Plant to Construct Tractor Parts

PLANT DEVELOPMENT AND CONSTRUCTION PROPOSAL: TRACTOR COMPONENTS ASSEMBLY

This research presents a proposal for the development and construction of a plant to assemble gear box components for tractors used in agricultural and construction activities. This proposal is presented in discussions concerning (1) the background, objectives, scope of operations, justification for the development, and functional layout of the proposed plant, (2) the market potential, costs, resource allocation, and probability of success, and (3) the implementation plan for the construction of the proposed plant to include construction project management.

Background, Objectives, Scope, Justification, and Functional Layout of the Proposed Plant

The tractor manufacturing industry is being transformed from a focus on the mass production of standardized designs to a focus on the production of equipment designed for the unique needs of specific customers (Howell, 1991, p. 22). Among the other implications of this shift in focus is the need for equipment manufacturers to provide a wider variety of gear boxes to meet a growing technical requirement diversity. This situation means that it is no longer efficient to view gear box assembly as a standard production line activity. Rather, efficiency within the context of the new product design demands will be better attained through the assembly of gear boxes at a locale external to the production line, with gear box com

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. Lastly in the qualitative area, a firm realizes additional profits from its internal production of parts and components. This advantage is also subject to potential offset. In this instance, the disadvantage may accrue from disharmony among sub- units of the firm with respect to transfer prices for internally produced parts and components. In the area of quantitative considerations involved in the make-or-buy decision, the emphasis is on costs (Gold, 1992, p. 154). In this context, the obvious concern is the direct comparison of the cost of internal production with the cost of external purchasing. Quantitative considerations, however, cannot end with this direct comparison. A firm must also consider the opportunity costs associated with a make-or-buy decision. On the one hand, there may be opportunity costs to a firm associated with a buy decision, because such a decision would cause some part of the firm's productive capacity to remain idle for some period of time. On the other hand, a make decision may also result in opportunity costs to the firm, if it would preclude use of some part of a firm's productive capacity for the manufacture of an item or items which would generate greater profit

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