Eee-Viii-Industrial Management - Electrical Estimation and e (06ee81) - Notes

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS
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VIII SEMESTER INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

: : : : 25 03
Subject Code No. of Lecture Hrs./ Week Total No. of Lecture Hrs.
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IA Marks Exam
52
UNIT - 1
PERSONAL MANAGEMENT: Recruitment and selection, training of personal employer and employee relationship, causes and settlement of disputes. 5 Hours
UNIT - 2
PRODUCTION MANAGEMENT: Plant location, plant lay-out, CPM and PERT strategies, line balancing, automation, statistical quality control, control chart, motion study. 7 Hours
UNIT 3
Economics of power factor improvement, Definition of power factor, Factors affecting power factor, Disadvantages of low power factor, Causes of low power factor, Advantages of high power factor, Avoidances of low power factor, Methods of improving power factor, Relative merits and demerits of static and synchronous condensers, Economics of power factor improvement, Advantages of
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PART - A Page 1
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Hours Exam : 100 Marks
INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS static condensers, Advantages and disadvantages of synchronous condenser,
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examples. UNIT - 4
TARIFFS: Aim and objectives of Tariffs, factors governing the Tariffs, components of Tariffs, Choice of electrical power supply, Worked examples. 6 Hours
UNIT 5 of selection, Worked examples. UNIT 6
Choice of plants and economic selection, Factors to be considered in selecting equipment, Methods 6 Hours
INTERIOR WIRING SYSTEM: Wiring system, earthing, and estimation of wiring installation.
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UNIT - 7
circuits, and the estimate for motor installation, pump set, workshop, theater etc., UNIT - 8
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POWER INSTALLATION: Load calculation, wire size selection, wiring materials for power 8 Hours
Depreciation and valuation of machinery, Inventory, Economic order quantity, break-even analysis. 6 Hours
TEXT BOOKS:
1. Introduction to Management-S. S. Chatterjee,
REFERENCE BOOK: Industrial Organization and Engineering Economics-T. R. Banga & S. C. Sharma.
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2. Engineering Economics and Management - N. Narasimhaswamy, 3. Electrical Estimation and Electrical Wiring Systems-Raghavendra Rao.
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PART - B
6 Hours
Page 2
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INDEX
Sl.no Contents Page no
x
UNIT-1 x x
PERSONAL MANAGEMENT: Recruitment and selection training of personal employer employee relationship causes settlement of disputes 5-18
x
UNIT - 2 x x x
PRODUCTION MANAGEMENT: Plant location plant lay-out, CPM and PERT strategies
line balancing, automation, statistical quality control
x
x
Economics of power factor improvement Definition of power factor, Factors affecting power factor, Disadvantages of low power factor Causes of low power factor, Advantages of high power factor, Avoidances of low power factor Methods of improving power factor, Relative merits and demerits of static and synchronous condensers, Economics of power factor improvement Advantages of static condensers, Advantages and disadvantages of synchronous condenser, worked examples. 51-59
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UNIT - 4
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x
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TARIFFS: Aim and objectives of Tariffs factors governing the Tariffs, components of Tariffs 60-74
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control chart, motion study
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19-50
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS x Choice of electrical power supply, Worked examples Choice of plants and economic selection Factors to be considered in selecting equipment Methods of selection, Worked examples. INTERIOR WIRING SYSTEM: Wiring system earthing, and estimation of wiring installation
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UNIT 5
x
x x
75-86
x
UNIT - 7 x
POWER INSTALLATION: Load calculation
wire size selection, wiring materials for power circuits estimate for motor installation
x x UNIT - 8 x x
pump set, workshop, theater etc.,
Depreciation and valuation of machinery Inventory, Economic order quantity Break-even analysis. 102-123
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UNIT 6
87-101
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UNIT - 1
PERSONAL MANAGEMENT
Recruitment and selection, Training of personal employer and employee relationship Causes and settlement of disputes.
The aims of training a supervisor are: x To develop leadership qualities in him.
x To develop in him the necessary skill so that, the same may be imparted to the workers x To develop the skills to improve upon the existing method of work. x To make him qualify for promotions.
x To impart knowledge about management principles to effectively interact with the workers. x To provide him adequate knowledge about labour problems and legislations.
x To develop in him the ability to plan, coordinate, control and build up an efficient team. x To train him about safety rules and practices to be followed in his section.
Methods of training supervisors (lower level management training) The various methods of training supervisors are: Induction and orientation Lecture method Conferences
Written instructional method and
Induction and orientation: This training is given to new employees appointed as supervisor. x To familiarize him with the organization he has joined, its history its structure and the products that are being manufactured. x To give information about the authorities and responsibilities assigned to him.
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Training within the industry (TWI)
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS x To familiarize the proper use of tools and equipments and
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x To explain the personal policies like disciplinary rules, conditions of employment etc.
Lecture method: Lectures are arranged by experts within or outside the company about the important topics such as techniques and responsibilities of shop management, company policies, production planning methods, methods of training workers, job evaluation methods of teaching using audio- visual aids such as OHP, slides, technical films, LCD projection etc. so that the learning process becomes easier. techniques, merit rating, safety policies, time and motion study etc. The experts use modern
Conferences: During a conference, a homogeneous group of people join together to discuss about particular subject matter of their choice, such as how to control absenteeism, how to As arrived at. Participation in the conferences, changes their attitudes, analytical and questioning abilities are developed and finally helps in solving a particular problem. reduce scrap etc. A conference helps in exchanging ideas and experience of different people.
Written instruction method: In this method, written instructions are given to the super visors on standard practices to be followed for immediate or future use as to how various jobs have to be performed, which forms a permanent record.
Training within the industry (TWI): This method of training is used to impart civilian supervisory skills and is arranged on the basis of group conference attended by supervisors on a part time basis. The super visors meet informally in a session and discuss about the
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basic principles of their own jobs and learn from each other experience. The TWI method imparts training to the supervisors which gives them the ability to give clear instructions to the workers to develop leadership qualities, the ability to analyze and handle labour problems, to improve the skills of applying new improved methods of doing the job and how to prevent accidents create safety conditions and awareness among the workers about the hazards of accidents.
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Training of executives (managerial training) The training of executives is an attempt to improve their managerial skills through a planned and deliberate process, which develops certain attitudes, skills and knowledge for the efficient running and to increase the effectiveness of the organization. The efficiency of the organization directly depends on how well the managers are trained to plan and execute the plans effectively. The basic aims of training the executives are: i. ii. iii. iv. v.
The self development of the executives so that, they acquire the personnel drive, initiative, inner motivation and abilities to run the organization effectively. For improving the aptitude of the executives.
For educating them to develop a broader outlook about the people working with them, to To provide an effective organizational climate and that, they become eligible for higher positions.
To effectively use the human resources and to exploit their talents and potentials fully so
Methods of training executives
The methods of training the executives may be broadly divided into two types:
ii)
Off-the-job training executives
i) On-the-job training method: The various methods of on the job training of the
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enlargement and job enrichment (e) management by objectives. manager. The trainee, while working as an assistant learns the ways of working from his superior under whom he is appointed. This method is used for the training of new and young managers for general management positions.
a. Understudies: In this method, the trainee is appointed as an assistant to some senior
Membership of the committee: In this method of training, the trainee is appointed as a member of a committee consisting of the executives of various departments. The trainee Page 7
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i)
On-the-job training and
are (a) understudies (b) membership of the committee (c) job rotation (d) job
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improve their capacity of judgment and decision making abilities.
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develops the required skills for solving problems in a group discussion with executives, who have lot of experience in solving such problems. c. Job rotation: In this method, the trainee is shifted from one job to another periodically, this exposes the employee to different type of experiences and broadens his knowledge and skills about different types of jobs he may be required to plan and execute. d. Job enlargement and job enrichment: Job enlargement is a horizontal expansion of the job. New tasks will be added to the already existing job without increasing the level at the responsibility of the executives. responsibility. Job enrichment is the vertical expansion of the job. This increases the level of e. Management by objectives (MBO): MBO is a process of setting up of the objectives jointly with the trainee and his superior. This type of goal setting facilitates the learning through interaction between the learner and his superior. II. Off-the-job training: The various methods of off-the-job training are (a) lecture method (b) a. Lecture method: as explained in previous section
Case study method: In this method of training, a real life or hypothetical problem is given analysis by discussion and participation. This method is best suited for a small group of twenty or less trainees. The trainees mainly learn from their mutual discussion and the trainer plays a passive role. The trainer assists the group through the use of questions, directs the guides the line of thinking about the problem. He helps in sharpening their analytical ability to trainee analyze the problem objectively discuss about alternate solutions, and ultimately come out with the best solution. This method of training helps the trainees to develop analytical
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thinking, to get problem solving ability, to broaden their outlook and to look at the problem from different angles and to develop decision making skills, verbal communication skills and inter-personal relation skills.
b. Business games: In this method, the trainees are formed into several groups. The trainees in each group may be from different departments of the same organization or from different organizations. Each group discusses about subject like production planning, research and development, cost control, inventory control, sales forecasting etc. The management provides Page 8
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enlarge their capacity to take a broader look at the problem in arriving at a solution. The
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to a small of trainees for analyzing the problem and to find out the solution through problem
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case study method (c) business games (d) role playing and (e) conferences.
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with the relevant data pertaining to the subject of discussion and the trainer provides them with a simulated data regarding results arising out of decisions made by them, which in turn leads to fresh decisions at the end of the business game. This method of training it develops the decision making abilities, team work and develops interaction between different groups. The trainees develop the talents to deal with deal with the real life situations. They learn from the experience of others abilities to anticipate problems in advance and to solve them. c. Role playing; this type of training helps the trainees to develop leadership qualities and the role they are required to play in the situation. Two or more trainees are assigned certain roles to be played. The trainees are required to play their role spontaneously before the other participants, who watch, analyze, and criticize the behavior of the role players. This type of training is called as fish bowl exercise because, the participants are in the center of the area and the others are observing their performance. The typical examples of role playing are: manager conduction an interview, a salesman promoting sales, an engineer explaining a new method of working etc. The advantage of this method of training are: (i) it generates enthusiasm and interaction among participants (ii) the skills and brings about attitudinal change. trainees get a chance to observe the performances of others (iii) it develops human relations human relations. The trainers are given either oral or written descriptions of a situation and
d. Conference: explained in previous section
The concept of industrial relations means the relationship between the employees and the management in the day-to-day working of the industry. The major parties in the industrial relations are: the employees, employee representatives, employers, associations of employers, the government, courts and tribunals. The best way of increasing the productivity of an industry is by maintaining good relations between the employers and the employees. Industrial relations exist in various stages such as (i) between government and industry (ii) between the management and the managers (iii) between the managers and workers. The government exerts its influence on industrial relations through its labour policy, implementing labour laws, the process of conciliation and adjudication by playing the role of mediator. It tries to regulate the activities and behavior of both employees organizations and employers
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Employer and employee relationship
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organizations. The relationship between the employers i.e. managers and the employees i.e the workers are vital for the successful running of an industry. Employer is a crucial factor in industrial relations. He employs the worker, pays the wages and various allowances, and regulates the working relations through various rules and regulations and by enforcing labour laws. He expects the workers to follow the rules, regulations and the laws. He further expects them to work hard and put in their best efforts to maximize production. For this, maintaining good working relations with the employees in very important.
In the early days, the relationship between the employer and the employee was governed by the assumption that the employers were like kings and were free to offer any terms of employment and treat their employees in any way they wanted. There were few laws and protections available for the employees that would practices and demanded that employees growth in employment, wages, benefits, working conditions, status of the workers and various facilities are provided to them. are also protected by various labour laws of the government. There has been a phenomenal
Objectives of good industrial relations
The main objectives of good industrial relations are: i) ii) iii) iv) v) vi) To maintain congenial relations between employees and the employer. To promote and develop congenial labour management relations. To minimize industrial conflicts and to regulate production. To provide an opportunity to the workers to have a say in the management and decision management. management.
vii) viii)
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To solve the problems of the workers through mutual negotiations and consultation with the To encourage the develop trade unions in order to improve the workers strength.
To maintain democratic approach in solving the problems of the workers.
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To enhance the economic status of the worker by improving wages and other benefits.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Code of industrial relations
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The management and the trade unions formulate a code of industrial relations in a number of industries. The codes of industrial relations are: i) ii) iii) iv) v) vi) vii) viii) ix) x) xi) xii) The management should have a positive attitude towards trade unions and employees. The trade unions and employees must have a positive attitude towards the managements. The attitude of the employees towards the trade unions must be positive. Management should not influence the employees regarding joining or withdrawing from trade unions. The management should not encourage the workers to form rival unions. possible. strategies.
All the collective bargaining agreements should be implemented in good faith as early as The employees and the trade unions should co-operate in implementing the company All the employees must attend the training programs when they are asked to do so. All employees must accept the transfer orders made by the management. Employees and trade unions must be allowed to participate in decision making and The employees should go on strike only as a last resort and must do so by giving at least one weeks prior notice. The management should use the lock-out technique only as a last resort and must give a
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Permanent industrial peace is required for the growth of the industry, which can be ensured through the following measures.
There must be an effective machinery to prevent strikes and their settlement. management
The government must be vested with the authority to settle disputes between and trade unions.
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notice to the trade unions at least one week in advance.
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implementation at different levels of the company.
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There must be provision to form bipartite and tripartite committees to draft personal policies, code of conduct, code of discipline etc. for the employees. There must be provision to form various committees to implement and evaluate the collective bargaining agreements, court orders and judgments, awards of voluntary arbitration etc.
Industrial disputes Disputes are common in industries. They manifest in the form of strikes, bundhs and lockouts. The consequences of disputes are loss of production, loss of profit, loss of market and even the closure of the plant.
According to the Industrial Disputes Act 1947, industrial dispute means, any dispute or difference between employers and employees, or between employers and workmen, or employment or terms of employment or with the conditions of labour of any person. In practice, a dispute mainly relates to the difference between employers and employees. Causes of disputes between workmen and workmen, which is connected with the employment or non-
The causes of industrial disputes are many and varied. The major causes are: i) ii) iii) iv) v) i) Wage demands Union rivalry
Unfair labour practices and Multiplicity of labour laws.
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Wage demands: One of the most important causes for industrial disputes is the demand by the employees for more wages. High inflation which increases the cost of living results in the never ending demand by the trade unions for the increase in the salaries, bonus, incentives and other allowances of the employees.
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Political interference
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Normally, the trade unions and the management with have a wage agreement valid for three years. Each new agreement is the outcome of a prolonged battle between the management and trade unions, often resulting in strikes and lockouts. Any agreement reached in one company will inspire trade unions in other companies nearby to go on strike for demanding more wages. ii) Union rivalry: In most of the organizations, there are multiple unions, which lead to interunion rivalries. During the settlement of disputes, if the union agrees for the settlement, another union will oppose it. This results in never ending disputes in the industry. Multiplicity of unions results in peculiar problems to the managers. One such problem is the authenticity of memberships. Unions declare the number of members in their unions and when ultimately the added up members will be more than the actual number of employees. Another problem will be the selection of a bargainer in the process of settlement Union rivalry often may lead to large scale violence also. iii)
Political interference: Major trade unions are affiliated to political parties to derive strength from their political clout. When the unions get politicized, the ideological issues divide and affiliation inter union rivalry erupts and settlements become difficult. Another problem is, even when the settlement is favorable to all the workers, certain unions refuse to sign the agreement because of their political ideologies, thus keeping the dispute alive. The various trade unions supported by major political parties in our country are: CITU affiliated to the Every political party somehow manages to engineer strikes, gheraos and bundhs to demonstrate their political clout. Invariably, the political party which is in power favours the fragment unions on party lines. When unions multiply because of different political
iv)
a)
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disputes.
union which is affiliated to it. Politicization of trade unions results in endless industrial
Unfair labour practices: Most of the disputes in the industries is because of the attitude of the management towards the employees. The following are the unfair, labour practices adopted by managements. The management generally do not want to talk to the employees or trade unions about the disputes, even when they are willing to talk, which enrages the workers.
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Communist Party of India, INTUC affiliated to the congress party of India.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS b)
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The management does not want to recognize a particular trade union and creates rivalry by supporting other union which is likely to fall in line with the policies of the management.
c)
During negotiations for the settlement of a dispute, the representatives of the employers always take the side of the management; create tensions which ultimately lead to strikes and lockouts.
d)
The managements unwillingness to promote workers with merit but always help yes masters to higher positions.
e)
The management always trying to restrain workers from forming trade unions with threats of dismissal or lockouts, if trade unions are formed.
f)
The managements attitude to victimize the workers even for minor mistakes in their work
g)
Transferring workers from one place to the other, even when it is not required.
conduct bond as a precondition to allow him to resume work. i) Indulging in acts of force and violence against workers and failure to honour the settlement or agreement.
v)
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Multiplicity of labour laws: In almost all the countries in the world, labour laws have been enacted to create conditions for the protection of the labour from unfair employment practices by the managements and to provide a legal framework to ensure the safety and security of the workers. Labour legislation is regarded as the most dynamic institution.
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When the workers are on strike, the management insisting on each worker to sign a good
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or misconduct and awarding disproportionate punishment.
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In our country, there are about 180 acts, both central and state, earning our country the dubious distinction of being one of the few highly labour legislated countries in the world. The result of so many acts is endless confusion, industrial disharmony, loss of production and exploitation of labour by the management and the management by the labour. Judiciary also has not played a positive role in solving the problems of the labour. By giving conflicting decisions, the judiciary has aggravated indiscipline among workers. The judiciary has gone to the extent of saying that even an illegal strike is justified. The result is that, the indiscipline in the industry has spread like wild fire and very badly affected productivity and national growth. Settlement of disputes: The important methods of resolving disputes are: i) ii) iii) iv) Collective bargaining Conciliation Adjudication and Voluntary arbitration
i)
Collective bargaining: Collective bargaining is a process of discussion and negotiation between two parties to resolve a dispute on mutual consent. It is a collective bargaining between employers and a group of employees, who agree upon the conditions of work. management may cooperate and work together over a certain period. In collective bargaining, the employer does not deal with the workers directly but deals with unions of
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workers.
The collective bargaining process involves six major steps: (a) preparation of negotiations
(b) identifying bargaining issues (c) negotiation (d) reaching the agreement and ratification
and (d) administration of the agreement. a) Preparations for negotiations: Careful advance preparations are required from both sides because of the complexity of the issues and wide range of topics to be discussed during
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Collective bargaining formulates the terms and conditions under which labour and
