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7 shows a combin
ation
type of layout for manufacturing different sized gears.
Process design, then, should be a continuous activity not one which is precipitate
d only when
new products or services are introduced. Since it is continuous, the question of
how much money to
spend in its pursuit is of utmost importance. The amount which should be spend d
epends, of course,
upon the benefits accured. At the limit, effort should continue as long as the m
arginal benefits from
the improvement are greater than the marginal costs. Again we use the word margi
nal, since it is
only those costs that change which are relevant. Fixed costs and some semivariab
le costs, to the
extent that they All these factors are interrelated and each presents many issue
s that have to be carefully
considered, as indicated by Figure 6.1. Market research may guide product engine
ers in their work
to improve existing products or to develop new ones. The design and its characte
ristics have to
undergo an economic analysis and must be studied in the light of available produ
ction facilities and
techniques. A costing analysis is naturally dependent on the sales volume; hence
the suggested
design has to be re-evaluated by market research so that a sales forecast can be
worked out. This
expected sales volume provides the basis for a further study from the production
methods aspect,
and the economic analysis has to be rechecked and perhaps modified. Thus product
development
and design is an excellent example of interdependence of a multitude of factors
that have to be
reconciled and integrated into a final composition.Simulation: The simulation ca
pability allows planners to trial fit a master schedule onto the
MRP system before the schedule is actually accepted and released. With this feat
ure, a planner can
try a potential customer order on the system to see if materials and delivery date
s can be met
even before the order is accepted. If lead times, materials, and capacities are
sufficient, the order
can be accepted; otherwise, changes in quantities or delivery times may have to
be negotiated, or
the order may even have to be turned down.The 100 handlebars on hand at the begi
nning of period 1 are adequate to supply the gross
requirement of 80 handlebars, leaving 20 on hand at the end of period 1. With th
e (scheduled)
receipt of 300 handlebars in period 2, the on-hand inventory remains adequate un
til the end of week
8, when 80 units are on hand. However, the gross requirement for 100 units in pe
riod 9 exceeds the
on-hand inventory. This results in net requirements (using Eq. 9.1) of 100
80 =
20 units.
To satisfy this, a planned-order receipt for the standard order quantity (300) i
s scheduled for the
beginning of period 8. In so far as the handlebars have a 2 week lead-time, the
planned order for the
handlebars must be released 2 weeks earlier (week 6). The planned order receipt
will result in a
projected end-of-period on-hand inventory (using Eq. 9.2) of 80 + 300
100 = 280
to exploit the special resources of a particular geographical area. The more dec
entralized these
pairs are in terms of the management and in terms of their physical location, th
e better would
be the planning and control and the utilization of the resources.
2. Manufacturing plants supplying to a specific market area: Here, each plant
manufactures almost all of the company s products. This type of strategy is useful
where market
proximity consideration dominates the resources and technology considerations. T
his strategy
requires great deal of coordination from the corporate office. An extreme exampl
e of this
strategy is that of soft drinks bottling plants.
3. Plants divided on the basis of the process or stages in manufacturing: Each
production process or stage of manufacturing may require distinctively different
equipment
capabilities, labour skills, technologies, and managerial policies and emphasis.
Since the products
of one plant feed into the other plant, this strategy requires much centralized
coordination of the
manufacturing activities from the corporate office that are expected to understa
nd the various
technological aspects of all the plants.
4. Plants emphasizing flexibility: This requires much coordination between plant
s to meet
the changing needs and at the same time ensure efficient use of the facilities a
nd resources.
Frequent changes in the long-term strategy in order to improve be efficiently te
mporarily, are not
healthy for the organization. In any facility location problem the central quest
ion is: Is this a
location at which the company can remain competitive for a long time?
64 Operations Management
For an established organization in order to add on to the capacity, following ar
e the ways:
(a) Expansion of the facilities at the existing site: This is acceptable when it
does not
violate the basic business and managerial outlines, i.e., philosophies, purposes
, strategies and
capabilities. For example, expansion should not compromise quality, delivery, or
customer service.
