Operations Management

Layout Strategy Chapter 9

9-1

Outline
Strategic Importance of Layout Decisions.
Fixed-Position Layout. Office Layout.

Process-Oriented Layout (Flow graphs).

Retail Layout. Warehouse Layout. Product-Oriented Layout (Assembly line balancing).
9-2

What is Facility Layout

Location or arrangement of everything within & around buildings.

Objectives are to maximize:

Utilization of space, equipment, & people. Efficient flow of information, material, & people. Employee morale & safety.

Trend is towards flexible and dynamic layouts.

9-3

Facility Layout
Helps achieve competitive advantage:
Better, faster, cheaper.

Determines productivity, cost, quality, flexibility, image, etc. May involve a blend of strategies.

9-4

Six Layout Strategies

1. Fixed-position layout.

For large unique projects such as ships and buildings.

2. Office layout.

Positions workers, equipment, and spaces/offices to provide for movement of information and material.

3. Process-oriented layout.

For low-volume, high-variety production.

9-5

Six Layout Strategies - continued

4. Retail/service layout.

Arranges facility and allocates shelf space in light of customer behavior.

5. Warehouse layout.

Addresses trade-offs between space utilization and material handling.

6. Product-oriented layout.

For repetitive or continuous production.

9-6

Layout Strategies
Project
(fixed-position)

Job Shop
(Process-oriented)

Office

Examples

Ingal Ship Building Pittsburgh Airport

Shouldice Hospital Olive Garden

Allstate Insurance Microsoft

Problem

Move material to limited storage areas at the site.

Manage varied material flow for each product.

9-7

Locate workers requiring contact close to each other.

Layout Strategies
Warehouse Retail
(storage)

Repetitive /Continuous
(Product-oriented)

Examples

Krogers Supermarket Famous-Barr Expose customer to high-margin items.

Federal-Moguls Warehouse
The Gaps distribution center Balance cost for storage and material handling.
9-8

Sonys TV Assembly Line Dodge Caravans Equalize the task time at each workstation.

Problem

Requirements for a Good Layout

Understand capacity and space requirements. Understand information flows. Understand cost of people and product flows. Select appropriate material handling equipment. Consider environment and aesthetics.

Consider safety and regulations.

9-9

Constraints on Layout Objectives

Product/service design.
Volume of business.

Process equipment & capacity.

Quality of work life.

Building and site.

9-10

1. Fixed-Position Layout
Project is stationary.

Special purpose: Construction, shipbuilding, etc.

Workers and equipment come to site.

Complicating factors.

Limited space at site. Changing material needs. Unique projects.

9-11

2. Office Layout
Positions people, equipment, & offices.

Usually for maximum information flow. Also can consider material flow.

Arranged by process or product.

Example: Payroll dept. is by process.

Different cultures have different expectations for space.

Relationship (or proximity) chart used.

9-12

Relationship (Proximity) Chart

Uses 6 levels to express desired proximity.

A = Absolutely necessary E = Especially important I = Important O= Ordinary importance U = Unimportant X = Not desirable
9-13

Relationship (Proximity) Chart

1 President 2 Costing O E

3 Engineering
4 Presidents Secretary 5 Photocopiers

U
A

I
E

A U

9-14

Relationship (Proximity) Chart

1 President 2 Costing 3 Engineering 4 Presidents Secretary 5 Photocopiers

Can determine layout using proximity diagram

O E U U I E A U

1
A

2
I X E E

4
9-15

Office Layout
1 President 2 Costing 3 Engineering 4 Presidents Secretary 5 Photocopiers O E U A

1
U I E A U

2
I E

3
X
E

Locate 5 offices in a rectangular space.

Offices 2-5 are to be same size.

Office 1 (Presidents) is twice as large.
9-16

Office Layout
Photocopiers (5) Corridor Engineering (3)

Presidents Secretary (4)

President (1)

Costing (2)

9-17

3. Process-Oriented Layout
Place departments with large flows of material or people close together. Similar processes and equipment are located in close proximity.

