Department Of Industrial Engineering,

Jalozai Campus.

OPEN-ENDED LAB

SUBMITTED BY: ABBAS KHAN

SUBMITTED TO: SIR MUHAMMAD ZUBAIR
COURSE TITLE: IE-358L INDUSTRIAL FACILITY
DESIGN (LAB)
DEPARTMENT: INDUSTRIAL
SEMESTER: 7th
REGISTRATION #: 19JZIND0120

SUBMISSION DATE: 22-01-2023

University Of Engineering and Technology,

Peshawar.
Lab # 13

“To Solve Hempakies Problem using the Industrial Facility Design Methods”
Objectives:

The objectives of this lab are;

• To learn about the Factor Rating Method.

• To learn about the Break-even Analysis.
• To learn about the Center of gravity/ Centroid Method.
• To learn about the importance of the material handling systems and selection of location.
• To compare the different alternatives and choose the best one.

Introduction:
Industrial facility design methods are a set of techniques used to optimize the layout, functionality, and
efficiency of industrial facilities. These methods can be applied to a wide range of real-life problems, such
as improving production efficiency, reducing costs, and increasing safety and environmental sustainability.

Factor Rating Method:

Factor Rating is a technique used in human resource management, operations management and other fields
to evaluate and rank options based on specific factors or criteria that are deemed important for the task or
decision in question. This method involves identifying the relevant factors, assigning a weight to each one
to indicate its importance, and then rating each option on a scale for each factor. The scores for each factor
are then multiplied by the weight assigned to that factor and the sum of the weighted scores is used to
determine the overall rating for each option.

Breakeven Analysis:
Break-Even Analysis is a financial tool used to determine the point at which a company's revenue is equal
to its costs, known as the break-even point. This analysis can help a company to determine the minimum
level of sales required to cover all of its costs and begin to generate a profit. It can also be used to identify
the level of sales at which a company would be most profitable.

Centroid Method:
The Centroid Method is a multi-criteria decision-making (MCDM) technique used to evaluate and rank
options based on multiple, often conflicting criteria. It involves identifying the relevant criteria and
assigning a weight to each one to indicate its importance. The options are then evaluated based on the
criteria and the centroid of each option is calculated. The option with the highest centroid value is
considered the best one.

Problem Statement:
The Hempakies industry wants to design a new material handling system. The different factors involved
in evaluating the alternatives are given along with the weights assigned to them. Using the factor rating
method evaluate the alternatives and recommend which material handling system should be feasible for
the facility.
Procedure:
 Open the Microsoft excel as shown below;

Figure # 13.1: Step 1

 Enter the given problem data in an excel sheet as shown in Figure # 13.2 and list the critical factors
then rate them and assign them weights according to their relative importance. The sum of all weights
must be 1 as shown below:

Figure # 13.2: Step 2

 Use the “SUMPRODUCT” command and fix the weight columns values by placing Dollar sign ($)
before weight columns values as shown below in figure # 13.3;

Figure # 133.3: Step 3

 After that we get the rating factor value for each alternative as shown below in figure # 13.4;

Figure # 13.4: Step 4

 Finally draw the “Pie Chart” by selecting the Sumproduct data of all alternatives, go to “Insert”, and
click on “Pie Chart” and we get the visual representation of the data as shown below;
 2

3.75

2.25

1.9

Tram Sideloader Chute LGV

Figure # 13.5: Step 5

Results & Discussion:

The different factors involved in evaluating the alternatives are given along with the weights assigned
to them. By using the factor rating method we evaluate the alternatives and recommend that Tram (3.75)
should be selected by the Hempakies industry for the material handling system because it has the higher
score.

Conclusion:

In this lab, we learn about the Factor Rating Method and the importance of selecting the best alternative for
the material handling system for the industry. Also we got ourselves familiarized with the factor Rating
method and solved a problem of factor rating method.

Problem Statement 2:
Hempakies Management is considering the location of a new plant. Three potential locations have been
identified as suitable candidates for building the new factory. The fixed and unit variable costs for each
of the three potential locations have been estimated and shown in the table below:

Table # 01 Breakeven Analysis

Location Fixed Cost ($) Unit Variable Cost ($)

A 500,000 400

B 550,000 300

C 1,000,000 200
Procedure:
 Open the Microsoft excel as shown below in Fig 13.6;

Figure # 13.6: Step 01

 Enter the given data in an excel sheet and let suppose the volume to be 1000 as shown in Figure # 13.7:

Figure # 13.7: Step 02

 Make a new table for comparing the units and dollars for different locations. First, find the units
using the following formula shown below in figure # 13.8 and then find the dollar using the
following formula as shown below in figure # 3.9;

Figure # 13.8: Units

 Figure # 13.9: Dollars

 After that find the revenue for each location by using the formula shown below in figure # 13.10;

Figure # 13.10: Revenue

 Finally draw the “Graph”, For the graph, we will use values starting from 0 and then extending up to
10 with an increment of 1000. Go to “Insert”, and click on “Graph” and we get the visual representation
of the data as shown below;
 Figure # 13.11: Step 5

4500000

4000000

3500000
Breakeven Analysis Altr A
3000000 Altr B

2500000 Altr C
B1
2000000
B2
1500000 B3

1000000

500000

0
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000

Figure # 13.12 Graph

  We get the following breakeven points from the graph.

