent

Engineering

Idea Design Manufacturing

Idea / Design / Manufacturing


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Over the Wall Approach

DesignMfg

New

Product



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Concurrent Engineering : Objectives

Smoother transition between Engineering and Operations

Shorten the new product introduction cycle

Obtain a product that reflects the needs of the customers and our processing

capabilities

Concurrent Engineering : Advantages

Operations personnel contribute early on to avoid trial and errors and adapt theproduct to our capabilities.

New equipment can be ordered more quickly and reduce the time to market.

Approach is based on problem resolution as opposed to conflict resolutions.



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6. Process Technologies

Robotics &

Numerically-

Controlled (NC)

equipment

Automated material handling

Computer Aided Design(CAD)

Robotics

Automation

Automated Material Handling:

Automated guided vehicles(AGV)

Automated storage & retrieval

systems (AS/RS)

Flexible Manufacturing Systems (FMS) Computer-Integrated

Manufacturing (CIM)


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Fixed automation:

Low production cost and high volume but with minimal variety and high changes cost

Assembly line

Programmable automation:

Economically producing a wide variety of low volume products in small batches

Computer-Aided Design and Manufacturing systems (CAD/CAM) Numerically controlled (NC) machines / CNC

Industrial Robots (ARMS)

Flexible automation:

Require less changeover time and allow continuous operation of equipment andproduct variety

Manufacturing cell

Flexible manufacturing systems: Use of high automation to achieve repetitiveprocess efficiency with job shop process

Automated retrieval and storage

Automated guided vehicles

Computer-integrated manufacturing (CIM)

Automation:Machinery that has sensing and control devices that enables it to operate


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Flexible Manufacturing System

Group of machines that include supervisory computer control, automatic materialhandling, robots and other processing equipment

Advantage:

reduce labor costs and more consistent quality

lower capital investment and higher flexibility than hard automation

relative quick changeover time

Disadvantage

used for a family of products and require longer planning and development

times

Computer-integrated manufacturing

Use integrating computer system to link a broad range of manufacturing activities,

including engineering design, purchasing, order processing and production planning and

control

Advantage:

rapid response to customer order and product change, reduce direct labor cost,high quality

D i f E i t


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Design for environment

designing a product from

material that can be recycled

design from recycled material

design for ease of repair

minimize packaging

minimize material and energy

used during manufacture,consumption and disposal

Extended producer

responsibility

holds companies responsiblefor their product even after itsuseful life

Design for Environment


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Mass Customization

Mass Customisation is the customisation and personalisation of products and

services for individual customers at a mass production price

A strategy of producing standardized goods or services, but incorporating some degree ofcustomization

Example : Nike ID


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High v. Low Contact ServicesDesign

Decision

High-Contact Service Low-Contact Service

Quality

Control

More variable since customer is

involved in process; customerexpectations and perceptions ofquality may differ; customerpresent when defects occur

Measured against

established standards;

testing and rework possible

to correct defects

Capacity Excess capacity required to

handle peaks in demand

Planned for average

demand

Service Design Services are intangible

Service output is variable

Services have higher customer contact

Services are perishable

Service inseparable from delivery

Services tend to be decentralized and dispersed

Services are consumed more often than

products

Services can be easily emulated

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High v. Low Contact Services (cont.)

Design

Decision

High-Contact Service Low-Contact Service

Worker skills Must be able to interact

well with customers and use

judgment in decision making

Technical skills

Scheduling Must accommodate

customer schedule

Customer concerned only

with completion date

Service process Mostly front-roomactivities; service maychange during delivery in

response to customer

Mostly back-room

activities; planned and

executed with minimalinterference

Service package Varies with customer;

includes environment as well

as actual service

Fixed, less extensive

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Process Selection and System Design

Forecasting

Product and

Service Design

Technological

Change

Capacity

Planning

Process

Selection

Facilities and

Equipment

Layout

Work

Design

External Environment (political,economical, social, technological and ecological)

Process Design

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Questions Before Selecting A Process

Variety of products and services

How much Flexibility of the process; volume, mix, technology and design

What type and degree

Volume

Expected output

Job Shop

Batch

Repetitive

Continuous


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Process Design

Caracteristics of processes

Small lot sizes

Setup time reduction Manufacturing cells

Limited work in process

Quality improvement

Production flexibility

Little inventory storage

Process Selection (From the following

criteria)

1. Quantity to be produced (Lot size)

2. Variety of products

3. Desired flexibility Processes in Services - Examples:

Projects: (Hospital)

Batch (Education)

Continuous (Cable companies)

Process Selection: Process Types

1. Projects

Non-routine jobs. Ex: Constructionof a Building

2. Job Shops

Small runs Ex: tool and die shop,

3. Batch production

systems process many differentjobs through the system in groups

or batches Eg: paint production

4. Mass production (repetitive)

produces large volumes of a

standard product for a mass

market Ex: Cars, cafeteria

5. Continuous production

used for very-high volume

commodity products Ex: steel mill,

chemical plants


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Continuum of Process Types


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Project1. Produced one at a time, from beginning to end.

