Optimizing Product Assembly Running head: AIC Netbooks

Optimizing Product Assembly BALASUBRAMANIAN S

RAMAIAH INSTITUTE OF MANAGEMENT STUDIES

Optimizing Product Assembly

Abstract
Advanced Integrated Circuitry, Inc. is a Taichung; Taiwan based company established in the year 1992. They are solid manufactures of producing Circuit boards and Graphics cards for Personal Computers. The company functions based on Original Design Manufacturer (ODM). The firm takes active interest in innovation and designing new generation components. By doing in-house design and development, the company has been able to foster exclusive, long-term relationships with its customers. In order to expand its business, the company decides to enter a new market of consumer electronics by mainly focusing on mobile technology. By seeing the increasing demand for Netbook in future market, it decides to produce with the latest technology. For this purpose the production manager created an assembly line that can produce Netbook that meets the quality of the product. By seeing a sudden increase in demand of the product, raises a situation to produce more units of Netbook that can reduce the cost and that can improve its time taken for producing the single Netbooks.

Optimizing Product Assembly

Optimizing Product Assembly

Objective

 To able to produce more units meeting the demand.  Analyze the existing assembly line and to improve its efficiency or to invest a new line.  To increase gross margin.  The cost of the product should not be increased.  To lower the labour cost.

Problem in the case:y y y The company should meet the expected demand for the month. There is increase in labour cost in Shenzhen area. The company cant force to run 10 or 12 hours shift.

Analysis :The following explanation should help in understanding whether or not to improve the existing assembly line or to invest a new line, in order to generate more production units.

Optimizing Product Assembly

IMPROVING THE EXISTING ASSEMBLY LINE

Merits: By improving the existing line will help in cost control  Can produce more units in lesser time.  Can meet the required demand.

Drawbacks
Problem in quality may arise. Proper coordination will not be there with operators. More pressure on labour leads to inefficiency.

INVESTING A NEW ASSEMBLY LINE Merits

 New assembly line can be helpful in generating more outputs.  Increased gross profit margin.  Quality of Product will be stable.  Can meet the demand, when it arises.  Workers can work with the allotted time given and reduces their pressure.

Drawbacks
Cost of production will be increased.

Optimizing Product Assembly By installing new assembly line can leads to more labour cost.

Interpretation
Based on the quantitative part it can be explained in the following manner:

Four Production Lines

       Working hours per day = 8 hours 8 hours per day = 28800 seconds (8 * 3600) Average Actual Time Taken = 44.30 seconds Laptop per shift = 28800 / 44.30 = 650 units Production per month = 650 * 2 * 4 * 6 * 4 = 124,800 units Labour cost per production line = 650 * 4.8 = $ 3120 Profit = 650*2*4*6*4*19.20 = $2,396,160

Five Production Lines

      Working hours per day = 8 hours 8 hours per day = 28800 seconds (8 * 3600) Average Actual Time Taken = 44.30 seconds Laptop per shift = 28800 / 44.30 = 650 units Production per month = 650 * 2 * 5 * 6 * 4 = 156,000 units Profit = 650*2*5*6*4*19.20 = $2,995,200

Optimizing Product Assembly

Based on the above quantitative measures we can say that

 The fifth production line is able to produce more units that can meet the demand.  Compare to the four production lines the five production lines could able to generate more gross profit margin.  The working hours and the labour cost per production line cost of labour remains the same.  By installing a new production line the company can afford to keep floaters in their production process who are very much essential.  The Quality check and their other process are not been affected while installing a new production line.

RECOMMENDATION
On my analysis the company should go for another production line which can be helpful for the company for generating more outputs and increased profits. By this now the company can meet the sudden increase in demand.

Optimizing Product Assembly

Conclusion
 The company with its new production line now could able to achieve the targeted production unit for a month.  Though installing a new production line leads to increase in cost but at the same time it is very helpful in generating more revenue as well.  If it is seen futuristic point of view this new production line certainly leads the company towards the success.  Now the production manager can able to produce more units without any harm in its quality and efficiency which is the important value focused by the company.  Similarly by this process the company now managed the time in meeting the targeted production units, because in order to speed up the work to generate more units can lead to loss of quality of the product.  Therefore installing a new production line irrespective of its increasing cost will be an ideal solution.