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Break-even Analysis Triveni Steels (P) Ltd is planning to start a new factory for manufacturing steel utensils.

. It is considering three location options, namely Bokaro, Jamshedpur and Bhilai. The fixed costs at three locations have been estimated at Rs 8.15million, Rs 7.377million and Rs 7.903,million respectively. The variable costs at the three locations are estimated at Rs 500 per unit, 580 per unit and 490 per unit respectively. The factory will have an annual production capacity of 10,000 steel utensils and in the initial years it will operate at 75% efficiency. Find the best location option, Which has the lowest total cost of production.

Sigma Instruments (P) Ltd is considering three locations for its new factory Faridabad, Kolkata and New Delhi. The estimates of different costs for the three location options are shown in Table below. Faridabad Kolkata 20 110 35,000 4million 15,000 21 New Delhi 9 100 45,000 4.7million 25,000 23

Transportation cost (Rs per 10 unit) Cost of materials (Rs per 120 unit) Taxes(Rs per year) Cost of construction factory (Rs) Electricity(Rs per year) Labour(Rs per unit) 40,000 of 5million 22,000 26

The company has financed the construction cost of the factory by a loan from the SBI at 15% interest per annum. Find the economically best location option for the production of 5000-10000 units.

Time clocks Ltd is considering two location options for its new clock manufacturing facility, Pune & Noida. The company has its existing manufacturing facility at Chennai, which caters to the markets in the southern part of the country. The new plant will cater to the northern and central regions of the country.

The company estimates that FC and VC at pune for the facility are Rs 2 million and Rs 30 per clock, respectively. On the other hand, at noida, the FC and VC are estimated Rs 1.8million and Rs 40 per clock, respectively. The sales revenue estimates are also different for the two locations because of the consumers perception of the quality of products manufactured at pune being better. A clock can be sold for Rs 100 if manufactured at noida, and the same clock can fetch Rs 120 if manufactured at pune. The management of the company will choose that location option for its new facility at which the break-even volume is lower. Which option should company choose according to this criterion?

Location Factor Rating


The Dynaco manufacturing Company is going to build a new plant to manufacture ring bearings (Used in automobiles). The site selection team is evaluating three sites, and they have scored the important factors for each as follows. They want to use these ratings to compare the locations. (R & T, Page 295 ) Location Factor Labour pool and climate Proximity to suppliers Wage rates Community environment Proximity to customers Shipping modes Air service Scores(0 to 100) [ Location Rating] Weight Site 1 Site 2 Site 3 0.30 80 65 90 0.20 100 91 75 0.15 60 95 72 0.15 75 80 80 0.10 0.05 0.05 65 85 50 90 92 65 95 65 90

The XYZ Company is evaluating three locations for its leather goods manufacturing facility. These location options are Kanpur, Noida & Gorakhpur. Find out best location using location factor rating technique. Factor ratings (1 to 5) & location ratings (1 to 10) are as follows. Location Factor Proximity to markets Proximity to raw material Transportation facility Basic amenities Acceptance by local people Cheap land Construction cost Cheap labour Simple Median Model The XYZ Ltd has five existing facilities. The details of these facilities are given in below table. The company wants to locate a new facility such that the total transportation cost is the minimum. Advise company about the best possible location using simple median model. Also find the total transportation cost.
Facility (F) Bareilly Shahjahanpur Gonda Kanpur Sultanpur Coordinate location (x,y) (10,80) (30,60) (80,50) (50,10) (80,10) Cost (C) of moving one unit by unit distance (Rs) 10 10 10 10 10 Annual Load (L) (Units) 452 678 483 711 539

Scores(0 to 100) [ Location Rating] Weight Kanpur Noida Gorakhpu r 3 4 6 3 5 10 5 4 4 2 4 3 1 3 9 6 8 7 5 3 10 7 3 2 1 8 5 6 7 8 6 4

CENTER-OF-GRAVITY TECHNIQUE The Burger Doodle restaurant chain purchases ingredients from four different food suppliers. The company wants to construct a new central distribution center to process and package the ingredients before shipping them to their various restaurants. The suppliers transport ingredients item in 40 foot truck trailers, each with a capacity of 38,000 lbs. The locations of the four suppliers A, B , C and D and the annual number of trailer loads that will be transported to the distribution center are shown in the following figure: Using the center-of-gravity method, determine a possible location for the distribution center.

LOAD-DISTANCE TECHNIQUE Burger Doodle wants to evaluate three different sites it has identified for its new distribution center relative to the four suppliers identified in previous example. The coordinates of the three sites under consideration are as follows:

X1 = 360 X2 = 420 X3 = 250

y1 = 180 y2 = 450 y3 = 400

Ardalan Heuristic Method

SBI is planning to open its rural branches in four villages, which are located close to each other. It has the policy of having rural branches (Which are not very profitable to the bank from investment point of view) to serve its social objectives. SBI decides that it would first open only one branch in any one of these 4 places. Depending upon the performance of this branch, it may open second, third and fourth branch in the remaining places over a period of time. It wants to determine the sequence in which the branches should be opened in the four places. The distance between places, population and weights attached (According to the banks social criteria) are given in table below:

Location Bacharwa n Bacharwa n Maharajg anj Pehremau Raebareli 0 8 12 10

Distance to Maharajg anj 8 0 15 6 Pehremau 12 15 0 11 Raebareli 10 6 11 0

Populatio n

Weights

10 11 5 8

0.7 1.2 1.1 0.9