Chapter 2

1. Chapter 2 Sources of Information for Manufacturing Facilities Design

2. Objectives • After reading the chapter and reviewing the materials presented the students will be able to: • Identify various sources for facilities planning • Understand the role of management in facilities planning

3. The Marketing Department • The marketing department provides a research function that analyzes what the world’s consumers want and need. • The selling price has a direct influence on the number of units the company sells. The lower the price is, the more customers will choose the product. Volume also comes down to how many units the company wants to build per day. • If 250,000 units will be needed, if the plant works 250 days a year (50 weeks times 5 days per week) then 1,000 units will be needed every day. • The number of units per day is a very important number for the facility designer because it determines the number of machines and people for which he needs to provide space.

4. Determining Takt Time or Plant Rate • The rate of production is called takt time (German word) or production rate. • For example, suppose you need to produce 1,000 units in a 8 hour shift. • Suppose the plant is operating at 90% efficiency. • Thirty minutes for lunch, 10 minutes for break, and 8 minutes for team meeting every shift. • 8 hour shift X 60 minutes = 480 minutes – 30 min for lunch – 10 min for breaks – 8 min for meetings = 432 min effective time x 90% efficiency = 389 min. • Takt time or R = 389 min / 1000 units = .389 min per unit. • Units per minute = 1 unit/ ,389 = 2.57 units per minute

5. Calculating Scrap and Rework Rates • Scrap and rework result in an inefficient and wasteful use of the facilities and resources. • In determining the plant rate you must include scrap and rework rates in your calculation. • For the previous example if you had 3 percent scrap, for 1000 good parts you would need to produce: 1000 / (1-.03) = 1,031 units. • The plant rate is used to calculate the number of machines and workstations, the conveyor speed, and the number of employees required for the facilities design.

6. The Product Design Department • The product design department is the source for blueprints, bill of materials, assembly drawings, and model shop examples. • There will be drawings for each individual part of the product. • These drawings tell you the size, shape, material, tolerances, and finish. • The parts list or bill of materials list all the parts that make up a finished product. The list includes part #s, part names, the quantity of each part, and may include make or buy decisions.

7. The Intended Bill of Material • The bill of material provides a hierarchical structure of the product by identifying each assembly, subassembly, and the parts of each subassembly. • The highest level of the product, or the finished assembly, appears on the top of the list and is given the number zero (fig 2-5, page 36). • Under this are listed the major sub assemblies and each is assigned a level of one (.1). The period before the numeral 1 indents the major sub assembly from the main assembly. • Under each subassembly, the required components are listed and numbered level two (..2). The purpose of the periods before each level number is to offset or indent each level in order to enhance readability. • The parts that are purchased complete are called buyouts and can be fabricated cheaper by someone else. • Companies that purchase every part from outside are called assembly plants.

8. Management Policy Information • Management refers to upper level employees who are responsible for the financial performance of a company. • Inventory policy: The company’s inventory policy could be as simple as “provide space for one month supply of raw material, work in process, and finished goods.” JIT and Kanban philosophies reduce inventory and therefore space, facilities, and cost. • Lean Thinking and Muda as Part of Management Philosophy: Muda means waste. Mistakes that require rectification and rework is a good indication of muda. • Investment Policy: Facilities design projects might be approved with a 33% ROI. 33% is a 3 year pay back period. • Startup Schedule: All the work needed to accomplish the task will be backdated from the production start date (page 42). • Make or Buy Decisions: The cheapest way to provide the part to the assembly department is the best source. • Organizational Relationships: The number of employees determines the size of many areas such as cafeterias, restrooms, office space, and medical facilities. • Feasibility Studies: Out of many feasibility studies only a small number of projects (1 in 4) are typically approved.

9. Summary • The marketing department provides a research function that analyzes what the world’s consumers want and need. • The number of units per day is a very important number for the facility designer because it determines the number of machines and people for which he needs to provide space. • The rate of production is called takt time or production rate. • Scrap and rework result in an inefficient and wasteful use of the facilities and resources. • The plant rate is used to calculate the number of machines and workstations, the conveyor speed, and the number of employees required for the facilities design. • The product design department is the source for blueprints, bill of materials, assembly drawings, and model shop examples. • The bill of material provides a hierarchical structure of the product by identifying each assembly, subassembly, and the parts of each subassembly. • The parts that are purchased complete are called buyouts and can be fabricated cheaper by someone else. • Companies that purchase every part from outside are called assembly plants. • Management refers to upper level employees who are responsible for the financial performance of a company. • Feasibility Studies: Out of many feasibility studies only a small number of projects (1 in 4) are typically approved.

10. Home Work • Why is the number of units per day a very important number for the facility designer ? • What is a bill of material?