Figure # 13.13 Breakeven Points

Results & Discussion:

If the demand is under 500, location A should be chosen. If demand is between 500 and 4500, location
B should be chosen for maximum profit. If demand exceeds 4500, location C should be selected. The
Management should select the location of a new plant at Location B for gaining more profit.
Table: 02 Breakeven Points

Breakeven Point Alternatives Demand

B1 7,00,000 500

B2 15,00,000 2,500

B3 19,00,000 4,500

Conclusion:

In this laboratory session, we are educated on the concept of break-even analysis and the significance of
selecting the optimal location for a new plant. Break-even analysis determines the minimum point at which
a company's revenue and expenses are equal, as illustrated in the accompanying graph (Figure 13.13). At
this point, the company neither incurs a loss nor generates a profit. The break-even point calculation
involves two key components: fixed costs and unit contribution margin. Additionally, we applied the break-
even analysis technique to a practical scenario.
Problem Statement:
The Hempakies Company operates 5 retail outlets within the city of Islamabad. The organization is
currently evaluating options for constructing a new warehouse to provide logistical support for its retail
locations. In this regard, the company is considering the Centroid method to determine the optimal
location for the new warehouse. The location coordinates of Hempakies' retail stores and the forecasted
weekly deliveries from the warehouse to each store are presented as follows:
Table # 3.0 Store data

Store Coordinates (x,y) Expected Deliveries

1 2,2 3

2 0,3 2

3 1.5,4 2

4 1,0 4

5 0.5,1 1

If there are no restrictions on the warehouse location, where should it be located to minimize the
distance traveled each week?

Procedure:
 Open the Microsoft excel as shown below in Fig 13.14;

Figure # 13.14: Step 01

 Enter the given data in an excel sheet as shown in Figure # 13.15:

Figure # 13.15: Step 2

 In the next step, sum all the expected deliveries then use the ‘IF’ statement for finding the “X”
“=IF($E$10>0,SUMPRODUCT(C4:C8,$E$4:$E$8/$E$10),0)” and “Y”
“=IF($E$10>0,SUMPRODUCT(D4:D8,$E$4:$E$8/$E$10),0)” coordinates for the new facility as
shown in below figure;

Figure # 13.16: Step 3

 Figure # 13.17: Step 4

 After that we have to construct a chart for showing results visually. Go to insert >> scatter chart, then
select data so we will get the required chart as shown below in figure # 13.18;

Figure # 13.18: Step 5

 Center of Gravity Method
4.5
4 1.5, 4
3.5
3 0, 3
2.5
Y AXIS

2 2, 2
1.125, 1.75
1.5
1 0.5, 1
0.5
0 1, 0
0 0.5 1 1.5 2 2.5
X AXIS

Store New Facility

Figure # 13.19 Scatter Graph

 Finally draw the “Bubble Graph”, For the graph, Go to insert >> scatter chart, then select data so we
will get the required chart as shown below in figure # 13.20;

Center of Gravity Method

4.5

4 1.5, 4

3.5

3 0, 3

2.5
Y Axis

2 2, 2 Store
1.125, 1.75
1.5 New Facility

1 0.5, 1

0.5

0 1, 0
-0.5 0 0.5 1 1.5 2 2.5
-0.5
X Axis

Figure # 13.20 Bubble Graph

Results & Discussion:

We concluded that if there are no restrictions on the warehouse location, the new facility should be located
at (1.125, 1.75) to minimize the distance traveled each week.

Conclusion:

The various factors involved in evaluating alternatives are presented along with the corresponding weights
assigned to them. By using the factor rating method, we evaluate the alternatives and recommend that the
Tram (3.75) should be selected by the Hempakies industry for its material handling system because it has
the highest score. In this lab, we learned about the Factor Rating Method and the importance of selecting
the best alternative for a material handling system in an industry. We also became familiar with the Factor
Rating method and applied it to solve a problem.
In Addition from Problem 2, if there isn't much demand for the product, we should choose location A. If
there is a moderate demand, location B is the best choice to make the most profit. If there is a lot of demand,
location C is the best option. The managers should choose location B for a new plant to make the most
profit. In this class, we learned about a method called break-even analysis, which helps us figure out the
best place to build a new plant. Break-even analysis shows us when a company is not making a profit or
losing money. It looks at how much money the company needs to make and how much they are earning.
We also practiced this method in a real-life scenario.
Finally from problem 3, Centroid method is a useful technique for organizing and understanding data. It
groups similar data points together by identifying the central point, or centroid, of each cluster. In this lab,
we studied the Centroid method and its importance in determining the best location for a new facility. We
also applied the method to a practical problem and determined that, given no limitations on location, the
new facility should be placed at coordinates (1.125, 1.75) to minimize the weekly distance traveled.