Operations Managements - Research Paper Example

Process Designing Techniques using Alternative Approaches Contents Section Page Numbers Section Introduction3-4 Section 2: Case Study Investigation: 4-12 2.1 Overview of case (organisation) 2.2 Make or Buy Decision 2.3 Facility Layout (Alternative Approaches) 2.3.1. Process Layout 2.3.2. Product or line Layout 2.3.3. Project or fixed position layout Section 3: Conclusion 12-13 3.1. Comparison of theory & Practice References: 14 Section 1 Process Design Introduction: Before starting process designing we should know the definition of process designing. As it name is self explanatory “Process design means designing of a process”. Process design involves various steps which are very critical for the designing. The most important step in process designing is process planning. Process planning is the process of establishing the shortest and most economical path that each part is to follow from the point it is received as raw material until it leaves as a finished part or a finished product. Process planning indicates operation to be performed and their sequence. It specifies the machine tools for each indicated operations. It shows the necessary tooling (jigs & fixtures, cutting tools, cams and templates, measuring instruments and gauges) for each indicated operation. It provides manufacturing data such as speed and feeds. It indicates estimated or stop watch based setup and processing times and incorporates sometimes the specification of the skill for each operation. During process planning we should have detailed information about the benefits of new process implementation. We should know how much the benefits we will get with the new process. For example while designing a new product we should know the future demand of the product, how much product we can produce in a day, and what is the cost associated with new products. These all information’s are incorporated onto a sheet known as process sheet or route sheet. The information contained in the process sheet can be used in following operations: Scheduling, Material movement, cost reduction & cost control, costing, method of working, requirement of manpower & machines & shop efficiency. Production is also depended on the demand of the material. If the demand of the product is less then there is no need for production in large batches. If the demand of the product is high then there is no need for production in small batches. So when the demand of the product is high we should plan the production of material in large batches or in continuous batches, to minimize the cost of production & also to minimize the delay delivering the material to the customer. Section 2 Case Study Investigation of Process Designing for UMA tools Inc. UMA tools Inc. is a job order production unit. It functions both as a secondary as well as a primary manufacturer. Some of the items contracted from its customers, it offloads in turn to its vendors for rough machining. The present list of sub-contract items includes components called exhause manifold. The raw casting of this component are purchased by the company and given for machining quarterly to three established suppliers (it costs $30.0 to raise a purchase order and process the delivery). Each raw casting weighs 0.450kgs and costs $4.50 including the cost of transportation (the additional cost of transportation from company to vendor’s plant and back in borne by the vendor). The finished part, however weighs 0.300 kgs. 5% machining rejection allowance is allowed to the sub-contractors and the cost of the reject above this percentage is to be borne by them. The cost of the rejection due to foundry faults is borne by the company. The company pays $ 4.00 per piece to the subcontractor towards cost of the machining which includes the cost of transportation. The company’s machines are capable of doing this type of work and extra capacity can be generated by starting an additional shift. To do so additional labour force shall have to be employed. The average labour rate/hour at the home is $3.40 per hour. The process sheet of this component is as follows: Table: Process Sheet Operation No. Operation Details Machine Time (mins.) Jigs & Fixtures Std. Time Setup Time 10 Snag Bottom side Horizontal disc Grinding machine 0.45 15.00 20 Drill 2 Stud holes 3/8” and chamfer Bench Drill 0.90 15.00 2 (3/8” Ф) drill jig 30 Drill 7/8” Ф x 0.812” deep hole for 1” BSP tap Column Drill 1.20 15.00 Drilling & Tapping Jig 40 Machine Tap 1” Ф BSP x 5/8” deep Column Drill 0.60 15.00 Drilling & Tapping Jig 50 Deburr, clean, hand tap (if required), wire brush. Bench 