Facility Laout


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Facility Laout

  1. 1. Facility Location <ul><li>To-day - Customer Satisfaction is the Ultimate objective of business </li></ul><ul><li>It has become the survival and sustaining mantra of business </li></ul><ul><li>One of the factors for achieving customer satisfaction is by effective distribution of product or services </li></ul><ul><li>At the time when customer wants </li></ul>
  2. 2. Facility Location Two factors affect distribution of product & Services Location of Production base Location of Warehouse/ Service facility <ul><li>The capacity of production base and Warehouse plays an </li></ul><ul><li>crucial role in satisfying customer needs </li></ul><ul><li>It also crucial in arriving at the Profits percentage </li></ul>
  3. 3. Facility Location <ul><li>Capacity of the warehouse or Production base has direct effect on the cost of product / services </li></ul><ul><li>Less Capacity : Choices available </li></ul><ul><ul><ul><ul><li>Spend more money for </li></ul></ul></ul></ul><ul><ul><ul><li>alternative arrangements </li></ul></ul></ul><ul><ul><ul><ul><li>Loose business </li></ul></ul></ul></ul>
  4. 4. Facility Location <ul><li>If Installed capacity is more- Effects are: </li></ul><ul><li>High overheads </li></ul><ul><li>Unutilized capacity </li></ul><ul><li>Loss of money due to unwanted facility </li></ul><ul><li>A survey has indicated that transportation & distribution costs are largest expenses in business </li></ul>
  5. 5. Facility Location <ul><li>Many industries are incurring 10 to 25 % of sales costs in transportation and distribution </li></ul><ul><li>The cost of Product distribution/ services has become increasingly important </li></ul><ul><li>But still very few companies are successful in curtailing this </li></ul>
  6. 6. Facility Location <ul><li>How did some of the companies reduced their product distribution/services cost ? </li></ul><ul><li>By application of scientific methods </li></ul><ul><li>By using computer for analyzing their distribution problems </li></ul><ul><li>Mathematical modeling </li></ul><ul><li>Also long range planning facilities </li></ul>
  7. 7. Facility Location <ul><li>Distribution of Product / Service cost need not be restricted to manufacturing </li></ul><ul><li>Many have derived benefits from application of scientific methods </li></ul><ul><li>Hospitals, Ambulances, Fire engines, Police Protection, Sewage treatment plants & Nuclear Power plants have derived benefits </li></ul>
  8. 8. Facility Location <ul><li>An Indian corporation was able to reduce cost of distribution from 9 % to less than 6% </li></ul><ul><li>Standard Oil Company of USA was able to save $5 billion by using mathematical model for planning distribution & manufacturing operations </li></ul>
  9. 9. Capacity Planning <ul><li>Before Studying facility layout we have to understand Capacity Planning </li></ul><ul><li>Capacity planning Defined: </li></ul><ul><li>It is the process of adjusting the capacity of an organization to do work in response to changing or predicted demands. </li></ul>
  10. 10. Capacity Planning <ul><li>For facility planning & location planning We need to know the capacity </li></ul><ul><li>It is determining the capacity of Production / facility needed in the long range </li></ul><ul><li>When additional capacity needed </li></ul><ul><li>Where the production facility to be located, its layout and characteristics </li></ul>
  11. 11. Capacity planning <ul><li>Capacity is the Max rate of production facility of a firm </li></ul><ul><li>Expressed as volume of output for a period of time </li></ul><ul><li>It indicates the ability of the firm to meet Market demand </li></ul>
  12. 12. Capacity Planning <ul><li>Operations Managers are concerned about capacity </li></ul><ul><li>Since </li></ul><ul><li>The need sufficient capacity to meet the market needs </li></ul><ul><li>Capacity affects efficiency of operations </li></ul><ul><li>Determines ease or difficulty of scheduling </li></ul><ul><li>Cost of maintaining facility </li></ul><ul><li>Capacity requires Investment </li></ul>
  13. 13. Capacity Planning <ul><li>Types of Capacities </li></ul><ul><ul><ul><li>FIXED </li></ul></ul></ul><ul><ul><ul><li>ADJUSTABLE - LABOUR/SHIFT ETC </li></ul></ul></ul><ul><ul><ul><li>DESIGN/INSTALLED </li></ul></ul></ul><ul><ul><ul><li>SYSTEM CAPACITY < DESIGN CAPACITY </li></ul></ul></ul><ul><ul><ul><li>POTENTIAL CAPACITY </li></ul></ul></ul><ul><ul><ul><li>IMMEDIATE CAPACITY </li></ul></ul></ul><ul><ul><ul><li>EFFECTIVE CAPACITY </li></ul></ul></ul>
  14. 14. Capacity Planning <ul><li>Factors affecting Production Capacity: </li></ul><ul><li>Absenteeism </li></ul><ul><li>M/C downtime </li></ul><ul><li>Maintenance time </li></ul><ul><li>Vocation </li></ul><ul><li>Production changeover </li></ul>
  15. 15. Capacity Planning <ul><li>Measurement of capacity: </li></ul><ul><li>In terms of Output </li></ul><ul><li>Capacity measure simple for single specialized products </li></ul><ul><li>Simple because </li></ul><ul><li>Capacity = Rate of output/day </li></ul><ul><li>For a car industry </li></ul><ul><li>Capacity = No of cars / day </li></ul>
  16. 16. Capacity Planning <ul><li>For job shops </li></ul><ul><li>Capacity = Labor hours </li></ul><ul><li>or M/c Hours </li></ul><ul><li>It is difficult to specify capacity for service industries </li></ul><ul><li>Or for organization with diversified products </li></ul><ul><li>In such cases capacity is specified as INPUT </li></ul>
  17. 17. Capacity Planning <ul><li>Capacity & Size or different </li></ul><ul><li>Capacity is related to rate or time </li></ul>Megawatts per day Power Co Cubic feet in storage space per year Warehouse Students enrolled per year University Patients treated per week Hospital Available seat miles/month Airlines People served/day Restaurant Barrels / Week Oil Refinery Tonnes per year Steel Capacity measure Organizations
  18. 18. Capacity Planning <ul><li>For organizations with diverse products: </li></ul><ul><ul><ul><li>An aggregate Unit of capacity </li></ul></ul></ul><ul><li>is specified i.e Units/day </li></ul><ul><li>More diversified products </li></ul><ul><ul><ul><li>Sales/ day could be measure </li></ul></ul></ul><ul><li>of capacity </li></ul>
  19. 19. Capacity Planning <ul><li>Different capacities </li></ul><ul><li>Peak - for service </li></ul><ul><li>industries </li></ul><ul><li>Normal - for mfg </li></ul><ul><li>industries </li></ul>
  20. 20. Capacity Planning <ul><li>Capacity Planning is an integral part of overall production planning of entire industry </li></ul><ul><li>The broad classes of capacity planning: lead strategy </li></ul><ul><li>lag strategy </li></ul><ul><li>match strategy </li></ul>
  21. 21. Capacity Planning <ul><li>3 time horizons of capacity planning </li></ul><ul><li>Long-range capacity planning </li></ul><ul><li>Medium-range capacity planning </li></ul><ul><li>Short-range capacity planning </li></ul>
  22. 22. Capacity Planning Corporate Prodn Plng AGP CRP-detailed Capacity Requirement Planning Rough Cut Capacity Plng Long Range Capacity Plng MPS MRP Priority Planning Relationship between Capacity & Prodn Plng