2.1 Facilities Planning

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Sunday, October 17, 2010Sunday, October 17, 2010 Industrial EngineeringIndustrial Engineering 11

FacilitiesFacilities

PlanningPlanning

Chapter 2Chapter 2


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IntroductionIntroduction

Facilities

FaLo


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Structure designStructure design: building and: building and

support services - gas, water, light,support services - gas, water, light,

air,air, Layout designLayout design: space requirements: space requirements

and location of resources inand location of resources in

available space.available space. Handling system designHandling system design: movement: movement

of material, people, information andof material, people, information and

equipment.equipment.



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LocationLocation A place or position of A place or position of

allocating the facilities, buildings,allocating the facilities, buildings,

equipment etc.equipment etc. LayoutLayout - The way that something is- The way that something is

physically arranged such as thephysically arranged such as the

space of material handling, storage,space of material handling, storage,labor, support activity & serviceslabor, support activity & services

and equipment.and equipment.



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Facilities LocationFacilities Location

Facilities LayoutFacilities Layout

FocusFocus
http://facilities%20location.ppt/http://facilities%20location.ppt/http://02a_facilities%20layout.ppt/http://02a_facilities%20layout.ppt/http://02a_facilities%20layout.ppt/http://facilities%20location.ppt/


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Evaluating LocationEvaluating Location

AlternativesAlternatives There are a number ofThere are a number of

techniques that are helpful intechniques that are helpful in

evaluating location alternatives:evaluating location alternatives: Location breakeven analysisLocation breakeven analysis

Assignment techniqueAssignment technique

Transportation methodTransportation method

Factor Rating, andFactor Rating, and

The Center of Gravity MethodThe Center of Gravity Method


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Location BreakevenLocation Breakeven

AnalysisAnalysisThe economic comparison ofThe economic comparison of

location alternatives is facilitatedlocation alternatives is facilitated

by the use of this method.by the use of this method. The analysis can be doneThe analysis can be done

numerically ornumerically or graphicallygraphically..


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Variable CostsVariable Costs

The portion of the total cost that variesThe portion of the total cost that varies

directly with the volume of output.directly with the volume of output.

e.g. labor, materials, transportation, and variablee.g. labor, materials, transportation, and variable

overheadoverhead


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Fixed CostsFixed Costs

The portion of the total costThe portion of the total cost

that remains constantthat remains constant

regardless of output levels.regardless of output levels.

e.g. land, property taxes, insurance,e.g. land, property taxes, insurance,equipment, and buildingequipment, and building


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For cost analysis, the total cost are given as:For cost analysis, the total cost are given as:

Total Cost = FC +VC(Q) Where:

FC = Fixed Cost

VC = Variable Cost per unit

Q = Quantity/volume of output


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AssumptionAssumption1. Satu barang sahaja terlibat1. Satu barang sahaja terlibat

2. Apa yg dihasilkan, semuanya habis dijual2. Apa yg dihasilkan, semuanya habis dijual

3. Kos berubah/unit adalah sama tidak kira3. Kos berubah/unit adalah sama tidak kiraberapa kuantiti yg dihasilkanberapa kuantiti yg dihasilkan

4. Kos tetap tidak berubah jika kuantiti keluaran4. Kos tetap tidak berubah jika kuantiti keluaranberubahberubah

5. Harga jualan tetap, tanpa ambilkira jumlah5. Harga jualan tetap, tanpa ambilkira jumlahjualanjualan


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LocationLocation

Break-Even AnalysisBreak-Even Analysis

Fixed CostsFixed Costs Variable CostsVariable Costs Total CostsTotal Costs

CommunityCommunity per Yearper Year per Unitper Unit (Fixed + Variable)(Fixed + Variable)

AA $150,000$150,000 $62$62

BB $300,000$300,000 $38$38

CC $500,000$500,000 $24$24

DD $600,000$600,000 $30$30

Example 10.3Example 10.3

TC = FC + VC(Q)TC = FC + VC(Q)


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LocationLocation




AA $150,000$150,000 $62$62

BB $300,000$300,000 $38$38

CC $500,000$500,000 $24$24

DD $600,000$600,000 $30$30

for 20,000 unitsfor 20,000 units

Total Variable Costs




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LocationLocation




AA $150,000$150,000 $62$62

BB $300,000$300,000 $38$38

CC $500,000$500,000 $24$24

DD $600,000$600,000 $30$30



$62 (20,000)