1.20 ‘----- Drilling & Tapping Jig The components, if decided to be manufactured at the home, plant shall be machined once in month and there shall be 12 proposed tools setup in a year. The standard time given in the above process sheet though includes relevant rest allowances, yet the operator may not maintain the desire output. The average efficiency on the other components currently being produced at the home plant is around 75%. New jigs & fixtures shall have to be made if the components are to be machined at the company’s own plant. The jigs & fixtures once made will be able to maintain the accuracy for around 20,000 pieces, after which again net set shall be required. The cost of 2(3/8” Ф) holes drilling jigs and 1(1”Ф) drilling and tapping jig has been estimated at $1600.00 and $ 1800.00 respectively. Though extra capacity can be generated by starting an additional shift and hence fixed overheads are nil, yet variable overheads (the cost of power, light, cutting oil etc.) may be sizeable. Information on the variable overheads is as follows: Table: Variable Overheads Operation No. Machine H.P. Additional Height Cutting Oil KWH cost ($) 10 5.0 Nil No cutting oil required as material cast iron 0.80 20 0.5 30 2.0 40 2.0 50 One apparent saving if the machining is done at the company’s own plant is by way of sale of the scrap, the prevailing rate of scrap being $ 0.20 per kg. Company needs 40,000 components per year and would continue to do so for at least next 3- 4 Years. From the above data we need to find whether the company do the machining at its own plant or continue the present practice. Also we need to define “Make-or-Buy” investigation. Make – or – Buy Cost Analysis Part name : Exhause Manifold Part No. : -------------------- Materials : Cast Iron Qty. Required/ Year: 40,000 Cost Element Relevant cost for annual requirement Make Indicator Buy indicator 1. Raw Material Cost Annual requirement of Finished Part (Nos.) : 40,000 Add machine rejection allowance @ 5% : 2,000 So annual requirement of raw casting : 42,000 Raw Material Cost if Sub contracted Cost of each new casting : $ 4.50 Annual requirement of raw casting : 42,000 Raw material Cost = 42,000 x 4.50 = $ 189,000 Raw material cost if machining is done at the company’s own plant Annual cost of raw casting : $ 189,000 * Less value of scrap : $ 1,380 Net material Cost (189,000-1380) : $ 1,87,620 $ 1,87,620 $ 1,89,000 2.0 Labour Cost 2.1 Direct Labour Cost for 42,000 Pieces Op. No. Machine Used Standard time (Min). Time /100 Pcs(hrs) Labour hour rate ($) Direct Labour cost per 100 pcs. ($) Time /Pcs Time /100 Pcs 10 Horizontal Disc Grinding 0.48 48 0.80 3.50 2.80 20 Bench Drill 0.90 90 1.50 3.50 5.25 30 Column Drill 1.20 120 2.00 3.50 7.00 40 Column Drill 0.60 60 1.00 3.50 3.50 50 Bench 1.20 120 2.00 3.50 7.00 Total 25.55 Direct labour cost per 100 pcs @100% = $ 25.55 Direct labour cost per 100 pcs @75%= $ 34.07 Direct labour cost to manufacture 42,000 pieces= $ 14309.00 $ 14,309.0 2.2 Fixed Labour Cost Op. No. Machine Used Setup time Labour hour rate ($) Fixed Labour rate ($) minutes hours 10 Horizontal Disc Grinding 15 0.25 3.50 0.8750 20 Bench Drill 15 0.25 3.50 0.8750 30 Column Drill 15 0.25 3.50 0.8750 40 Column Drill 15 0.25 3.50 0.8750 50 Bench ---- ---- ---- ----- Total 3.500 Fixed Labour cost per production Run= 3.50 Number of production run per year = 12 Fixed labour cost per year = 3.50 x 12 = 42 $ 42.0 3.0 Tooling Cost 1) Cost of jigs & fixture a) Cost of 2(3/8” Ф) holes drilling jigs= $1600 b) Cost of 1(1” Ф) drilling & tapping jigs= $1800 Total= $ 3400 2) Jigs & Fixture life = 20,000 Pieces 3) Tooling Cost/ Piece = 0.17 4) Tooling cost for annual requirement of 40,000 pieces = 40,000 x 0.17 = $ 6800.00 $ 6800.00 4.0 Overheads 4.1 Fixed Overheads Not Required 4.2 Variable Overheads 4.2.1 Power Op. No. H.P. K.W. Time/100 pcs. (hrs.) Kwh/100 Pcs. 10 5.0 3.730 0.80 2.98 20 0.5 0.373 1.50 0.56 30 2.0 1.492 2.0 2.98 40 2.0 1.492 1.0 1.49 50 --- --- ---- ----- Total 8.01 Kwh Consumption per 100 pcs = 8.01 Cost / KWH = 0.80 Cost of power/ 100 Pcs = 6.41 Cost of power for annual = 2692 (requirement (40,000 +expected rejection of 2,000 Pcs) $ 2,692 5.0 Purchase Cost 5.1 Purchase Price 1) Unit Price = 4.00 (including Transportation cost) 2) Purchase cost for annual requirement= 40,000 x 4.00 = 1,60,000. $ 1,60,000 5.2 Procurement Cost 1) Procurement cost = $30.0 2) Frequency of ordering per year = 4 3) Number of suppliers = 3 4) Procurement cost per year = $ 30 x 4 x 3 = $ 360.00 $ 360 Grand Total $ 2,11, 463 $3,49,360 By analyzing the above data Uma tools Inc. decided to manufacture the exhause