FP Unit 1
FP Unit 1
FP Unit 1
PLANNING
AND ANALYSIS
Learning Objectives
List some of the main reasons organizations need to
make location decisions.
Explain why location decisions are important.
Discuss the options that are available for location
decisions.
Describe some of the major factors that affect location
decisions.
Outline the decision process for making these kinds of
decisions.
Use the techniques presented to solve typical problems.
Need for Location Decisions
Marketing Strategy
Cost of Doing Business
Growth
Depletion of Resources
8-3
Nature of Location Decisions
Strategic Importance of location decisions
Long term commitment/costs
Impact on investments, revenues, and operations
Supply chains
Objectives of location decisions
Profit potential
No single location may be better than others
Identify several locations from which to choose
Location Options
Expandexisting facilities
Add new facilities
Move
8-4
Factors in Locating Manufacturing Facilities
Favorable Labor Climate
Proximity to Markets
Proximity to raw materials sources
Proximity to Suppliers and Resources
Construction costs, land price
Proximity to the Parent Company’s Facilities
Factors in Locating Service Facilities
Customer-based factors
Cost-based factors
Competitor-based factors
Support systems
Geographic/environmental factors
Business Climate
Communication-based factors
Transportation-based factors
Personal desires of the CEO
Location Screening
Clear responsibilities should be assigned to seek a new
location involving a different site. Location projects
involving a new site usually follow the following
sequence:
Determine the general region or area
Screen communities and select a specific one
Analyze the sites within a specific community and select
one
Plant Location Aspects
1.Selection of Region:
Availability of raw materials
Nearness to source of motive power
Proximity to the market
Availability of transport facilities
Suitability of climate
Plant Location Aspects
2. Selection of Locality:
Supply of labour
Prevailing wage rates
Existence of supplementary of complementary
industries
Banking, credit and communication facilities
Attitude of the people in the locality
Local taxes and bye-laws
Living conditions of workers
Availability of utilities
Plant Location Aspects
3. Selection of Site:
Price of land
Disposal of Effluents
Qualitative Analysis
Step 1: List all the factors that are important, i.e. have an
impact on the location decision.
Step 2: Assign appropriate weights (typically between 0
and 1) to each factor based on the relative importance
of each.
Step 3: Assign a score (typically between 0 and 100) for
each location with respect to each factor identified in
Step 1.
Break-Even Analysis
Break-even analysis computes the amount of goods required to be sold to
just cover costs
Break-even analysis includes fixed and variable costs
Break-even analysis can be used for location analysis especially when the
costs of each location are known
Costs
Fixed
Variable Costs
Costs
2-13
Variable Costs are…
Expenses that are uniform per unit of output
within a relevant time period
As volume increases, total variable costs
increase
2-14
THERE ARE TWO CATEGORIES OF
VARIABLE COSTS
2-15
Variable Costs – Cost of Goods Sold
For Manufacturer or Provider of Service
Covers materials, labor and factory overhead
applied directly to production
For Reseller (Wholesaler or Retailer)
Covers primarily the cost of merchandise
2-16
Other Variable Costs
Expenses not directly tied to production but vary
directly with volume
Examples include:
Sales commissions, discounts, and delivery
expenses
2-17
Fixed Costs
2-18
THERE ARE TWO CATEGORIES OF
FIXED COSTS
1. Programmed costs
2. Committed costs
2-19
Example -Location Break-Even Analysis
Example -Location Break-Even Analysis
Center of Gravity Method (Single
Facility Location)
This approach requires that the analyst
find the center of gravity of the geographic
area being considered
Computing the Center of Gravity for Matrix
Manufacturing
22
Steps in Center of Gravity Method
Computing the Center of Gravity
Where
Qi = Quantity to be shipped to destination i
xi = x coordinate of destination i
yi = y coordinate of destination i
26
Example
27
Example -Center-of-Gravity
Example -Center-of-Gravity
Multi-Facility Location
How many sites?
Where to locate each?
Capacities?
Which customers assigned to each site?
Which products to stock/produce at each site?
Costs:
transportation, handling, inventory carrying,
production/purchase
facility fixed costs
30
Multiple Centre-of-Gravity Approach
Pre-assign demand points to each facility (i.e.
cluster customers that are closest together).
For each cluster, locate one facility at centre of
gravity.