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negotiations. Each side should present its case in an orderly way with facts and figures for discussion during negotiation. b) Identifying bargaining issues: Normally, the major issues discussed in collective bargaining fall under the following categories:
i. Wage related issues which include basic wage rates, wage differentials, overtime rates, allowances etc.
ii. Supplementary economic benefits which include issues such as pension plains, paid vacations, health issues etc.
iii. Institutional issues such as rights and duties of the employees, trade unions and quality of life programs.
iv. Administrative issues such as seniority, discipline, health and safety of the employees etc.
c) Negotiation: During negotiation each side will present its initial demands. The negotiation negotiations depend on the knowledge and skill of the negotiators. A good negotiator must know the technique of listening skills and the ability to communicate clearly. d) Reaching the agreement and ratification: After the initial agreement, the two sides return to their respective groups to find out whether the agreement is acceptable to them. The negotiating team explains the points of agreement and places the agreement before the members for a vote. If voted, this agreement is formalized into a contract. The contract has to be clear and precise and there should not be any ambiguity in the interpretation of the points in the agreement. The contract is signed by both parties after ratification by the members of both the groups.
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goes on for days till the final agreement is reached. Negotiation is an art. Successful
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e) Administration of the agreement: Signing the agreement is not the end of collective bargaining, rather the beginning of the process. The agreement must be implemented in the letter and spirit o the provisions of the agreement. Violation of any provision leads to disputes again. The management is primarily responsible for implementing the agreement. H.R.D manager plays a crucial role in the day-to-day administration of the contract. He or she works with the management and the employees to establish a good working relationship between them to implement the provisions of the agreement in letter and ii) Conciliation: Conciliation is a process by which representatives of both the management and workers are brought together before a third party with the purpose of persuading them to arrive at an agreement by mutual discussion between them. As per the Industrial Disputes Act, 1947 the government is authorized to appoint conciliators to mediate and promote the settlement of industrial disputes. A conciliator appointed by the government decision rests with the parties themselves. The conciliator can only offer a solution acceptable to both the parties. The parties may accept his recommending or reject it all iii) Adjudication: If conciliation fails, the dispute may be settled by a compulsory adjudication which the parties have no other choice than to accept it. Adjudication means a mandatory settlement of industrial disputes by labour courts, industrial tribunals or national tribunals under a industrial disputes act. Once a dispute is referred for parties. The system of adjudication is the most significant method of resolving disputes but is often criticized for the delay in dissolving the conflicts. together. tries to bring about an agreement between the two disputed parties, but ultimately the final spirit.
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iv)
Voluntary arbitration: Voluntary arbitration is one of the most recognized and democratic ways of settling industrial disputes. It is the best method of resolving industrial disputes when conciliation method fails. In this method, a neutral third party studies the dispute, listens to both the parties, gathers the information and then makes the recommendations that are binding on both the parties. In this type of settlement, the agreement must be in writing and a reference to voluntary arbitration must be made before the dispute is referred to labour court or a tribunal. The arbitrators shall investigate the
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adjudication, the award of settlement by a labour court or tribunal is binding on both the
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dispute and submit the award of arbitration to the government with the signature of the arbitrators.
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UNIT 2
PRODUCTION MANAGEMENT
Plant location, plant lay-out CPM and PERT strategies line balancing, automation Statistical quality control, control chart, motion study.
Introduction: Among all the functional areas of management, production is very crucial in any industrial organization. Production is the process by which, raw materials and other inputs are converted into useful finished products. Manufacturing is another word synonymous with the production.
Manufacturing normally refers to a process of producing only tangible goods, where as
Production management refers to the application of management principles to the production function in a factory. It involves the application of planning, organizing, directing and controlling of the production process. The standard of living of the people in any nation depends on the quality of the goods produced. Production creates national wealth. High productivity is the backbone of a nations economic progress. The production management covers such activities as the location of the plant, acquisition of the land, plant layout, materials and converting them into salable products. Plant location construction of building, procuring and installing of machinery, purchasing and storing of
i) ii) iii) iv)
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The selection of a place for the location of a plant is one of the important problems faced by an entrepreneur while launching a new enterprise. The important considerations in the location of a plant are: Easy and regular supply of raw materials Availability of skilled labour force Sufficient space for efficient plant layout Proper utilization of production capacity
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production includes the creation of tangible goods as well as intangible services.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS v) vi) Reduced cost of production and Feasibility of marketing the products
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Even though the location of the plant itself can not guarantee the success of the plant, however an ideal location helps in the smooth and efficient working of the plant. A bad location of plant forms a severe handicap and ultimately may lead to bankruptcy. Therefore, utmost care must be taken in selecting a proper location of the plant. If the mistake is done in locating the plant, it becomes extremely difficult and costly to relocate it.
Need for plant location:
The need for the location of a plant becomes necessary under the following conditions:i) ii) iii) iv) v) When the business has to be started newly in the present location. places.
When the volume of business increases, it may be necessary to start new branches at different When the lease of the land expires and the land lord does not agree to renew the lease. Other social or economic reasons such as inadequate labour supply, shifting of the market, etc. The selection of the location of the plant must be made after considering all the economic requirements to start an industry. The guiding principle in selecting a plant ultimately must be made for a place where the cost of the raw material, its fabrication, cost of production and marketing is minimum, so that the product is highly competitive with similar products produced by other companies.
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Webers theory of plant location: According to Albert Webers theory of plant location, the locational factors are broadly divided into two categories: (i) primary factors (ii) secondary factors. Materials and labour constitute the primary factors which influence the dispersal of industries over different regions. Industrial units are materials-oriented, depending on the availability of Page 20
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factors. However, it may not be possible to find a particular location which satisfies all the
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When the existing business has outgrown its existing facilities and expansion is not possible
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raw materials and the cost of transportation. They become market oriented, depending on the cost of transportation of the final products. They become labour-oriented, depending on the availability of skilled and cheap labour. Bank credit, insurance, communication, cost of land and rent constitute the secondary factors of location. Some of these factors, which attracts the location of industries in a place are called agglomerating factors and some of these which contribute to the moving away of the industries are called as deglomerating factor. Though, Weber told his theory in1909, it is relevant even today. Errors in location:
Some of the common errors in the selection of a site for plant location are: 1.
Absence of proper investigation and consideration of various factors involved.
2.
Personal likes and dislikes of owners or executives in taking into consideration the impartially established facts.
3.
The reluctance of the executives to move from traditional home ground to better new location.
4.
Trying to move to the already congested or over industrialized areas.
5.
Trying to acquire an existing structure which is not located in a proper area and which is not
6.
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designed for efficient production.
Choice of backward area to which key administrative and technical personnel are not willing to move and trying to seek employment elsewhere.
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of the plant, has to be constitute. The committee must tour places, select two or three locations and ultimately select the best one for the location of the plant. Steps in plant location The entrepreneur has to follow a systematic procedure, step by step in selecting a suitable site for plant location. The various steps to be followed are: x Deciding on domestic or international location x Selection of the locality and x Selection of the exact site x
Deciding on demand or international location: Due to liberalization, the business is internationalized. The first step in the location of the plant is to decide whether, the plant has to be located domestically or internationally. If the management decides on foreign location, are vying with each other to attract foreign investments. The choice of a particular country mainly depends on the political stability, export and import regulations, currency and exchange rates, cultural and economic conditions, availability of natural resources, etc.
Selection of a region: The selection of a particular region in a country is the second step to be followed in the location of a plant. The following factors influence the selection of a . region
i)
Availability of raw material: The plant must be located in place where the supply of raw
ii)
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materials is plenty and available at reasonable cost. Nearness to raw materials has the advantages of reduced cost of transportation, regular and proper supply of raw materials and savings in the cost of storage of materials.
Nearness to the market: The goods produced by the plant have to be sold in the market and hence it is better that the market is also nearby. Nearness to the market has the advantages of transporting the finished goods at low cost, adjusting the production programme according to Page 22
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the next logical step would be to decide upon a particular country. In recent times, countries
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x Selection of the region
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the requirements of the consumers, ability to render prompt service to the consumers, providing after-sales services, executing replacement orders without delay.
iii)
Availability of power: Power is an absolute requirement for production in any industry. Coal, electricity, oil and natural gas are the sources of power. Industries requiring coal such as iron and steel industries have to be located near coal fields. Therefore, most of the modern industries rely on electricity as the source of power. Hence such industries have to be set up where electrical power is available in plenty at lower cost.
iv)
Transport facilities: Transport facilities are required for bringing raw materials and workers to the factory and for carrying the finished products from factory to the market. A place which is well connected by rail, road and sea is ideal for plant location.
v)
Suitability of climate: There are certain industries which require particular climatic conditions because of the type of production and they have to be located in regions of such though, artificially, any climatic conditions can be created, it is very costly. It is always advisable for an entrepreneur to locate his industry where suitable natural climatic conditions exist. The adverse climatic conditions affect labour efficiency also.
vi)
Incentive and policies of the government: To expand the industrial base and to provide employment to the people, many states offer incentives such as land at cheap rate, investment subsides and tax exemptions to new industries, which is very lucrative to start medium-sized plants. The policies of the government such as licensing policy, freight rate policy etc. also influence the location of plants in the region.
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Selection of locality: Selection of a particular locality is the third step in plant location. The various factors that influence the selection of a locality for plant location are:
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climate. For Ex: cotton textiles and jute industries requires humid climatic conditions. Even
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS i)
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Availability of labour: Labour is an important factor in the production of goods. Availability of enough workers at reasonable wages is very essential for the successful working of an industry. Unskilled labour can be found in any locality. It is the availability of skilled labour which influences the location of the plant. However, the attitude of workers, union activities and industrial disputes may drive away the existing factories and discourage new entrepreneurs from locating their plants in such localities.
ii)
Civic amenities for workers: The workers must be provided with not only good working conditions inside the factory, but also other facilities such as clubs, theatres, parks and good schools for their children must be available for the employees, outside the industry.
iii)
Availability of water and fire fighting facilities: Some industries require plenty of water for Water may be obtained from the local authority from the canal, from a river or lake or by sinking bore wells. Industrial units are exposed to fire hazards. Hence, adequate fire fighting facilities must be available.
iv)
Finance and research facilities: In the developed countries, the wealth is uniformly distributed but in developing countries, capital is not available uniformly throughout the attract new industries. country. Hence in such countries, places where facilities for raising capital are available,
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During the course of working, a factory may encounter a number of problems. There must be facilities to examine and find solutions for such problems. If the problems. If the factory has to be dynamic, it should always adopt new technologies and hence research facilities also must be available in the locality. Selection of the size: The selection of an exact site in a chosen locality is influenced by the following considerations.
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their working. Hence, such industries must be located where water is available in plenty.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS x
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Soil, size and topography: The quality of the soil does not influence the selection of size for plant location, if the factory is producing engineering goods. However, fertile soil in the size is necessary for agro based industries. The size of the site is also important because it should not only accommodate the existing manufacturing facilities, but there should also be scope for future expansion.
Proper considerations must also be given to the topography of the site. A hilly, rocky and rough terrain is unsuitable for plant location because, lot of money has to be spent to level the site. Plant Layout
A plant layout is the arrangement of machinery equipments and other industrial facilities proper layout of the plant. In the plant layout, importance is given to the placement of machinery at different places, the location of stores, inspection cabins, tool rooms, and and other equipments. However, there is no set pattern of layout for all plants. It differs from plant to plant, from location to location and from industry to industry. The best layout is the one in which the flow of the raw material is quick and the amount of handling is less in processing the product, from the receipt of raw materials to the formation of the finished maintenance wings, plating shops, heat treatment chambers, toilets, canteens, trolleys, cranes
Objectives of a good layout
1.
2.
3.
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A good layout of a plant must serve the following objectives. It should provide enough capacity for production.
It should reduce material handling costs.
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product.
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when a new plant is erected. The efficiency of the production flow mainly depends on the
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS 4. There should not be any hazards to the workers.
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5.
The workers should be used efficiently and their morale has to be increased.
6.
Utilize available space efficiently and effectively.
7.
Provide space for proper supervision.
8.
Conductive atmosphere for safety and health of the workers.
9.
provision for the improvement of productivity and
10.
Allowance for easy maintenance.
Factors influencing plant layout
The types of layouts are different for different types of plants. The selection of a particular layout depends on several factors. They are:
i)
Materials: In the layout there must be provision for the storage and proper movement of the
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raw materials in the plant until they are converted into finished products. There must be proper storage rooms for materials and materials handling equipments such as cranes, trolleys, pipe lines etc. The type of storage mainly depends on the type of material stored i.e. solid or liquid, light or heavy, small or large. Flow charts have to be drawn to visualize the path of materials
flow during various stages of production and care must be taken to see that there are no crossover, long distances and back tracking. The best path is thus determined and accordingly the layout is planned.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS ii)
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Product: A plant layout must express its product. Any layout of a plant is drawn with the ultimate purpose of producing a product. The type of product, whether it is solid or liquid, light or heavy, big or small dictates the layout of the plant. The requirements of a layout meant for a heavy product is different from the requirements of a layout for a light product. The demand for the sales of the product also influences the type of layout. The sales demand for a product also influences the type of layout. The sales demand for a product determines the volume of production and therefore the quality and size of the equipment, the area of the storage space and other facilities, which in turn determines the type of layout.
iii)
Workers: The type of workers, their positions and their requirements must be taken into consideration in designing the layout of a plant. If women workers are employed, their requirements must be kept in mind, whether the workers remain stationary or moving also influence the layout. Employees facilities such as health and related services, locker rooms, public facilities also influence the layout.
the volume of its production, the type of process and the managements policies, which in turn influences the plant layout. Production is the combination and manipulation of men, materials and machines. These elements may be combined in various ratios and in various ways during the course of production activity. Therefore it is necessary to draw the layout taking into
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v)
Type of industry: The type of industry and the method manufacturing significantly influence the plant layout. All types of industries may be classified basically into two types (a) intermittent industries and (b) continuous industries. Intermittent industries manufacture different components on different machines and assemble them to get the end products. Continuous industries produce one or two products of standardized nature. Hence, the layout of the plant designer must take the method of manufacture process into consideration during the process of planning a layout.
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consideration the stationary or fixed positions of these elements.
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Machinery: The size and type of machinery used in the plant depends on the type of product,
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS vi)
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Location: The site selected for the location of the plant influences its layout in several ways. The size and the terrain of the site determine the type of building and mode of transportation which influences the layout. The mode of transportation may be rail roads or by trucks by which the raw materials and finished products are transported. The plant layout must also take into consideration the fuel requirements and its transportation. The type of layout plan also depends on whether the plant is located in a village or in urban area. If it is in a village, the expansion may be affected by adding one more wing to the existing single-storeys to the storeys to the existing buildings. Thus the plant layout must also take into consideration any demand for future expansion. construction. If the plant is in urban area, the expansion may be affected by adding more
vii)
Managerial policies: Any plant layout is basically decided by the policies of the top management and the layout engineer must have a clear understanding of these policies and accordingly design the plant layout. The various management policies which influence the plant layout are a. The volume of production and provision for expansion.
b. The extent of automation
d. Purchasing policies.
e. Personnel policies.
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Principles of layout: While designing a particular layout of a plant, the engineer should be guided by certain principles. They are:
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c. Desire for prompt and rapid delivery of goods to consumers.
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The principle of minimum travel: The movement of men and material must be minimum between various operations of production to avoid waste of man-hours and to minimize the cost of materials handling.
Principle of sequence: The operations on various machines should be arranged in a sequential material.
Principle of usage: The entire space of the site must be effectively utilized, especially when the plant is located in urban areas where the land is costly.
x Principles of compactness: There should be a harmonious fusion of all the relevant factors so that the final layout looks well integrated and compact.
x Principles of safety and satisfaction: The plant layout should contain all built in provision for the safety of the workers and provide comfort and convenience to them so that they feel satisfied.
x Principle of flexibility: The plant layout should have provision for any changes with minimum effort and cost.
x Principle of minimum investment: The layout should be such that the capital investment must be minimum by an intensive use of available facilities but not sacrificing the necessary requirements.
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order so that there is continuity in the process of producing the final product from the raw
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Importance of plant layout:
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An ideally laid plant layout reduces manufacturing costs and helps in smooth and efficient running of the plant. Some of the advantages of a good plant layout are: x The materials handling cost is reduced by avoiding long distance movements, thereby reducing the manufacturing costs.
effectively used.
x Results in prompt execution of orders and eliminates delays, which helps in the satisfaction of consumers.
x Provides for inspection at different stages og manufacture and ensure quality control of the product produced.
x Investment on equipment is minimized by proper balance in machine procurement and location.
x The bottlenecks due to slow production,. Inadequate use of space, machines capacities, accidents and wastage of floor area are avoided.
x Helps in the production of right type of product at the right time and at reasonable cost.
x Provides for better supervision of the workers by providing a full view of the entire department for the supervisor.
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x The entire site area is effectively used for the location of equipments so that, the labour force is
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS x Helps in the effective utilization of labour by paying ways on hourly basis.
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x Improves employees morale by providing better working conditions, better facilities and increased earnings to the workers.
Types of layouts: Plant layouts may be classified as i) Process layout or functional layout
ii)
Product layout or line layout
iii)
Static layout or fixed position layout and
iv)
Mixed layout or hybrid layout
Process layout or functional layout: The process layout involves the grouping together of like machines in one department. For example, drilling machines are installed in drilling departments, section etc. There will be different departments for doing different jobs. The fig. 2.1 shows the process layout in which the machines in each department attend to any product that is taken to them. The flow of the raw material from stores to the finished product is shown by dotted lines in which the raw material is moved from department to department for different operations in sequence. This type of layout is best suited for intermittent type of production. all lathes are grouped together in turning section, milling machines are grouped in milling
x Greater flexibility in the production.