manifold in its own plant. Facility Layout: Plant layout is the placing of right equipment coupled with right method in the right place to permit the processing of a product in the most effective manner through the shortest possible distance and through possible time. A good layout results in comforts, convenience, appearance, safety, efficiency, and profits while a poor layout causes congestion, disruption in material flow, unnecessary material handling, more scrape & rework, higher throughput time, wasted movements, frustration and inefficient. For making a good layout the following criteria should be taken into consideration: 1) Overall integration of all factors 2) Minimum Movement 3) Unidirectional Flow 4) Effective use of available space 5) Maximum visibility 6) Maximum accessibility 7) Minimum handling 8) Inherent safety 9) Safe & improved improvement 10) Maximum Flexibility 11) Maximum Security The following types of process layouts are taken into consideration: Process or functional layout: Process layout is also known as “layout by function” and it is generally associated with the batch production. The factory is divided into process units or departments, and within these process units all similar facilities are grouped together. The advantage of process layout involves lower capital investment, higher utilization of available equipment & greater flexibility in regards to allocation of work to equipment and workers. Product or line layout: Product layout is also called “Layout by sequence”. The layout of the plant, shape, and size of its building, location of services and storage yards, position of material handling equipment is such that material flows unidirectional and at the steady rate. Product layout is suitable when the products are standard and required to be produced in large quantities. Project or fixed position layout: Project type of industry such as manufacturer of airplane, ships, locomotives, large turbines, heavy machines, pressure vessels and others which involve heavy materials and sub-assemblies have this type of layout. Heavy metals, components or sub assemblies, under this layout remain fixed at one place. Men, machines and tools are brought to the location to complete the job. Minor components and sub-assemblies are also brought to the cite for assembly. This type of layout is suitable when one or few pieces of an identical product are to be manufactured. There are three alternative approaches for Uma Tools Inc. to select its plant layout the manufacturing of exhause manifold. As Uma tools Inc. needs to manufacture 40,000 thousand units in a year, it opts for batch production to save cost of the production, to manage production effectively and also to complete the production as per requirement. The process layout is suitable for batch production, so Uma tools Inc. will go for process layout. The process layout also involves lower capital investment. The process layout can be easily designed. Section 3 Conclusion: From the above analysis of “Make-or Buy” decision & Facility layout, we come to know that alternative approaches may also lead to improvement in the performance of the organization. Alternative approaches helps in selecting the best approaches among them for the growth of the organization. Comparison of theory & Practice: If we consider theoretically there is no difference between theory & practical, but if we consider practically there is a great difference between theory & practice. The difference between theory & practice is caused by practical considerations. In general, theory is used for describing the practical matters. There are different meaning of theory for different person, for some people it is related with knowledge, for some people it is related with science, & for some people it is related experiments. Practices are done by human beings only. Human being can perform different activities by utilizing the knowledge or theory. The field of practice is the total nexus of interconnected human practices. The practice approach can thus be demarcated as all analyses that (1) develop an account of practices, either the field of practices of some sub domain thereof (e.g. science), or (2) treat the field of practice as the place to study the nature and transformation of their subject matter." Schatzki (2001). So it is clear that practices are depended upon the theory. And all practice involves human being. Reference: 1) http://www.project-as-practice.org/index.php/What_is_practice 2) http://en.wikipedia.org/wiki/Theory 3) http://en.wikipedia.org/wiki/Process_management 4) http://en.wikipedia.org/wiki/Design Read More