plant layout & forecasting & price policy

8/4/2019 Plant Layout & Forecasting & Price Policy

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Introduction Of Plant Layout

Definition Of Plant LayoutObjectives Of Plant Layout

Importance Of Plant Layout

Types Of Plant Layout

Advantages & Drawbacks Of Plant Layout

Conclusion


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INTRODUCTION OF PALNTLAYOUT

Plant layout planning includes decisionsregarding the physical allocation of theeconomic activity centers in a facility.

An economic activity center is anyentity occupying space.

The objective of plant layout planning

is a more effective work flow at thefacility, allowing workers andequipment being more productive.


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DEFINITION OF PLANTLAYOUT

Plant layout is the overall arrangement of

the machine tools,handlingequipment,storerooms mid

stockrooms,tools cribs,die racks & othervarious accessories required forfacilitating product in a factory


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OBJECTIVES OF PLANTLAYOUT

The main objective consists of organizingequipment and working areas in the most efficientway, and at the same time satisfactory and safe forthe personnel doing the work. Sense of Unity

The feeling of being a unit pursuing the same objective.

Minimum Movement of people, material andresources.

Safety In the movement of materials and personnel work flow.

Flexibility In designing the plant layout taking into account the

changes over short and medium terms in the productionprocess and manufacturing volumes.


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OBJECTIVES OF PLANTLAYOUT

These main objectives are reached through the attainment ofthe following facts: Congestion reduction. Elimination of unnecessary occupied areas. Reduction of administrative and indirect work. Improvement on control and supervision.

Better adjustment to changing conditions. Better utilization of the workforce, equipment and services. Reduction of material handling activities and stock in

process. Reduction on parts and quality risks. Reduction on health risks and increase on workers safety.

Moral and workers satisfaction increase. Reduction on delays and manufacturing time, as well asincrease in production capacity.

All these factors will not be reached simultaneosly, so the bestsolution will be a balance among them.


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IMPORTANCE OF PLANTLAYOUT

Utilization of area.

Save handling cost.

Remove bottlenecks.

Quick execution of orders.

Better quality control.

Improved production control.

Limited investment.

Better use of labour.

Improved supervision.


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TYPES OF PLANT LAYOUT

The production process normally determines thetype of plant layout to be applied to the facility:

Fixed position plant layout

Product stays and resources move to it.

Product oriented plant layout Machinery and Materials are placed following the

product path.

Process oriented plant layout (Functional Layout).

Machinery is placed according to what they do andmaterials go to them.

Cell Layout

Hybrid Layout that tries to take advantage of

different layouts types.


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TYPES OF PLANT LAYOUT

The following are the types of plant layout/

Product/Line Layout,

Process/Functional Layout,

Combined Layout,Static/Stationery Layout,

Cellular Layout. Process oriented plant layout Detailed layout

Equipment and machinery layout within each area or department,getting a detailed layout of installations and all elements.

There could appear some issues like scales, elevators, columns,floor resistance, roof height, etc. not considered in previousstages, that could make necessary the review of the solution.


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Product oriented plant layout Advantages:

Reduced material handling activities.

Work In Process almost eliminated.

Minimum manufacturing time.

Simplification of the production planning and control systems. Tasks simplification.

Disadvantages: No flexibility in the production process.

Low flexibility in the manufacturing times.

High capital investment. Every workstation is critical to the process.- The lack of personnel

or shut down of a machine stops the whole process.

Monotonous work.


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Process Layout Process layout: It is also called functional layout. All machines performing similar type of operations are grouped at one

location in the process layout e.g. all lathes, milling machines, cutting machines etc in the engineering shop will beclustered in their like groups. Thus all forging will be done in one area and all the lathes will be placed in another area. Inthis layout, several products may share a machine to make its full use. The sequential arrangement of the machine groupis generally, but not necessarily made on the basis of labor operations. In this type of layout the process rather than theproduct has a dominating role. The product is given secondary consideration and is moved for the purpose of operations tothe process section with like machines stationed at a particular point. This type of process is more suitable to job ordertype of production. In such production the operation differs from product to product. So, it is desirable to arrange themachines on the basis of process rather than on the products.

The typical arrangement of the machines in the process layout will be as under: Product A and Product B with their differential sequence will be routed for the processing in the manner. Advantages: The process layout avails of the following advantages: 1) Like product layout it eliminates the duplication of machines an enables the optimum use of installed capacity.

2) It facilitates the flexibility in production. It is more flexible than a line layout. Different products can be made without thechanges in the arrangement of machine. The production capacity is not arranged in rigid sequence and fixed ratedcapacity with line balancing.3) Like product layout, the break down of one machine does not interrupt the entire production flow.4) Specialization in supervision becomes possible.5) Individual incentive schemes can be developed.

Disadvantages: The following are the main disadvantages of the process layout: 1) Due to lack of straight line sequence of production, it is impossible to maintain the line balancing in production. So the

problems of bottleneck and waiting and idle capacity arise.2) The cost of material handling increases due to long routing and back tracking between the processes.3) The processing time is prolonged which reduces the inventory turnover and increase the investments in inventories.