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The advantages of process layout are: Reduced investment on machines as most of them are general purpose machines.
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x Greater scope for expansion as the capacities of different departments can be easily increased. x Results in better utilization of men and machines. x Easier to handle the breakdown of any equipment by transferring the work to another machine. x Efficient supervision is possible through specialization.
The disadvantages are:
x Requires more floor space x There is difficulty in production control machines.
x Production time is more as the work-in- progress has to travel from place to place in search of x There is accumulation of work-in-progress at different places.
i)
Product layout or line layout: Product layout involves the arrangement of machines in one finished products from machine to machine. The output of one becoming the input to the next machine. For Ex: Sugarcane is fed at one end and sugar comes out at the other end in a sugar factory. In paper mills, bamboos are fed to the machine at one end and paper comes out at the other end. The advantages of product layout are:
x Handling of materials is automatic and hence there is reduction in material handling etc. x Less floor area is required for production. x Little skill is required for supervision as the process is automatic. x The mistakes in production can be detected early. The disadvantages are: x There is no scope for flexibility of operations. A change in product design may need major alterations in the layout.
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x There is saving in manufacturing time.
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line, depending on the sequence of operations. Raw materials are fed into the first machine and
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x There is difficulty in the movement of the materials.
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x The break-down of one machine leads to the complete stoppage of that line of production. x Comparatively, high investment is required as standby machines are required during breakdowns. x Expansion is difficult. x The pace of production is determined by the slowest machine and hence machines have excess idle time. ii) Static layout or fixed position layout: Static layout involves the movement of men and fixed position and tools, machinery and men are moved to this position. This type of layout is followed in the manufacture of bulky and heavy products such as locomotives, ships, boilers, aircrafts, generators etc.
The advantages of this type of layout are:
x The high cost and difficulty of transporting a bulky product is avoided. x The investment on layout is small. product. x The workers identify themselves with the work and takes pride in the completion of the x A number of different projects can be taken up in the same layout.
The disadvantages are:
x Highly skilled workers are required. x Machines and tools take more time to reach the place. x Under utilization of labour and equipments.
iii)
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Mixed layout or hybrid layout: Mixed layout is the combination of both process layout and product layout, which is suitable for most of the industrial establishments. This type of layout is suitable when the manufactured goods are somewhat similar and are not complex. In plants which involve both fabrication and assembly, the fabrication part employs process layout and the assembly part employs the product process.
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machines to the product which is stationary. In this type of layout, the work piece remains in a
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS PERT and CPM:
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An industrial project consists of a number of activities involving labour, time, materials, money etc. Many of these activities are interdependent and the rest can be carried out independently in order to achieve the desire objectives. The project management should not only plan, schedule, coordinate and optimize the activities but also should identify and watch closely the critical activities which must be completed within the allotted time. To deal with large and complex developed. They are: x PERT x CPM x RAMS x PEP x MAP x RPSM x LCS x PCS x GERT projects, a number of management techniques known as network techniques have been
: Program Evaluation and Review Technique. : Critical Path Method : Program Evaluation Procedure
: Resource Allocation and Multi project Scheduling
x COPAC : Critical Operating Production Allocation Control : Manpower Allocation Procedure : Least Cost Scheduling : Project Cost System :Resource Planning and Scheduling Method
: Graphical Evaluation Review Technique
The most convenient and commonly used network techniques are PERT and CPM. PERT and CPM are the scheduling techniques used to plan, schedule and control a project consisting of a number of inter-related activities. These techniques provide a frame which defines the jobs to progress of the plan.
a)
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be done integrates them in a logical sequence and provides a system of control over the
Objectives of PERT and CPM The objectives of PERT and CPM are: To plan, schedule and control the project consisting of a number of inter-related activities. Page 34
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS b) c) d) e) To define and integrate the tasks in a logical sequence. To show the precedence relationship between the various activities of the project. To give guidance about the proper sequence of operations.
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To draw the attention on the most critical activities for which the time schedules have too be strictly followed. To know the progress of the work as related to the scheduled time.
f) g) h)
To maximize the use of resources to achieve the objective within time and cost limitations. Provides basis for determining the requirements of manpower, material and money.
i)
Helps in designing, planning, coordinating, controlling and decision making in order to accomplish the project most economically and in the minimum possible time, with the available limited resources.
Terms related with PERT and CPM
1 Event: An event is a specific instant of time which indicates the beginning or end of the activity. Even is also known as a junction. It is represented by a circle and the even t number is represented with in the circle. An event consumes neither time nr resources. For ex: Start the motor, loan approved etc.
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activities.
2. Activity: Every project consists of a number of operations or tasks which are called as activities. An activity is time consuming or resource consuming part of the project which has a definable start and finish. It may be a process like moldings, a material handling or machine procurement process. For Ex: Install machinery, arrange foreign exchange is examples of
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An activity is represented by an arrow in the network diagram. It begins in start event (or tail event) and ends on completion event (or head event). An activity is normally given a name such as A, B, C etc. which is marked below the arrow and the estimated time to accomplish the activity is marked above the arrow. Tail event means: start machine installation Activity A means: machine installation Head event means: complexity of machine installation.
3. Represents the time required for installation which may be in hours or days. The activities are classified as: x Critical activities x Non critical activities and x Dummy activities
1. Critical activities: In a project, critical activities are those which have to be completed within the stipulated time. If they consume more time than the estimated time, the project will be delayed. Hence, more attention must be paid to the critical activities. Any delay even in the completion of one critical activity, the project can not be completed in time. In the distinguish it from non-critical activity. network diagram, the critical activity is marked by a thick arrow or a double line arrow to
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2. Non-critical activities: These are such activities in the project, even if they are delayed over and above the estimated time, the project as a whole will not be delayed. Hence such activities will have a provision of float or stack.
3. Dummy activities: A dummy activity in an artificial activity introduced in a network, to maintain a unique numbering system for the different activities and also to keep the logical sequence of activities and their inter-relationships correctly. A dummy activity does not Page 36
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consume time or resources. In the network, it is represented by a dotted arrow. In Fig 2.4, F represents a dummy activity.
4. Critical path: It is that sequence of activities which decide the total project duration. Critical path is followed by critical activities. In figure 2.4, the path 1-2-4-5 is the critical path. Critical path consumes maximum resources. It is the longest path and consumes maximum time. A critical path has zero float. Even if one critical activity is delayed, the completed by hook or crook, if the project schedule has to be maintained.
5. Duration: It is estimated or the actual time required to complete a task or activity.
6. Total project time: It is the time taken to complete a project and is found from the sequence
7. Earliest start time (EST): It is the earliest possible time by which the activity is started.
8. Earliest finish time (EFT): It is the earliest possible time by which an activity can be finished EFT= EST+ duration of that activity
9. Latest start time (LST): It is the latest possible time by which an activity can start without delaying the date of completion of the project. LST= LFT- duration of that activity.
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10. Latest finish time (LFT); it is the latest time by which the activity must be completed so that the scheduled date for the completion of the project is not delayed. It is calculated by moving backwards from the last event to the network diagram.
11. Float or slack: Float or slack means a margin of extra time over and above its duration which a critical activity can consume without delaying the date of completion of the project. Page 37
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of the critical activities. In other words, it is the duration of the critical path.
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project cannot be completed in time. A critical path indicates that these activities must be
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Float is used with respect to an activity and slack is used with respect to an event i.e. float is used in CPM and slack is used in PERT. However, in general, they can be used interchangeably. Float or slack = (LST EST) or (LFT EFT) Network diagram or arrow diagram: A network diagram is the basic feature of network planning. It is a diagram which represents all the events and activities in a sequence in which they are required to be performed to complete the project along with their inter-relation and inter-dependencies. Arrow diagram is the visual representation of the complete activities represented by means of arrows. It is the most frequently used form of network diagram, where every activity is represented by an arrow and the activity sequences are indicated by the direction of the arrows. Complete. F is a dummy activity represented by a dotted arrow and shows that activities. A and B finish at the same time i.e. t1 = t2 and C and D start at the same time. There are two paths to complete the project. They are 1-2-4-5 and 1-3-4-5. In an arrow diagram, the length and inclination of an arrow does not have any significance. Arrow diagrams are very useful as they provide detailed information for making decisions in connections with large and complex projects.
PERT (Project Evaluation and Review Techniques) PERT is a technique used for planning, scheduling and controlling the industrial projects. It in performance time. It is very essential for timely execution of the projects. it is used for large and complex projects. Because of the uncertainty of activity timings. PERT is a
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probabilistic model. It uses linear programming and probability concepts for planning and controlling the activities. PERT is mainly concerned with events and is thus an event oriented system. The basic tool used in PERT technique is the network diagram which consists of a series of related events and activities. The various steps followed in PERT planning techniques are:
x The project is broken into different activities systematically.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS x The activities are arranged in a logical sequence.
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x The network diagram is drawn. The events and activities are marked on the network diagram. x Using three times estimate, the expected time for each activity is calculated. x The standard deviation and variance for each activity is computed. x ESTs and LFTs are calculated. x Expected time, earliest starting time and latest finishing times are marked on the network x The slack is calculated.
x Critical path is identified and marked on the network diagram.
x The length of the critical path or total project duration is found out.
x Lastly, the probability that the project will finish at due date is calculated.
CPM (Critical Path Method)
CPM is a technical used for planning and controlling the most logical and economic sequence of operations for accomplishing a project. It is widely recognized and is the most versatile and potent management technique. CPM is applicable to both small and big projects. The
Project is analyzed into different activities, whose relationships are expressed in the network CPM employs the following techniques for accomplishing the project planning.
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x The project is broken into various activities systematically. x All the activities are arranged in a logical sequence. x The arrow diagram is constructed. x All the events and activities are labeled. x The time required for each activity is found and marked in the arrow diagram. x ESTs and LSTs are calculated and marked in the arrow diagram. x The float for each activity is calculated. Page 39
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diagram. The network is then utilized for optimizing the resources, progress and control.
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diagram.
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x All critical activities are identified and the critical path is marked on the arrow diagram thick lines. x The total duration required for the project is calculated.
Difference between PERT and CPM Both PERT and CPM use the same fundamental diagram for planning and controlling of a
PERT x A probabilistic model with uncertainty in activity duration. An event-oriented approach. PERT technology uses terms like network diagram, events and slack. The use of dummy activities is required for representing the proper sequencing. Does not differentiate between critical and noncritical activities. Finds applications in projects where resources are always made available as and when required. Especially suitable for defense projects and R & D projects activity times can not be reliably predicted. x
x x
x x
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x x x
A deterministic model with well known activity duration. An activity oriented system. CPM terminology uses terms like arrow diagram, nodes and float. The use of dummy activities is not necessary. The arrow diagram thus becomes slightly simpler. Critical activities are identified and differentiated from noncritical activities. Finds applications in projects where minimum overall costs are of primary importance. There is better utilization of resources. Suitable for setting up industrial projects, plant maintenance, civil construction projects etc.
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project. However, there are some differences between the two. They are:
INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Applications of network techniques
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Network techniques find wide range of applications in planning and controlling various processes are: 1. The detailed and thoughtful planning provides better analysis and logical thinking. 2. Identifies critical activities so that more attention can be given to them. 3. Helps in forecasting the project durations more accurately. 4. The resources are optimized by using the concept of slack. 5. Scientifically monitor the slippages and controls them. 6. Helps in better coordination among the related activities.
The limitations of networks techniques are:
1. Network technique is only a tool to help the management and hence, its effectiveness mainly depends on how well it is used by the management. 2. Its accuracy depends on the estimation of the data used in the network. 3. It is useful only if it is updated regularly and corrective actions are taken in time.
Line balancing:
In an industry, line balancing means the balancing of the production line or an assembly line. The main objective of line balancing is to distribute the tasks over the work stations so as to and workers in order to obtain an optimum balance of the capacities and flow of production of assembly processes. The main aim of layout planning is to find out the minimum number of workers required and assigning tasks to each one of them so that, the desired level of output is achieved. If the line balancing of any product layout is not proper, it means that the utilization a production line such that, there is an even flow production from one work station that will leave the next work station with idle time. The main problem in line balancing is to assign the task to the workers at work stations so that the performance times are made as equal as possible. This problem can be solved to a great extent by following the steps given below. minimize the idle time of men and machines. Line balancing is done by grouping the tasks
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of machinery and men is poor and the idle time is more. Line balancing is the arrangement of
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x The task is defined i.e. task is the smallest grouping of work that can be assigned to a work station. x The tasks are properly sequenced. For this the predecessor and successor tasks are to be properly identified. x The minimum number of work stations required to produce a desired output is calculated. x Tasks are assigned to each station. For this, several combinations are possible. Normally heuristic method (i.e. Thumb rules, logical analysis, common sense, and past experience) are normally used. x The efficiency and effectiveness of the line balance is evaluated. If it yields the desired output, it is effective, efficient and minimizes idle time. x The line balancing of the layout may be improved by trial and error method.
Methods of line balancing
The various methods of line balancing are: x Heuristic method x x x
Linear programming method
Dynamic programming method
Computer based sampling techniques.
Heuristic and computer based techniques are widely used for solving large scale line
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balancing problems. We will discuss only about the Heuristic method of line balancing. Heuristic method is a thumb rule method which gives almost a satisfactory but not optimized solution to the line balancing problem. Heuristic methods are acceptable when optimizing solutions are not feasible and are too costly to apply. Heuristic method of line balancing is a trial and error technique in which work elements are grouped such that, the cycle time is not violated and the procedure diagram is made use of to group the activities as per the sequence of operations.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Automation:
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Automation is defined as the process of moving materials and parts in and out of machines and operating the machines automatically without any human control. It requires that machines, tools and other mechanical handling devices are so integrated that all these act like a continuous machine without any human intervention. Automation is not just mechanization but something more than that. Mechanization means doing something by machines what previously was done by men. It requires human watching, thinking and longer required to load, put the machine through its cycle, unload, inspect, make any machine corrections and send the part on its way to the next operation. All these steps are performed by instruments, mechanical and electronic devices and other means of controls, feed, operator and link machines together into an automatic process.
There are three types of automation. They are: 1. Continuous automation
2. Segmented automation and
3. Non-manufacturing automation x
Continuous automation: This type of automation is used in industries like chemical plants, oil refineries etc, where homogenous materials such as liquid, gases and pulverized substances will be conveyed throughout the whole process. The operations are done by control boards and push buttons. The instruments measure, record and control volumes, weight flow, pressure, humidity, temperature etc and take corrective measures when something starts
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x Segmented automation: This type of automation is intermittent automation of a part
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Types of automation:
whole process, such as fabrication or assembly with intervals between automation equipments. This type of automation is used where it is not practically possible to automation the whole process of fabrication or assembly.
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reacting for routine machines operations. But in automation, machine operators are no
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x Non-manufacturing automation: This type of automation is used in office automation, automatic elevators, transportation ticket selling equipments etc. in which no manufacturing process is involved. Advantages of automation The various advantages of automation are: x x x x x x x x x x Greater output per unit labour Lesser floor space required Increased safety to the operators Automatic production schedules Uniform quality of products Less scrap Less inventories
High rate of production due to transfer of knowledge of efforts from man to machine.
Requires less expert staff and rest semi-skilled workers.
The various disadvantages are:
x Requires greater capital investment x Less manufacturing flexibility x Increased unemployment
x Failure of one part may result in the shut down the whole process x During less demand, the automated plant can not be used for any other purpose.
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x sustained.
Applications of automation. Automation of plants is not economical, if the volume of production is small or where a great variety of products are to be manufactured, in the plant. Automated plants are employed in the following cases:
Where a product design is stable for a long time, so that the cost of automation can be
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Greater output per unit investment
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Where the volume of continuous manufacture is adequate and steady for a long time so that, the plant installation becomes economical, profitable and permit the use of single purpose equipment.
x Where the manufacturing method requires more manual work and automation helps in cost saving. x Where machines are complex or work at such a high speed that it is not possible to work efficiently using manpower. x radioactive materials.
Statistical Quality Control
Before understanding the meaning of statistical quality control, it is better to know the meaning of the three words statistics, quality and control. Statistics means data required to for a particular purpose. Control means measuring and checking. It speaks about, when to inspect, how often to inspect and how much to inspect. Hence statistical quality control may quality of the product by performing inspection, testing and analysis to find out whether the quality of the product is as per the laid quality standards. S.Q.C relies on probability theory to evaluate the batch quality and controls the quality of the processes and products. Statistical quality control involves the statistical analysis of the inspection data obtained from the samples. The fundamental basis of S.Q.C is the theory is probability. According to the theory of probability, the dimensions of the components made on the same machine in a batch, vary slightly from component to component due to the inherent machine be defined as a quality control system employing the statistical techniques to control the
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techniques.
characteristics and environmental conditions. The chance that a sample will represent the entire batch of component is developed from the theory of probability. S.Q.C evaluates batch quality and controls the quality of the processes and products using the following three
x Sampling inspection x Control charts and
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obtain reliable results. Quality is a relative term which describes the fitness of the product
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Where the product is so hazardous that it can not be controlled by manual methods such as
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS x Analysis of data
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When large number of similar components is manufactured, it is impossible to inspect all the components individually as it is very tiring and costly. This continuous process becomes monotonous and chances of errors in inspection increases. On the other hand, if a random sample is selected from a lot and inspected using probability concepts, assuming that this sample represents the lot, there will be much saving in cost and labor involved in inspection. In certain cases such as fatigue testing, analyzing the chemical composition of an alloy, of the outgoing components. The results are analyzed by determining the mean, range, standard deviation and the control limits for fixed levels of confidence. S.Q.C also decides about the shape and size of the sample and its reliability. Advantages of S.Q.C compared to 100% inspection. sampling test is the only method of inspection. Sampling plans control of the average quality
S.Q.C is one of the tools of scientific management and has the following advantages as
x Reduction in cost: The cost of inspection is greatly reduced as only a small part of the x Greater efficiency: It requires less time and reduces boredom as monotony of inspecting all the components is avoided and hence, the efficiency of inspection also improves. x Easy to apply: Once the statistical quality control plan is established, it is easy to apply even by a person who does not have extensive special training.
x Accurate prediction: Specification can be easily prescribed for the future, which is not
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x produced.
possible with 100% inspection. Where destruction of items is required: In cases where destruction of product is required for inspection, 100% inspection is not possible as all the components have to be destroyed. measures can be immediately taken using control charts. In 100% inspections variations in quality can be detected only after a large number of defective items are already being
x Early detection of faults: The moment a sample is not according to specifications, corrective
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output is inspected.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Control charts:
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A control chart is a day-to-day graphical representation of the collected information about a few samples randomly taken out from a lot consisting of a large number of sample produced. The information may pertain to the measured or quality characteristics of the samples. The samples are drawn at random from a lot and for each selected sample, a particular measurement or quality is plotted and studied to know its deviation from the standard measurement or quality expected. All processes whether automatic or semi-automatic are variations occur due to chance causes or due to certain factors. For ex .variation in the diameter of spindles being manufactured may be due to tool wear, changes in machine settings etc. The purpose of the control chart is to detect these changes dimensions and to indicate whether the variation in the products is with in the specified tolerance or not. A control chart detects variations in the processing and warns if there is any departure from the keeps the current and up to date record about the dimensions or quality of the product. It immediately tells about the undesired deviations and helps in eliminating the manufacturing troubles. specific tolerance limits. A control chart is a diagnostic technique. It is dynamic in nature. It susceptible to variations, which result in the changes in the dimensions of the products. These
Let us assume that a turret is set to produce 1000 spindles of 2 cm diameter each. After they are made, randomly about 20 specimens are selected and their diameters are measured and plotted against the number of the pieces .Certain measured diameter values lie very close to diameter values are quite far from the mean value. All those pieces which fall under a specified tolerance limits i.e. control limits are accepted. Once the upper and lower control limits are specified, the plot becomes a control chart. Normally 3 limits are taken for plotting control charts, where is the standard deviation. 3 + 3 = 6 is known as the basic spread. Besides 3 control limits, certain control charts also show warning limits spaced at 4 spread. These warning limits give the indication to the manufacturer that the samples are approaching danger level and corrective action have to be immediately taken so that the process does not go out of control the desired diameter i.e. 2 cm which is known as the mean diameter or mean value. Some
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS The important uses of control charts are: x A control chart indicates, whether the process is in control or out of control. x It detects the variations taking place in the process. x It ensures the quality level of the product.
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x It warns in time about the deviation beyond control limits so that, the process is rectified in time and hence the scrap or percentage rejection of the samples can be reduced. x The control charts build up the reputation of the organization through customers satisfaction. x It provides information about the selection of the process and setting of the tolerance limits.
Motion study:
Frank Gilbreth is the founder of motion study and according to him, the motion study is the science of eliminating wastefulness resulting from ill-directed and inefficient motions. The technique which analyses each operation of a given piece of work very closely in order to eliminate unnecessary operations and to approach the quickest and easiest method of each operation. performing each operation and to approach the quickest and easiest method of performing aim of motion study is to find a scheme of least wastage of labour. The motion study is a
The main objectives of motion study are:
x To eliminate wastage of time and labour. x To find the best way of doing the job.
x To have more effective utilization of materials, men and machines.
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x To improve the design of work place layout. x To standardize the method, obtained after conducting the motion study.
x To train the individual worker in the practice of the motion study as per standardized method.
Procedure for motion study Motion study can be performed in the following steps:
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x To reduce boredom and fatigue of workers by eliminating unnecessary movements.
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Step-1: Break up of the operation of the job: A detailed list of all operations in the present manufacturing method including material handling, machine work and hand work made. Step-2: Critical examination: The motion study engineer should ask the questions about the following points to ascertain the way in which the various operations are conducted. The procedure of questioning is called as critical examination. x What is the purpose of the operation? Whether it is required or can be eliminated? x What are the sequences of operations? x Who will do this operation in a better way?
x How is the operation performed? Which machines and tools are required? Can we make this work easier and safer both for the worker and for the equipment?
taking into consideration the following points:
without any harm.
x To find out whether two or more operations can be combined without any adverse effect so that, the time of operation is reduced. simplified. x To find out whether the sequence of operations can be rearranged so that the operations are x The operations can be simplified by placing the materials, tools and equipments at proper working area, taking useful work from both hands and by using jigs and fixtures.
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Step-4: Installing new method: After developing the new method, first, it should be
approved by the supervisors, workers and management. Then, the workers must be trained to work according to the new method and the progress of the job is continuously monitored.
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x E very operation is studied in detail to find out whether any operation can be eliminated
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Step-3: Develop a new method: After the critical examination, a new method is developed
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x Which is the best place to do this operation?
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Step-5: Maintaining new method: Once the new method is accepted for operation, it should be seen that it is not allowed to step back into old method or any other new method. Copies of the job instruction sheets must be distributed to all the concerned and continuous checking is required to compare what is actually being done and selection of persons for training must be done according to job specifications of the new method.
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UNIT 3
Economics of power factor improvement
Economics of power factor improvement Definition of power factor, Factors affecting power factor Disadvantages of low power factor, Causes of low power factor. Advantages of high power factor, Avoidances of low power factor Relative merits and demerits of static and synchronous condensers Economics of power factor improvement Advantages of static condensers, Methods of improving power factor
Advantages and disadvantages of synchronous condenser.

