Technical Feasibility Study

The learning outline

The definition of technical feasibility The purposes of technical feasibility Determine facility needs. Suitability of production technology (adjusting to demand and supply, PLC) Availability and suitable of location. How to determine the location Methods in determining the location Lay out (office, plant : space, material, transportation, safety Selecting technology (the appropriateness, investment, manpower capability, etc) Economic Order Quantity Reorder point

What is technical feasibility

Technical feasibility takes into account whether the required technology is available or not and whether the required resources are available in terms of manpower and equipment.

Why is technical feasibility?

In order to see if the development and routinity implementation of a project or business can be technically conducted as well as the technological aspect to be apllied. Technical feasibility relates to the operational management of a project or business.

 There are three main issues in aspect of operational management of a project or business: 1. Physical layout of the company (for efficiency and effectiveness): poduction strategies, product selection and planning, and qualitiy planning 2. Engineering design (facilities design): design of the building, plant layout, production process, technology used, space layout, the capacity of machine 3. The operational decision: production planning, raw material planning, quality control, and cost of production control.

The purposes of technical feasibility

Anticipate Broader Problems with Questions: 1. Adequate Choice of Available Technologies for purposes, considering: a. Physical layout b. Engineering design c. Availability of raw materials? 2. Costs of Constructing & Operating a) Machinery, b ) Equipment, c) Spare Parts? 3. Manpower Req: a) From professional to labor b) locally available? c) Responses vary sector to sector Alternative Design

Alternatives in Production strategies

Chase strategy or demand matching strategy. Produce goods only enaugh goods to meet or exactly match the demand for goods. Level production. The company continuosly prodeces goods equal to the average demand. Make to order. Produce goods after receiving an order from the customers. Like in tailor shop, fine jewelry. Make to stock. Produce goods before customers place orders. Producing goods in long run production and on a consistent basis. Assemble to order. Like in a restaurant.

Selecting and planning products

Ideas recognition and selection (by observing the markets) Setting design for intial product (by considering the benefits, function of the products). Developing prototipe and testing the product. Implementation. Assessing wether the products produced and marketed have a long and good opportunity.

Quality planning
Aspects quality planning for goods: performance, features, reliability, conformance, durability, serviceability, aesthetics, fit and finish. Aspect quality planning for services: reliability, responsiveness, assurance, emphaty, tangibles.

Primary task of TF is Blueprinting:

Manpower Needs b) Resources, and Design c) Provide Design Alternatives d) A Choice of Available Technologies, & Cost estimates for each alternative.

Considerations to select location

Types of business run Near market or consumers Near raw materials The availability of manpower Facilities and infrastructure Near government Near the financial institutions Located in industrial area

Considerations to select location

The ease of expansion Local culture Tax rules

Location methods assessment

Yield value assessment Raw materials Transportation Manpower Others (price of RM, HR, fuel, electricity, etc.)

EOQ, ROP

The basic economic order quantity Model

The more important assumptions:
Demand is known constant. Lead time, that is, the time between the placement of the order and the receipt of the order, is known and constant. Receipt of inventory is instanenous. The inventory from an order arrives in one bath, at one time. Quantity discounts are not possible. The only variable costs are the cost of setting up or placing an order (setup cost) and the cost of holding or carrying cost. Stockout (shortages) can be completely avoided, if orders are placed at the right time.

Optimal Order Quantity

Setup cost = holding cost
D --- S Q = ----- H
Q = number of pieces per order Q* = optimum number of pieces per order (EOQ) D = annual number in units S = setup or ordering costt for each order H = holdingor carrying cost per unit per year

Q Q* =

2
2 DS -----H

Example
Squirt, Inc., a company that markets painless hypodermic needless for hospitals, would like to reduce its inventory cost by determining the optimal number of hypodermic needless to obtain per oder. The annual demand is 1,000 units; the setup or ordering cost is $10 per order; and the holding cost per unit per year is $.50. Using this figures, we can calculate the optimal number of units per order:

Q* =
Q* =

2 DS -----H 2 (1,000)(10) ----------------0.50

Q* =

40,000

Q* = 200 units

Expected number of oders (N)

Expected number of orders = N = D/Q*

Expected time between orders = T = Number of working days in a year / N

Example for N and T

Using the data from Squirt, Inc., above. There is a 250 day working a year, we can find N and T as follows: N = D/Q*
= 1,000/100 = 5 orders per year

Number of working days per year T = -----------------------------------------------------expected number of orders T = 250/5 = 50 days between order

Total cost

TC =
TC =

D --- S Q

Q + ----- H 2 200 ----- ($.50) 2

1,0000 ----------- ($10) + 200

TC = 5 x $10 +100 x $.50 TC = $50 + $50 = $100

Reorder point (ROP)

ROP = (demand per day)(lead time for a new order) Demand per day = d D d = ----------------------------------------number of working day in a year