Scrutinise the process sequences and calculate annual cost, Operation Management

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Scrutinise the Process Sequences and Calculate Annual Cost

A company produces a range of product, but the dominant demand is for three of them, A, B and C. The table shows the annual demand, transport cost per unit per metre, and process sequence through departments 1 - 6, for each of them. 

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The layout has to fit into a building of 30m × 40m floor plan, and the area requirements of the departments are: 

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How would you lay out the departments?

Hint: scrutinise the process sequences and calculate the annual cost per metre separation between department's e.g. only products A and C move between departments 1 and 2, and the annual cost per metre is (1000   £0.20)   (500   £0.40)   £400 per metre per annum.


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