4) The inspection cost increases. Due to frequent changes in the machine set-up inspection is required at each stage ofthe process.5) The cost of supervision increase due to specialist supervisors and more number of supervisors are required at eachprocess unit.6) The production planning and control becomes difficult due to complexities arising in routing, scheduling, dispatching andfollow up.7) It is not possible to implement the group inventive schemes on the basis of quantity of the products manufacturing8) More space is required for internal storing, reservoir of materials and provision for the expansion of the particularprocess section.


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PLANT LOCATION OPERATIONS MANAGEMENT Plant location may be understood as the function of determining where the plant should be located for maximum operating

economy and effectiveness .The selection of a place for locating a plant is one of the problems, perhaps the mostimportant , which is faced by an entrepreneur while launching a new enterprise .A selection on pure economicconsiderations will ensure an easy and regular supply of raw material , labor forces ,efficient plant layout, proper utilizationof production capacity and reduced cost of production .An ideal location may not, by itself, guarantee success; but itcertainly contributes to the smooth and efficient working of an organization .A bad location ,on the other hand, is a severehandicap for any enterprise and it finally bankrupts it .It is, therefore, very essential that utmost care should be exercised inthe initial stages to select a proper place. Once a mistake is made in locating a plant, it becomes extremely difficult andcostly to correct it, specially where large plants are concerned .Cases are not wanting where mistakes were committed andwrong places selected. M/s. Samrat Thermo Plastic Industries, for example, are the manufacturers of mixers and grinders,located in Raipur district in Madhya Pradesh. Seventy-five percent of the raw materials required by them had to be bought

from Mumbai, and 75%of the finished products had to be marketed in Pune and Mumbai. To overcome this difficulty , itwas decided to shift the entire plant to Pune. Similarly, Associated Breweries & Distilleries first set up its plant for brewingbeer at Goa, though Mumbai is its main consuming centre The plant is now shifted to Vashi, near Mumbai. This enabledthe firm to save considerably on transportation costs .Since the shifting to, Mumbai , the firm has had a steady run ofsuccess. The difficulties experienced by the proprietors and the cost of shifting the plant can easily be imagined.

The need for the selection of the location may arise under any following conditions: (a) When the business is newly started;

(b) The existing business unit has outgrown its original facilities and expansion is not possible; hence a new location has tobe found;(c) The volume of business or the extent of market necessitates the establishment of branches;(d) A lease expires and the landlord does not renew the lease; and(e) Other social or economic reasons; for instance , inadequate labor supply, shifting of the market etc.

Whatever the reasons, the selection of the location has to be made after considering all the economic factors which have abearing on it.It may be impossible to find a place which abounds in all the facilities that are required to start a factory; but asearch has to be made for a place which enjoys as many facilities as possible. The guiding principle in the search shouldbe for a place where the cost of the raw material and of fabrication, plus the cost of the marketing of the finished product,will be minimum.


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Product Layout Product layout:

In this type of layout, the machines are arranged in the sequence as required by the particularproduct. All machines as required to balance the particular product the product line layout. In thislayout, one product goes through all the machines lined up, in the order required by its manufacture.The best known example of this type of layout is seen in motor car production. To make this layoutsuccessful, the work load on the various machines must be balanced. The process of getting evenloading at each stage of production is called line balancing.

In this type of layout, the product is dominating over the process, in the sense that the product isgiven the primary importance and the process machine must remain present at a point where theproduct needs its services. Thus, unlike the process layout, the process is given secondary

importance in relation to the product. Product layout suitable for continuous flow production with fewitems of production: It does not require frequent changes in machine set up. The typical arrangement of the machines in

the product with the separate independent product lines for the Product A and Product B will be asshown.

Advantages: The product layout is advantageous as under: 1) Reduced material handling cost due to straight line production flow.

2) Mechanization of material handling is possible due to handling between fixed points.3) Line balancing may eliminate bottlenecks an idle capacity.4) Shorter operating cycle due to shorter and speedier movement of materials.

5) Maximum utilization of machine and labor capacity through developing proper balance betweenthem.6) Effective control over production with reduced supervision by generalist supervisors. By reducingthe manufacturing to simple steps we can often use less skilled labor.7) Effective quality control with reduced inspection points. It does not require frequent changes inmachine set-up.8) Effective production planning and control. Unlike process layout, the routing, scheduling,dispatching and follow up are relatively easier.9) Maximum use of space due to straight production flow and reduced need of interim storing.10) It facilitates the implementation of the group inventive schemes for the workers.11) It is relatively easy to control


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ADVANTAGES OF GOODPLANT LAYOUTAdequate space for free movement of workers.

Safety to worker.

Maximum flexibility.

Effective production control.

Convenience in storing.

Adequate gangway space.

Minimum materials handling.

Minimum damage & spoilage of material


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DRAWBACKS OF A POORPLANT LAYOUT

Poor lighting ,ventilation & space formovement of workers.