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Sunday, October 17, 2010Sunday, October 17, 2010

Industrial EngineeringIndustrial Engineering

1616

LocationLocation




AA $150,000$150,000 $62$62

BB $300,000$300,000 $38$38

CC $500,000$500,000 $24$24

DD $600,000$600,000 $30$30



$62 (20,000) = $1,240,000




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LocationLocation




AA $150,000$150,000 $62$62 $1,390,000$1,390,000

BB $300,000$300,000 $38$38 $1,060,000$1,060,000

CC $500,000$500,000 $24$24 $ 980,000$ 980,000

DD $600,000$600,000 $30$30 $1,200,000$1,200,000





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QQ

(thousands of units)(thousands of units)

00

200200

400400

600600

800800

10001000

12001200

14001400

16001600

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

Ann

ualcost(th

ousandsofdol l

ars)

Ann

ual

cost(thousand

sofdol l

ars)

LocationLocation


Fixed Costs Total CostsCommunity per Year (Fixed + Variable)

A $150,000 $1,390,000

B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000



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QQ


00

200200

400400

600600

800800

10001000

12001200

14001400

16001600

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

AA

DD

BB

CC

(20, 1390)(20, 1390)

(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

(20, 980)(20, 980)

Ann

ualcost(th

ousandsofdol l

ars)

Ann

ual

cost(thousand

sofdol l

ars)

LocationLocation



A $150,000 $1,390,000

B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000



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AA

DD

BB

CC

(20, 1390)(20, 1390)

(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

(20, 980)(20, 980)

A bestA best

Break-evenBreak-even

pointpoint

QQ


00

200200

400400

600600

800800

10001000

12001200

14001400

16001600

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

Ann

ualcost(th

ousandsofdol l

ars)

Ann

ual

cost(thousa

nd

sofdol l

ars)

LocationLocation



A $150,000 $1,390,000

B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000



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B bestB best

Break-even pointBreak-even point

AA

DD

BB

CC

(20, 1390)(20, 1390)

(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

(20, 980)(20, 980)

A bestA best

6.256.25

Break-even

point

QQ


00

200200400400

600600

800800

10001000

12001200

14001400

16001600

22 44 66 88 1010 1212 1414 1616 1818 2020 222214.314.3

Ann

ualcost(th

ousandsofdol l

ars)

Ann

ual

cost(thousa

nd

sofdol l

ars)

LocationLocation



A $150,000 $1,390,000

B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000



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C bestC best

(20, 980)(20, 980)

B bestB best

Break-even point

AA

DD

BB

CC

(20, 1390)(20, 1390)

(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

A bestA best

6.256.25

Break-even

point

QQ(thousands of units)(thousands of units)

00

200200400400

600600

800800

10001000

12001200

14001400

16001600

22 44 66 88 1010 1212 1414 1616 1818 2020 222214.314.3

Ann

ualcost(th

ousandsofdol l

ars)

Ann

ual

cost(thousa

nd

sofdol l

ars)

LocationLocation



A $150,000 $1,390,000

B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000



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LocationLocation


Figure 10.2Figure 10.2QQ(thousands of units)(thousands of units)

00

200200400400

600600

800800

10001000

12001200

14001400

16001600

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

A bestA best B bestB best C bestC best

Break-even point

6.256.25 14.314.3

AA

DD

BB

CC

(20, 1390)(20, 1390)

(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

(20, 980)(20, 980)

Break-even

pointAnn

ualcost(th

ousandsofdol l

ars)

Ann

ual

cost(thousa

nd

sofdol l

ars)


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Sunday, October 17, 2010Sunday, October 17, 2010 Industrial EngineeringIndustrial Engineering 2525QQ(thousands of units)(thousands of units)

00

200200400400

600600

800800

10001000

12001200

14001400

16001600

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

A bestA best B bestB best C bestC best

Break-even pointBreak-even point

6.256.25 14.314.3

AA

DD

BB

CC

(20, 1390)(20, 1390)

(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

(20, 980)(20, 980)

Break-evenBreak-even

pointpointAnn

ualcost(th

ousa

ndsofdol l

ars)

Ann

ual

cost(thousa

nd

sofdol l

ars)

LocationLocation



(A) (B)

$150,000 + $62Q = $300,000 + $38QQ = 6,250 units

$300,000 + $38Q = $500,000 + $24QQ = 14,286 units

(B) (C)

Break-Even Quantities

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2.1 Facilities Planning