Facilities Planning

Prepared By: Prof. Shuchi Mathur

Product: Product is considered as a bundle

of benefits that it refer to the customer.

Product Selection
Product selection is not decision that could be taken by the operations department alone but it evolve the other departments like the finance, R&D, materials etc. It evolve participation & support of the top management.

Product Selection Process:

Idea Generation Idea Screening Business Analysis Product Development Test Market Commercialized

Product Design
Needs Identification Advanced Product Planning Advance Design

Product Evaluation & Improvement

Production Process Design & Development

Detailed Engineering Design

Product Use & Support

Needs Identification
It is generated by idea generation. New product development starts with an idea. Ideas come from customers, top management, staff of marketing department, production department or from the engineering section.

Advance Product Planning

It includes preliminary market analysis, creating alternative concepts for the product, clarifying operational requirements, establishing design criteria & logistics requirements for producing, distributing & maintaining the product in the market.

Advance Design
This step involves detailed investigation by basic & applied researchers into technical feasibility. It can be evaluated whether by analytical testing, experimentation, physical modeling & prototype testing.

Detailed Engineering Design

Design for function to ensure that the product will perform as intended. Design for reliability to ensure that the product will perform as consistently. Design for maintainability so that the product can be economically maintained. Design for safety to ensure that the product will perform with least physical hazards to the user & the environment. Design for producibility so that, the product can be produced at the intended cost & volume.

Production Process Design & Development

It includes material acquisitions, production, warehousing, transportation & distribution. It involves controls, information & human resources.

Production Evaluation & Improvement

After the product has been launched, it needs constant evaluation & improvement. Field performance & failure data, technical breakthroughs in materials & equipments & formal research are used to monitor, analyze & if necessary, redesign the product.

Product use & support

Educate Users Provide Warranty Distribute replacement parts Upgrade the product with design improvements.

Process Selection
Process selection refers to the strategic decision of selecting which kind of production process to have in the plant. Process selection is a major strategic decision as it involves allocation of man & material resources as well as financial commitments of a long nature & marketing plays a supportive role.

Criteria for selection of Process

Adaptive Process Environmental Effect Volume v/s Variety Forms of transformation process

 Adaptive Process: Process selection has no. of factors like capacity, lead-time, flexibility, trade-offs between material, labor & capital, trade-offs b/w volume & variety. As the factors change with due to the time, there could be a change in process selected too.

Environmental Effect: Process selection responds to environmental changes in technology. The competitive environment also effects the process selection. Non- price competition is also important in process selection.

 Volume v/s Variety: It could be considered as a

continuum. One extreme is of very high variety & hence very low volume. The other extreme is that of low variety but very high volumes. Variety requires skilled technicians, general purpose machine. High volumes required automation, mass- producing, special machines & simple PPC.

Forms of Transformation Process: Process refers

to the selection of sub processes & the sub processes of these sub-processes also. When the output consist of a product, there are assemblies & sub- assemblies & this break-up continues till the elemental level of components incapable of being broken down further. These components can either be made by us & can be purchased from outside. We have to take make or buy decision.

Process technology
Process Technology refers to the equipment, people & systems used to produce a firms product & service.

There are 4 types of process Technology:Project Technology Job Shop Batch Technology Assembly Line Technology Continuous Flow Technology

 Project Technology: It deals with

one-of-a kind products that are tailored to the unique requirements of each customer. The product cannot be standardized, the conversion process must be flexible in its equipment capabilities, human skills & procedures.

 Job Shop: It is appropriate for manufacturers of small batches of many different products each of which is custom design.
Batch Technology: It is suitable for a variety of products in varying volumes.

Assembly Line Technology: It is suitable for a narrow range of standardization products in high volumes.
Continuous Flow Technology: It is suitable for producing a continuous flow of products.

Make-or Buy Decisions

The very first step in process planning. It involves considering whether to make or buy some or all of a product or service.

When to make
Higher purchase price per unit of the item as compared to the per unit product cost if produced in-house. Assurance of timely availability because the firm does not have to depend on outside suppliers.

Availability of the required facilities and capacities in-house.

Better control of the quality on in-house operations. Savings on transportation costs of items from vendors premises to the buying firm.

When to buy
When the purchase price per unit of the item (including transportation costs) is lesser than the per unit product cost if made in-house. When the firms requirement of an item is low and does not justify investment on special purpose equipments, machines and tools for manufacturing the item in-house.

Ability of the outside supplier to supply the item at lower cost, higher quality and faster delivery times than would be possible if manufactured in-house.
When the outside suppliers hold a patent on the needed item. When opportunity cost of producing is much higher than the buying. When there is not enough capacity to make an item and increasing the capacity is not cost effective.

Q1. Machines A & B are both capable of manufacturing a product. They compare as follows:
Machine A Investment Rs. 50,000 Machine B Rs.80,000

Interest on capital Hourly charges (Wages + Power)

No. of pieces produced per hour Annual operating hours

15% per annum Rs. 10

5 2000

15% per annum Rs. 8

8 2000

1. Which machine will have the lower cost per unit of output, if run for the whole year?

2. If only 4000 pieces are to be produced in a year, which machine would have the lower cost per piece?
3. If you are informed that 12.5% of the output of machine B gets rejected at the inspection stage. If so, what would be the new solution?

Q2. Methods P & Q are both capable of manufacturing a product. They compare as follows:

Data Fixture - Cost - Life Tooling Cost

Method P Rs. 24,000 6 months Rs. 2,560

Method Q Rs. 16,000 4 months Rs. 4,800

- Life

300 pieces

500 pieces 4 mts.

Processing time per 6 mts. piece

2 no's of fixtures are required per year in method P & 3 no's required in method Q.

The annual requirement is 1500 nos. Operating cost hour of the process is Rs. 128 for both processes. Material cost is same in each case. Which method would you choose for production during a period of one year?

Thank You