What is Power Factor?
Power factor is the percentage of electrictricity that is being used to do useful work It is defined as the ratio of 'active or actual power' used in the maul measured in watts or kilowatts ( or KW to the 'apparent power expressed in volt-amperes or kilo va-amperes (VA or KVA) Active Power W Power factor = or Apparent Power VA The apparent power also referred to as total power delivered by utility company has. Components 1) Productive Power' that powers the equipment and performs the useful work It is measured in Kw 2) 'Reactive Power' that generates magnetic fields to produce field necessary for the operation of induction devices (AC motors, transformer, inductive furnaces, ovens etc ) It is measured in KV. (Kilovolt-Ampere-Reactance) Reactive power produces no productive work An inductive motor with power applied and no load on rms shaft should draw almost nil productive power, same no output work is being accomplished untill a load is applied The current associated with no-load motor readings is almost entirely "Reactive" Power As a load is applied to shaft of the motor, the 'Reactive" Power requirement will change only a small amount The 'Productive Power' is the power that is transferred from electrical energy to some other form of energy (le su. as heat energy or mechanical energy) The apparent power is always in always in excess of the productive power for
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(kilowatts)
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inductive loads and is dependent on the type of machine in use The working power (KM a. reactive power (KV.), together make up apparent power which is measured in kilovolt-amperes (KVA) Graphically it can be represented as
Understanding Power Factor
The cosine of the phase angle 0 between the KVA and the 1,KW components represents the power factor of the load. KVAR represents the non-productive reactive power and 0 is lagging phase angle. The Relationship between KVA KW and KVAR is non-linear and is expressed KVA2= KW2 + KVAR2
A power factor of 0.72 would mean that only 72% of your power is being used to do useful work. Perfect power factor is 1.0. (Unity); meaning 100% of the power is being used for useful work. Any industrial process using electric motors (to drive pumps. fans, conveyors. refrigeration plant called "inductive reactive currents". etc.) introduces inefficiencies into the electricity supply network by drawing additional currents, Although these currents produce no useful power they increase the load on the supplier's switchgear & distribution network and on the consumer's switchgear & cabling. The inefficiency is expressed as the ratio of useful power to total power (KW/KVA) known as Power Factor.
Typical uncorrected industrial power factor is 0.8. This means that a 1MVA transformer can only supply 800KW or that a consumer can only draw 80 useful Amps from a 100Amp supply. To put it the other way, a 3-phase 100KW load would draw 172A per phase instead of the 139A expected. For inherently low power factor equipment, the utility company has to generate much more current
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than is theoretically required. This excess current flows through generators, cables, and transformers in the same manner as the useful current. If steps are not taken to improve the power factor of the load, all the equipment from the power station to the installation sub-circuit wiring, has to be larger than necessary. This results in increased capital expenditure and higher transmission and distribution losses throughout the whole network. To discourage these inefficiencies the electricity companies charge for this wasted power. These charges appear on electricity bills as "reactive power charges", "KVA maximum demand" or "KVA KVA = 1000, KW = 800, KVAR = 600, PF = .80
Typical Utility Billing Structure Examples:
I) 90% Billing Structure - Where demand billed is based on 90% of the KVA or 100% of the KW 90% of the KVA 1000 x .90 = 900 KVA because it is the larger number (900 KVA > 800 KW). Thus the facility is paying a penalty on 100 KVA of unproductive power. Correcting the facilitys Power Factor to 90% + will eliminate this penalty cost.
II) 100% KVA + 100% KW Billing Structure - Where one rate is applied to 100% of the KVA and another rate is applied to 100% of the KW. Both are then added together to determine the total demand charged on the bill. If we correct the power factor to unity (KVA = KW or 800 KVA = 800 KW) we can recover costs paid on 200 KVA at *KVA rates. Assuming an equal rate is being paid for KVA and KW Rather than pay demand costs on 1000 KVA + 800 KW = 1800 if the Power Factor = Unity we will pay demand costs on 800 KVA + 800 KW = 1600. Savings = 1800 -1600 = 200. *Note: Generally the cost per KVA is greater than the cost for KW. Thus the savings would be greater by correcting the power factor to unity. The reactive power charges levied as penalties in the billing should always be regulated. The excess reactive currents and associated charges can be removed by a well-established technology called "Power factor correction". Simply put, this technology offsets the inductive reactive currents by introducing equal and opposite capacitive reactive currents. Typically this can reduce electricity bills by 5-8%, with a payback period of 12 to
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Whichever is greater. Because the facility has a power factor of 0.80 they will pay demand rates on
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availability charges". For instance known information taken from billing about electrical system:
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18 months. In addition, the consumer shall gain from improved supply availability, improve voltage and reduced power losses. To improve the power factor, equipment drawing KVAR of approximately the same magnitude as the load KVAR, but in phase opposition Leading is connected in parallel with the load. The resultant KVA is now smaller and the new power factor, cosine 2 is increased. Thus any value of cosine 2 can be obtained by controlling the magnitude of the leading KVAR added. It is never economic to attempt to improve the power factor to unity, since the nearer the approach to unity the
Disadvantages of low power factor
Many engineers are oblivious to the effects of low power factor. They view it only as a direct charge on their electrical bill, and only when stated as such. Low power factor is a direct cost to the utility company and must be paid for. Direct costs of low power factor
Power factor may be billed as one of or combination of, the following: 1) A penalty for power factor below and a credit for power factor above a predetermined value,
3) A charge on monthly KVAR Hours,
4) KVA demand: A straight charge is made for the maximum value of KVA used during the month. Included in this charge is a charge for KVAR since KVAR increase the amount of KVA.
Loss in efficiency of the equipment: When an installation operates with a low power factor, the amount of useful power available inside the installation at the distribution transformers is figure below indicates the available actual power of distribution equipment designed to supply 1000KW considerably reduced due to the amount of reactive energy that the transformers have to carry. The
Benefits of Power Factor Correction Benefit 1 - Reduce Utility Power Bills In areas where a KVA demand clause or some other form of low power factor penalty is incorporated in the electric utility's power rate structure, removing system KVAR improves the
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2) An increasing penalty for decreasing power factor,
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more KVAR that must be installed for a given improvement.
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power factor, reduce power bills by reducing the KVA. Most utility bills are influenced by KVAR usage. Benefit 2 Increase System Capacity The power factor improvement releases system capacity and permits additional loads (motors, lighting, etc.) to be added without overloading the system. In a typical system with a 0.80 PF, only 800 KW of productive power is available out of 1000 KVA installed. By correcting the system to unity (1.0 PF), the KW = KVA. Now the corrected system will support 1000 KW, versus the 800 KW at the .80 PF uncorrected condition; an increase of 200 KW of productive power. This is achieved by adding capacitors which furnish the necessary magnetizing current for induction motors and transformers. Capacitors reduce the current drawn from the power supply; less current means lesser load on transformers and feeder.
Benefit 3 - Improve System Operating Characteristics (Gain Voltage)
expected when power factor is brought to +\-0.95. Excessive voltage drops can make your motors sluggish, and cause them to overheat. Low voltage also interferes with lighting, the proper application of motor controls and electrical and electronic instruments. Motor performance is improved and so is production. An estimate of voltage rise from the improved power factor with the installation of power capacitors can be made using following equation: Benefit 4 - Improve System Operating Characteristics (Reduce Line Losses) Improving power factor at the load points shall relieve the system of transmitting reactive current. proportional to the square of the current (I2R). Therefore, fewer kilowatt-hours need to be purchased from the utility. An estimate of reduction of power losses can be made using following equation: Equipment Creating Poor Power Factor Less current shall mean lower losses in the distribution system of the facility since losses are
It is useful to have an idea of the value of the power factor of commonly used electrical equipment. This will give an idea as to the amount of reactive energy that the network will have to carry. Find below is the summary of power factor of commonly used electrical equipment.
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A good power factor (0.95) provides a "stiffer" voltage, typically a 1-2% voltage rise can be
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Lighting Incandescent Lamps: The power factor is equal to unity.
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Fluorescent Lamps: Usually have a low power factor, for example, 50% power factor would not be unusual. They are sometimes supplied with a compensation device to correct low power factor. Mercury Vapor Lamps: The power factor of the lamp is low; it can vary between 40% to 60%, but the lamps are often supplied with correction devices.
The power factor varies considerably as a function of the load and the design of the transformer. A completely unloaded transformer would be very inductive and have a very low power factor. Electrical Motors
Induction Motors: The power factor varies in accordance with the load. Unloaded or lightly loaded motors exhibit a low power factor. The variation can be 30% to 90%. Synchronous Motors: Very Synchronous motors can be over excited to exhibit a leading power factor and can be used to compensate a low power system. Industrial Heating
With resistance, as in ovens or dryers, the power factor is often closed to 100%. Welding Electric arc welders generally have a low power factor, around 60%. Other types of machinery or equipment those are likely to have a low power factor include:
Power factor correction can be made in two ways: 1) Reduce the amount of reactive energy 2) Compensate artificially for the consumption of reactive energy with power factor capacitors. In practice, two type of equipment are available for power factor correction: Rotary Equipment: Phase advancers, synchronous motors and synchronous condensers. Where auto-synchronous motors are employed the power factor correction may be a secondary function.
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Power Factor Correction
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good power factor when the excitation is properly adjusted.
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Distribution Transformer
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Capacitors:
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Power factor correction is achieved by the addition of capacitors in parallel with the connected motor circuits and can be applied at the starter, or applied at the switchboard or distribution panel. Capacitors connected at each starter and controlled by each starter is known as "Static Power Factor Correction" while capacitors connected at a distribution board and controlled independently from the individual starters is known as "Bulk Correction". When installing equipment, the following points are normally considered: 3) Reliability of the equipment to be installed 4) Probable life of such equipment 5) Capital cost 6) Maintenance cost 7) Running cost 8) Space required and ease of installation
Generally the cost of rotating machinery, both synchronous and phase advancing, makes its use uneconomical, except where one is using rotating plant for a dual function drive and power factor correction. In addition the wear and tear inherent in all rotating machines involves additional expense for upkeep and maintenance. Capacitors have none of these disadvantages. Compared with other forms of correction, the initial cost is very low, upkeep costs are minimal and they can be used with the same high efficiency on all sizes of installation. They are compact, reliable, highly efficient These facts indicate that generally speaking, power factor correction by means of capacitors is the most satisfactory and economical methods. The static capacitor owing to its low losses, simplicity and high efficiency is now used almost universally for power factor correction. & convenient to install and lend themselves to individual, group or automatic method of correction.
Synchronous condensers
In electrical engineering synchronous condensers (sometimes synchronous capacitor or synchronous compensator) is a device identical to a synchronous motor, whose shaft is not connected to anything but spin freely. Its purpose is not to convert electric power to
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mechanical power or vice versa, but to adjust conditions on the electric power transmission grid. Its field is controlled by a voltage regulator to either generate or absorb reactive power as needed to adjust the grid's voltage, or to improve power factor. The condensers installation and operation are identical to large electric motors. Increasing the device's field excitation results in its furnishing magnetizing power (kvars) to the system. Its principal advantage is the ease with which the amount of correction can be adjusted. The energy stored in the rotor of the machine can also help stabilize a power system during short condensers are sometimes used in association with high-voltage direct current converter stations to supply reactive power.
Unlike a capacitor bank, the value of reactive power from a synchronous condenser can be continuously adjusted. In addition, reactive power from a capacitor bank decreases with voltage does have higher losses than a static capacitor bank. Most synchronous condensers connected to electrical grids are rated between 20 Mvar and 200 Mvar and many are hydrogen cooled. decrease, while a synchronous condenser can increase current as voltage decreases. However, it
excitation. For under and over excited motors, the power factor (p.f.) tends to approach 1 with increase in load. The change in power factor is greater than the change in Ia with increase in load. The magnitude of armature current varies with excitation. The current has large value both for low and high values of excitation. In between, it has minimum value corresponding to a certain excitation. The variations of I with excitation are known as V curves because of their shape. For the same output load, the armature current varies over a wide range and so causes the power with lagging power factor when under-excited. In between, the power factor is unity. The minimum armature current corresponds to unity power factor. An over-excited synchronous motor has a leading power factor. This makes it useful for power factor correction of industrial loads. Both transformers and induction motors draw lagging currents from the line. On light loads, the power drawn by induction motors has a large reactive component and the power factor has a very low value. The current flowing to supply reactive power creates
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factor also to vary accordingly. When over-excited, the motor runs with leading power factor and
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As the load on a synchronous motor increases, the stator current Ia increases regardless of
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losses in the power system. In an industrial plant, synchronous motors can be used to supply some of the reactive power required by induction motors. This improves the plant power factor and reduces supply current. A synchronous condenser provides step-less automatic power factor correction with the ability to produce up to 150% additional Mvars. The system produces no switching transients and is not affected by system electrical harmonics (some harmonics can even be absorbed by synchronous condensers). They will not produce excessive voltage levels and are not susceptible to support during short power outages.
The use of rotating synchronous condensers was common through the 1950s. They remain an alternative (or a supplement) to capacitors for power factor correction because of problems that have been experienced with harmonics causing capacitor overheating and catastrophic failures. a capacitor bank is in direct proportion to the square of its terminal voltage, where a synchronous condenser's reactive power declines less rapidly, and can be adjusted to compensate for falling terminal voltage. This reactive power improves voltage regulation in situations such as starting large motors, or where power must travel long distances from where it is generated to where it is used, as is the case with power wheeling, the transmission of electric power from one geographic region through another within a set of interconnected electric power systems. Synchronous condensers may also be referred to as Dynamic Power Factor Correction systems. controller with PF controller and regulator will allow the system to be set to meet a given power factor or can be set to produce a specified amount of reactive power. On an electric power system, synchronous condensers can be used to control the voltage on long transmission lines, especially for lines with relatively high ratio of inductive reactance to resistance. Synchronous condensers are also very good for supporting voltage. The reactive power produced by
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These machines can prove very effective when advanced controls are utilized. APLC based
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electrical resonances. Because of the rotating inertia of the condenser, it can provide limited voltage
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UNIT 4 TARIFFS
Aim and objectives of Tariffs Factors governing the Tariffs Components of Tariffs Choice of electrical power supply.
INTRODUCTION
Now-a-days, electrical energy is universally used by all types of consumers. Domestically, it is used for refrigeration, air-conditioning, TVs and for almost all household appliances. It is used to small induction motors to lift water to the overhead tanks. Farmers extensively used it for lifting water through three-phase induction motors for the purpose of agriculture. Industrially, most of the machines that work in the industry are supplied by electrical energy. The percentage use of electrical energy by various types of consumers in our country is approximately as follows:
1. 2. 3.
Domestic use: about 12% Agriculture Industries
: about 30%
: about 58%
The electrical power may be supplied to the consumers either by a private company or public supply. In most of the developed countries, the supply of electrical energy is privatized, but in our easily stepped up or stepped down and can not be stored. It has to be generated at a voltage (11 kV) and transmitted at a higher voltage (220 kV or 400 kV) and distributed to the consumers at a lower voltage (400 V or 230 V). As the voltage of D.C electrical energy can not be decreased or increased greatly, it is used only for some special application. However, it can be stored in small quantities in the form of cells and batteries. country. It is through public supply. A.C electrical energy is extensively used as its voltage can be
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The supplying agency has to change the consumers supplying electrical energy. The supply of electrical energy cost money and hence, it is necessary to recover these costs from the uses. This recovery must be such that, all the costs involved in generation, transmission and distribution of electrical energy is recovered along with a reasonable margin of profit. The supplying authorities evolve a scheme for fixing these charges, which is known as tariff.
Tariff: Tariff is the rate of payment of schedule of rates on the energy bill of the consumer is prepared. There are different methods of charging different types of consumers depending on the type of load (domestic, commercial or industrial), maximum demand, time at which load is required, power factor of the load and the amount of energy consumed.
The aims and objectives of tariff are: consumers.
i) The rates charged by the supplying agency must conform with the energy received by the ii) The recovery from the different types of consumers should be equitably distributed among them, except in some cases where special concession have to be given to special type of consumers such as farmers, small scale industries, cottage industries etc. iii) While framing the tariff, the supplying agencies should take into account all the costs involved from the point of generation to the point of the consumption. In addition to generation, transmission and distribution costs, of metering, meter reading, billing, bill collection and annual charges on capital investment should also be considered.
Classification of costs
The cost of generating electrical energy, its transmission and distribution can broadly classified as: a. Fixed costs or standing costs b. Running costs or variable costs or operating costs
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a) Fixed costs: The fixed costs are those costs which do not vary with the operation of the generating plant and the connected equipments which generate electrical energy. These costs are independent of the number of units of electrical energy generated. This consists of i)Interest on capital investment: fixed costs are necessary to purchase of machinery and equipment and replacement of worn out and obsolete equipments. The interest on this capital investment is one of important components of the fixed charges. ii) Depreciation: when the building machinery and equipment are used for a number of years. Their value gradually decreases and hence provision must be made to take into account depreciation as a component of fixed charges. component of fixed cost. iii) Various taxes levied by the government both state and central, insurance costs also form a iv) Salaries and wages of management people and workers. v) Small portion of fuel cost and maintenance costs.
b) Running costs vary with the operation of the plant. They depend upon the number of kWhs comprise of
i) Fuel costs: The plant requires fuel for its operation such as steam, oil or water. Hence fuel cost is one of the main components of running costs. ii) Small part of salaries and wages: supervisors and operators are required to handle the operations and a small part of that is considered as running cost as temporary staff has to be requited to do certain operation. iii) Maintenance costs: these costs of cooling water, lubricating oil and the cost of maintenance and repairs to be done as and when required. iv)Administration costs: these costs relate to promotion, legal aspects, engineering aspects and accounting charges.
Before finalizing a particular tariff, all the costs have to be considered in detail before fixing up the costs for the various components of the tariff.
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generated and hence on the amount of fuel spent and other related charges. The running costs
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Factors governing a tariff:
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Determination of the various costs incurred to generate electrical energy is not so difficult but distributing these costs equitably to all the types of consumers is difficult. It requires good engineering judgment and ultimately the tariff produced is a huge compromise as it is not possible to satisfy all types if consumers. The following factors are considered in framing a tariff in order to satisfy all types of consumers. i) Maximum or peak demand (M.D): The maximum demand of an installation is the greatest of the demands that have occurred during a given period of one month or one year which is expressed either in kilowatts (KW) or kilovolt (KVA). It is not the greatest instantaneous demand. It is greatest average KW or KVA demand during a specified period of 1 minute, 5 minutes, 15 minutes, 30 minutes or any suitably relatively small period of time in a month or year. The maximum demand determines KVA or KW capacity of the plant and hence, determines the capital investment cost of the plant. The generator and all the connected apparatus with maximum demand for short duration, without any adverse effects.
ii) Demand factor: The demand factor of a plant system defined as the ratio of the maximum demand in KW or KVA to the total load connected to the system.
Maximum demand in KW or KVA .. Demand factor = ------------------------------------------
For ex. Let the maximum demand over the specified period = 1.200 kW and total connected load be 1,500 kW. Then, Demand factor =1,200 -------- =0.8 or 80%. If the demand factor is more, then the maximum demand on the plant is more and the fixed charges increase. Hence, the demand factor must be low keep down these charges. Low demand factor also reduces running charges. Lighting loads have almost constant demand factors, as their rating is fixed. However, the industrial loads change abruptly and the demand factor also changes.
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Total load in KW or KVA
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iii) Diversity factor (D.F): Diversity factor is defined when different types of loads such as domestic, power and industrial loads are connected to a station which is supplying electricity to a particular locality. There is diversification of loads and different types of loads are ON during different of intervals of time.
loads to the simultaneous maximum demand of all the loads.
Sum of all the consumers maximum demands D.F= -------------------------------------------------------- = Station maximum demands
ECMD Or M.D = ---------D.F
Diversity factors is always greater then unity. The greater is the diversity factor, less will be the station capital costs and hence less will be the fixed charges on the consumers. For Ex. Consider a station having different types of loads such as lighting load =10 kW, Power load=20 kW, industrial load =50 kW. Then, E C.M.D. = 50+20+10=80kW
The diversity factor is given by E CMD 80
D.F= --------- = MD
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But at any point of time, let the maximum power drawn is not more than 50 kW,
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----- =1.6 50
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ECMD --------MD
Diversity factor is defined as the ratio of the sum of all the individual maximum demands of the
INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS iv) Load factor (L.F):
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No consumer switches ON all his simultaneously. He switches them ON only for the duration he requires them. If we draw a graph of the load power demand in kW required at every instant during a certain time interval we get a curve known as the load duration curve This curve is drawn for a day i.e.24 hours of a day. Hence, it is called as daily load curve. The area under the curve gives the energy consumed by the load in kWhs per day. In a similar way monthly load curve and annual load curve also can be drawn. BEFGHIJ is the regular daily load curve. A rectangular curve MCDO is drawn such that the area under the curve BEFGHIJD is equal to the area rectangle MCDO. Then the height OM represents the average demand in kW which is given by Total energy drawn in kWhs Average demand in kW= ---------------------------------Duration in hours
Area under the curve MCDO .. A.D = ----------------------------------Duration in hours
For the daily load curve, the duration is 24 hours. The load factor is defined as the ratio of the average demand in kW to the maximum demand in kW. A.D in kW -------------
.. L.F =
The load factors calculated for a day is daily load factor. If it is calculated for a month, it is known as monthly load factor and if it is calculated for a year, it is known as annual load factor. Average demand per day in kW Daily load factor = ---------------------------------------------Maximum demand during the day in kW
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M.D in kW
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Average demand per month in kW Monthly load factor = ------------------------------------------------Maximum demand during the month in kW
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Average demand per year in kW Annual load factor = ---------------------------------------------------
The load factor helps in fixing the running charges i.e. charge per kWh of energy consumed by the consumer.
Cost per kWh = -------------------------------
Number of kWhs supplied
Total kWhs supplied per year = average demand in kW * 8,760 hours = A.D * 8,760 kWhs
.. Cost per kWh = -----------------------
Form equation (4.3), we find that the cost per unit decreases by raising the maximum demand. Maximum demand can be increased by increasing the L.F.
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Net running cost
L.F * M.D * 8,760
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= L.F * M.D * 8,760 kWhs (as per equation 4.2)
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Net running costs
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Maximum demand during the year in kW
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From equation (4.3), we also find that the running charges can be decreased by raising the maximum demand. Maximum demand can be increased by increasing the consumers, maximum demand, which can be done by suitably staggering the load supply to different types of consumers.
v) Power factor (P.F): we know that power factor is given by the ratio of the true power to the apparent power. kW = kVA * cos$ true power When the power drawn remains constant, if the p.f of the system is low, then kVA of the generating plant has to be increased. If the generated voltage remains constant, then to maintain constant power, the current drawn by the load increases. This increase in current increases the copper loss (i^R loss) and the voltage drop in the line also increases. Therefore, the consumers must be encouraged to improve the p.fs of loads. This can be done by making the fixed charges on the basis of maximum kVA demand instead of maximum kW demand.
vi)Utilization factor (U.F): The utilization factor is defined as the ratio of the maximum demand on
Max. demand on the generating station U.F =
-----------------------------------------------
The U.F is low; it means that the plant has been installed much in advance need. A high value overloaded. For reducing energy costs, the U.F must be very close to unity.
vii) Plant capacity factor: plant capacity factor is the ratio of actual energy produced to the maximum possible energy that the plant is capable of producing during the same period. It can be also be defined as the ratio of the rated capacity of the plant.
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indicates that the plant is more efficient. If its value exceeds unity, it means that the plant is
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Installed capacity of the plant
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the generating station on the installed capacity of the plant.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Total kWhs generating the a period Average demand
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Plant capacity factor = ---------------------------------------------- = -------------------Installed capacity * hours in the period Average demand Max. demand Rated capacity
= ----------------------- * -----------------Maximum demand Rated capacity
= Load factor * utilization factor
For reducing energy charges, the plant use factor must be more.
viii)
Plant
use
factor:
It is
the
ratio
of
plant is actually in operation.
Total kWhs generated
Rated capacity of the plant in kW * No. of ours the plant is operation
Requirements of good tariff
i) The tariff should be fair for both supplies and consumers. It should correspond to the actual cost of supplying energy with a marginal profit
ii) It should be impartial, uniform and must be supplied with same conditions to all the consumers of the same type.
iii) A good tariff must take into account both the fixed charges and the running charges and keep them as minimum as possible. This can be achieved by having diversity factor, due to which the fixed charges are minimized.
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The requirements of a good tariff are:
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Plant use factor = -------------------------------------------------------------------------
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given period of time to the product of the capacity of the plant and number of hours for which the
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the actual enerage generated
during
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iv) The load factor must be more which reduces the running costs. v) A good tariff must be simple so that, the consumer is able to understand it and the can be easily prepared. vi) It should encourage the consumer to work their loads at high power factors, which reduces the fixed costs on maximum kVA demand. vii) The metering equipment must be simple and cheap.
viii) There should be separate charges for H.T supply and L.T supply. It should be lower for H.T consumers than L.T consumers, because in the case of H.T consumers, the authorities are relived of the investment cost on the sub-station equipment cost and its maintenance. poorer and backward sections of the society than the richer sections. ix) A good tariff should promote the cause of socialism, such as supplying energy at reduced rates to
Components of a tariff
Different supplying agencies have proposed different tariffs from time to time. However, all of them have a general formula as given below: C = Ax + By + D
Where, C= Total charges for a certain period (say one month) X = Maximum demand during that period ( kW or kVA)
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Y = Total energy consumed during that period A = Cost per kW or kVA of maximum demand. This charge takes care Of the fixed charges
B = Cost per kWh of energy consumed. This charge takes care of The running charges
D = Fixed charge during each billing period. This charge takes care of Service charges, surcharge, tax or any other charge which is Independent of maximum kW or kVA demand and energy charges
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Types of tariffs Some of the important types of the tariff are described as follows:
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i) Flat demand rate tariff: The flat demand rate tariff is expressed in the form C=Ax. The bill depends on only the maximum demand and is independent of the energy consumed. This type of tariff is used when the hours of use of loads are know in advance such as street lighting, single system, sign lighting etc. the charge is based on the number of lamps installed or on the basis of the total connected load. Metering is not required in this type of tariff. ii) Flat rate tariff: This type of tariff is given by the relation C = By. The bill depends only on the amount of energy consumed. Charges are made as a simple flat-rate per kWh. Different types of loads are charged at different rates. Hence, separate energy meters are to be installed for different types of loads such as lighting, power loads (heaters, geysers, boilers etc). The main advantage of is that, if the consumer does not use energy for a particular period, he need not pay any charges and the fixed charges incurred by the supplying agency is not recovered from the consumer. this method is that, it is very simple and he consumer does not waste any energy. The disadvantages
iii) Step rate tariff: In this type of tariff, the energy consumption is divided into different blocks and different charges are fixed for different blocks. Earlier, when the electrical energy was available in plenty, to encourage the consumers to use more energy, the rate per unit for the first block of units is the highest and it decreases for the succeeding blocks. This type of tariff does not encourage is the lowest and increases for the succeeding blocks.
For Ex: The first 100 units are charged at Rs.1.50 per unit. The next 100 units at Rs.2.00 per units and the additional units may be Charged at Rs.3.00 per unit. This type of tariff is normally used for domestic and commercial Consumers.
iv) Power factor tariffs: In this type of tariff, the charges are divided into two components. The first component is the fixed charges which depend on the maximum kW or kVA demand. The
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conservation of energy. Now-a-days, when there is energy crisis, the rate per unit for the first block
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second component is the running charge which depends on the energy consumed. The tariff is expressed as C = Ax + By, where A = charge per kW or kVA maximum demand X = kW or kVA maximum demand B = charge per kWh of energy consumed The maximum demand can be taken as a certain fraction of the connected load or measured by a pay the fixed charges, even if he does not consume any energy. This type of tariff is normally used for industrial consumers. For such consumers, the fixed charges are charged on the basis of maximum kVA demand rater than maximum kW demand, improvement device in order to reduce fixed charges. Because kVA =----and the consumer tries to maintain a good p.f of his load by installing Cos $ a p.f maximum demand indicator. The consumer is not happy about this type of tariff, because he has to
v) Power factors tariff: If the consumer loads have poor p.fs, the kVA demand increases for a constant kW supplied. The supplier has to increase. Due to low p.f, more current flows through the who operate their loads at low p.fs power factor tariff is offered to them, which forces the consumers to improve the p.f of their loads or pay a penalty for operating their loads at low p.fs. The following are three different types of power factor tariffs offered. system, which increases the copper loss and transmission efficiency decreases. Thus consumers,
a) KVA maximum demand tariff: In this type of tariff, the fixed charge is based
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kVA demand instead of maximum kW demand. If the p.f of consumer load is poor, for a given kW consumer tries to improve the p.f of his load by installing a p.f improvement device, which will be more economical.
b) KWh and kVARh tariff: in this type of tariff, the consumer not only
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load, the kVA demand increases and hence the consumer has to pay more. On the other hand, the
consumed i.e.kWhs but also the reactive energy kVARh. If the p.f is low, consumer has to pay more
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on maximum
pays for the real energy
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for kVARh. Hence, he tries to improve the p.f by installing a p.f improvement device due to which the reactive energy kVARh decreases
c) P.f penalty or bonus tariff: in this type of tariff, a certain p.f says 0.9 lagging is taken as the reference p.f. If the load p.f is less than this, the consumer is penalized. On the other hand, of the p.f is more than 0.9, he will be rewarded with a bonus. Normally, the p.f penalty or bonus will be a certain amount per month for every decrease or increase of p.f by 0.01. This is one form of surcharge levied on the customer.
vi) Three-part tariff: This is the only tariff which truly passes on all types of costs incurred by the company to the consumer under all conditions of load. In this type of tariff, the changes are divided into three components and is expressed as C = Ax + By + D
And all these components are explained in section 4.6. the constant A takes care of the charges for kW or kVA maximum demand i.e. fixed charges. The constant B takes care of the charges for the surcharges, tax or any other charge except maximum demand charges and energy charges. actual energy consumed i.e. running charges. The constant D takes care of the services charges,
Vii) Welding tariff: in resistance welding and arc welding. Very large currents are drawn from the supply for short duration of time. In spot welding, the welding time is usually less then a second or even may last less than one cycle. The voltage regulation of the system is affected by this and the neighboring loads are affected. The short welding currents may not be recorded and the p.f is also current demand. In such cases, the tariff is modified to levy extra charges on the rated kVA of the welding equipment. The rate may be increased for higher kVA ratings, depending on the number of welding sets used. low. Therefore any type of tariff described will not take into account this instantaneous maximum
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Choice of electrical power supply: The consumer may obtain electrical energy from two types of supplies
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a) b)
Public supply system or Private supply system or own captive power plant
state government owned electricity boards. In Karnataka, the state government owned Karnataka power corporation (KPC) generated electrical energy and supplies it to the consumers though Karnataka Power Transmission Corporation Limited (KPTCL). The consumers prefer public supply system because of the following reasons: i) The management of a company can concentrate entirely on its own business, since it is completely ii) Ample overload capacity is available and any expansion of the company can be taken up without problem as and when required. iii) One of the distinctive features of public supply system is reliability of the supply. The power shut down is occasional and that too for a few hours only. iv) The electrical energy supplied by a public supply system is reasonably cheap and hence is more economical. v) The space for setting up a sub-station in the industrial premises is very small as compared to setting up a captive power plant. vi) During operations at light loads, the energy from public supply system.
b) Own captive power plant: There are certain circumstances, when generating electrical energy from a captive power plant i.e. private generating plant i.e. private generating plant has certain advantages. The various such circumstances are:
i) Exhaust steam: In certain industries such as paper mills, textile mills,
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relieved of the responsibilities of generation and distribution of electrical energy.
industries etc. steam generated at a high pressure is used. The exhaust steam after being used for the
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a) Public supply system: In this type of supply system, the electrical
power supply is obtained by
sugar mills, chemical
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various processes can be used to drive steam turbines which from prime movers for alternators generating considerable amount of energy.
ii) Industrial wastes: The industrial wastes can be used to generate electrical energy. For Ex. In steel industries, coke-over-gas and blast furnace gas having high calorific values come out as byproducts. These gases can be used to run gas engines, which in turn run generators directly to generate electrical energy. The gases can also be burnt in boilers to generate steam, which can be used to run steam turbine driven generators to generate electrical energy. In sugar industries, the left over sugarcane waste can be crushed and burnt in boilers to produce steam, which can be used to generate electrical energy.
iii) Low grade oils: Collieries sometimes use low grade, unsalable oils for burning in boilers coal cutting, coal haulage and transport. Diesel also can be used to generate electrical energy, where power requirements are less than 500 kW.
The captive generation of power has two advantages i) ii)
The captive generation of electrical energy becomes inevitable, where the public supply During power crisis, the generated energy can be supplied to the public supply company and
system imposes regular power cuts, as the production should not suffer. make a reasonable amount of money also.
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generating steam which can be used for generating electrical energy. This energy can be used for
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PART - B UNIT 5
Choice of plants and economic selection
Choice of plants and economic selection Factors to be considered in selecting equipment
Introduction:
When we want to purchase equipments and materials for production in a plant, several alternatives will be available. Each of these will have certain special features and qualities. After considering all he aspects, ultimately, the choice between alternative types will be the relative costs of various and annual fixed charges and running equipments and material. The best choice would be that equipment, whose initial cost in minimum
Charges are minimum. Normally, the annual fixed charges and running charges are minimum, when
One of the important criteria for selection of equipment its technical features. However, before making the final selection, we have to consider economic aspects also. For Ex. Silver is the best conductor in the world, but we cant use it for transmission of electrical power as it very costly and reasonably good conductor also. An electric motor of a particular type and size of lower operating efficiency will usually costs less than a similar motor of higher efficiency. For the first motor, fixed motor, whose annual charges are less. Therefore, before selecting equipment for plant, several factors have to be considered in addition to its performance characteristics. annual charges are less, but the running costs will be less. Ultimately, the choice will be on the not available in the required quantity. Either copper or aluminium is used, as they are cheap and
Factors to be considered in selecting equipment

