Technical Feasibility, BFS4

8/13/2019 Technical Feasibility, BFS4

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Technical Feasibility Study


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The learning outline The definition of technical feasibility The purposes of technical feasibility Determine facility needs. Suitability of production technology (adjusting to demand and supply, PLC) Availability and suitable of location. How to determine the location Methods in determining the location Lay out (office, plant : space, material, transportation, safety Selecting technology (the appropriateness, investment, manpower capability Economic Order Quantity Reorder point


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What is technical feasibility

Technical feasibility takes into account whether the reqtechnology is available or not and whether the required resourcesavailable in terms of manpower and equipment.


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There are three main issues in aspect of operational management project or business:1. Physical layout of the company (for efficiency and effective

poduction strategies, product selection and planning, andqualitiy planning

2. Engineering design (facilities design): design of the buplant layout, production process, technology used, space laythe capacity of machine

3. The operational decision: production planning, raw maplanning, quality control, and cost of production control.


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The purposes of technical feasibility

Anticipate Broader Problems with Questions:1. Adequate Choice of Available Technologies for Alternative

purposes, considering:a. Physical layoutb. Engineering designc. Availability of raw materials?

2. Costs of Constructing & Operating a) Machinery, b ) Equipment, c) Spare Parts?

3. Manpower Req:a) From professional to laborb) locally available?c) Responses vary sector to sector


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Alternatives in Production strategies

Chase strategy or demand matching strategy . Produce goodsenaugh goods to meet or exactly match the demand for goods. Level production . The company continuosly prodeces goods eq

the average demand. Make to order . Produce goods after receiving an order from the

customers. Like in tailor shop, fine jewelry. Make to stock . Produce goods before customers place orders.

Producing goods in long run production and on a consistent basis Assemble to order . Like in a restaurant.


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Selecting and planning products

Ideas recognition and selection (by observing the markets) Setting design for intial product (by considering the benefits, func

of the products). Developing prototipe and testing the product. Implementation. Assessing wether the products produced and

marketed have a long and good opportunity.


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Quality planning

Aspects quality planning for goods: performance, features, reliabiconformance, durability, serviceability, aesthetics, fit and finish. Aspect quality planning for services: reliability, responsiveness,

assurance, emphaty, tangibles.


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Primary task of TF is Blueprinting:

Manpower Needsb) Resources, and Designc) Provide Design Alternativesd) A Choice of Available Technologies,

& Cost estimates for each alternative.


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Considerations to select location

Types of business run Near market or consumers Near raw materials The availability of manpower Facilities and infrastructure Near government Near the financial institutions Located in industrial area


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Considerations to select location

The ease of expansion Local culture Tax rules


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Location methods assessment

Yield value assessment Raw materials Transportation Manpower Others (price of RM, HR, fuel, electricity, etc.)


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EOQ, ROP


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The basic economic order quantity Model

The more important assumptions: Demand is known constant. Lead time, that is, the time between the placement of the order and the

receipt of the order, is known and constant. Receipt of inventory is instanenous. The inventory from an order arrives

one bath, at one time.

Quantity discounts are not possible. The only variable costs are the cost of setting up or placing an order (set

cost) and the cost of holding or carrying cost. Stockout (shortages) can be completely avoided, if orders are placed at th

right time.


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Optimal Order Quantity Setup cost = holding cost

D Q--- S = ----- H

Q 2

Q* = 2 DS------H

Q = number of pieces per orderQ* = optimum number of pieces per order D = annual number in unitsS = setup or ordering costt for each orderH = holdingor carrying cost per unit per ye


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Example Squirt, Inc., a company that markets painless hypodermic needless for hospit

would like to reduce its inventory cost by determining the optimal number ohypodermic needless to obtain per oder. The annual demand is 1,000 units; thsetup or ordering cost is $10 per order; and the holding cost per unit per year$.50. Using this figures, we can calculate the optimal number of units per or

Q* =

Q* =

2 DS

------H

2 (1,000)(10)-----------------

0.50

40,000Q* =

Q* = 200 units


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Expected number of oders (N)

Expected number of orders = N = D/Q*

Expected time between orders = T = Number of

working days in a year / N


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Example for N and T Using the data from Squirt, Inc., above. There is a 250 day workin

year, we can find N and T as follows: N = D/Q*

= 1,000/100 = 5 orders per year

Number of working days per year T = ------------------------------------------------------

expected number of orders

T = 250/5 = 50 days between order


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Total cost

TC =

TC =

TC = 5 x $10 +100 x $.50 TC = $50 + $50 = $100

D Q--- S + ----- HQ 2

1,0000 200----------- ($10) + ----- ($.50)

200 2


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Reorder point (ROP)

ROP = (demand per day)(lead time for a new order) Demand per day = d

D d = -----------------------------------------

number of working day in a year

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Technical Feasibility, BFS4