With facility locations fixed, re-assign
customers to closest facility.
Find centres of gravity for new clusters.
Repeat cluster-assign steps until no further
change.
31
Multiple Centre-of-Gravity Approach -
Example
32
Multiple Centre-of-Gravity Approach -
Example
33
Multiple Centre-of-Gravity Approach -
Example
34
Median Method (Mini-Sum Method)
Step 1: List the existing facilities in non-decreasing
order of the x coordinates.
Step 2: Find the jth x coordinate in the list at which the
cumulative weight equals or exceeds half the total
weight for the first time, i.e.,
Median Method (Cont)
Step 3: Cont... The optimal location of the new
facility is given by the jth x coordinate and the
kth y coordinate identified in Steps 2 and 4,
respectively.
Notes
1. It can be shown that any other x or y coordinate will
not be that of the optimal location’s coordinates
2. The algorithm determines the x and y coordinates of
the facility’s optimal location separately
3. These coordinates could coincide with the x and y
coordinates of two different existing facilities or
possibly one existing facility
Example :
Two high speed copiers are to be located in the fifth floor
of an office complex which houses four departments of
the Social Security Administration. Coordinates of the
centroid of each department as well as the average
number of trips made per day between each department
and the copiers’ yet-to-be-determined location are
known and given in Table below. Assume that travel
originates and ends at the centroid of each department.
Determine the optimal location, i.e., x, y coordinates, for
the copiers.
Prob:
Department X- Y-
coordinate Coordinate Deman
d
1 10 2 6
2 10 10 10
3 8 6 8
4 12 5 4
Solution:
Using the median method, we obtain the following
solution:
Step 1:
Dept.
Dept. xx coordinates
coordinates in
in Weights
Weights Cumulative
Cumulative
## non-decreasing
non-decreasing order
order Weights
Weights
33 88 88 88
11 10
10 66 14
14
22 10
10 10
10 24
24
44 12
12 44 28
28
Solution:
Step 3:
Dept.
Dept. YY coordinates
coordinates in
in Weights
Weights Cumulative
Cumulative
## non-decreasing
non-decreasing order
order Weights
Weights
11 22 66 66
44 55 44 10
10
33 66 88 18
18
22 10
10 10
10 28
28
Solution:
Step 4: Since the third y coordinates in the above list is
where the cumulative weight exceeds half the total
weight of 28/2 = 14, the optimal coordinate is 6. Thus,
the optimal coordinates of the new facility are (10, 6).
Distance measure
The distance measure involved in a facility location
problem is an important element in formulating an
analytical model. There are two ways to measure the
distance between two facilities.
Rectilinear Distance
Euclidean Distance
Rectilinear Distance
When distance between two facilities is measured
along path that is orthogonal to each other, then that
distance is termed as rectilinear distance. Suppose two
facilities are located at points represented by ( X 1 , Y
1 ) and at ( X 2 , Y 2 ) then the rectilinear distance
between the facilities will be :
| X 1 - X 2 | + | Y 1 - Y 2 |
Euclidean distance
When distance is measured along straight-line path
between the two facilities, then that distance is termed
as Euclidean distance. Suppose two facilities are
located at points represented by ( p , q) and at ( r , s )
then the Euclidean distance between the facilities will
be
Euclidean distance= [(p-r) 2 + (q-s) 2]1/2
Example Mini-Max Location
(10, 16)
16
h4 = 11
Find the optimal location of an ambulance
with respect to four (known) possible 14
accident locations which coordinates are
P1=(6,11), P2=(12,5), P3=(14,7), and P4=(10,16).
12
The objective is to minimize the maximum
(6, 11)
distance from the ambulance location to an
10 h1 = 10
accident location and from the accident
(12, 9)
location to its closest hospital. The
distances from the accident locations to 8
optimal solutions. h2 = 16
(5, 4) 6 8 10 12 14
Mini-Max Location Formulae
c1 = min {ai + bi - hi}
c2 = max {ai + bi + hi}
c3 = min {-ai + bi - hi}
c4 = max {-ai + bi + hi}
c5 = max (c2 - c1, c4 - c3}
Set of optimal solutions: line segment defined by the following
end points:
Set of optimal solutions: line segment defined by the following end points:
for each type, as well as type and quantity of tools and equipment.