(b) Relocation of the facilities (closing down the existing ones): This is a dra
stic step
which can be called as Uprooting and Transplanting . Unless there are very compelli
ng reasons,
relocation is not done. The reasons will be either bringing radical changes in t
echnology, resource
availability or other destabilization.
All these factors are applicable to service organizations, whose objectives, pri
orities and
strategies may differ from those of hardcore manufacturing organizations.
III. In Case of Global Location
Because of globalisation, multinational corporations are setting up their organi
zations in India
and Indian companies are extending their operations in other countries. In case
of global locations
there is scope for virtual proximity and virtual factory.
VIRTUAL PROXIMITY
With the advance in telecommunications technology, a firm can be in virtual prox
imity to its
customers. For a software services firm much of its logistics is through the inf
ormation/
communication pathway. Many firms use the communications highway for conducting
a large
portion of their business transactions. Logistics is certainly an important fact
or in deciding on a
location whether in the home country or abroad. Markets have to be reached. Custom
ers have
to be contacted. Hence, a market presence in the country of the customers is qui
te necessary.
VIRTUAL FACTORY
Many firms based in USA and UK in the service sector and in the manufacturing se
ctor often out
sources part of their business processes to foreign locations such as India. Thu
s, instead of one s
own operations, a firm could use its business associates operations facilities. T
he Indian BPO firm
is a foreign-based company s virtual service factory . So a location could be one s own
or one s
business associates. The location decision need not always necessarily pertain t
o own operations.
REASONS FOR A GLOBAL/FOREIGN LOCATION
A. Tangible Reasons
The tangible reasons for setting up an operations facility abroad could be as fo
llows:
Reaching the customer: One obvious reason for locating a facility abroad is that
of
capturing a share of the market expanding worldwide. The phenomenal growth of th
e GDP of
India is a big reason for the multinationals to have their operations facilities
in our country. An
important reason is that of providing service to the customer promptly and econo
mically which
is logistics-dependent. Therefore, cost and case of logistics is a reason for se
tting up manufacturing
facilities abroad. By logistics set of activities
The desired range is usually denoted as f(x1, . . . ,xi, . . . ,xn); in particul
ar,
for addition, this notation takes the form x1 + x2. Thus, we can define
addition of two intervals as follows,
[x1, x1] + [x2, x2] = [x1 + x2, x2 + x2]. (18)
This formula makes perfect intuitive sense: if one town has between 700 and
800 thousand people, and it merges with a nearby town whose population is
between 100 and 200 thousand, then:
The smallest possible value of the total population of the new big town is
when both populations are the smallest possible, 700 + 100 = 800, and
The largest possible value is when both populations are the largest possible,
that is, 800 + 200 = 1000.
The subtraction function f(x1, x2) = x1 -x2 is increasing with respect to
x1 and decreasing with respect to x2, so we have
[x1, x1] - [x2, x2] = [x1
- x2, x1 - x2]. (19)
These operations are also in full agreement with common sense. For
example, if a warehouse originally had between 6.0 and 8.0 tons, and we moved
between 1.0 and 2.0 tons to another location, then the smallest amount left is
when we start with the smallest possible value 6.0 and move the largest possible
value 2.0, resulting in 6.0 - 2.0 = 4.0. The largest amount left is when we
start with the largest possible value 8.0 and move the smallest possible value
1.0, resulting in 8.0 - 1.0 = 7.0.
For multiplication f(x1, x2) = x1 x2, the direction of monotonicity
depends on the actual values of x1 and x2: for example, when x2 > 0, the
product increases with x1; otherwise it decreases with x1. So, unless we know
the signs of the product beforehand, we cannot tell whether the maximum
is attained at x1 = x1 or at x1 = x1. However, we know that it is always
attained at one of these endpoints. So, to find the range of the product, it is
sufficient to try all 2 2 = 4 combinations of these endpoints
130 V. Kreinovich
[x1, x1] [x2, x2]
= [min(x1
x2, x1
x2, x1 x2, x1 x2), max(x1
x2, x1
x2, x1 x2, x1 x2)].
(20)
Finally, the function f(x1) = 1/x1 is decreasing wherever it is defined
(when x1 = 0), so if 0 ? [x1, x1]; then
1
[x1, x1]
= 1
x1
,
1
x1
. (21)