2.1 facilities planning a~breakeven analysis

8/10/2019 2.1 Facilities Planning A~Breakeven Analysis

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Chapter 2Chapter 2Chapter 2Chapter 2Chapter 2Chapter 2Chapter 2Chapter 2

Thursday, September 19, 2013 Industrial Engineering 1


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Introduction

FacilitiesPlanning

FacilitiesLocation

StructuralDesign


FacilitiesDesign

LayoutDesign

Handling SystemDesign


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Facilities Location

Location A place or position of allocatingthe facilities, buildings, equipment etc.La out - The wa that somethin isphysically arranged such as the space ofmaterial handling, storage, labor, supportactivity & services and equipment.



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Facilities Design

Structure design : building and supportservices - gas, water, light, air,La out desi n : s ace re uirements andlocation of resources in available space.Handling system design : movement ofmaterial, people, information andequipment.



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FACILITIES LOCATION:Evaluating Location Alternatives

There are numbers of technique that arehelpful in evaluating location alternatives:

Location breakeven analysis

Minimax Transportation method Assignment technique

Factor Rating, and The Center of Gravity Method



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a) Location Breakeven AnalysisBased on economic comparison oflocation alternatives is facilitated by theuse of this method.

or graphically .



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Variable Costs

The portion of the total cost

volume of output.

e.g. labor, materials, transportation, andvariable overhead



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Fixed Costs

The portion of the total cost

regardless of output levels.

e.g. land, property taxes, insurance,equipment, and building



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For cost analysis, the total costare given as:


Total Cost = FC + VC(Q)Where:

FC = Fixed Cost VC = Variable Cost per unit

Q = Quantity/volume of output


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Assumption1. Only one product is involved2. What have been produced are sold out.3. Variable cost/unit is constant regardless

.4. Fixed cost remains unchanged whenoutput quantity changed5. Sale price is fixed regardless of salequantity



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LocationBreak Break- -Even AnalysisEven Analysis

Fixed CostsFixed Costs Variable CostsVariable Costs Total CostsTotal CostsCommunityCommunity per Year per Year per Unitper Unit (Fixed + Variable)(Fixed + Variable)

TC = FC + VC(Q)TC = FC + VC(Q)

Thursday, September 19, 2013 16Industrial Engineering

,,BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30


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for 20,000 unitsfor 20,000 units



,,BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30

Total Variable Costs


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,,BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30


$62 (20,000)


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,,BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30


$62 (20,000) = $1,240,000


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,, , ,, ,BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30

Total Costs = $150,000 + $62 (20,000)


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,, , ,, ,BB $300,000$300,000 $38$38 $1,060,000$1,060,000CC $500,000$500,000 $24$24 $ 980,000$ 980,000DD $600,000$600,000 $30$30 $1,200,000$1,200,000


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Location

12001200

14001400

16001600

s a n

d s o

f d o l l a r s

)

s a n

d s o

f d o l l a r s

)Break Break- -Even AnalysisEven Analysis

Fixed Costs Total CostsCommunity per Year (Fixed + Variable)

A $150,000 $1,390,000B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000

Thursday, September 19, 2013 22Industrial EngineeringQ Q (thousands of units)(thousands of units)

00

200200

400400

600600

800800

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

A n n u a

l c o s

t ( t h o u

A n n u a

l c o s

t ( t h o u


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Location

12001200

14001400

16001600 AA

DDBBCC

(20, 1390)(20, 1390)(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

s a n

d s o

f d o l l a r s

)

s a n

d s o

f d o l l a r s



A $150,000 $1,390,000B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000

Thursday, September 19, 2013 23Industrial EngineeringQ Q (thousands of units)(thousands of units)

00

200200

400400

600600

800800

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

(20, 980)(20, 980)

A n n u a

l c o s

t ( t h o u

A n n u a

l c o s

t ( t h o u


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Location

AA

DDBBCC

(20, 1390)(20, 1390)(20, 1200)(20, 1200)

(20, 1060)(20, 1060)12001200

14001400

16001600

s a n

d s o

f d o l l a r s

)

s a n

d s o

f d o l l a r s



A $150,000 $1,390,000B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000


(20, 980)(20, 980)

A bestA best

BreakBreak- -evenevenpointpoint

Q Q (thousands of units)(thousands of units)

00

200200

400400

600600

800800

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

A n n u a

l c o s

t ( t h o u

A n n u a

l c o s

t ( t h o u


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LocationAA

DDBBCC

(20, 1390)(20, 1390)(20, 1200)(20, 1200)

(20, 1060)(20, 1060)12001200

14001400

16001600

s a n

d s o

f d o l l a r s

)

s a n

d s o

f d o l l a r s



A $150,000 $1,390,000B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000


B bestB best

BreakBreak- -even pointeven point(20, 980)(20, 980)

A bestA best

6.256.25

Break-evenpoint


00

200200

400400

600600

800800

22 44 66 88 1010 1212 1414 1616 1818 2020 222214.314.3

A n n u a

l c o s

t ( t h o u

A n n u a

l c o s

t ( t h o u


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LocationAA

DDBBCC

(20, 1390)(20, 1390)(20, 1200)(20, 1200)

(20, 1060)(20, 1060)12001200

14001400

16001600

s a n

d s o

f d o l l a r s

)

s a n

d s o

f d o l l a r s



A $150,000 $1,390,000B $300,000 $1,060,000C $500,000 $ 980,000D $600,000 $1,200,000


C bestC best

(20, 980)(20, 980)

B bestB best

Break-even point

A bestA best

6.256.25

Break-evenpoint


00

200200

400400

600600

800800

22 44 66 88 1010 1212 1414 1616 1818 2020 222214.314.3

A n n u a

l c o s

t ( t h o u

A n n u a

l c o s

t ( t h o u


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12001200

14001400

16001600 AA

DDBBCC

(20, 1390)(20, 1390)(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

s a n

d s o

f d o l l a r s

)

s a n

d s o

f d o l l a r s

)



00

200200

400400

600600

800800

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

A bestA best B bestB best C bestC best

Break-even point

6.256.25 14.314.3

(20, 980)(20, 980)

Break-evenpoint

A n n u a

l c o s

t ( t h o u

A n n u a

l c o s

t ( t h o u


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Location

12001200

14001400

16001600 AA

DDBBCC

(20, 1390)(20, 1390)(20, 1200)(20, 1200)

(20, 1060)(20, 1060)

s a n

d s o

f d o l l a r s

)

s a n

d s o

f d o l l a r s


Break-Even Quantities



00

200200

400400

600600

800800

22 44 66 88 1010 1212 1414 1616 1818 2020 2222

A bestA best B bestB best C bestC best

BreakBreak- -even pointeven point

6.256.25 14.314.3

(20, 980)(20, 980)

BreakBreak- -evenevenpointpoint

A n n u a

l c o s

t ( t h o u

A n n u a

l c o s

t ( t h o u

$150,000 + $62 Q = $300,000 + $38 Q Q = 6,250 units

$300,000 + $38 Q = $500,000 + $24 Q Q = 14,286 units

(B) (C)

2.1 facilities planning a~breakeven analysis

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