The various factors that required in selecting equipment are: a. First cost
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initial costs of equipments are more.
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Methods of selection.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS b. Performance characteristics c. Output or rating d. Labour costs e. Fuel and power requirements f. Efficiency g. Cost of repairs and maintenance h. Freedom from breakdown j. l. Safety and flexibility Floor space i. Tolerances and allowances
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k. Ease of operation
a) First cost: first cost is the investment required for the purchase of the equipment which includes the but the performance qualities of the machine are also important. Low cost equipment may not be efficient, may give poor performance and incur high costs for maintenance and repairs. Normally, investment on first cost the depreciation. the investment of equipments is taken in form of loan form banks. The annual charges include
b) Performance characteristics: different equipments are required for doing different types of jobs in plant. The equipment purchased must satisfy all the performance characteristics required for required in advance. For Ex. For most of the industrial needs, we require a constant speed motor. Therefore three phase induction motors are used. If motor is required for running trains, high improving the p.f of a system, synchronous motors are used.
c) Output or rating: the rating of any machine always refers to its full load output. The rating of alternators and transformers are rated in kVA. The D.C generators are rated in KW. The three phase induction motors are rated in H.P or kW. The conductors are usually in terms of their current
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starting torque motors are required for which D.C series motors are used. If motors are required for
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doing particular job. Therefore, we must know the performance characteristics of the equipment are
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transportation charges and also installation charges. This first cost must be as minimum as possible,
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carrying capacity. The cost of any machine depends on its rating. Therefore, we must know in advance the required output and accordingly the machines of required rating must be purchased. There is no point in purchasing equipment of either lower capacity or higher capacity, than what is the required.
d) Labour costs: different types of machines used in a plant require different operators having necessary skills. The machines become useless, if they are not operated by skilled operators. If skilled labour is not available, the operator selected must be trained properly before putting them on work with the machines. Therefore, we must have sufficient knowledge about the type of labour required, the cost of labour involved, the probable increase in labour cost in future and the type of training required to given to the labour.
e) Fuel and power requirements: for operating the machines, fuels and electrical power are required and they must be easily available. Before installing any machine, we must the cost of fuel and power required and all arrangements must be made so that, they are readily available for use. f) Efficiency: the machine purchased for a plant must have good efficiency as they reduce losses and output is more, the cost of production is reduced and margin of profit increases. However, the cost of high efficient machines is more. Most of machine work at a higher efficiency near about full load and their efficiency will be very small at low loads. Therefore, as far as possible, the machine must be always used at their rated output.
g) Cost of repairs and maintenance: if the machines go out of order frequently, the production will must be known in advance and they must be minimum. Care must be taken to reduce the costs of repairs and maintenance by keeping the standard parts of the machines always in stock so that, whenever they are required, they can be easily replaced. The machines must be properly lubricated in time and lubricating oils must be always kept in stock.
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suffer and cost of repairs and maintenance will be increase. The cost of repairs and maintenance
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h) Freedom from breakdown: there should not be any breakdown of machines as they effect production. If breakdowns are inevitable. They should be kept to a minimum. When such breakdowns occur, the machine should be repaired immediately and put to use.
i) Tolerances and allowances: the durability and reliability of the machine largely depends on the accuracy with witch the parts of the machines are manufactured and assembled. Therefore the tolerances and allowances of the parts must be minimum. If they are more, the maintenance, repair and operating cost will increase. The machines will work with low efficiency and the wearing out the machines will be accelerated.
j) Safety and flexibility: the machines purchased for a plant must be flexible in their operation. Hence, care must be taken while purchasing them. The selection must be made among the general purpose, special purpose and combination of these machines.
There must be safety to the operators while working. The machines must be fitted with safety machines stop working so that, there are no human hazards during operation. k) Floor space: the machines purchased for the plant should not be unnecessarily large sized. They should be as compact as possible, so that, the floor space is reduced. This reduces the cost of the workshop, cost of labour and installation also.
l) Ease of operation: the machines installed in the must be easy to operate, service and repair.
m) Other factors: in addition to taking into consideration, all the factors described, while selecting suitable equipment for a plant, costs relating to depreciation, insurance costs, taxes, salvage value etc. must also be considered. Methods of selection: Before buying any machine or equipments, it is clear that, the overall costs involved in buying transportation. A performance characteristic, ease of operation, period of operation, maintenance
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devices, so that, whenever disturbances occur on the machines, the supply is cut off and the
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and repairs etc. the highly efficient machine may have more initial cost but reduces running costs. A less efficient machine may have lower initial cost but running charges will be more. Ultimately, the final economic choice depends on the minimum overall annual cost. Considering all possible expenses. We have several methods available for this cost comparison. They are: i) Annual cost basis ii) Present worth basis iii) Unit cost basis iv) MAPI method v) Pay back period method vi) Rate of return method We shall discuss each one of these method in detail.
1. Annual cost basis: This method is also known as yearly cost basis or cost per year basis. In this equipments available for selection. The equipment which has the least annual cost will be recommended as economic choice. The various annual costs considered are: a) Interest on the capital (I) =Ci
Where, C=capital cost or first cost I=rate of interest per annum
b) Depreciation annual charges (D): A fixed amount is deposited in a bank every year in a bank equal installment. So that at the end of the life of the equipment. We have the ready amount to purchase a new equipment .the annual depreciation deposit, as per sinking fund method of calculation. Is given by D=Ai/ (l+i)-l=(C-V) i/ (l+i)-l Where, D=annual depreciation deposit
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method, all the items of expenditure are calculated on annual cost basis for various alternative
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS C=capital cost of equipment V=salvage value of equipment after L year L=period in years I=rate of interest on sinking fund deposits Then, C-V=A=Total depreciation deposit for L year
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Using equation (6.2), we can also find the book value of the equipment at any time of its life, For Ex. The book value of the equipment after x years of its life is given by Vx=C-Ax Where Vx=book value x years
Ax=total depreciation deposit for x years
V6=C-A6
Where, V6=book value after 6 years A6+depreciation deposit for 6 years
c) Annual maintenance cost (M)
All equipments require maintenance and repair work, when there is some problem. Therefore, every year, some amount has to be spent on maintenance and repairs. This cost is also known as operating cost.
d) Annual cost on taxes, insurance etc. (T) The state and central government taxes have to be paid on the products produced and insurance costs have to be paid towards equipment every year.
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At the end of 6 years, the book value of the equipment is given by
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e) Annual losses costs (L) The annual operating cost also depends on the efficiency of the equipment. If the losses are more, the costs involved due to these losses in the year are known as annual losses costs. The total annual cost of any equipment is given by the sum of all the above annual costs Total annual cost= I+D+M+T+L The total annual cost of all the equipments is calculated and the equipment with the least annual cost will be selected as the most economical choice.
This method of comparison has of the following advantages. x The calculations are simple. x Depreciation deposits are considered x Annual accounting becomes very easy
This method is also known as capitalized cost method. In this method, every item of expenditure is converted into its present worth. The first cost, maintenance costs, repair costs, salvage value and others are transformed their todays money value. All the present and future expenses are converted into their capitalized values. In this method, the entire expenditure on the equipment is set aside at
While comparing tow equipments to the economic choice, all the cost on the both the machines are time.
Suppose, there are two machines A and B which are to be compared for an economical choice. Let life of machine A is 10 years and that of B is 20 years. Then the period of comparison be made for 20 years. In that case, two machines of the type A are required, one at the beginning and another after 10 years. The calculation for each machines are done as follows:
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converted into their present worth assuming that both the equipments will be for equal length of
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the beginning itself for its life time operation.
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2. Present worth method:
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i. present worth of the first cost C=C itself ii. present worth of maintenance costs: Let Rs. M=maintenance cost per year The present worth of M required for L years of services for end of year deposits is given by P=present of M=m/i[(l=i)l-l/(l=i)l]=m/i[l-l/(l=i)l] In a similar way, the present worth of annual taxes, insurances can be calculated.
iii. Sometimes the life of the machine is purchased is less than the years of service required. At the end of life of first machine, a new machine has to be brought. The present worth of the second machine is calculated as follows. Present worth of the first machine=P1=first cost Life of the first machine=l years Salvage value of the equipment=V
Then the present worth of the second machine required after L years given by P2=P1-V/(l=i)2l
Then, the total present worth of all such machine is given b P=P1+P2+P3+.. i)
VP=V/ (l+i) l
However, the present worth of the salvage value should be considered as an item of income, not as expenditure. The some of the present worths of all the above items of expenditure are calculated for the various machines to be compared. The machine for which the present worth is minimum is recommended for purchase.
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The present worth of the salvage value of the machine is given by,
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The advantages of this method are: This method gives an idea of the total cost of the equipment concerned does not the comparison because, the change same for all machines. The disadvantages of this method are: i) ii) iii) Calculations are elaborate, though simple. O.K but for the subsequent ones, it changes. for its entire life. No
depreciation deposits are required to be made at end of each year.Any change in the operating cost
When more than one machine is required, the calculation of present worth for the first machine is Factors like obsolescence and inadequacy are taken into account.
3. Unit cost basis:
This method of comparison is applicable for purchasing articles which have a relatively short span of life and not very costly and which can not be compared on time basis. For Ex: electric lamps,
These articles have to be replaced frequently and the frequency of the replacement depends on the number of hours, the article is put into use. The unit of comparison may be the unit of output such as watt, watt-hour or ampere-hour. It may also be cost per element of a set of articles of the same depreciation because their short span of life. kind. In the case of this articles, the interest component is negligible as the first compared to
usually in hours and other related changes are determined. Then the cost per unit is determined for various alternatives and whichever is cheaper in overall cost is recommended for purchase. 4. MAPI method: MAPI is the abbreviation of Machinery and Allied Products Institute of Washington D.C. This new method of comparison was developed by George Terborgh, the director of the institute. According
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to this method, the equipment which gives the minimum adverse cost is to be selected for replacement. This method takes into consideration, the following aspects regarding the cost involved. i) All the equipments deteriorate in one form or other over a period of time of use and rate of deterioration increases with time of use. ii) The equipments are likely to become obsolete or suffer from inadequacy or both. As the machine is in use, it suffers form operation inferiority, which brings down its book value. This method of comparison used when an old machine has to be replaced by a new machine and cost comparison has to be made among the new machines. To find out the minimum adverse cost of various alternatives, the important factors considered in this method are (i) capital cost and (ii) operating inferiority cost. The minimum adverse cost of all the alternatives is calculated using the above two factors and whichever machine gives the minimum adverse cost, is selected as the economic choice. In other methods, the above two factors are considered in the form of depreciation of the equipment.
machine replacing the old machine is called the challenger. The minimum adverse cost for both the defender and the challenger is calculated and the defender is replaced by the challenger, only if the adverse minimum cost of the latter is less than that of the former. When replacement is required, then the minimum adverse cost of the available alternatives is calculated and the one which has the capital cost of the equipment decreases with time. The curve EE shows the way in which the working inferiority expenditure on the equipment increases with time. Both the curves meet at point method whichever alternative give the least of all these minima is selected as the best alternative for replacement. The calculations involved in MAPI method are very complex cumbersome and sophisticated. However MAPI-charts and work sheets are available for use. 5. Pay back period method: This method helps to determine the period in years. At the end of which the equipment pays back the invested capital.
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P at which the net cost is minimum. This is determined for all the alternatives available using MAPI
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minimum adverse cost is selected for replacement.The curve CC shows the way in which the
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Let C=capital investment R=annual profit after deducting the taxes Lp=pay back period in years Then, Lp=C/R This method is not normally used for comparison as it has the following disadvantages. i) ii) iii)
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It is not reliable as it does not consider insurance costs, interest charges and maintenance charges. It does not take account the allowances for depreciation and obsolescence. initial years. The profit will be less than the later years. It is assumed that, the profit and taxes will be same every year, which is not correct. During the
6. Rate of return method:
In this method, the average net income per year, after deducting the taxes and allowances for depreciation, is expressed as a percentage of the capital investment.
The percentage rate of return is calculated for all the alternatives and the alternative for which the rate of return is selected for replacing the old machine. All the expected earnings over the years and salvage value are converted into their present worths
C=Rn/(l+r)n=R1/(l+i)1+R2/(l+i)2+R3/(l+i)3+Rn/(l+i)n+V/(l+r)n
Rn=expected return in the nth year r=rate of return R1=return for the first year R2=return for the second year etc.
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Where, C=investment cost or present worth
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Percentage rate of return= Net income per year/Net investment*100
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS V=salvage value of the equipment after n years
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The disadvantage of this method is that the rate of return r can not be determined exactly. This can be determined only by trial and error method r is compared with the rate of interest i if r>i, the new machine is worthy of buying to replace the old. If r<i, the new machine is not worth buying.
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UNIT 6 & 7
Interior wiring system, Wiring system, earthing, Estimation of wiring installation. Power installation, Load calculation Estimate for motor installation, pump set, workshop, theater etc. Introduction Wire size selection, wiring materials for power circuits
Before any electrical project is initiated, it is essential to list out the materials required and compute the cost involved for completion of that work. Thus estimation consists of two parts; (a) Preparing list of various items involved and
(b) Calculating the cost of materials and labour cost involved for executing the work. The quantity and specification of various materials required for installation work written in a tabular form is called schedule of materials.
Graphical symbols for diagram
In engineering drawing it is common practice to employ graphical symbols to represent various components. In order to get the same meaning to every one who reads the drawing, symbols are the convention adopted by the International Electro Technical Commission. An important criterion in the selection of symbol is that, as far as possible, they should be self explanatory and easy to draw. standardized by Bureau of Indian Standards (BIS). As far as possible these symbols are agreed with
Standard values of voltages For the sake of completeness, all the standard values of voltages given in IS: 585 1962. Single phase, two wire system The standard voltage shall be 240 V Three phase system -415 V, 3.3 kV, 6.6 kV, 11 kV, 22 kV, 33 kV, 66 kV, 110 kV, 132 kV, 220kV and 400 kV. The standard dc voltage shall be 220 / 440 V
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Voltage limits for AC system The voltage at any point of the system under normal conditions shall not depart fromthe declared voltage by more than the values given below; x 6% in the case of low (250V or less) or medium (251 to 650 V) voltage x 6% in the higher side or 9% on the lower side in case of High voltage (651 V to33 kV x 12.5% in case of Extra High voltage ( above 33 kV)
Distance from Electric Lines
No building shall be allowed to be erected or re- erected, or any additions or alterations made to the existing building unless the following minimum clearances are provided from the over head electric supply lines. Vertical Horizontal
(b) High voltage lines above 11 kV up to and including 33kV3.7 2.0
clearance indicated, a vertical and horizontal clearance of 3.0 m from every additional 33 kV or part thereof shall be provided. Wiring Installations
and Accessories
A ceiling rose or any other attachment shall not be used on a circuit, the voltage of which normally exceeds 250 V.
Each 15 A socket outlet provided in building for the use of domestic appliances such as AC, water cooler etc. Each socket outlet shall be controlled by a switch which shall preferably be located immediately adjacent thereto or combined therewith.
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A major portion of the fixed installation design in a building relates to wiring installation. Fittings
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(c) Extra high voltage lines 3.7 2.0Note:- For extra high voltage lines apart from the minimum
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(a) Low & medium Voltage lines 2.5 1.2Up to and including 11 kV 3.7 1.2
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Ordinary socket outlet may be fixed at any convenient place at a height above20 cm from the floor level. In a situation where the socket outlet is accessible to children, socket outlet which automatically gets screened by the with drawl of plug is preferable. In an earthed system of supply, a socket outlet with plug shall be three pint types with third terminal connected to earth. All lamps unless otherwise required and suitably protected, shall be hung at a height of not less
Unless otherwise specified, the clearance between the bottom most point of the ceiling fan and the floor shall be not less than 2.4 m. the minimum clearance between the ceiling and the plane of the blade shall be not less than 30 cm.(6.2) Reception and Distribution of Main Supply
There shall be circuit breaker or a linked switch with fuse on each live conductor of the supply the termination of service line.
Branch distribution board shall be provided with a fuse or a miniature circuit breaker (MCB) or
Light and fans may be wired on a common circuit. Such sub-circuit shall not have more than a total of 10 points of light, fan and 5 A socket outlets. The load of such circuit shall be restricted to 800 Watts. Power sub-circuit shall be designed according to the load but in no case shall there be more
The load on any low voltage sub circuit shall not exceed 3000 Watts. In case of new installation, any future modification.
The distribution fuse board shall be located as near as possible to the center of the load. These shall be fixed in suitable stanchion or wall and shall not be more than 2 m from the floor level. All conductors shall be of copper or aluminium. Conductor for final sub-circuit of fan and light wiring shall have a nominal cross sectional area not less than 1Sq. mm copper and 1.5 Sq. mm aluminium. The cross sectional area for power wiring shall be not less than 2.5 Sq. mm copper, 4
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all circuits and sub-circuits shall be designed by making a provision of 20% increase in load due to
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both of adequate rating / setting.
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mains at the point of entry. The main switch shall be easily accessible and shall be situated near to
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Sq. mm aluminium. The minimum cross sectional area of conductors of flexible cord shall be 0.5 Sq.mm copper.(6.3) Conduit wiring Rigid non-metallic conduits are used for surface, recessed and concealed conduit wiring. Conductors of ac supply and dc supply shall be bunched in separate conduits. The numbers of insulated cables that may be drawn in to the conduit are given in table. Maximum permissible number of 1.1 kV grade single core cables that may be drawn into rigid non metallic conduits
Earthing or grounding means connecting all parts of the apparatus (other than live part) to the general mass of earth by wire of negligible resistance. This ensures that all parts of the equipment other than live part shall be at earth potential (ie, zero potential) so that the operator shall be at earth potential at all the time, thus will avoid shock to the operator. The neutral of the supply system is also solidly earthedto ensure its potential equal to zero. Earthing shall generally be carried out in accordance with the requirement of Indian Electricity Rule 1956, particularly IE Rules 32, 51, 61, 62, 67, 69, 88(2) and 90.
through an earth electrode. In the case of high and extra high voltage the neutral point shall be earthed by not less than two separate and distinct connections. Each earth system shall be so devised that the testing of individual earth electrode is possible. It is recommended that the value of any earth system resistance shall not be more than 5, unless otherwise specified.
Under ordinary conditions of soil, use of copper, iron or mild steel electrodes is recommended. In electrode. Use similar materials for earth electrode and earth conductors to avoid corrosion. Design data on earth electrode Standard earth electrodes are; (a) Road and pipe electrodes, (b) Strip or conductor electrodes, (c)Plate electrodes, and (d) Cable sheaths.
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direct current system, however due to corrosive action, it is recommended to use only copper
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All medium voltage equipment shall be earthed two separate and distinct connections with earth
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Type of Electrodes Measurement Rod Pipe Strip Round conductor Plate Diameter(not less than)16 mm(Steel orGI)12.5 mm(copper)38 mm(Steel orGI)100 mm(CastIron)Length/ Depth of burial (not lessthan)2.5 m(ideal 3 to3.5 m)2.5 m 0.5 m 1.5 m 1.5 mSize - -25 x 1.60mm(copper)25 x 4(Steel orGI)3.0 Sq. mm(copper)6 Sq. mm(Steel or GI)60 x 60 cm Thickness - - - -6.30 mm(copper)3.15 mm(Steel orGI)(7.2) Design of earth electrode Earth resistivity, = 2SR -m, where S = distance between successive electrode in m, R = earth megger reading in Permissible current density for 3 sec; Copper = 118 A/mm Aluminium = 73 A/mm Steel (GI) = 46 A/mm Current density permissible at an earth electrode,
Domestic Electric Installations and Estimates
Domestic dwellings/ Residential buildings include any buildings in which sleeping accommodation is provided for normal residential purpose with cooking and dining facilities Estimation of load requirements
The electrical installation in this area mainly consists of lights, fans, electrical appliances and other
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gadgets. In estimating the current to be carried, following ratings are recommended.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Number of points in branch circuit Recommended numbers of points for dwelling units is as follows
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Number of socket outlets
Recommended schedule of socket outlets for various sub-units are as follows
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Recommended levels of illumination
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Domestic wiring
Balancing of circuit in 3 phase installation shall be planned before hand. It is recommended that all
Power sub-circuits shall be kept separate and distinct from light and fan sub-circuit. All wiring and electrical load centers. It is recommended to provide at least two lighting sub-circuits in each house. Separate lighting circuits be utilized for all external lightings of steps, walkways, porch, car park terrace etc. with two way switch control. Whatever the load to be fed is more than 1 kW, it shall be controlled by an isolator switch or MCB
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shall be on the distribution system with main and branch distribution boards convenient physical
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socket outlets in a room are connected to one phase.
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Switch boards shall not be erected above gas stove or sink or within 2.5 m of any washing unit in the washing room. A switch board shall not be installed at height less than 1.25 m from floor level, unless the front of the switch board is completely enclosed by a door Energy meters shall be installed at a height where it is convenient to note themeter reading; it should preferably not be installed at a height not less than 1m from the ground. Sequence to be followed in carrying out the estimate
Wiring layout: Prepare building plan on a suitable scale and mark electrical points, switch boards, main board, meter board, distribution board etc. on the plan using specified symbols. The path of wiring showing connection to each point is marked by a little thick line..
Calculation of total connected load: The total connected load and hence the total current is calculated for deciding the cable size, rating of main switch board and distribution board. Selection of Main Switch: Once the connected load is calculated, the main switch can be switches for domestic purpose:
DPIC (Double Pole Iron Clad) main switch: or 30 A, 250V or DPMCB(Double Pole Miniature Circuit Breaker): 5, 10, 16, 32 and 63 A, 250 Vb)
Miniature Circuit Breaker): 16, 32 and 63 A, 500 Beyond this TPMCCB (Triple Pole Molded Case Circuit Breaker): 100,200, 300 and 500 A, 660 Vc) TPN main switch: 30, 60, 100, 200, 300 A, 500 V or TPNMCB: 16, 32,63A, 500 V, beyond this TPNMCCB: 100, 200, 300, 500 A, 660 V.4. Selection of Main Distribution Board: The Main Distribution Board is a fuse box or MCB box where different sub-circuits are terminated. Numbers of sub-circuits are decided based on the total connected load or total number of points. Assumptions: the conditions which are not specified in the
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TPIC (Triple Pole Iron Clad) main switch: 30, 60, 100, 200 A, 500 V or TPMCB (Triple Pole
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question maybe assumed conveniently. Eg:- location of main switch board, switchboards, height of building. Calculation of length of conduit: To avoid duplicity in calculating the length of conduit pipe, this may be calculated in three stages. (a) The conduit installed from switch board up to horizontal run (HR) including from main switch or DB to HR. (b) The conduit on walls running parallel to the floor ie, the HR below ceiling. (c) The conduit installed between HR and ceiling, along ceiling and ceiling to last point on HR. The total length of conduit is calculated by adding the length of conduit to obtain from the three stages and including 10% wastage.
Calculation of length of phase wire and neutral wire: The phase wire and neutral wire is calculated sub-circuit wise. Once it is calculated, wastage of 15% is included.8.
carried out in length but it is converted into weight while preparing material. Preparing Material Table: The material table should be prepared with complete specification of
Power distribution in an industry The power distribution in an industry has different levels Main Switch Board (MSB) level
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each item. Current rating of copper conductor single core cables
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Sub Switch Board (SSB) level
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Distribution Board (DB) levelDB is the last element before the loads. But large loads are directly connected to SSBor MSB. DB / DFB (Distribution Fuse Board) / FDB (Fuse Distribution Board) Usually even numbers of ways are used in DBs (2, 4, 6, 8, 10 and 12). As per IS the maximum number of ways is limited to 12.Eg:- 12 way 3 ph DB = 4 x 12 = 48 cable connection including neutral. Usual current rating of DB s are : 16A, 32A and 63A
63A, 12 way DB s are not common. Since maximum input current = 63 x12 = 700A, which is not possible to handle by a DB. Hence 63A DB is 2 ways or4 ways. Motor loads up to 20 hp are fed from DB s of various rating.
All DBs have isolator or SFU as incomer switch. But in some case this isavoided if the switch board supplying to the DB is within 3m from the DB
In a designed system 20% spare outlets are kept for future expansion. ie, ineach DB, 1 or 2 outlets shall be kept as spares.
Selection of rating of incomer isolator/SFU and incomer feeder size
demand from simply computing by adding all connected loads. The maximum demand is expressed through a factor called Diversity Factor, Sum of connected load Diversity Factor (DF) =Simultaneous max. Demand (MD)>1
From the requirement data, the details of connected load on each DB areknown to us. For spare outlets, an average of other outlets can be assumed.
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In any system, all the connected loads will not be put on simultaneously. This reduces the maximum
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If the DF is known, we can find the maximum current requirement of the DB to feed all loads including spares. Instead of furnishing the DF, a usual practice is specifying MD. A commonly accepted and safe value of DF is 1.5. This value can be assumed for each DB If motor loads are connected, for selection of isolator / SFU, the starting
Grading or Discrimination between Feeder Fuse and DB Fuse The feeder to a DB will be fed from an SSB or MSB. This feeder will be protected by the HRC fuse motor protective fuse in the DB. This is achieved by proper grading between the fuses. The fuse of SSB/MSB is denoted as major fuse and that of DB is termed as minor fuse. For achieving grading the ratio between major and minor fuses shall be 2:1 or more Feeder cable is selected by considering the 20% excess of the MD of DB. Also major fuse rating should match with the cable selection. If the cable length exceeds 75 to 100 mtr, the voltage drop condition should betaken in to account. The voltage drop in the feeder should not be more than 3%in the maximum demand condition.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Design of incomer SFU, Cable size and Bus bar rating for SSBs and MSBs
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Switch boards in general are power distribution centers with SFUs/MCCBs/ACBs/OCBs for controlling outlets and incomer. Unlike DBs, switchboards are specified by its total current carrying capacity or incomer current rating. Where as in DBs current rating of the outlet is the specified rating. Standard switchboard ratings are 100 A, 200 A, 400 A, 800 A, 1200 A, 1600 A, 2000 A, 2500 A and3200 A. If the incomer supply is controlled with an SFU, the switch board is called switch fuse controlled board and if the incomer is ACB/ OCB controlled, it is called breaker controlled board. A switch board having three sections Outlet control gears Bus chamber Incomer control gear