Crafts

Construction projects Consultations

Job & Batch Processing

2. Job Shop : Small Quantity

produced highly

differentiated products

3. Batch : Moderate Quantity

produced of similar goods

or services.


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Mass Production and Continuous

Production

4. Mass production : (repetitive,assembly line)

Production in large

quantities of very similar

products

5. Continuous :

Non-stop production of a

highly standardized product


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Product-Process Matrix

Continuous

process

Project

process

Line

process

Batch

process

Job

process

Low

Varie

ty

HighVariety

Low Volume High Volume

High Cost

High Cost

Project

Job Shop

Batch

Line

Continuous

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Types of Processes

PROJECT BATCH

Type of

productUnique

Made-to-order

/ or to stock

MASS

Made-to-stock

(standardized)

Continuous

Commodity

Job

Shop

Made-to-order

(customized)

No. ofdifferentproducts

Infinite variety Many, varied Few Very few

Productionsystem

Long-term

project

Discrete /

batches

Repetitive,

assembly lines

Continuous,

process

industries

Many, varied

Discrete, job

shops

Type of

customer

One-at-a-timeFew individual

customers

Mass

market

Mass

market

Few individual

customers

Productdemand Infrequent

Fluctuates Stable Very stableFluctuates

Demand volume Very low Low to medium High Very highLow

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Types of Processes (cont.)

Project BATCH

Equipment Varied General-purpose

Primarytype of work

Specialized

contractsFabrication

MASS

Special-

purpose

Assembly

Continuous

Highly

automated

Mixing,

treating,

refining

Workerskills

Experts,

crafts-

persons

Significant

range of skills

Limited range

of skills

Equipment

monitors

Job shop

General-

purpose

Fabrication

Wide range

of skills

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Types of Processes (cont.)

Project BATCH

AdvantagesCustom work,

latesttechnology

Flexibility,

quality

DisadvantagesNon-repetitive,

small customer

base, expensive

Costly, slow,

difficult to

manage

MASS

Efficiency,

speed,

low cost

Capital

investment;

lack of

responsiveness

Continuous

Highly efficient,

large capacity,

ease of control

Difficult to

change,

far-reaching

errors,

limited variety

ExamplesConstruction,

shipbuilding,

spacecraft

Bakeries,

education

Automobiles,

televisions,

computers,

fast food

Paint, chemicals,

foodstuffs

Job Shop

Flexibility,

quality

Costly, slow,

difficult to

manage

Machine

shops,

print shops

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Basic Process Selection

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(Sample Capacity

Planning)


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Capacity/Facility Planning

How much and what kind of physical equipment is needed to support

production goals?

Issues:

Basic Capacity Calculations: stand-alone capacities and congestion

effects (e.g., blocking)

Capacity Strategy: lead or follow demand

Make-or-Buy: vendoring, long-term identity

Flexibility: with regard to product, volume, mix

Speed: scalability, learning curves

Capacity Planning


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Capacity PlanningCapacity is the upper limit or ceiling on the load that an operating unit can handle.

Capacity also includes

Equipment

Space Employee skills

The basic questions in capacity handling are:

What kind of capacity is needed?

How much is needed?

When is it needed?

Importance of Capacity Decisions

1. Impacts ability to meet future demands2. Affects operating costs3. Major determinant of initial costs4. Involves long-term commitment5. Affects competitiveness6. Affects ease of management7. Globalization adds complexity

8. Impacts long range planning

Capacity

Design capacity

maximum output rate or servicecapacity an operation, process, or

facility is designed for

Effective capacity

Design capacity minus allowances

such as personal time,

maintenance, and scrap

Actual output

rate of output actually achieved--

cannot

exceed effective capacity.


