Whether to Add a New Production Line or Decline - SuperWheel - Case Study Example

MGT4540 Operations Management Module leader & tutor: Dr Anna Lassila Assignment 2 Report on the consideration of whether to add a new production line or decline (SuperWheel) By: FidaaAlshalan M00460018 Word Count: 2020 Academic Year: 2015 Preamble The business has identified two alternatives for producing the new product in order to guarantee production effectiveness and simultaneously preserve low manufacturingcost for the new product. The corporation ought to verify both alternatives using the Arena simulation model so as to establish the significance of the model and identify the manufacturing alternative that would be best, most resourceful and most cost efficient to the company. The two alternative production processes for manufacturing the new product ought to be assessed in terms of two barriers, namely scarce labour resources and limited machinery available in the company. The company intends to maximise on its limited resources in order to generate high returns, as well as minimising production and operation cost (Hanna, 2006). The company will try to ensure that the existing production capacity will not be hampered during the introduction of the new production line. The following are some of the production options that the company is considering choosing from in order to select the option which will minimise production and operation costsand increase returns in the form of profits to the business. Alternative A The business proposes to manufacture the new product using a manufacturing procedure which involves fewer manufacturing phases along with fewer experienced labourers. The production option entails the use of machine P to process the product and machine C cleans the product The end result of this alternative is that it will save time and capital, as well as reducing the manufacturing and operation expenditure. However, a concern of this alternative is that, in adding a new manufacturing line to the existing processes, the business should consider adding more machines or hiring more staff. Alternative B This alternative involves the extensive use of both the labour force and the machinery in terms of loading,processing and unloading the finished goods. The net consequence of this alternative is that it would make the operations manager need to consider other alternatives or approaches to adding capacity to the new production line so as to improve production capability and at same time improve manufacturing effectiveness. Problem definition At present, the business is at present facing the predicament of recognising the best production and operation techniques that would most excellently fit the business by way of the cost-effectiveness and usefulness of the new production line (Greene, 1984). The business is consequently trying to make certain that the new production line would not change the present production line, and is attempting to make the most of its production capacity in generating profit while remaining outlay efficient. Materials and equipment employed in the study The business plan involves the use of the resources outlined below in producing the new product. A. Machine X The corporation plans to employ machine X in the manufacture of the SuperWheel. This will aid in cutting the operating outlay, as well as making certain that production effectiveness and time managementare upheld. The trials were collectedusing a haphazard method because the approach was considered the best method for reducing bias, as well as minimising expenditure and time in determining the significance and substance of the alternative to be adopted by the management in processing the SuperWheel. The sample was then prepared by the management accountant and production forecaster in order to consider whether adding the new production line will be beneficial to the business in terms of reducing expenditure, effectiveness in material utilisation and outlay cutbacks. B. Labour force The business will use the labour force in some production stages, such as the loading and cleaning points, as well as during unloading. This will help in reducing machine faults in handling the loading and offloading points,while reducing operating expenditure. How the measurement was carried out The sample was then measured on a 5-point scale and scrutinisedin terms of the sufficiency of the alternative to be accepted. After demonstrating a 99% self-assurance level on the sample gathered, the sample was then subjected to the Arena simulation model and the outcomes generated were analysed for significance, sufficiency and effectiveness.This allowed a knowledgeable judgment concerning which alternative to employ based on material consumption, time taken in the manufacture procedure and the self-assurance level at which the outcome could be relied upon in coming to a conclusion. The statistical techniques used upon the data The data and information collected was then entered into the Arena simulation model for analysis. The final result generated was then analysed based on the average mean, standard deviation and correlation between options (Halevi, 2003).The Arena statistical tool is important because it ascertains the risk and variance of each model, as well as considering the ideal confidence level at which the best model should be adopted by the management.This will ensure that the ideal production line is added; the new product will be manufactured with reduced cost and improved efficiency,and ultimately result in increased profit for the company. Appropriateness of the simulation model The simulation model assumed by the business is the best for the production line to be introduced, given that it allows arithmeticallycalculation to identify the better alternative.Moreover, it provide dependable productivity based on 95% degree of self-assurance. A number of the aspects that make the model appropriate for operations management are described below. 1. The Queue The model has the ability to recognise volume of units and the time they spend in queues. The benefit is that it provides the best approach to establishing the best alternative with the least units in queues,as the major objective of the model is to guarantee well-organised production to reduce the processing time and volume of units in the queue.A large volume of units in the queue will lead to high operating and maintenance costs,as well as a reduction in profitsfor the company (Mukhopadhyay, 2007). Therefore, an ideal production process should ensure that there is small volume of units in the queue with high output in order to guarantee the efficiency of the new production line. 2. The Resources The model guarantees that a comprehensive report on material consumption is made available. This is important because material usage is significant in establishing on whether to add a new production line based on the accessible equipment, as well as a new or existing labour force.The business is consideringwhether the production alternative to be adopted will use resources and whether the alternative will lead to financial difficulty for the existing production processes. 