methodologies to plan and setup a manufacturing plant

Slide 1:

Methodologies to plan and setup a manufacturing plant Submitted To: Dr. Md. Ariful Islam Associate Professor Dept. of IPE, SUST. Ahmed Sayem Assistant Professor Dept. of IPE, SUST. Submitted By: Group no : 6 2007334015 2007334029 2007334038 2007334045 Course No : IPE-326 Date : 12/28/2010

Introduction:   :

Introduction: It is indispensible to study and analysis of facility location and layout to setup a new plant. Plant location may be define as deciding or selecting a suitable location or site or place where the facility will start functioning form which potential markets will be served. In its strategy formulation, a company determines what type of goods or service it will offer and in what markets it will compete.

Three different aspects to a location problem :

Three different aspects to a location problem Selection of a region Selection of a locality Selection of a site

Selection of a region: :

Selection of a region: Availability of row material Availability to market Availability of transport to market Suitability of climate Near of the source of motive power

Selection of a locality: :

Selection of a locality: Supply of labor Prevailing wage rate Banking credit and communication facility Attitude of the locale people Local tax bye Living condition for worker

Selection of a site: :

Selection of a site: Site cost/price of land Population clearance Land safety Fig: plant location

Major categories of factor have important influence on location decision: :

Major categories of factor have important influence on location decision: Market related factors Tangible cost factors Intangible cost factor

Market related factor: :

Market related factor: 1. Proximity to markets 2. Anticipation of growth markets 3. Shipping costs to market areas 4. Consumer characteristics 5. Size of market.

Tangibles cost factor :

Tangibles cost factor Transportation 1. Availability of airways facilities. 2. Availability of highways facilities. 3. Availability of railways facilities. 4. Availability of trucking services. 5. Availability of water transport.

Slide 10:

International transportation 1.Nearest to the air gate way. 2.Customs duty or tariff. Labor 1. Availability of skilled labor 2. Amount of Wage rates 3. Availability of unskilled labor. 4. Educational level of labor. 5. Cost of living (housing)

Intangible Factor :

Intangible Factor 1. Environmental factors 2.International consideration 3.community attitude 4.Quality of life 5.Zoning and legal regulation.

Models of plant location selection :

Models of plant location selection There are commonly three plant location models: Transportation model Center gravity model Delphi model

Slide 13:

Transportation model: A special form of linear programming the transportation model can be used to compare the total transportation costs associated with each of several potential sites. The underlying assumption of the model are- The items being shipped are homogeneous. There is only one route and mode of transportation between each plant and each warehouse. Per unit shipping costs do not vary with the number of item being shipped.

Slide 14:

Warehouse Plant X Y Z M Plant capacity A 9 10 11 12 600 B 5 9 14 6 500 C 10 18 5 20 450 D 4 5 6 7 200 E 2 6 10 8 200 Warehouse demand 350 400 450 350 1550 If demand of each warehouse increase 50 units then what should we do to choose a plant from plant D and E. The solution can be done by Transportation model like as-

Slide 15:

X Y Z M Plant capacity A 9 450 10 50 11 100 12 600 150 100 B 200 5 9 14 300 6 500 300 C 10 18 450 5 20 450 D 200 4 5 6 7 200 Warehouse demand 400 200 450 500 50 400 100 1750 Warehouse Plant X Y Z M Plant capacity A 9 450 10 50 11 100 12 600 150 100 B 200 5 9 14 300 6 500 300 C 10 18 450 5 20 450 E 200 2 6 10 8 200 Warehouse demand 400 200 450 500 50 400 100 1750 Suppose we choose D- Now we choose E- Total cost= 200*4+200*5+450*10+50*11+450*5+100*12+350*6 =$ 12100 Total cost= 200*5+200*2+450*10+50*11+450*5+100*12+350*6 =$ 11700 So we choose plan t E because of least cost expenditure.

Slide 16:

Center of gravity : The center of gravity method is a technique for location single facilities the existing facilities, the distance between the demand and the volumes of goods to be shipped. The center of gravity is found by calculating the x and y coordinates that result in the minimal transportation cost. c x =(∑d ix v i )/∑v i c y =(∑d iy v i )/∑v i Where, C x =X co-ordinate of the center of gravity C y =Y co-ordinate of the center of gravity d ix =X co-ordinate of the ith location d iy =Y co-ordinate of the ith location V i =Volume of good moved to or from the ith location

Slide 17:

Delphi model: Some decision criteria are base on intangible –even emotional-issues. One approach to address the more complex location decision is by using the analytical Delphi Model that incorporates tangible and intangible factors into the decision-making process. Step-1 : Form two Delphi panels : First a consultant team acts as coordinator to design questionnaires and conduct the Delphi inquires. The team then select two panels from within the organization to participate in two Delphi inquires-one to forecast the trends in social and physical environments affecting the organization and the second to identify the strategic goals and priorities of the organization. Step-2 : Identify threats and opportunities: The coordinating team through several rounds of questionnaires and feedback ask for the forecasting Delphi panel to identify major trends, opportunities, threats.

Slide 18:

Step-3 : Determine direction and strategic goals of the organization: The coordinating team conveys the findings of the forecasting Delphi inquiry to the strategic Delphi panel. Step-4 : Develop alternatives: Once the strategic Delphi panel establishes the long term goals, it should focus its attention on developing various alternatives. Step-5 : Prioritize the alternatives: The set of alternative developed in step 4 should be presented to the participants of the strategic Delphi panel to obtain their subjective values judgments.

Slide 19:

Lafarge Surma Cement Factory

Case study   Objective: To analyze facility location of a manufacturing industry Name of the industry: Lafarge Surma Cement factory Location: chhatak, shunamgonj, Sylhet, Bangladesh. Longitude: 91.6506119 E Latitude: 25.0309391 N:

Case study Objective: To analyze facility location of a manufacturing industry Name of the industry: Lafarge Surma Cement factory Location: chhatak, shunamgonj, Sylhet, Bangladesh. Longitude : 91.6506119 E Latitude: 25.0309391 N Preferred Yes/No Cause Materials-oriented Y It has a single source of raw material ships its products in many directions. The raw material is cumbersome or heavy. Market-oriented N Rapid delivery is not depended on sales condition. The finished product are not extremely heavy. Availability of raw material Y Near the resources Easy to transport suitable waste disposal Y By using recycle. TABLE 1:

TABLE 2: :

TABLE 2: Preferred Status Availability of water transport. Good Direct highways facilities. Bad Availability of storage facilities for materials and components Well Availability of marketing services Good Size of market Big Availability of railways facilities(external) No Nearest to the air gate way No Cost of living(labor) Cheap Adequacy of water supply Good Suitable climate well

Conclusion: :

Conclusion: Plant location and set up decision are a key element in any firm’s over all strategic plan. Dramatic changes in the global geopolitical environment, with rapid advance in technology, have provided decision makers with variety of options and opportunities for locating in their businesses. The criteria for selecting appropriate locations have also evolved bound the singular focus of minimizing cost and distance.

Slide 25:

Thanks to all