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Milestone 3 BUS-415

This document discusses factors that influence effective capacity, benefits of basic layout designs, applying motion study to service industries, types of inventory, using the economic order quantity model, and calculating reorder point. It provides examples to illustrate design capacity, utilization, efficiency, quality performance, dependability, process layout, product layout, fixed position layout, cellular layout, applying motion analysis to a hotel check-in process, classifying inventory as raw materials, work in progress, and finished goods in a car manufacturing facility, using the EOQ model to determine order quantity, and calculating reorder point based on demand, lead time, and safety stock for a shop.

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32 views3 pages

Milestone 3 BUS-415

This document discusses factors that influence effective capacity, benefits of basic layout designs, applying motion study to service industries, types of inventory, using the economic order quantity model, and calculating reorder point. It provides examples to illustrate design capacity, utilization, efficiency, quality performance, dependability, process layout, product layout, fixed position layout, cellular layout, applying motion analysis to a hotel check-in process, classifying inventory as raw materials, work in progress, and finished goods in a car manufacturing facility, using the EOQ model to determine order quantity, and calculating reorder point based on demand, lead time, and safety stock for a shop.

Uploaded by

mabdullah4830
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Milestone 3

1. Determinants of Effective Capacity:

Effective capacity denotes the level of production a system can reach in circumstances.
Factors influencing capacity encompass;

a. Design Capability: This signifies the output, under optimal conditions. For instance a
factory might have a design capability of manufacturing 10,000 units

b. Utilization: It gauges how much of a systems capacity is utilized. For example if a machine
operates at 80% capacity its utilization rate stands at 80%.

c. Efficiency: Efficiency pertains to how resources used to achieve output while minimizing
waste and downtime. Enhancing efficiency can involve reducing setup times in a production
line.

d. Quality Performance: Issues with quality can diminish capacity through rework or scrap
requirements. Maintaining high quality standards can lessen rework needs. Enhance capacity
utilization.

e. Dependability: Regular maintenance and ensuring equipment reliability are vital, for
sustaining capacity levels. Implementing maintenance programs can aid in reducing
downtime.

Illustration:
In a call center the factors that contribute to performance may encompass the quantity of
agents, on hand (design capacity) the portion of agents time devoted to calls (utilization)
streamlining call handling duration (efficiency) diminishing errors when addressing customer
concerns (quality rate) and guaranteeing that the technical infrastructure backing the call
center is kept in condition and dependable (maintenance and reliability).

2. Benefits of Basic Layout Designs:


The four fundamental layout designs include process layout, product layout, fixed position
layout and cellular layout. Each type of layout comes with its advantages;

a. Process Layout: This design offers flexibility in handling a variety of products or services.
For example a hospital utilizing a process layout can efficiently cater to specialties.

b. Product Layout: This arrangement enhances efficiency by organizing resources based on


the sequence of operations. An assembly line, in an automobile manufacturing facility
exemplifies a product layout where each workstation carries out a task in the assembly
process.

c. Fixed Position Layout: Ideal for large scale projects involving items where resources
stationary while the product is moved across various workstations. The construction of
buildings serves as an illustration where the site remains fixed while resources are transported
to the construction location.

d. Cellular Layout: This design combines elements from both process and product layouts
by grouping workstations into cells to enhance flow while maintaining flexibility. In a
restaurant kitchen different stations like grill, sauté and salad preparation can be structured in
a layout, for food production.

For example: In a consumer electronics manufacturing plant an assembly line follows a


product layout to streamline production processes.
The repair department may employ a process design to handle kinds of repairs effectively.

3. Motion Study in Service Industries:


Motion analysis aims to make processes more efficient by examining and refining sequences
of movements. In sectors, like hospitality motion analysis can boost efficiency by minimizing
actions standardizing protocols and optimizing the workflow.
For example lets take a hotel front desk where guests register. An examination of the check
in process could involve reviewing steps, like confirming identification assigning rooms and
handling payments. By reorganizing the desk layout offering check in alternatives and
establishing procedures the hotel can decrease check in durations enhance guest satisfaction
levels and boost overall effectiveness.

4. General Classifications of Inventory:

There are typically three types of inventory; materials, work, in progress (WIP) and finished
goods.

a. Raw Materials: These are the materials that are waiting to be processed or turned into
products. For example this could include metals at a factory or ingredients at a food processing
plant.

b. Work in Progress (WIP): This category refers to inventory that's currently in the process
of being transformed into goods. For example in a furniture workshop WIP inventory might
consist of assembled furniture pieces.
c. Finished Goods: This type of inventory is ready for sale or immediate use. In a setting
finished goods typically include products that're on display on shelves or stored in
warehouses.

For example in an automobile manufacturing facility, raw materials like steel sheets and
plastic components are. Stored initially. As these components are put together to form vehicle
bodies they transition into work, in progress inventory. Once these vehicles are fully
assembled and inspected they become goods for distribution.

5. Application of EOQ Model:

The EOQ model helps businesses determine the order quantity to reduce inventory costs by
factoring in expenses, for ordering, storing and demand levels.

For example imagine a store that sells an item with a monthly demand of 500 units. Each
order costs $100. The monthly cost to hold one unit is $2. By using the EOQ formula;

EOQ = √((2 * Demand * Ordering Cost) / Holding Cost)


= √((2 * 500 * $100) / $2)
≈ √(100,000)
≈ 316 units

Therefore its recommended for the store to place orders for 316 units at once to keep inventory
costs low.

6. Calculation of Reorder Point:


The point at which an order should be placed to refill inventory and prevent running out of
stock is determined by the reorder point. It takes into account factors such, as time, demand
and safety stock.

For example if a shop typically sells 100 units of a product, per week has a two week lead
time. Aims to maintain a safety stock of 50 units the reorder point can be calculated as follows;

Reorder Point = ( Demand * Lead Time) + Safety Stock


= (100 units/week * 2 weeks) + 50 units
= 200 units + 50 units
= 250 units

The shop should place an order when the inventory level hits 250 units to avoid running out
of stock during the time.

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