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Efficiency and Utilization

Actual outputEfficiency =Effective capacity

Actual outputUtilization =

Design capacity

Both measures expressed as percentages


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Efficiency/Utilization Example

Actual output = 36 units/day

Efficiency = = 90%Effective capacity 40 units/ day

Utilization = Actual output = 36 units/day= 72%

Design capacity 50 units/day

Design capacity = 50 trucks/dayEffective capacity = 40 trucks/day

Actual output = 36 units/day


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Operations Management Planning

MRP (Material Requirement Planning)

A computer-based production

management system that uses salesforecasts to make sure that needed

parts and materials are available at

the right time and place (for a single

firm)

ERP (Enterprise Resource Planning)

A computer application that enables

multiple divisions or firms to

manage all of their operations

(finance, requirements planning,

human resources and orderfulfillment) on the basis of a single,

integrated set of corporate data

ERP Programs help to bring

operations management to the

Internet

Determinants of Effective Capacity


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Determinants of Effective Capacity

Facilities

Product and service factors

Process factors

Human factors

Policy factors

Operational factors

Supply chain factors

External factors

Estimate future capacity requirements

Evaluate existing capacity

Identify alternatives

Conduct financial analysis

Assess key qualitative issues

Select one alternative

Implement alternative chosen

Monitor results

Steps for Capacity Planning

Forecasting Capacity Requirements

Long-term vs. short-term capacity needs

Long-term relates to overall level of capacity such as facility size, trends, and cycles

Short-term relates to variations from seasonal, random, and irregular fluctuations

in demand

Strategy Formulation


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Strategy Formulation Capacity strategy for long-term demand

Demand patterns

Growth rate and variability

Facilities

Cost of building and operating

Technological changes

Rate and direction of technology changes

Behavior of competitors

Availability of capital and other inputs

1. Amount of capacity needed

* Capacity cushion (100% Utilization)

2. Timing of changes

3. Need to maintain balance

4. Extent of flexibility of facilities

Capacity cushion

extra demand intended to offset uncertainty

Key Decisions of Capacity Planning

Decision Tree

Product Strategies and Process Choice


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Product Strategies and Process Choice

Process Selection Facility Layout


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Process Selection Facility Layout

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Planning Service Capacity


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Planning Service Capacity

Need to be near customers

Capacity and location are closely tied

Inability to store services

Capacity must be matched withtiming of demand

Degree of volatility of demand

Peak demand periods

In-House or Outsourcing

Available capacity

Expertise

Quality considerations

Nature of demand

Cost

Risk

Outsource: obtain a good or service

from an external provider

Developing Capacity

Alternatives

1. Design flexibility into systems

2. Take stage of life cycle into

account

3. Take a big picture approach

to capacity changes

4. Prepare to deal with capacity

chunks

5. Attempt to smooth outcapacity requirements

6. Identify the optimal operating

level

B ttl k O ti


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Bottleneck Operation

Machine #2 BottleneckOperation

Machine #1

Machine #3

Machine #4

10/hr

10/hr

10/hr

10/hr

30/hr

Bottleneck operation: An operation

in a sequence of operations whosecapacity is lower than that of the

other operations

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Bottleneck Operation

Operation 1

20/hr.

Operation 2

10/hr.

Operation 3

15/hr. 10/hr.

Bottleneck

Maximum output rate

limited by bottleneck

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Economies of Scale


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Economies of Scale Economies of scale

If the output rate is less than the optimal level, increasing output rate results in

decreasing average unit costs

Diseconomies of scale

If the output rate is more than the optimal level, increasing the output rate results

in increasing average unit costs

O i l R f O


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Optimal Rate of Output

Minimumcost

Averagec

ostperunit

0 Rate of output

Production units have an optimal rate of output for minimal cost.

Minimum average cost per unit

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C V l R l i hi


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Cost-Volume Relationships

Amount($)

0Q (volume in units)

Fixed cost (FC)

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C V l R l i hi


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Amou

nt($)

Q (volume in units)0

55

C t V l R l ti hi


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Amou

nt($)

Q (volume in units)0 BEP units

56


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Break-Even Analysis

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Break Even Problem with Step Fixed


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Break-Even Problem with Step FixedCosts

Quantity

Step fixed costs and variable costs.

1 machine

2 machines

3 machines

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Evaluating Alternatives


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Cost-volume analysis

Break-even point

Financial analysis Cash flow

Present value

Decision theory

Waiting-line analysis

Assumptions of Cost-Volume Analysis

1. One product is involved

2. Everything produced can be sold

3. Variable cost per unit is the sameregardless of volume

4. Fixed costs do not change with volume5. Revenue per unit constant with volume

6. Revenue per unit exceeds variable costper unit

Financial Analysis

Cash Flow - the difference between cash received from sales and other

sources, and cash outflow for labor, material, overhead, and taxes.