It’s essential as well to know about space required, shape, height,
waste.
It’s important to have efficient services to insure that their indirect costs
have been minimized.
Factors affecting Plant Layout
The factors affecting plant layout can be grouped into 8
categories:
The building
If it has been already selected, its characteristics will be a constraint at
the moment of designing the layout, which is different if the building
has to be built.
Future changes
One of the main objectives of plant layout is flexibility.
It’s important to forecast the future changes to avoid having an
to them.
Cell Layout
Hybrid Layout that tries to take advantage of different layouts
types.
Fixed position or Project plant
layout
Fixed position or Project plant layout
In Fixed product layout, the products generally circulate
within the production facilities (machines, workers, etc.)
In this particular type of layout, the product does not
move, it is the different resources that are moved to
perform the operations on the product.
This type of layout is commonly found in industries that
manufacture large size products, such as ships or aircrafts.
Product oriented plant layout
Types of Plant Layout
Product oriented plant layout
This type of plant layout is useful when the production process
is organized in a continuous or repetitive way.
Continuous flow: The correct operations flow is reached through
the layout design and the equipment and machinery specifications.
Repetitive flow (assembly line): The correct operations flow will be
Tasks simplification.
Disadvantages:
No flexibility in the production process.
Low flexibility in the manufacturing times.
Group Technology
Grouping outputs with the same characteristics to families, and
assigning groups of machines and workers for the production of
each family.
Cellular Layout
D D M D
M M D D D
SG CG CG D
M M D D D SG
Electronic mail.
Interphones.
Cafetería
Plant Layout for a Warehouse
Objective: Optimal relationship between space and material handling costs.
Aspects to be considered: cubic space utilization, storing equipment and methods,
material protection, allocation of different parts, etc.
A warehouse layout is more complicated when:
The different customer orders take into account a high number of references.
There are frequent orders of low numberZones
of units for theZones
same product.
Control
station Shipping
Click to add title
In this cases, the material handling costs for each roundtrip move would be excessively high. doors
Solutions for this problem: Aggregation of units for several orders, or establishment of optimal
routes for each order.
Tractor
trailer
Tractor
trailer
Feeder Feeder
lines lines Overflow
Flexible Manufacturing
Systems (FMS)
What is an FMS?
A flexible manufacturing system (FMS) is a
manufacturing system in which there is some amount of
flexibility that allows the system to react in the case of
changes, whether predicted or unpredicted.
Two categories of flexibility
Machine flexibility, covers the system's ability to be changed to
produce new product types, and ability to change the order of
operations executed on a part.
Routing flexibility, which consists of the ability to use multiple
machines to perform the same operation on a part, as well as the
system's ability to absorb large-scale changes, such as in volume,
capacity, or capability.
Definition
A Flexible Manufacturing System (FMS) is a
production system consisting of a set of identical and/or
complementary numerically controlled machine which
are connected through an automated transportation
system.
each process in FMS is controlled by a dedicated
computer (FMS cell computer).
Equipment of FMS
Primary equipment
work centers
• Universal machining centers (prismatic FMSs)
• Turning centers (rotational FMSs)
• Grinding machines
• Nibbling machines
Process centers
• Wash machines
• Coordinate measuring machines
• Robotic work stations
• Manual workstations
Equipment of FMS
Secondary equipment
Support stations
• Pallet/fixture load/unload stations
• Tool commissioning/setting area
Support equipment
• Robots
• Pallet/fixture/stillage stores
• Pallet buffer stations
• Tools stores
• Raw material stores
• Transport system(AGVs,RGVs,robots)
• Transport units(pallets/stillages)
Types of FMS
Sequential FMS
Random FMS
Dedicated FMS
Engineered FMS
Modular FMS
Illustration example of a FMS
Application of FMS
Metal-cutting machining
Metal forming
Assembly
Joining-welding (arc , spot), glueing
Surface treatment
Inspection
Testing
FMS Layout Configurations
The types of commonly found FMS layout
configurations:
1. Progressive (In-line )layout
2. Loop layout
3. Ladder layout
4. Open field layout
5. Robot-centered cell
Nuts and Bolts of FMS
FMS Layouts
Progressive (Inline)Layout:
Best for producing a variety of parts
• Ladder Layout:
― Parts can be sent to any machine in any sequence
― Parts not limited to particular part families