Economics and Advantages of Good Material Handling systems

Then American Society of Mechanical Engineers (ASME) had developed certain formulas for estimating the economies that are possible with the application of certain equipment to a material handling problem. The following factors in the handling costs are taken into account are indicated by letters:

1) A = Percentage allowance on investment
2) B = Percentage allowance for insurance, taxes etc
3) C = Percentage allowance for maintenance
4) D = Percentage allowance for depreciation and obsolescence
5) E = Yearly cost of power, supplies and other items in dollar6s
6) S = Yearly saving in direct labor cost in dollars
7) T = Yearly saving in fixed charges, operating charges or burden in dollars.
8) U = Yearly saving or earning through increased production in dollars
9) X = Percentage of year during which equipment is used.
10) I = Initial cost of the equipment.

Formulae: The relations between these factors are expressed in following formulae:

Maximum justifiable investment in dollars (i.e. Z);

Z = (S + T + U – E) X / A + B + C + D

Yearly cost of maintaining the equipment (i.e. Y)

Y = 1 (A + B+ C + D)

Yearly profit from the operation of the equipment, above simple interest (i.e. V);

V = [(S + T + U – E) X] – Y

The estimated rate of profit (i.e. P);

P = V / I + A

Number of years required for amortization of investment out of earnings (i.e. H);

H = 100 / P + D

Advantages of a good Material Handling System:

The following advantages are availed from an efficient material handling systems:

1) A good material handling system minimizes the movement of material, moves them continuously and at maximum rate which is advantageous as under:
a) Shorter operating cycle
b) Reduction in handling cost

2) It eliminates unproductive handling of materials like back tracking, re-handling etc.
3) It reduces idle machine capacity thus ensuring better turnover of investment.
4) It reduces the idle time of labor. Workers are required to keep pace with the production processes supported by a good handling system. Moreover, they are freed from the physical work of moving and positioning materials.
5) It eliminates the factory hazards and thus increases the safety of the operators.
6) The quality of the materials is maintained through minimum human touches, elimination of breakages etc.
7) The factory area is used most effectively, unproductive overhead an floor areas are used most productively.
8) It avails of greater economy in store room and facilitates material issues.
9) It helps in maintaining effective production control.
10) It helps in providing better customer services due to

i) Reduced operating cost.
ii) Better quality of products and
iii) Timely production.

Container Revolution:

The cargo movement has been revolutionized with the arrival of a container. Containers permit unit lo-ads and are fit for inter-modal transport by road, rail, sea and air. ISO Container has the following dimensions.

Length: 5, 10, 20, 30, 40 feet:

35 feet Sealand containers and 45 feet containers are becoming popular. 20 feet unit is popular in shipping.

Width: Common

Height: 8 feet – 9.6 feet

Details: Floor, walls and roof
Opened at the end
Some units permit entry from the side or top

Insulated walls

Refrigeration units

Made of steel, aluminium or fire board

Cargo shifted manually or by fork lifts.

Containers are put on ship by container handling systems like counter-balanced trucks or reach stackers. There are straddle carriers and mobile lifting frames. These equipment operate in unrestricted area. Some equipments are operated in restricted area, gantry cranes and ship-to-shore cranes.

If there is one area which can increase industrial productivity almost overnight, it is material handling. The term material handling relates to the art of sorting, packaging and moving materials from one place or form to another. A wise choice of techniques and equipments for material handling can bring about considerable saving of time and money. —

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