The outlet switch, fuse and cable rating are decided by the load that has to be handled through that feeder. If the number of loads is more, SSB is required, which is installed almost at the load centers. In smaller set up SSB may not be necessary and MSB will be the only switch board. Consider the setup:-
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For 63 A and 100 A respective rating of switch and fuse are available.
For 80 A, 100 A switch with 80 A fuse may be used, since 80 A switch is not available. For 40 hp motor with star-delta starter
Spare is taken as 100 A
Total out going fuse rating = 63 x 2 + 100 x 3 + 80 = 506 A
The MD will be = (506/2) = 253 A
switch and fuse shall have a rating of 300A is used. If 300A switch is not available, 400A switch with 300A fuse can be used. The incomer cable is also rated for 300A. But in this case, instead of 56A (40 x 1.4) continuous current of 40 hp motor, we have taken 84 A and fuse of 100A. Considering all these, a practical and most economical selection is 250Aincomer.
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Taking 20 % extra, the maximum current requirement = 303.6 A say, 300 A Hence the incomer
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DF of 2 is assumed
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Starting current = 40 x 1.4 x 1.5 = 84 A Therefore 100 A switch and fuse are used
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Since the incomer fuse is 250A, any fuse on the outlet greater than 125A will grade with 250A. Here maximum fuse rating is100A and grading is automatically satisfied
with 300A fuse can be used. The incomer cable is also rated for 300A. But in this case, instead of 56A (40 x 1.4) continuous current of 40 hp motor, we have taken 84 A and fuse of 100A. Considering all these, a practical and most economical selection is 250Aincomer. Since the incomer fuse is 250A, any fuse on the outlet greater than 125A will grade with 250A.
Next step is finding Bus bar size. Bus bar materials are: Aluminum or Aluminium alloy working current density, 0.8A/ Sq.mm Copper working current density, 1.2 A/ Sq.mm
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Here maximum fuse rating is100A and grading is automatically satisfied.
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS For the above set up:250/0.8 = 312.5 Sq. mm For neutral bus bar, half the size of phase bus bar size is sufficient.
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ie, 40 x 8 mm or 50 x 6 mm Al bus bar may be used for phases and 20 x 8 mm or 25 x 6 mm for neutral .Or31 x 6 mm Cu bus bar may be used for phases and 31 x 3 mm for neutral.
Used for phases and 20 x 8 mm or 25 x 6 mm for neutral. Or 31 x 6 mm Cu bus bar may be used for phases and 31 x 3 mm for neutral. For small switch boards the distance between the bus supports will be 50 cms. If DF is not given, we can assume, DF as 2 for all switch boards. The term ampacity is some times used to denote the maximum current rating of the feeders. If DF
is not clearly known, the total ampacity of outlet feeders shall not be more than two times the ampacity of the incomer feeder. The feeder cables need to be selected for the fuse used in the SFU
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For small switch boards the distance between the bus supports will be 50 cms.
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UNIT - 8
Depreciation and valuation of machinery Inventory, Economic order quantity break-even analysis
Depreciation refers to two very different but related concepts: periods in which the assets are used (depreciation with the matching principle).
The former affects values of businesses and entities. The latter affects net income. Generally the cost is allocated, as depreciation expense, among the periods in which the asset is expected to be used. Such expense is recognized by businesses for financial reporting and tax purposes. Methods of computing depreciation may vary by asset for the same business. Methods and lives may be specified in accounting and/or tax rules in a country. Several standard methods of computing depreciation expense may be used, including fixed percentage, straight line, and declining balance depreciation expense of 100 per year for 5 years may be recognized for an asset costing 500.
of the vehicle were to be sold and the sales price exceeded the depreciated value (net book value) then the excess would be considered a gain and subject to depreciation recapture. In addition, this gain above the depreciated value would be recognized as ordinary income by the tax office. If the sales price is ever less than the book value, the resulting capital loss is tax deductible. If the sale price were ever more than the original book value, then the gain above the original book value is recognized as a capital gain.
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methods. Depreciation expense generally begins when the asset is placed in service. Example: a
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The decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to
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If a company chooses to depreciate an asset at a different rate from that used by the tax office then this generates a timing difference in the income statement due to the difference (at a point in time) between the taxation department's and company's view of the profit. Declining-balance method (or Reducing balance method)
Depreciation methods that provide for a higher depreciation charge in the first year of an asset's life and gradually decreasing charges in subsequent years are called accelerated depreciation methods. This may be a more realistic reflection of an asset's actual expected benefit from the use of the asset: many assets are most useful when they are new. One popular accelerated method is the decliningbalance method. Under this method the book value is multiplied by a fixed rate.
Annual Depreciation = Depreciation Rate * Book Value at Beginning of Year
The most common rate used is double the straight-line rate. For this reason, this technique is referred to as the double-declining-balance method. To illustrate, suppose a business has an asset depreciation rate. Since the asset has 5 years useful life, the straight-line depreciation rate equals (1 / 5) = 20% per year. With double-declining-balance method, as the name suggests, double that rate, or 40% depreciation rate is used. The table below illustrates the double-declining-balance method of depreciation. with $5,000 original cost, $1,500 salvage value, and 5 years useful life. First, calculate straight-line
When using the double-declining-balance method, the salvage value is not considered in determining the annual depreciation, but the book value of the asset being depreciated is never brought below its salvage value, regardless of the method used. The process continues until the
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salvage value or the end of the asset's useful life, is reached. In the last year of depreciation a subtraction might be needed in order to prevent book value from falling below estimated Scrap Value.
Since double-declining-balance depreciation does not always depreciate an asset fully by its end of life, some methods also compute a straight-line depreciation each year, and apply the greater of the two. This has the effect of converting from declining-balance depreciation to straight-line depreciation at a midpoint in the asset's life.
It is possible to find a rate that would allow for full depreciation by its end of life with the formula: \mbox{depreciation rate} = 1 - \sqrt[N]{\mbox{residual value} \over \mbox{cost of fixed asset}}, \mbox{depreciation rate} = 1 - \sqrt[N]{\mbox{1500} \over \mbox{5000}}, where N is the estimated life of the asset (for example, in years).
Activity depreciation
Activity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a vehicle, or a cycle count for a machine. When the asset is acquired, its life is estimated in terms of this level of activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. The per-mile depreciation rate is calculated as: ($17,000 cost - $2,000 salvage) / 50,000 rate by the actual activity level. miles = $0.30 per mile. Each year, the depreciation expense is then calculated by multiplying the
Sum-of-years' digits method Sum-of-years' digits is a depreciation method that results in a more accelerated write-off than straight line, but less than declining-balance method. Under this method annual depreciation is determined by multiplying the Depreciable Cost by a schedule of fractions. depreciable cost = original cost salvage value book value = original cost accumulated depreciation
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Example: If an asset has original cost of $1000, a useful life of 5 years and a salvage value of $100, compute its depreciation schedule. First, determine years' digits. Since the asset has useful life of 5 years, the years' digits are: 5, 4, 3, 2, and 1. Next, calculate the sum of the digits. 5+4+3+2+1=15 The sum of the digits can also be determined by using the formula (n2+n)/2 where n is equal to the useful life of the asset. The example would be shown as (52+5)/2=15
Depreciation rates are as follows: the 5th year.
5/15 for the 1st year, 4/15 for the 2nd year, 3/15 for the 3rd year, 2/15 for the 4th year, and 1/15 for
Units-of-production depreciation method Under the units-of-production method, useful life of the asset is expressed in terms of the total \mbox{Annual Depreciation Expense} = {\mbox{Cost of Fixed Asset} - \mbox{Residual value} \over \mbox{Estimated Total Production}} \times \mbox{Actual Production} number of units expected to be produced:
Suppose, an asset has original cost $70,000, salvage value $10,000, and is expected to produce 6,000 units. Depreciation per unit = ($70,00010,000) / 6,000 = $10
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS 10 actual productions will give the depreciation cost of the current year.
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The table below illustrates the units-of-production depreciation schedule of the asset.
Depreciation stops when book value is equal to the scrap value of the asset. In the end, the sum of
Units of time depreciation
Units of time depreciation is similar to units of production, and is used for depreciation equipment linear year to year.
A simple example can be given for construction companies, where some equipment is used only for some specific purpose. Depending on the number of projects, the equipment will be used and depreciation charged accordingly. Group depreciation method
Group depreciation method is used for depreciating multiple-asset accounts using straight-linedepreciation method. Assets must be similar in nature and have approximately the same useful lives.
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used in mine or natural resource exploration, or cases where the amount the asset is used is not
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accumulated depreciation and scrap value equals the original cost.
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Composite depreciation method
The composite method is applied to a collection of assets that are not similar, and have different equipment. Depreciation on all assets is determined by using the straight-line-depreciation method.
Composite life equals the total depreciable cost divided by the total depreciation per year. $5,900 / $1,300 = 4.5 years. $6,500 = 0.20 = 20% Composite depreciation rate equals depreciation per year divided by total historical cost. $1,300 / Depreciation expense equals the composite depreciation rate times the balance in the asset account (historical cost). (0.20 * $6,500) $1,300. Debit depreciation expense and credit accumulated When an asset is sold, debit cash for the amount received and credit the asset account for its original cost. Debit the difference between the two to accumulated depreciation. Under the composite the gains and losses from assets sold before and after the composite life will average them selves out. method no gain or loss is recognized on the sale of an asset. Theoretically, this makes sense because depreciation.
Tax depreciation Most income tax systems allow a tax deduction for recovery of the cost of assets used in a business or for the production of income. Such deductions are allowed for individuals and companies. Where the assets are consumed currently, the cost may be deducted currently as an expense or treated as
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service lives. For example, computers and printers are not similar, but both are part of the office
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part of cost of goods sold. The cost of assets not currently consumed generally must be deferred and recovered over time, such as through depreciation. Some systems permit full deduction of the cost, at least in part, in the year the assets are acquired. Other systems allow depreciation expense over some life using some depreciation method or percentage. Rules vary highly by country, and may vary within a country based on type of asset or type of taxpayer. Many systems that specify depreciation lives and methods for financial reporting require the same lives and methods be used for tax purposes. Most tax systems provide different rules for real property (buildings, etc.) and personal property (equipment, etc.).
Capital allowances
A common system is to allow a fixed percentage of the cost of depreciable assets to be deducted each year. This is often referred to as a capital allowance, as it is called in the United Kingdom. Deductions are permitted to individuals and businesses based on assets placed in service during or before the assessment year. Canada's Capital Cost Allowance are fixed percentages of assets within a class or type of asset. Fixed percentage rates are specified by type of asset. The fixed percentage is multiplied by the tax basis of assets in service to determine the capital allowance deduction. The tax law or regulations of the country specifies these percentages. Capital allowance calculations may be based on the total set of assets, on sets or pools by year (vintage pools) or pools by classes of assets.
Tax lives and methods
Revenue Agency specifies numerous classes based on the type of property and how it is used. Under the United States depreciation system, the Internal Revenue Service publishes a detailed guide incorporates specified lives for certain commonly used assets (e.g., office furniture, computers, and automobiles) which override the business use lives. U.S. tax depreciation is computed under the double declining balance method switching to straight line or the straight line method, at the option of the taxpayer.[7] IRS tables specify percentages to apply to the basis of an asset for each year in which it is in service. Depreciation first becomes deductible when an asset is placed in service.
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which includes a table of lives based on types of businesses in which assets are used. The table also
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Some systems specify lives based on classes of property defined by the tax authority. Canada
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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Additional depreciation
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Many systems allow an additional deduction for a portion of the cost of depreciable assets acquired in the current tax year. The UK system provides a first year capital allowance of 50,000. In the United States, two such deductions are available. A deduction for the full cost of depreciable tangible personal property is allowed up to $250,000. This deduction is fully phased out for businesses acquiring over $800,000 of such property during the year.[8] In addition, additional first year depreciation of 50% of the cost of most other depreciable tangible personal property is allowed
Real property
Many tax systems prescribe longer depreciable lives for buildings and land improvements. Such lives may vary by type of use. Many such systems, including the United States and Canada, permit cost. Generally, no depreciation tax deduction is allowed for bare land. In the United States, residential rental buildings are depreciable over a 27.5 year or 40 year life, other buildings over a 39 or 40 year life, and land improvements over a 15 or 20 year life, all using the straight line method. depreciation for real property using only the straight line method, or a small fixed percentage of
Averaging conventions
Depreciation calculations can become complex if done for each asset a business owns. Many systems therefore permit combining assets of a similar type acquired in the same year into a pool. Depreciation is then computed for all assets in the pool as a single calculation. Calculations for such pool must make assumptions regarding the date of acquisition. The United States system allows a taxpayer to use a half year convention for personal property or mid-month convention for real property. Under such a convention, all property of a particular type is considered acquired at the midpoint of the acquisition period. One half of a full period depreciation is allowed in the acquisition period and in the final depreciation period. United States rules require a mid-quarter convention for personal property if more than 40% of the acquisitions for the year are in the final quarter.
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as a deduction.[9] Some other systems have similar first year or accelerated allowances.
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To calculate composite depreciation rate, divide depreciation per year by total historical cost. To calculate depreciation expense, multiply the result by the same total historical cost. The result, not surprisingly, will equal to the total depreciation Per Year again. Common sense requires depreciation expense to be equal to total depreciation per year, without first dividing and then multiplying total depreciation per year by the same number. Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials.
The scope of inventory management concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. inventory, quality management, replenishment, returns and defective goods, and demand
Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs are kept in check. It also involves systems and processes that identify inventory requirements, set targets, provide replenishment techniques, report actual and projected inventory status and handle all functions related to the and out of stockroom locations and the reconciling of the inventory balances. It also may include ABC analysis, lot tracking, cycle counting support, etc. Management of the inventories, with the functions to balance the need for product availability against the need for minimizing stock holding and handling costs.
Definition: Inventory management Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random
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primary objective of determining/controlling stock levels within the physical distribution system,
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tracking and management of material. This would include the monitoring of material moved into
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disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Or can be defined as the left out stock of any item used in an organization.
The reasons for keeping stock There are three basic reasons for keeping an inventory:
Time - The time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amounts of inventory to use in this lead time. However, in practice, inventory is to be maintained for consumption during 'variations in lead time'. Lead time itself can be buffers to meet uncertainties in demand, supply and movements of goods. Economies of scale - Ideal condition of "one unit at a time at a place where a user needs it, when he storing brings in economies of scale, thus inventory. needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and All these stock reasons can apply to any owner or product addressed by ordering that many days in advance. Uncertainty - Inventories are maintained as
Stock Keeping Unit (SKU) is a unique combination of all the components that are assembled into the purchasable item. Therefore, any change in the packaging or product is a new SKU. This level of Stock out means running out of the inventory of an SKU. New old stock" (sometimes abbreviated NOS) is a term used in business to refer to merchandise being offered for sale that was manufactured long ago but that has never been used. Such merchandise may not be produced anymore, and the new old stock may represent the only market source of a particular item at the present time. detailed specification assists in managing inventory.
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Special terms used in dealing with inventory
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Buffer/safety stock Cycle stock (Used in batch processes, it is the available inventory, excluding buffer stock) De-coupling (Buffer stock held between the machines in a single process which serves as a buffer for the next one allowing smooth flow of work instead of waiting the previous or next machine in the same process)Anticipation stock (Building up extra stock for periods of increased demand - e.g. ice cream for summer) Pipeline stock (Goods still in transit or in the process of distribution - have left the factory but not arrived at the customer yet)
Inventory examples
While accountants often discuss inventory in terms of goods for sale, organizations - manufacturers, they do not intend to sell. Manufacturers', distributors', and wholesalers' inventory tends to cluster in warehouses. Retailers' inventory may exist in a warehouse or in a shop or store accessible to an organization uses. Stock ties up cash and, if uncontrolled, it will be impossible to know the actual level of stocks and therefore impossible to control them. customers. Inventories not intended for sale to customers or to clients may be held in any premises
divide their "goods for sale" inventory into: Raw materials - materials and components scheduled for use in making a product. goods. Finished goods - goods ready for sale to customers. Goods for resale - returned goods that are salable.
For example: Manufacturing A canned food manufacturer's materials inventory includes the ingredients to form the foods to be canned, empty cans and their lids (or coils of steel or aluminum for constructing those components), labels, and anything else (solder, glue, etc.) that will form part of a finished can. The firm's work in
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Work in process, WIP - materials and components that have began their transformation to finished
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While the reasons for holding stock were covered earlier, most manufacturing organizations usually
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service-providers and not-for-profits - also have inventories (fixtures, furniture, supplies, etc.) that
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process includes those materials from the time of release to the work floor until they become complete and ready for sale to wholesale or retail customers. This may be vats of prepared food, filled cans not yet labeled or sub-assemblies of food components. It may also include finished cans that are not yet packaged into cartons or pallets. Its finished good inventory consists of all the filled and labeled cans of food in its warehouse that it has manufactured and wishes to sell to food distributors (wholesalers), to grocery stores (retailers), and even perhaps to consumers through arrangements like factory stores and outlet centers. Principle of inventory proportionality Purpose
Inventory proportionality is the goal of demand-driven inventory management. The primary optimal outcome is to have the same number of days' (or hours', etc.) worth of inventory on hand across all products so that the time of run out of all products would be simultaneous. In such a case, there is no "excess inventory," that is, inventory that would be left over of another product when the first product runs out. Excess inventory is sub-optimal because the money spent to obtain it could have been utilized better elsewhere, i.e. to the product that just ran out. The secondary goal of inventory proportionality is inventory minimization. By integrating accurate demand forecasting with inventory management, rather than to past averages, a much more accurate and optimal outcome. Integrating demand forecasting into inventory management in this way also allows for the prediction of the "can fit" point when inventory storage is limited on a per-product basis.
Applications
the consumer, as opposed to "keep full" systems where a retail consumer would like to see full shelves of the product they are buying so as not to think they are buying something old, unwanted or stale; and differentiated from the "trigger point" systems where product is reordered when it hits a certain level; inventory proportionality is used effectively by just-in-time manufacturing processes and retail applications where the product is hidden from view.
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The technique of inventory proportionality is most appropriate for inventories that remain unseen by
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One early example of inventory proportionality used in a retail application in the United States was for motor fuel. Motor fuel (e.g. gasoline) is generally stored in underground storage tanks. The motorists do not know whether they are buying gasoline off the top or bottom of the tank, nor need they care. Additionally, these storage tanks have a maximum capacity and cannot be overfilled. Finally, the product is expensive. Inventory proportionality is used to balance the inventories of the different grades of motor fuel, each stored in dedicated tanks, in proportion to the sales of each grade. Excess inventory is not seen or valued by the consumer, so it is simply cash sunk (literally) underground storage tanks. This application for motor fuel was first developed and implemented by Petrolsoft Corporation in 1990 for Chevron Products Company. Most major oil companies use such systems today. The use of inventory proportionality in the United States is thought to have been inspired by Japanese just-in-time parts inventory management made famous by Toyota Motors in the 1980s.[3] High-level inventory management into the ground. Inventory proportionality minimizes the amount of excess inventory carried in
It seems that around 1880 there was a change in manufacturing practice from companies with relatively homogeneous lines of products to horizontally integrated companies with unprecedented diversity in processes and products. Those companies (especially in metalworking) attempted to achieve success through economies of scope - the gains of jointly producing two or more products in one facility. The managers now needed information on the effect of product-mix decisions on overall profits and therefore needed accurate product-cost information. A variety of attempts to However, the burgeoning need for financial reporting after 1900 created unavoidable pressure for financial accounting of stock and the management need to cost manage products became cost accounting. The dominance of financial reporting accounting over management accounting remains to this day with few exceptions, and the financial reporting definitions of 'cost' have distorted effective management 'cost' accounting since that time. This is particularly true of inventory.Hence, high-level financial inventory has these two basic formulas, which relate to the accounting period:Cost of Beginning Inventory at the start of the period + inventory purchases within the period + cost of production within the period = cost of goods available overshadowed. In particular, it was the need for audited accounts that sealed the fate of managerial achieve this were unsuccessful due to the huge overhead of the information processing of the time.
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Cost of goods available cost of ending inventory at the end of the period = cost of goods sold
The benefit of these formulas is that the first absorbs all overheads of production and raw material costs into a value of inventory for reporting. The second formula then creates the new start point for the next period and gives a figure to be subtracted from the sales price to determine some form of sales-margin figure. Manufacturing management is more interested in inventory turnover ratio or average days to sell inventory since it tells them something about relative inventory levels.
Inventory turnover ratio (also known as inventory turns) = cost of goods sold / Average Inventory = Cost of Goods Sold / ((Beginning Inventory + Ending Inventory) / 2) and its inverse year / Inventory Turnover Ratio Average Days to Sell Inventory = Number of Days a Year / Inventory Turnover Ratio = 365 days a This ratio estimates how many times the inventory turns over a year. This number tells how much cash/goods are tied up waiting for the process and is a critical measure of process reliability and generally not a good figure (depending upon the industry), whereas a factory that moves from six turns to twelve turns has probably improved effectiveness by 100%. This improvement will have some negative results in the financial reporting, since the 'value' now stored in the factory as inventory is reduced. While these accounting measures of inventory are very useful because of their simplicity, they are also fraught with the danger of their own assumptions. There are, in fact, so many things that can used. These include: vary hidden under this appearance of simplicity that a variety of 'adjusting' assumptions may be effectiveness. So a factory with two inventory turns has six months stock on hand, which is
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Specific Identification Weighted Average Cost Moving-Average Cost FIFO and LIFO.
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Inventory Turn is a financial accounting tool for evaluating inventory and it is not necessarily a management tool. Inventory management should be forward looking. The methodology applied is based on historical cost of goods sold. The ratio may not be able to reflect the usability of future production demand, as well as customer demand.
Business models, including Just in Time (JIT) Inventory, Vendor Managed Inventory (VMI) and Customer Managed Inventory (CMI), attempt to minimize on-hand inventory and increase inventory turns. VMI and CMI have gained considerable attention due to the success of third-party vendors who offer added expertise and knowledge that organizations may not possess.
Economic order quantity is the order quantity that minimizes total inventory holding costs and
ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine this order quantity is also known as Barabas EOQ Model or Barabas Formula. The extensively, is given credit for his in-depth analysis. model was developed by Ford W. Harris in 1913, but R. H. Wilson, a consultant who applied it EOQ applies only when demand for a product is constant over the year and each new order is of the number of units ordered. There is also a cost for each unit held in storage, sometimes expressed as a percentage of the purchase cost of the item. We want to determine the optimal number of units to order so that we minimize the total cost associated with the purchase, delivery and storage of the product. The required parameters to the solution are the total demand for the year, the purchase cost for each item, the fixed cost to place the order and the storage cost for each item per year. Note that the number of times an order is placed will also affect the total cost, though this number can be determined from the other parameters. Underlying assumptions The ordering cost is constant. The rate of demand is known, and spread evenly throughout the year. The lead time is fixed.
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delivered in full when inventory reaches zero. There is a fixed cost for each order placed, regardless
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The purchase price of the item is constant i.e. no discount is available The replenishment is made instantaneously; the whole batch is delivered at once. Only one product is involved. EOQ is the quantity to order, so that ordering cost + carrying cost finds its minimum. (A common misunderstanding is that the formula tries to find when these are equal.) Variables
x x x x x
= Purchase Price
= optimal order quantity = annual demand quantity This is not the cost of goods)
= fixed cost per order (not per unit, typically cost of ordering and shipping and handling. = annual holding cost per unit (also known as carrying cost or storage cost) (warehouse space, refrigeration, insurance, etc. usually not related to the unit cost)
The single-item EOQ formula finds the minimum point of the following cost function: Total Cost = purchase cost + ordering cost + holding cost - Purchase cost: This is the variable cost of goods: purchase unit price annual demand quantity. - Ordering cost: This is the cost of placing orders: each order has a fixed cost S, and we need to order D/Q times per year. This is S D/Q cost is H Q/2 - Holding cost: the average quantity in stock (between fully replenished and empty) is Q/2, so this This is PD
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To determine the minimum point of the total cost curve, partially differentiate the total cost with respect to Q (assume all other variables are constant) and set to 0:
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The Total Cost function
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= order quantity
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Solving for Q gives Q* (the optimal order quantity):
Q* is independent of P; it is a function of only S, D, H.
Extensions
Several extensions can be made to the EOQ model, including backordering costs and multiple items. Additionally, the economic order interval can be determined from the EOQ and the economic production quantity model (which determines the optimal production quantity) can be determined in a similar fashion. A version of the model, the Baumol-Tobin model, has also been used to determine the money demand function, where a person's holdings of money balances can be seen in a way parallel to a firm's holdings of inventory.[3] NOTE: In the example, Q means annual requirement quantity whereas earlier in the article Q meant order quantity. This is confusing. Example
x x x
Suppose annual requirement quantity (Q) = 10000 units Cost per order (CO) = $2 Cost per unit (CU)= $8 Carrying cost %age (%age of CU) = 0.02 Carrying cost Per unit = $0.16
Economic order quantity = Economic order quantity = 500 units

