Factory Profit Optimizer How To
In addition of finding the optimal product mix, Factory Profit Optimizer can also be used to evaluate different scenarios on the manufacturing floor. It is an excellent prototyping tool to find the true impact of a decision before costly changes are made. Below are just some of the common scenarios where Factory Profit Optimizer can be used.
How to validate a model
You can validate your manufacturing model by forcing the Factory Profit Optimizer to use your current product mix in order to have matching sales figures. You can do so by limiting the range of possible solutions. You need to set market constraints for your products equal to the quantity sold during the production period. For example, if you sold 100,000 units, you should set the max quantity 100,001 units and the min quantity to 99,999 units. Allow for a ±1 margin of error.
Validate Sales
Optimal and current sales should match and the difference should be around 0%. Current sales are calculated from the quantity of products sold multiplied by the unit price. Current sales should be equal to amount specified in your financial statement. If they do not match, revise the quantity sold and unit price for all products.
If the optimal sales do not match the current sales, there is probably a production bottleneck. In that case, it will be impossible for Factory Profit Optimizer to find an optimal solution that respect time and market constraints. You should lower the minimum product quantity until the Factory Profit Optimizer finds a solution and identify the bottleneck. This probably means that the processes in the model do not reflect the real ones. Revise manufacturing time and efficiency until optimal sales reach current sales.
Validate Cost of Goods Sold
The optimal cost of goods sold should match the current cost of goods sold. If they do not match, this probably means that the processes in the model do not reflect the real ones. Examine each product page in the report. Pay particular attention to the material and operating cost of a product. Adjust theses values to obtain a matching cost of goods sold.
Validate Operating Costs
You should set the change in operating costs value to 0 for the operating costs to match.
Validate Manufacturing Capacity
Validate that the capacity used for each equipment and worker reflect the true use in your factory.
How to solve a manufacturing bottleneck
Factory Profit Optimizer makes it easy to find manufacturing bottlenecks. The bottlenecks will be listed in the executive summary of the report. Once you have identified a bottleneck, you can use the Factory Profit Optimizer to test a strategy for solving it. There are several ways to solve a manufacturing bottleneck.
You could improve the performance of an equipment by putting into place techniques such as SMED (single minute exchange of die). This would improve the availability of the equipment and would be able to perform more value added work. You can also improve the performance of the equipment to reduce cycle time.
You can also solve a bottleneck by adding more manufacturing capacity at the right place. There is two way you can use.
You can increase the size of the pool available for this particular resource and assign more of that resource where the bottleneck is located.
You can also assign another resource to perform the same work in parallel.
In both cases, you should modify the change in fixed operating costs value to reflect the added financial weight of the resources that were added. For example, if the changes require the purchase of a new equipment, you should add the depreciation cost for the production period set in the general options.