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Facility Location To-day - Customer Satisfaction is the
Ultimate objective of business It has become the survival and sustaining
mantra of business One of the factors for achieving customer
satisfaction is by effective distribution of product or services
At the time when customer wants
Facility Location
Two factors affect distribution of product & Services
Location of Production base
Location of Warehouse/Service facility
The capacity of production base and Warehouse plays an crucial role in satisfying customer needsIt also crucial in arriving at the Profits percentage
Facility Location Capacity of the warehouse or
Production base has direct effect on the cost of product / services
Less Capacity : Choices available1. Spend more money for
alternative arrangements2. Loose business
Facility Locationo If Installed capacity is more- Effects are:1. High overheads2. Unutilized capacity3. Loss of money due to unwanted facility A survey has indicated that transportation
& distribution costs are largest expenses in business
Facility Location
Many industries are incurring 10 to 25 % of sales costs in transportation and distribution
The cost of Product distribution/ services has become increasingly important
But still very few companies are successful in curtailing this
Facility Location How did some of the companies reduced
their product distribution/services cost ? By application of scientific methods By using computer for analyzing their
distribution problems Mathematical modeling Also long range planning facilities
Facility Location
Distribution of Product / Service cost need not be restricted to manufacturing
Many have derived benefits from application of scientific methods
Hospitals, Ambulances, Fire engines, Police Protection, Sewage treatment plants & Nuclear Power plants have derived benefits
Facility Location
An Indian corporation was able to reduce cost of distribution from 9 % to less than 6%
Standard Oil Company of USA was able to save $5 billion by using mathematical model for planning distribution & manufacturing operations
Capacity Planning
Before Studying facility layout we have to understand Capacity Planning
Capacity planning Defined: It is the process of adjusting the capacity
of an organization to do work in response to changing or predicted demands.
Capacity Planning For facility planning & location planning We
need to know the capacity It is determining the capacity of
Production / facility needed in the long range
When additional capacity needed Where the production facility to be located,
its layout and characteristics
Capacity planning
Capacity is the Max rate of production facility of a firm
Expressed as volume of output for a period of time
It indicates the ability of the firm to meet Market demand
Capacity Planning Operations Managers are concerned about
capacity
Since The need sufficient capacity to meet the
market needs Capacity affects efficiency of operations Determines ease or difficulty of scheduling Cost of maintaining facility Capacity requires Investment
Capacity Planning Types of Capacities
FIXED ADJUSTABLE - LABOUR/SHIFT ETC DESIGN/INSTALLED SYSTEM CAPACITY < DESIGN
CAPACITY POTENTIAL CAPACITY IMMEDIATE CAPACITY EFFECTIVE CAPACITY
Capacity Planning
Factors affecting Production Capacity: Absenteeism M/C downtime Maintenance time Vocation Production changeover
Capacity Planning Measurement of capacity: In terms of Output Capacity measure simple for single
specialized products Simple because Capacity = Rate of output/day For a car industry Capacity = No of cars / day
Capacity Planning For job shops Capacity = Labor hours or M/c Hours It is difficult to specify capacity for service
industries Or for organization with diversified products In such cases capacity is specified as INPUT
Capacity Planning Capacity & Size or different Capacity is related to rate or time
Organizations Capacity measure
Steel Tonnes per year
Oil Refinery Barrels / Week
Restaurant People served/day
Airlines Available seat miles/month
Hospital Patients treated per week
University Students enrolled per year
Warehouse Cubic feet in storage space per year
Power Co Megawatts per day
Capacity Planning
For organizations with diverse products:
An aggregate Unit of capacity
is specified i.e Units/day More diversified products
Sales/ day could be measure
of capacity
Capacity Planning
Different capacities Peak - for service industries Normal - for mfg industries
Capacity Planning
Capacity Planning is an integral part of overall production planning of entire industry
The broad classes of capacity planning: lead strategy
lag strategy match strategy
Capacity Planning
3 time horizons of capacity planning Long-range capacity planning Medium-range capacity planning Short-range capacity planning
Capacity Planning
CorporateProdnPlng
AGP
CRP-detailedCapacity
Requirement Planning
Rough CutCapacity
Plng
Long RangeCapacity
Plng
MPS
MRP
PriorityPlanning
Relationship between Capacity & Prodn Plng