Manufacturing (part Three)

Today I’m going to tell you about financial report for factories. It keeps all information about expenses of your enterprise for the last week of production, so you can use this information to analyze prime cost structure and to optimize your production of the factory. To see that information go to financial report page. There you will find this numbers:

• Revenues – total value of goods sold.
• Expenses – enterprise’s total expenses

All enterprise expenses are divided into variable and fixed expenses:

• Variable: these expenses depend on production volume. If production volume changes, the expenses volume will change too. For example: cost of raw material, energy etc.
• Fixed: these expenses don’t depend on production volume. Even if you stop all your production, the enterprise will still have fixed expenses.

Main expenses are: fuel, energy, losses, management expenses, salary, etc. Energy costs depends on production volume, technology and one unit of energy cost (depending on the level of city development) and production power intensity (steel production requires much more energy than bread production).

Management expenses are connected with total salary expenses and main office efficiency. Minimal possible value is 10% of the fund.

• Salary = wages of one employee X total number of employees.

General production expenses depend on city average salary, your enterprise size, equipment quantity and enterprise efficiency.

• Prime cost = variable + fixed expenses (per 1 unit of produced goods)
• Profit = revenues – (expenses+taxes)

I hope this will help you a little to understand the production.

Manufacturing (part One)

When you earn enough money you can start manufacturing your own goods. First step is to build the factory. You can do it by choosing ”New subdivision”. Then you choose what type of factory you want and where you want to place it (you must build factories where you allready have offices).

When you once have the factory build (usually is that next day) click on the factory main page. There you will see following:

• Factory size – this is how big the factory is. Size of the enterprise isn’t maximal production volume (max. is 2500 work places)
• Specialization – the current specialization of enterprise. Kind and type of goods depends on enterprise specialization.
• Equipment quantity – number of installed equipment. Along with number of employees, this value determines the load and the output of enterprise.
• Equipment quality – the current quality of installed equipment. If you install equipment of higher than required quality, it will not improve the production.
• Equipment wear – the current level of equipment wear. High degree of wear will affect overal efficiency, decrease quality and quantity of output goods. Even if your equipment has 100% efficiency, volume of produced goods still gradually goes down — proportionally to the wear ratio.
• Equipment efficiency – how efficient is the installed equipment. If the equipment technological level is lower than required, and the current level of equipment wear is also high, the efficiency will fall.
• Technology level – the current level of technology introduced at the enterprise. It influences the quality of produced goods. Besides, this value determines required quality of equipment and required qualification of employees.
• Number of workers – number off employed workers, depends on equipment quantity level.
• Production load – depends on Equipment quantity.
• Workers salary – the higher is the salary, the more experienced are your workers.
• Salary expenses – total salary expenses.
• Staff training – one way to hired a more qualified staff is to raise their salary. Another way is to train it.
• Qualification of employees – the current qualification of employees. In case if your people have too high qualification, it will not produce any positive effect on production, but top-manager’s «Production» qualification must be sufficiently raised. You can raise staff qualification by means of training, or by means of salary change (in this case there is no need to wait for the update, you will see the result as soon as you make these changes).
• Staff efficiency – depends on their training, technology level and salary.
• Office efficiency – How efficient is the office.
• Top manager efficiency – depends on your qualification in manufacturing. The more manufacturing point you’ve got the bigger is the efficiency.
• Work efficiency – plant’s overall efficiency. The higher the efficiency, the higher is the quality of the manufactured products and the bigger is the produced volume.