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x x
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Therefore:
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Number of order per year (based on EOQ) Number of order per year (based on EOQ) = Total cost Total cost Total cost If we check the total cost for any order quantity other than 500(=EOQ), we will see that the cost is higher. For instance, supposing 600 units per order, then Total cost Total cost Similarly, if we choose 300 for the order quantity then Total cost Total cost
Break-Even Analysis
Break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no opportunity costs have been "paid", and capital has received the risk-adjusted, expected return. For example, if a business sells fewer than 200 tables each month, it will make a loss, if it sells expect to be able to make and sell 200 tables per month. If they think they cannot sell that many, to ensure viability they could: 1. Try to reduce the fixed costs (by renegotiating rent for example, or keeping better control of telephone bills or other costs) 2. Try to reduce variable costs (the price it pays for the tables by finding a new supplier) 3. Increase the selling price of their tables.
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more, it will be a profit. With this information, the business managers will then need to see if they
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Any of these would reduce the break even point. In other words, the business would not need to sell so many tables to make sure it could pay its fixed costs.
Computation
In the linear Cost-Volume-Profit Analysis model, the break-even point (in terms of Unit Sales (X))
x x x
TFC is Total Fixed Costs, P is Unit Sale Price, and V is Unit Variable Cost.
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can be directly computed in terms of Total Revenue (TR) and Total Costs (TC) as:
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The Break-Even Point can alternatively be computed as the point where Contribution equals Fixed Costs. The quantity is of interest in its own right, and is called the Unit Contribution Margin (C):
it is the marginal profit per unit, or alternatively the portion of each sale that contributes to Fixed Costs. Thus the break-even point can be more simply computed as the point where Total Contribution = Total Fixed Cost:
In currency units (sales proceeds) to reach break-even, one can use the above calculation and multiply by Price, or equivalently use the Contribution Margin Ratio (Unit Contribution Margin over Price) to computed. R=C, Where R is revenue generated, C is cost incurred i.e. Fixed costs + Variable Costs or Q * P(Price per unit) = TFC + Q * VC(Price per unit),
Q * (P - VC) = TFC,
Break Even Analysis Q = TFC/c/s ratio=Break Even Margin of Safety
Margin of safety represents the strength of the business. It enables a business to know what is the exact amount it has gained or lost and whether they are over or below the break even point. margin of safety = (current output - breakeven output)margin of safety% = (current output - breakeven with "Budgeted output".
If P/V ratio is given then profit/ PV ratio Break Even Analysis
By inserting different prices into the formula, you will obtain a number of break even points, one for each possible price charged. If the firm changes the selling price for its product, from $2 to $2.30, in the example above, then it would have to sell only (1000/(2.3 - 0.6))= 589 units to break even, rather than 715.
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output)/current output 100When dealing with budgets you would instead replace "Current output"
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Q * P - Q * VC = TFC,
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To make the results clearer, they can be graphed. To do this, you draw the total cost curve (TC in the diagram) which shows the total cost associated with each possible level of output, the fixed cost curve (FC) which shows the costs that do not vary with output level, and finally the various total level, given the price you will be charging. revenue lines (R1, R2, and R3) which show the total amount of revenue received at each output The break even points (A,B,C) are the points of intersection between the total cost curve (TC) and a horizontal axis and the break even price at each selling price can be read off the vertical axis. The total cost, total revenue, and fixed cost curves can each be constructed with simple formulae. For example, the total revenue curve is simply the product of selling price times quantity for each output quantity. The data used in these formulae come either from accounting records or from various estimation techniques such as regression analysis. Application
provide a dynamic view of the relationships between sales, costs and profits. A better understanding of break-even, for example, is expressing break-even sales as a percentage of actual salescan give managers a chance to understand when to expect to break even (by linking the percent to when in the week/month this percent of sales might occur). The break-even point is a special case of Target Income Sales, where Target Income is 0 (breaking even). This is very important for financial analysis.
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total revenue curve (R1, R2, or R3). The break even quantity at each selling price can be read off the
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Break-even analysis is only a supply side (i.e. costs only) analysis, as it tells you nothing about what sales are actually likely to be for the product at these various prices. It assumes that fixed costs (FC) are constant. Although this is true in the short run, an increase in the scale of production is likely to cause fixed costs to rise. It assumes average variable costs are constant per unit of output, at least in the range of likely quantities of sales. (i.e. linearity) It assumes that the quantity of goods produced is equal to the quantity of goods sold (i.e., there is no change in the quantity of goods held in inventory at the beginning of the period and the quantity of goods held in inventory at the end of the period). In multi-product companies, it assumes that the relative proportions of each product sold and produced are constant (i.e., the sales mix is constant).
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Eee-Viii-Industrial Management - Electrical Estimation and e (06ee81) - Notes