Present Value - the sum, in current value, of all future cash flows of an

investment proposal.



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Decision Theory

1. Helpful tool for financial comparison of alternatives under conditions of risk or

uncertainty2. Suited to capacity decisions


Waiting-Line Analysis

Useful for designing or modifying service systems

Waiting-lines occur across a wide variety of service systems

Waiting-lines are caused by bottlenecks in the process

Helps managers plan capacity level that will be cost-effective by balancing

the cost of having customers wait in line with the cost of additional capacity

The Location Decision


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The Location Decision

Making Location Decisions


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Making Location Decisions

Analysis should follow 3 step process:

Step 1: Identify dominant location factors

Step 2: Develop location alternatives Step 3: Evaluate locations alternatives

Procedures for evaluation location alternatives include

1. Factor rating method

2. Load-distance model

3. Center of gravity approach

4. Break-even analysis

5. Transportation method

1. Factor Rating Example

2 Load Distance Method


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The load-distance method enables a location planner to evaluate two or potential

candidates.

Choosing the location with best load-distance among these will satisfy the objective of

identifying an appropriate location for the proposed facility.

Distance is measured using an appropriate location for the proposed facility.

Distance is measured using a Cartesian measure.

Let us use the following notations for the load-distance method:

The number existing demand (or supply ) points in the grip map= nIndex used for existing demand ( or supply ) = 1

Coordinates of existing demand ( or supply ) points I in the grid map=( Xj, Yj)

The distance measure for the Cartesian coordinates between an existing demand ( or

supply) points and a candidate facility (Dij) is given by:

Dij = sqrt((xi

Xj)2

+ (yi

Yj)2

)

2. Load Distance Method

3 The Center of Gravity Approach


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3. The Center of Gravity Approach

This approach requires that the analyst find the center of gravity of thegeographic area being considered

Computing the Center of Gravity for Matrix Manufacturing

Is there another possible warehouse location closer to the C.G. that should beconsidered?? Why?

10.6

41

436

l

YlY;7.9

41

325

l

XlX

i

ii

c.g.

i

ii

c.g.

Computing the Center of Gravity for Matrix ManufacturingCoordinates Load

Location (X,Y) (li) lixi liyi

Cleveland (11,22) 15 165 330

Columbus (10,7) 10 165 70

Cincinnati(4,1) 12 165 12Dayton (3,6) 4 165 24

Total 41 325 436

4 Break-Even Analysis


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4. Break-Even Analysis Break-even analysis computes the amount of goods required to be sold to just cover

costs

Break-even analysis includes fixed and variable costs

Break-even analysis can be used for location analysis especially when the costs of eachlocation are known

Step 1: For each location, determine the fixed and variable costs

Step 2: Plot the total costs for each location on one graph

Step 3: Identify ranges of output for which each location has the lowest total cost

Step 4: Solve algebraically for the break-even point over the identified ranges

Remember the break even equations used for calculation total cost of each locationand for calculating the breakeven quantity Q.

Total cost = F + cQ Total revenue = pQ

Break-even is where Total Revenue = Total CostQ = F/(p-c)

Q = break-even quantityp = price/unitc = variable cost/unit

F = fixed cost

5. The Transportation Method


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p

The transportation method of linear programming can be used to solve specificlocation problems

It could be used to evaluate the cost impact of adding potential location sites to the

network of existing facilities It could also be used to evaluate adding multiple new sites or completely redesigning

the network

There is a unit transportation cost of shipping material from every supply point toevery demand point, by an optimal choice of supply points, the total cost oftransportation is minimized.

6. Qualitative factor analysis method: If economic criteria are not sufficiently influential to decide the location

alternative, a system of weighting the criteria might be useful in making a plantlocation decision.

This approach is referred to as Qualitative Factor Analysis. The steps involvedare:

Develop a list of relevant factors.

Assign a weight to each factor to indicate its relative importance.

Score each potential location according to the designated scale and multiply thescores by the weights to arrive at the weighted scores.


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How Manufacturers Have Become More

Effective

Focus more on customers

Maintain close relationships

Continuous improvement

Focus on quality

Save costs through site selection

Rely on the Internet to unite partners

New production techniques

Looking overseas to get new ideas for production and innovation inproviding goods and services

Documents

Unit II - Prod. Mgt. 2a