FPD-6-10-REVIEWER PDF - Production Line Balancing & Facility Location

MODULE 6: LINE BALANCING REASON TO BALANCE A PRODUCTION LINE Step 3 ▪ 480 available mins per day ▪ In the use of a product layout, the flow of invent...

MODULE 6: LINE BALANCING REASON TO BALANCE A PRODUCTION LINE Step 3 ▪ 480 available mins per day ▪ In the use of a product layout, the flow of inventory from one ▪ 40 units required/day (given) station to the next is important. ▪ The output in the preceding station must be supported by the succeeding station; otherwise, inventory will pile up. STRATEGIES FOR BALANCING THE PRODUCTION LINE LOAD A. Objective is to minimize the imbalance between machines or personnel while meeting required output B. Starts with the precedence relationships ▪ Determine cycle time ▪ Calculate theoretical minimum number of workstations LINE-BALANCING HEURISTICS ▪ Balance the line by assigning specific tasks to workstations SAMPLE PROBLEM ▪ Boeing wants to develop a precedence diagram for an electrostatic wing component that requires a total assembly time of 66 minutes. Furthermore, the production schedule requires that 40 units of the wing component be completed as output from the assembly line each day. ▪ How to start finding the solution? o Gather tasks/activities, sequencing and assembly times for the making the electrostatic wing component Electronic Wing Component Step 1 WING COMPONENT EXAMPLE MEASURING THE EFFICIENCY OF LINE BALANCING Step 2 Precedence diagram  MODULE 7: FACTORS IN CHOOSING FACILITY LOCATION FACTORS TO CONSIDER IN FACILITY LOCATION custom’s department) into which foreign goods can be 1. Proximity to customers - suppliers are located near the brought without being subject to the normal custom’s assembly plant. Example is Toyota. Its suppliers are requirements. Manufacturers in free trade zones can use located near its assembly plant. imported components used in production of the final product and delay payment of custom duties until the 2. Business climate - can include presence of similar-sized product is shipped into the host country. businesses, companies of SME industry or presence of other international businesses. It may include also pro- 9. Political risk- the fast-changing geopolitical scenes business legislation and local government intervention to present exciting and challenging opportunities. But, the facilitate business locating in an area via business extended phase of transformation that many countries are subsidies, tax abatements and other support are also undergoing makes the decision to locate in those areas factors. extremely difficult. Political risks in both the country of location and the host country influence location decisions. 3. Total costs - the objective is to select the site with the lowest cost. This includes regional costs, inbound 10. Government barriers –barriers to enter and locate are now distribution costs and outbound distribution costs. Land, being removed through legislation. Non-legislative and construction, labor, taxes and energy costs make-up the cultural barriers should be considered. regional costs. In addition, there are hidden costs that are 11. Trading blocs- the Central America Free Trade Bloc difficult to measure. These involve (1) excessive moving of Agreement (CAFTA)-is one of the new trading blocs in our preproduction material between locations before final hemisphere. Firms typically locate or relocated within a delivery to the customers and (2) loss of customer bloc to take advantage of new market opportunities or lower responsiveness arising from locating away from the main total costs afforded by the trading agreement. Others customer base. decide on location so as not to be disqualified from 4. Infrastructure - Adequate rail, road, sea and air competing in the new market. transportation energy and telecommunication 12. Environmental regulation-the environmental regulation requirements is vital. The local government’s willingness to that impact a certain industry in a given location should be upgrade infrastructure to the level required may be an included in the location decision. Aside from measurable incentive to select the site. cost implications, these regulations influence the 5. Quality of labor - the educational and skills of the labor relationship with the local community. pool must match the company’s need. Willingness and 13. Host Community- the host community’s interest in having ability to learn are very important. the plant in its midst is a necessary part of the evaluation 6. Suppliers - a high-quality and competitive supplier base process. Local educational facilities and the broader issue makes a given location suitable. The proximity of supplier’s of quality life are also important. plants also supports lean production. 