Low production & under utilization of plant

capacity. Inadequate safety provisions for workers.

Absence of flexibility in the plant production

facility. Inadequate storage facilities.

Uneconomical materials handling.


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(iii)Improving the Layout.Layout needs constant attention from the management. It has tobe reviewed and revised to correct any deficiencies which mayhave crept into the plant and which were originally unnoticed bythe layout engineer. Even if the plant was perfectly laid initially,subsequent developments in materials, machines and methods

might render the layout deficient. Generally speaking, thelimitations in a layout go unchecked for two reasons: 1.The evils of a poor layout are a hidden cost not revealed even

by the best accounting method and2.Even if the limitations are revealed, the management may beunwilling to initiate remedial steps because there is a built-inadjustability to any circumstance in all human beings; and the

management is no exception What is needed is a progressive outlook and courage on the

part of the management to rectify defects.


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Reason for Revision Generally speaking, the following developments necessitate a

revision of the existing layout:1.Expansion;2.Technological advancements and3.Improvement in the layout.

The reasons for revision are elaborated in the paragraphs thatfollow:(i)Expansion: Expansion is a natural feature of any industrialestablishment. A plant may expand in any one of the followingways:(a)Increase in the output of the existing product:(b)Introduction of a new product in the same line and

(c)Diversification of the lines of activity. In order to cater to the ever-increasing demand of the product,

the plant may have to install a few more machines or addmachines of new designs and high capacity.


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A good plant layout involves not only thedesigning and installing of the layout for thefirst time, but also encompasses revision ofthe existing layout as well. The best layoutbecomes obsolete over a period of time. Whena plant has remained unchanged for a numberof years, it can be assumed that the layout isobsolete in some way. Revisions, ranging fromminor alterations to a complete dismantling ofthe existing structure and installation of newlayout, become necessary from time to time inorder to increase and maintain the operatingefficiency of the plant.


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CONCLUSION

Thus in the end we can conclude by sayingthat poor layout results in increasing costsmore accordingly & accident hazards increase,while plant output decreases ,since suchoutcomes are undesirable good plant layout

is obviously very important & should beintroduced. Sophisticated forecasting isessential for capital budgeting decisions

Quantitative forecasting uses historical data toestablish relationships and trends which canbe projected into the future

Qualitative forecasting uses experience andjudgment to establish future behaviours Forecasts can be made by either thetopdown

or bottom up routes.


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FORECASTING METHODS &PRICE/POLICY

IntroductionForecasting

Forecasting Methods

Price Policy


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FORECASTING METHOD

Qualitive Methods-

Delphi Method

Market Research

Product Life cycleanalogy

Expert Judgement


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Quantities MethodsTime Series Forecasting Method

Moving Averages

Exponential Smoothing

Mathematical Models

Box-Jenkins Methods

Average

TrendSeasonal Influence

Cyclical Movement

Random Error


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Forecasting is the establishment of

future expectations by the analysisof past data, or the formation of

opinions.

Forecasting is an essential elementof capital budgeting


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Quantitative Forecasting

YEAR HOUSEHOLDS SALES

1991 815 2109

1992 927 2530

1993 1020 2287

1994 987 3194

1995 1213 3785

1996 1149 3372

1997 1027 3698

1998 1324 3908

1999 1400 3725

2000 1295 4129

2001 1348 4532

2002 1422 4487

HISTORICAL DATA

Quantitative: Regression with related variableData set of Salesas related to both time and the number of households


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Quantitative Forecasting

Quantitative:Sales plotted related tohouseholds.

SalesUnits Related to Number of

Households

0

1000

2000

3000

4000

5000

0 500 1000 1500

Number of Households

Sales

Units

Sales


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Short Term Forecasting:Needs and Uses Scheduling existing resources

How many employees do we need and when? How much product should we make in anticipation of

demand?

Acquiring additional resources When are we going to run out of capacity? How many more people will we need? How large will our back-orders be?

Determining what resources are needed

What kind of machines will we require? Which services are growing in demand? declining? What kind of people should we be hiring?


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PRICE POLICY

Cost is fact,Price is policy & Value isconcept

Price is policy & guess work.


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Business Forecasting

Used to try to predict the futureUses two main methods:Qualitative seeking opinions on whichto base decision making

Consumer panels, focus groups, etcQuantitative using statistical data to helpinform decision making

Identifying trendsMoving averages seasonal, cyclical, random

Extrapolation simple Costs and Benefits of Forecasting:Benefits:

Aids decision makingInforms planning and resource allocation decisionsIf data is of high quality,can be accurate


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Forecasting Horizon

Long Term 5+ years into the future

R&D, plant location, product planning Principally judgement-based

Medium Term 1 season to 2 years Aggregate planning, capacity planning, sales forecasts Mixture of quantitative methods and judgement

Short Term 1 day to 1 year, less than 1 season

Demand forecasting, staffing levels, purchasing, inventorylevels

Quantitative methods

plant layout & forecasting & price policy

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