TSU English control number 2 for managers

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Description

Verification work number 2 (II semester)
for students of specialties: "Management"
Quality control
Part I
Working with text
Factory Location and Capacity
The decision to make a new product usually involves changing equipment and altering layout of an existing factory, or constructing a new production facility. When deciding where to locate a plant or factory, a company has to take into consideration a number of factors, including the efficiency of the region's infrastructure, including telecommunications, and road and rail transport; its utilities - the supply of energy and so on; the cost of land and construction; and local tax rates. Land usually becomes cheaper the further you go from the city centre, but a company must make sure that it will be able to find appropriate labour skills at a suitable price. It also needs to determine the availability and cost of raw materials, components and supplies, and the lead time to acquire them. The company must also take into account the cost of transporting raw materials and components from suppliers and subcontractors, and shipping or distributing products to wholesalers' warehouses, retailers, or other plants in the network. Transport costs and time constraints make it logical to produce close to the customer.
Manufacturing companies have to make difficult decisions concerning the size of their production capacity. Having a large capacity enables a firm to meet unexpected increases in demand. When there is strong market growth and insufficient capacity you have to move fast: insufficient capacity, leading to a long lead time and slow service, may cause customers to go to other suppliers, and allow competitors to enter the market. Furthermore, lost sales and lost market share tend to be irreversible. On the other hand, occasional demand has to be balanced against overcapacity, which might lead to under-utilizing the workforce, which is clearly expensive, or make it necessary to reduce prices to stimulate demand, or to produce additional products that are less profitable.
Yet most companies budget for a certain capacity cushion - an amount of capacity in excess of expected demand. It is also necessary to plan for occasional downtime, when production stops because of equipment failures.
Capacity can also be affected by external considerations such as government regulations concerning working hours, safety, pollution levels, and so on, trade union agreements, and the capabilities of suppliers. There are also internal considerations such as the training and motivation of the personnel, the capabilities and reliability of the equipment, the control of materials and quality, and the capabilities of the management.
Producing in large quantities allows a firm to take advantage of quantity discounts in purchasing, and lowers the average fixed cost per unit produced, as each succeeding unit absorbs part of the fixed costs, giving economies of scale. The best operating level is the level of capacity for which the average unit cost is at a minimum, after which there are diseconomies of scale. There are also disadvantages to having large-scale facilities. Finding staff becomes more difficult, and the logistics of material flow become more complicated. Moreover, the working environment, and consequently industrial relations, are frequently less good in large factories.
A plant's ideal capacity is very likely not maximum capacity - eg operating 24 hours a day, with three shifts of workers - as this may be inefficient in terms of higher labour costs (shiftwork or overtime payments), higher maintenance expenses, and so.

Additional information

Verification work number 2 (II semester)
for students of specialties: "Management"
Quality control
Part I
Working with text
Factory Location and Capacity
The decision to make a new product usually involves changing equipment and altering layout of an existing factory, or constructing a new production facility. When deciding where to locate a plant or factory, a company has to take into consideration a number of factors, including the efficiency of the region's infrastructure, including telecommunications, and road and rail transport; its utilities - the supply of energy and so on; the cost of land and construction; and local tax rates. Land usually becomes cheaper the further you go from the city centre, but a company must make sure that it will be able to find appropriate labour skills at a suitable price. It also needs to determine the availability and cost of raw materials, components and supplies, and the lead time to acquire them. The company must also take into account the cost of transporting raw materials and components from suppliers and subcontractors, and shipping or distributing products to wholesalers' warehouses, retailers, or other plants in the network. Transport costs and time constraints make it logical to produce close to the customer.
Manufacturing companies have to make difficult decisions concerning the size of their production capacity. Having a large capacity enables a firm to meet unexpected increases in demand. When there is strong market growth and insufficient capacity you have to move fast: insufficient capacity, leading to a long lead time and slow service, may cause customers to go to other suppliers, and allow competitors to enter the market. Furthermore, lost sales and lost market share tend to be irreversible. On the other hand, occasional demand has to be balanced against overcapacity, which might lead to under-utilizing the workforce, which is clearly expensive, or make it necessary to reduce prices to stimulate demand, or to produce additional products that are less profitable.
Yet most companies budget for a certain capacity cushion - an amount of capacity in excess of expected demand. It is also necessary to plan for occasional downtime, when production stops because of equipment failures.
Capacity can also be affected by external considerations such as government regulations concerning working hours, safety, pollution levels, and so on, trade union agreements, and the capabilities of suppliers. There are also internal considerations such as the training and motivation of the personnel, the capabilities and reliability of the equipment, the control of materials and quality, and the capabilities of the management.
Producing in large quantities allows a firm to take advantage of quantity discounts in purchasing, and lowers the average fixed cost per unit produced, as each succeeding unit absorbs part of the fixed costs, giving economies of scale. The best operating level is the level of capacity for which the average unit cost is at a minimum, after which there are diseconomies of scale. There are also disadvantages to having large-scale facilities. Finding staff becomes more difficult, and the logistics of material flow become more complicated. Moreover, the working environment, and consequently industrial relations, are frequently less good in large factories.
A plant's ideal capacity is very likely not maximum capacity - eg operating 24 hours a day, with three shifts of workers - as this may be inefficient in terms of higher labour costs (shiftwork or overtime payments), higher maintenance expenses, and so.

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