3. Time The model considers the time it will take for the project to be completed, as well as the waiting time that the product will consume in the production process.The relevance of time is that it gives an overview of the production delay, time in and out,and the total time that a product will take in its production operation.Thus, it provides a better platform for ascertaining an ideal production option as far as time usage is concerned. Examination of the simulation end result Alternative A Resource consumption The immediate values for consumption of material for machines P and C are 1 and 0.8745, where the highest possible value is 1.This means that machine P is operating at total capacity, while machine C is underperforming. Both machines are operating constantly (Peter J, 2012). Under the scheduled utilisation, machine P is operating at total capacity, while machine C is not, as it can be illustrated that machine C is operating at 87% operation capability. Both machines must be operating under full capacity in order to take advantage of the available resource in the best way while ensuring that the highest profit is realised from in the production line. Queue The queue process for machine P depicts a standard value of 17.6279, with a highest queue value of 34. This is quite high, since, it depicts a 52% queue process. The target value must be 33.9 which is 95% usage it implies that machine P has a lot of idle time, which is not ideal for this process. No redundant time is envisagedfor Machine C because there are no productsin the queue, as depicted by the output results from the model. Time The total time on average is 374 with 1units worth 35 hours. One unit of value of work in progress is worth 17.78 hours. This is an average result, since the value of the output is higher than the value of the work in progress. The company should ensure that there is a small value of work in progress in relation to the value of the output in order to guarantee production efficiency. Alternative B Queue The queue procedure portrays a standard of 73.78 units with an upper limit of 148 units. This is problematic because it signifies under-exploitation of resource and high redundancy time in the manufacturing. In this regard, the quantity of units in the queue must be reduced to ensure the effectiveness of the production and make the most of limited inadequate resource so that the new production line will result in high profit. Resource consumption Labour resources are utilised well, while machine X exhibits 99% usage. This is an excellent sign of machine employment and its capability; therefore, both the machinery and labour force are fully active in the system. Consequently, the alternative makes correct use of resources, and as a result, there is no stoppage in resource consumption. Entity The entire number of inputs unit into the process is 148, with 74.8 units as work in progress. This mean that the number of completed units is 73.2.This is a relatively small unit in view of the fact that the volume of productivity must be much higher than the quantity of work in progress (Volkmann, 1973). This is a sign that there is a high volume of queued items in development, thereby leading to extra redundant machines and man hours. The net result is that this will lead to stoppage in manufacturing and high operating expendituresfor the new production line. Proposal Alternative A should be accepted, bearing in mind the capability of the existing and requisite labour force to ensure the successful production of the SuperWheel. The labour force can be a restrictive issue if appropriate care is not taken, because the new production procedure considers personnel at the loading point.Therefore, the business ought to consider hiring new employees. The equipment to be used in producing the new product is machine X; consequently, the operating and maintenance expenditure will be kept as low as in order to prevent avoidable expenditure, which might lead to losses for the business. The company ought to consider the effectiveness and adequacy of machine X in producing the SuperWheel. This will lead to manufacturing success because definite machine working hours will facilitate a decrease in operating and maintenance expenditures. The business must consider employing alternative A in producing the new product (Super Wheel) because this will allow it to take advantage of it limited resources to produce high returns in the form of profit (Hanna, 2006).The alternative to be adopted will result in small redundancy time; the results for the number of units waiting in the queue demonstrates the best manufacturing effectiveness with the smallest operating and maintenance expenditure. The new production line will not affect the existing production processes because the best alternative will be adopted by the business to produce Super Wheel, representing the most efficient use resources and equipment with low operating and maintenance costs. The best alternative to be employed by the business allows efficient use of both labour and machinery, because these are the vital factors to consider in producing the SuperWheel. The ultimate material consumption is of supreme significance to the business,as inefficient resource consumption would result in an increase in redundant expenditure to the business;this would cause lossesin relation to both the new product and the existing production line. In this regard, care must be taken in acting on the outcome generated by the Arena simulation model, as the representation assumes that the necessary resources required to manufacture the new product are obtainable. Reference list David Kelton, ‎S 2010, Simulation with Arena, McGraw-Hill Science/Engineering/Math, New york. Greene, J 1984, Operations Management: Productivity and Profit - Page 170, Reston publishing company, London. Halevi, G 2003, Process and Operation Planning, springer, New york. law, A 2014, Simulatiison modeling and Analysis, Cingage learning, london. Mark Hanna, RN 2006, Integrated Operations Management: A Supply Chain Perspecti, cengage learning, London. mukhopadhyay, SK 2007, production planning and control, Jonh Wiley's $ sons, New York. Murthy, PR 2005, Production And Operations Management - Page 1, New age international, London. Peter Jones, ‎R 2012, Operations Management - Page 79, New york, Cengae learning. Vollmann, TE 1973, Operations management: a systems model-building approach, Addison-Wesley Education, London. Read More