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. 3. Expansion of the available capacity when there is an increase of demand 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 operator training, 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

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 can also 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

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
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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:

(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