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I. Facility Layout
A. Definition
 The arrangement of machines, workstations, storage areas etc. to enable an
operation to function efficiently, safely and in a cost-effective manner
 Refers to the specific configuration of physical facilities in an organization.
 Helps achieve competitive advantage
 Determines productivity, cost, quality, flexibility, image, etc.
 Trend is toward flexible and dynamic

B. Strategic Importance of Facility Layout

Objective of layout strategy is to develop an effective and efficient layout that will
meet the firm’s competitive requirements

C. Layout Design Considerations

1. Higher utilization of space, equipment, and people
2. Improved flow of information, materials, or people
3. Improved employee morale and safer working conditions
4. More convenience to the customer
D. Good Layouts Consider
1. Material handling equipment
2. Capacity and space requirements
3. Environment and aesthetics
4. Flows of information
5. Cost of moving between various work areas

II. Different Types of Facilities Layout

1. Office layout
a. Definition
 Positions workers, their equipment, and spaces/offices to provide for
movement of information
 Design positions people, equipment, & offices for maximum people and
information flow, comfort and safety
 Arranged by process
 Relationship chart used

b. Considerations in Designing Effective Office Layout

 Space available
 Number of workers
 Volume of work
 Nature of work
 Number of workers in designation wise
 Types of machine and equipment used
 Flow of work
 Physical appearance
c. Types of Office Layout
 Process Layout
In process layout, both equipment and employees are arranged according
to the sequence of operations.
 Group Layout
In group layout, employees are placed in a separate partition where
similar activities are carried on and office machines are fitted with another
d. Advantages of an Effective Office Layout
 No waste of time and energy of office personnel
 Promotes efficiency of staff
 Proper utilization of floor space
 Easy supervision
 Speed in inter – communication
 Better use of office machines and equipment

2. Retail layout
a. Definition
 Allocates shelf space and responds to customer behavior
 Maximize product exposure to customers.
Maximize profitability per square foot of floor space or per linear foot of shelf
 Decision variables
Arrangement of store
Store flow pattern
Allocation of (shelf) space to products
b. Ideas for Retail Layout
 Locate high-draw items around the periphery of the store
 Use prominent locations for high-impulse and high-margin items
 Distribute power items to both sides of an aisle and disperse them to increase
viewing of other items
 Use end-aisle locations
 Convey mission of store through careful positioning of lead-off department
c. Category Management
Computerized programs are available to assist managers in evaluating
the profitability of various merchandising plans for hundreds of categories
d. Retail Slotting
 Slotting Fees
Fees manufacturers pay to get their goods on the shelf in a retail store or
 Contributing factors
 Limited shelf space
 An increasing number of new products
 Better information about sales through POS data collection
 Closer control of inventory

Example of a Store Layout

e. Services capes
Physical surroundings where the service is delivered and
how it have a humanistic effect on customers and employees.
 Ambient Conditions
Background characteristics such as lighting, sound, smell, and temperature
 Spatial layout and functionality
Customer circulation, aisle characteristics, and
product grouping
 Signs, Symbols, and Artifacts
Characteristics of building design that carry social significance

3. Warehouse layout
a. Definition
Addresses trade-offs between space and material handling
b. Objectives
 Objective is to optimize trade-offs between handling costs and costs
associated with warehouse space
 Maximize the utilization of the total “cube” of the warehouse while maintaining
low material handling cost.
 Material Handling cost: all the cost related to the transaction
 Incoming transport
 Storage
 Finding and moving material
 Outgoing transport
 Equipment, people, material, supervision, insurance, depreciation
 Minimize damage and spoilage

c. Activities in a Warehouse Layout

1. Cross Docking
o To avoid placing materials or supplies in storage by processing them
as they are received.
o Transferring goods from:
 Incoming trucks at receiving docks
 To outgoing trucks at shipping docks
2. Random Stocking
o Random assignment of stocking locations allows more efficient use of
o Key tasks
 Maintain list of open locations
 Maintain accurate records
 Sequence items to minimize travel, pick time
 Combine picking orders
 Assign classes of items to particular areas

3. Customizing
o Value-added activities performed at the warehouse
o Enable low cost and rapid response strategies
 Assembly of components
 Loading software
 Repairs
 Customized labelling and packaging
f. Advantages
 Track exact location with one storage location with FIFO
 Provides better picking functionality
 Allows for picking locations wit replenishment when falls below a define
 Allow segregation of stock types within the warehouse
g. Disadvantages
 Increased master data maintenance
 Requires expert knowledge to configure for maximum benefit
 More complex to resolve problems caused by incorrect processing

4. Fixed-position layout:
a. Definition
 Addresses the layout requirements of large, bulky projects such as ships and
 Used when product is large
 Product is difficult or impossible to move. (i.e. very large or fixed)
 All resources must be brought to the site
 Scheduling of crews and resources is a challenge
b. Disadvantages
Due to the nature of the product, the user has little choice in the use of a
fixed-position layout. Disadvantages include:
 Space. For many fixed-position layouts, the work area may be crowded so
that little storage space is available. This also can cause material handling
 Administration. Oftentimes, the administrative burden is higher for fixed-
position layouts. The span of control can be narrow, and coordination difficult.

