capacity and equipment selection
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Equipment Selection
Equipment Selection is a decision planning process whereby an organization
decides to purchase equipment for business purpose. So, “Operation managers
initiate proposals for purchasing of equipment” because
1. New equipment is required for the production of new products or
services
2. Expansion of the available capacity when there is an increase of demand
3. Obsolescence of technology is required to maintain competitiveness
4. Existing of depreciation and wear out phase of its equipment must be
replaced
Therefore, when equipments are selected, it must be suitable for organization
in term of follow choice of technology/ considerations:
Capacity : criteria of equipment selection in which capable to offers more
volume from the equipment that since the reason for purchasing equipment is
for production purpose. Therefore, Organization usually attempts to buy
equipment that offers maximum volume that machine can produce. So, the
manufacturers can achieve economies of scale. For example, if ABC company have 2 equipments under considerations. That machine A can produce goods
120 per hour and the machine B can produce goods 150 per hour. If the 2
machines have the same criteria beyond capacity. So, the best option must be
B machine.
Compatibility : Whenever possible, new equipment should be of a type
similar or to identical with the existing equipment. The resultant
simplification in the provisioning of spare parts, in maintenance, in operatortraining, in setting and preparation, and in lording, is enormous. In the
purchase of computer software, for example, compatibility with the existing
hardware, operating system and other software is vital.
Availability of associated equipment: Much of the new, highly complex
equipment now available can only be fully utilized if a wide range of associated
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equipment is employed, and the availability of this can often dictate choice.
This is particularly true of computers and computer-controlled equipment
which is of minimal value without it associated „software‟.
Reliability and after service: Equipment breakdown can be costly and canalso jeopardize service of delivery dates; hence its reliability is very important.
Reference to other users, if possible, is often very helpful here. The availability
of a good after-sales service should be investigated.
Ease of Maintenance: Maintenance cost need always to be as low as
practicable, and equipment which is difficult to service will not only have a
high maintenance cost, it will also provide an inducement to carry out
maintenance inadequately.
Ease of learning to use: The speed with which new equipment can be
utilized depends on how easy it is to learn how to use it. This applies
particularly to computers and software, where the quality of the supporting
documentation and training will greatly influence the learning period.
Ease of preparation: Ancillary time (setting up stepping down, cleaning) is
expensive and reduces the running time of equipment, so its ease of
preparation should be considered.
Safety : Plant and equipment needs to be safe and, and , though it is very rate
to find unsafe equipment on the market output today, this aspects repays
study. Accidents are costly in a lowering of output, in deterioration of morale
and in bad staff relations.
Ease of installation: This point can be easily overlooked when it may then
be found, on installation, that access doors are to low, or permissible floor
loading exceeded, the new equipment.
Delivery : The delivery situation needs to be investigated to see that th needs
the organization can be matched by the delivery promised. An investigation
into the reliability of the supplier in this espect is worth making
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State of development: Newly design equipment is sometimes marketed
before the design has been entirely finalized or stabilized. Guarantees on this
are highly desirable, although it must be recognized that no guarantee can
compensate for the loss of goodwill attendant upon broken delivery or service
promises.
Regards, Mike
PUBLISHED IN:
BUSINESS
ON MARCH 24, 2011 AT 1:15 AM LEAVE A COMMENT
TAGS: BUSINESS, EQUIPMENT SELECTION, PURCHASING
Equipment Selection
Things that are need to be considered on selecting Equipment:
1) Equipment Appraisal:
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(A) Cost ($) Elements: Standing cost & Running Cost
Standing Cost (Fixed Cost)
Purchase price Depreciation Allowance for tax Insurance Rental of space
Running Cost (Variable Cost)
Utilities charges (Electricity, Gas, Chemical) Direct Cost of operations (Operators)
Cost of supporting staff (Technicians, Engineers) Maintenance (Daily Weekly, Monthly, Yearly)
(B) Economic Evaluations
Capital Budgeting – Use the time value money concept Break-even Analysis – Uses the pay-back period method Physical Life Technological Life Product, Service, or Market life?
2) Other factors:
Capacity Compatibility Availability of associated equipment Reliability & after-sales service Ease of maintenance Ease of learning to use Ease of preparation
Safety Ease of installation Delivery Effect on existing organization State of development of the equipment