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Equipment Selection 

Equipment Selection is a decision planning process whereby an organization

decides to purchase equipment for business purpose. So, “Operation managers

initiate proposals for purchasing of equipment” because 

1. New equipment is required for the production of new products or

services

2. Expansion of the available capacity when there is an increase of demand

3. Obsolescence of technology is required to maintain competitiveness

4. Existing of depreciation and wear out phase of its equipment must be

replaced

Therefore, when equipments are selected, it must be suitable for organization

in term of follow choice of technology/ considerations:

Capacity : criteria of equipment selection in which capable to offers more

 volume from the equipment that since the reason for purchasing equipment is

for production purpose. Therefore, Organization usually attempts to buy 

equipment that offers maximum volume that machine can produce. So, the

manufacturers can achieve economies of scale. For example, if ABC company have 2 equipments under considerations. That machine A can produce goods

120 per hour and the machine B can produce goods 150 per hour. If the 2

machines have the same criteria beyond capacity. So, the best option must be

B machine.

Compatibility : Whenever possible, new equipment should be of a type

similar or to identical with the existing equipment. The resultant

simplification in the provisioning of spare parts, in maintenance, in operatortraining, in setting and preparation, and in lording, is enormous. In the

purchase of computer software, for example, compatibility with the existing

hardware, operating system and other software is vital.

 Availability of associated equipment: Much of the new, highly complex

equipment now available can only be fully utilized if a wide range of associated

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equipment is employed, and the availability of this can often dictate choice.

This is particularly true of computers and computer-controlled equipment

 which is of minimal value without it associated „software‟. 

Reliability and after service: Equipment breakdown can be costly and canalso jeopardize service of delivery dates; hence its reliability is very important.

Reference to other users, if possible, is often very helpful here. The availability 

of a good after-sales service should be investigated.

Ease of Maintenance: Maintenance cost need always to be as low as

practicable, and equipment which is difficult to service will not only have a

high maintenance cost, it will also provide an inducement to carry out

maintenance inadequately.

Ease of learning to use: The speed with which new equipment can be

utilized depends on how easy it is to learn how to use it. This applies

particularly to computers and software, where the quality of the supporting

documentation and training will greatly influence the learning period.

Ease of preparation: Ancillary time (setting up stepping down, cleaning) is

expensive and reduces the running time of equipment, so its ease of 

preparation should be considered.

Safety : Plant and equipment needs to be safe and, and , though it is very rate

to find unsafe equipment on the market output today, this aspects repays

study. Accidents are costly in a lowering of output, in deterioration of morale

and in bad staff relations.

Ease of installation: This point can be easily overlooked when it may then

 be found, on installation, that access doors are to low, or permissible floor

loading exceeded, the new equipment.

Delivery : The delivery situation needs to be investigated to see that th needs

the organization can be matched by the delivery promised. An investigation

into the reliability of the supplier in this espect is worth making

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State of development: Newly design equipment is sometimes marketed

 before the design has been entirely finalized or stabilized. Guarantees on this

are highly desirable, although it must be recognized that no guarantee can

compensate for the loss of goodwill attendant upon broken delivery or service

promises.

 Regards, Mike 

PUBLISHED IN:

  BUSINESS 

ON MARCH 24, 2011 AT 1:15 AM LEAVE A COMMENT 

TAGS: BUSINESS, EQUIPMENT SELECTION, PURCHASING 

 Equipment Selection 

Things that are need to be considered on selecting Equipment: 

1) Equipment Appraisal: 

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(A) Cost ($) Elements:  Standing cost & Running Cost  

 Standing Cost (Fixed Cost) 

  Purchase price   Depreciation    Allowance for tax   Insurance   Rental of space 

 Running Cost  (Variable Cost) 

  Utilities charges (Electricity, Gas, Chemical)  Direct Cost of operations (Operators) 

Cost of supporting staff (Technicians, Engineers)  Maintenance (Daily Weekly, Monthly, Yearly)

(B) Economic Evaluations 

  Capital Budgeting – Use the time value money concept  Break-even Analysis – Uses the pay-back period method  Physical Life   Technological Life   Product, Service, or Market life? 

 2) Other factors: 

  Capacity   Compatibility    Availability of associated equipment     Reliability & after-sales service    Ease of maintenance    Ease of learning to use    Ease of preparation  

 Safety    Ease of installation    Delivery    Effect on existing organization    State of development of the equipment