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INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

VIII SEMESTER INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

06EE81 worked 8 Hours

UNIT 5 of selection, Worked examples. UNIT 6

1. Introduction to Management-S. S. Chatterjee,

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

line balancing, automation, statistical quality control

control chart, motion study

POWER INSTALLATION: Load calculation

pump set, workshop, theater etc.,

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

The aims of training a supervisor are: x To develop leadership qualities in him.

Written instructional method and

Training within the industry (TWI)

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

Methods of training executives

Off-the-job training executives

a. Understudies: In this method, the trainee is appointed as an assistant to some senior

On-the-job training and

improve their capacity of judgment and decision making abilities.

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

d. Conference: explained in previous section

Employer and employee relationship

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

Objectives of good industrial relations

To maintain democratic approach in solving the problems of the workers.

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS Code of industrial relations

notice to the trade unions at least one week in advance.

implementation at different levels of the company.

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

Unfair labour practices and Multiplicity of labour laws.

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

Communist Party of India, INTUC affiliated to the congress party of India.

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS b)

or misconduct and awarding disproportionate punishment.

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

Manufacturing normally refers to a process of producing only tangible goods, where as

i) ii) iii) iv)

production includes the creation of tangible goods as well as intangible services.

Need for plant location:

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

Absence of proper investigation and consideration of various factors involved.

Trying to move to the already congested or over industrialized areas.

designed for efficient production.

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

x Selection of the region

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS i)

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS x

Objectives of a good layout

It should reduce material handling costs.

Utilize available space efficiently and effectively.

Provide space for proper supervision.

Conductive atmosphere for safety and health of the workers.

provision for the improvement of productivity and

Allowance for easy maintenance.

Factors influencing plant layout

INDUSTRIAL MANAGEMENT, ELECTRICAL ESTIMATION & ECONOMICS ii)