5. Process-oriented layout:
a. Definition
 Deals with low-volume, high-variety production (also called job shop or
intermittent production)
 Place departments with large flows of material or people together
 Department areas having similar processes are located in close proximity
e.g., All x-ray machines in same area

Example of a Process-Oriented Layout(Emergency Room Layout)

b. Steps in Developing a Process-Oriented Layout
1. Construct a “from-to matrix”
2. Determine space requirements for each department
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. By trial-and-error (or more sophisticated means), try to improve the
initial layout
6. Prepare a detailed plan that evaluates factors in addition to
transportation cost
c. Cost of Process Oriented Layout

Interdepartmental Flow of Parts

Possible Layout 1

Interdepartmental Flow Graph

Possible Layout 2
d. Cellular Layout Work Cells
 Definition
 Special case of product-oriented layout - in what is ordinarily a
process-oriented facility
 Consists of different machines brought together to make a product
 Temporary arrangement only
Example: Assembly line set up to produce 3000 identical parts in
a job shop
Work Cell Concept

 Advantages
 Inventory
 Floor space
 Direct labor costs
 Equipment utilization
 Employee participation
 Quality
Work Cell Floor Plan
Work Cell
A temporary assembly-line-oriented arrangement of machines and personnel in
what is ordinarily a process-oriented facility
Example: job shop with rearranged machinery and personnel to produce 30
unique control panels
Focused Work Center
A permanent assembly-line-oriented arrangement of machines and personnel in
what is ordinarily a process-oriented facility
Example: manufacturing of pipe brackets at a shipyard
Focused Factory
A permanent facility to produce a product in a product-oriented facility
Example: a plant to produce window mechanisms for automobiles

e. Advantages
 Flexibility. The firm has the ability to handle variety or processing
 Motivation. Employees in this type of layout will probably be able to perform a
variety of tasks on multiple machines, as opposed to the boredom of
performing a repetitive task on an assembly line. A process layout also allows
the employer to use some type of individual incentive system
 System protection. Since there are multiple machines available, process
layouts are not particularly vulnerable to equipment failures.

f. Disadvantages
 Utilization. Equipment utilization rates in process layout are frequently very
low, because machine usage is dependent upon a variety of output
 Cost. If batch processing is used, in-process inventory costs could be high.
Lower volume means higher per-unit costs. More specialized attention is
necessary for both products and customers. Setups are more frequent, hence
higher setup costs. Material handling is slower and more inefficient. The span
of supervision is small due to job complexities (routing, setups, etc.), so
supervisory costs are higher.
 Confusion. Constantly changing schedules and routings
make juggling process requirements more difficult.

6. Product-oriented layout:
a. Definition
 Seeks the best personnel and machine utilizations in repetitive or
continuous production
 Used with product-focused processes
 Facility organized around product.
 High volume, low variety.
 Divide work into small tasks. To be done by workers or machines.
 Assign tasks to workstations.
 Balance output of each workstation.
 To smooth operations of the line.
 To make workload equal.
 To minimize idle time.
 To achieve desired output
b. Types of Product Oriented Layout
 Fabrication Line
A machine-paced, product-oriented facility for building
 Assembly Line
An approach that puts fabricated parts together at a series of
workstations; used in repetitive processes
c. Requirements of a Product-Oriented Layout
 Standardized product.
 High production volume.
 Stable production quantities.
 Uniform quality of raw materials & components.
d. Advantages/Disadvantages
 Advantages
 Lower variable cost per unit.
 Lower material handling costs.
 High utilization of labor and equipment
 Accounting, purchasing and inventory control are fairly routine
 Easier training & supervision.
 Disadvantages
 Higher capital investment for special equipment.
 Any work stoppage stops whole process.
 Lack of flexibility in volume and product.
Example of an Assembly Line

III. Ethical Issues

 Changes in environmental or other legal requirements
 Changes in methods and equipment
 Changes in volume of output or mix of products
 Morale problems
 Inefficient operations
 Changes in design of products or services
 Accidents and safety hazards
IV. Reference/s:

Boundless. “Facilities Layout.” Boundless Business. Boundless, 20 Sep. 2016. Retrieved

12 Nov. 2016 from

Heizer, J., Render, B. (2014). Operations Management. 11th Edition

Render, B., Hanna, M., & Stair, R. (2012). Quantitative analysis for management (11th