14. Competitive Advantage-an important decision for 7. Other facilities- the location of other plants or other multinational companies is the nation in which to locate the distribution centers of the same company may influence a home base for each distinct business. Competitive new facility’s location in the network. Issues of product mix advantage is created at a home base where strategy is set, and capacity are strongly interconnected to the location in the core product and process technology are created, and the network. a critical mass of production takes place. A company should move its base to a country that stimulates 8. Free trade zones – a foreign trade zone or a free trade zone innovation and provides the best environment for global is typically a closed facility (under the supervision of the competitiveness. MODULE 8: LOCATIONAL BREAK-EVEN ANALYSIS LOCATIONAL BREAK-EVEN ANALYSIS 3. Select location with lowest total cost for expected ▪ Method of cost-volume analysis used for industrial production volume locations SAMPLE: John Kros, owner of Carolina ignitions Manufacturing, ▪ Three steps in the method needs to expand capacity. He is considering three (3) locations 1. Determine fixed and variable costs for each location – Akron, Bowling Green, and Chicago – for a new plant. The 2. Plot the cost for each location company wishes to find the most economical location for an expected volume of 2,000 units per year.  Fixed Variable Total o Note: x=cross over point City Cost Cost Cost o 30x = 30,000 AKRON $30,000 $75 $180,000 o x = 1,000 BOWLING $60,000 $45 $150,000 GREEN ▪ Cross-over point for Chicago and Bowling Green: CHICAGO $110,000 $25 $160,000 o 110,000 + (25)(x) = 60,000 + 45 (X) o 20x = 50,000 Total Cost = Fixed Cost + (Variable Cost X Volume) o x = 2,500 Selling Price = $120 Expected Volume = 2,000 units GRAPH LOCATIONAL BREAK-EVEN ANALYSIS TO COMPUTE FOR TOTAL COST ▪ Total Cost = Fixed Cost + (Variable Cost x Volume) ▪ for Akron: $30,000 + $75 (2000) = $180,000 ▪ Do the same for Bowling Green and Chicago ▪ Chicago TC= $160,000 ▪ From the computed total cost Bowling Green has the lowest cost at $150,000. COMPUTE FOR THE EXPECTED PROFIT Expected Profit = Total revenue – Total Cost ▪ Use Bowling Green because it has the lowest cost: o Selling Cost (vol) – T.C. o $120 (2,000) – 150,000 o Expected Profit = $ 90,000 Interpretation COMPUTE THE CROSS-OVER POINTS ▪ For prodn vol less than 1,000; Akron provides the lowest WITH BOWLING GREEN cost ▪ Cross-over point for Akron and Bowling Green: ▪ For prodn vol greater than 2,500 ; Chicago provides the o 30,000 + (75)(x) = 60,000 + 45 (X) lowest cost MODULE 9: FACTOR RATING METHOD CRITERIA USED TO EVALUATE SOURCING LOCATIONS ▪ The factor-rating method is used to evaluate outsourcing. It instills objectivity into the process of identifying hard-to- evaluate costs. The following is a step-by-step procedure in performing it. STEPS IN DEVELOPING A FACTOR-RATING METHOD 1. Develop a list of relevant factors called key success factors (KSF). 2. Assign a weight to each factor reflecting its relative importance. 3. Develop a scale for each factor. 4. Management to score each factor. 5. Multiply the score to its weight and get the total. 6. Make a recommendation SAMPLE PROBLEM Supposing a company is looking for a factory where it can outsource a car radio component. It identified the risk factors seen below. It identified factor ratings from 0 to 3; 0 is no risk ▪ Which country will be chosen to be the car radio component and 3 as high risk and rated each factor according to the provider? company executive’s evaluation. ▪ Answer: Mexico because it has the lowest risk factors.  MODULE 10: CENTROID METHOD CENTROID METHOD TO COMPUTE CENTROID ▪ Is a technique for locating single facilities that considers the ▪ The formula for solving for the Centroid is: existing facilities, the distance between them, and the Cx =∑ dixVi / ∑Vi Cy =∑diyVi / ∑Vi volumes of goods to be shipped. This is often used to locate ▪ where: intermediate or distribution warehouses. In its simplest o Cx = coordinate of the centroid form, this method assumes that inbound and outbound o Cy = coordinate of the centroid transportation costs are equal and it does not include o dix = x coordinate of the ith location special shipping costs for less than full loads. o diy = y coordinate of the ith location ▪ Another application of the centroid method today is the o Vi = Volume of goods moved to or from the ith location location of communication towers in urban areas. Examples include radio, TV, and cell phone towers. In this EXAMPLE application, the goal is to find sites that are near the clusters Hi-octane Refinery Company needs to locate an intermediate of customers, thus ensuring clear radio signals. The holding facility between its refining plant in Long Beach and its centroid method finds sites a simple mathematical point. major distributors. Exhibit shows the coordinate map and Once found, qualitative factors such as geography, roads, amount of gasoline shipped to or from the plant and distributor. and utilities are considered to find an exact location. ▪ Also called center of gravity (Render and Heizer) In the example: Long Beach location ▪ Finds location of distribution center that minimizes Location Gallons Of Coordinates (Dix, distribution costs Gasoline/ mo. Vi Diy) ▪ Considers (000,000) o Location of markets Long Beach 1,500 (325,75) o Volume of goods shipped to those markets Anaheim 250 (400,150) o Shipping cost (or distance) La Habra 450 (450,350) Glendale 350 (350,400) Thousand Oaks 450 (25,450) COMPUTED CENTROID X – COORDINATES ∑𝑑𝑖𝑥𝑉𝑖 [(325)(1,500) + (400)(250) + (450)(450) + (350)(350) + (25)(450)] 923,750 𝐶𝑥 = = = = 307.916 ≈ 308 ∑𝑉𝑖 (1,500 + 250 + 450 + 350 + 450) 3,000 Y – COORDINATES ∑𝑑𝑖𝑦𝑉𝑖 [(75)(1,500) + (150)(250) + (350)(450) + (400)(350) + (450)(450)] 650,000 𝐶𝑦 = = = = 216.666 ≈ 217 ∑𝑉𝑖 (1,500 + 250 + 450 + 350 + 450) 3,000 CENTROID: (307.916, 216.666) ≈ (308, 217) Facility Location Long Beach Anaheim La Habra Glendale Thousand Oaks Centroid 500 (25, 450) (350, 400) 400 (450, 350) Y – Coordinates 300 (308, 217) 200 (400, 150) (325, 75) 100 0 0 100 200 300 400 500 X – Coordinates