For example, all x-ray machines in same area.

Used with process-focused processes.

Low volume, high variety.

9-18

Emergency Room Layout

E.R.Triage room
Patient A broken leg Patient B - erratic pacemaker

Hallway

E.R. beds
9-19

Pharmacy

Billing/exit

Process-Oriented Layout Advantages

Flexibility.

Allows wide variety of products.

Low fixed costs for general purpose equipment. Breakdown of one machine or worker does not stop processing.

9-20

Process-Oriented Layout Disadvantages

Scheduling is difficult.
High variable cost. High work-in-process inventory and waiting. High labor skills required.

9-21

Developing a Process-Oriented Layout by Hand

Goal: Minimize cost of moving between departments. 1 Construct a from-to matrix. 2 Determine space requirements for each department. 3 Develop an initial layout and try to place departments with large flows close together. 4 Determine the cost of this initial layout. 5 Improve the initial layout (by hand or more sophisticated means). 6 Consider factors in addition to transportation cost.
9-22

Cost of Process-Oriented Layout

n n

M inimize cost

X C ij ij

i 1 j 1

where n total number of work centers or department s i,j X ij C ij

9-23

individual department s number of loads moved from department i to department j cost to move a load between department i and department j

Flows of Parts (loads/week)

to

1
1 2 3 4 5 6

40 10 0 0 0 20 20

100 10

0 40 0

0 10 0 50

0 0 80

10 0
0

20 0

0
0

20
9-24

0 0

Interdepartmental Flow of Parts

Number of loads/week between departments

1
1 2

50

100

0 10 0 50

20 0 100 0 0

30

50
20

3
4

5
6
9-25

Initial Layout
Room 1 Room 2 Room 3

Assembly Department (1) Receiving Department (4)

Room 4

Printing Department (2) Shipping Department (5)

Room 5
9-26

Machine shop Department (3) Testing Department (6)

Room 6

Initial Layout Flow Graph Showing Loads/Week

100 1 50 2 30 3

100 10 4 50 5 6

9-27

Cost of Initial Layout

1-2 50 = 50*1 1-3 200 = 100*2 1-6 40 = 20*2 2-3 30 = 30*1 2-4 50 = 50*1 2-5 10 = 10*1 3-4 40 = 20*2 3-6 100 = 100*1 4-5 50 = 50*1 Total = $570
Cost per load for adjacent locations = $1 Cost per load for non-adjacent locations = $2

100
1 50 2 30 3

100 10 4 50 5 6

9-28

Large Flows in Initial Layout

100 1 50 2 30 3

100 10 4 50 5 6

Largest Flows: 100 for 1-3 & 3-6, so put 3 close to 1 and 6. 50 for 1-2, 2-4 & 4-5 ,
9-29

Improved Layout Flow Graph

30 2 50 1 100 3

100

50

9-30

Improved Layout
Room 1 Printing Department (2) Room 2 Assembly Department (1) Room 3 Machine shop Department (3)

Receiving Department (4)

Room 4

Shipping Department (5)

Room 5
9-31

Testing Department (6)

Room 6

Cost of Improved Layout

1-2 50 = 50*1 1-3 100 = 100*1 1-6 20 = 20*1 2-3 60 = 30*2 2-4 50 = 50*1 2-5 10 = 10*1 3-4 40 = 20*2 3-6 100 = 100*1 4-5 50 = 50*1 Total = $480
Cost per load for adjacent locations = $1 Cost per load for non-adjacent locations = $2

30
2 50 1 100 100 3

50

9-32

Alternative Improved Layout

20 1 100 3 100 6

50

4
10
9-33

50

Cost of Alternative Improved Layout

1-2 50 = 50*1 1-3 100 = 100*1 1-6 40 = 20*2 2-3 30 = 30*1 2-4 50 = 50*1 2-5 20 = 10*2 3-4 20 = 20*1 3-6 100 = 100*1 4-5 50 = 50*1 Total = $460
Is this best? Cost per load for adjacent locations = $1 Cost per load for non-adjacent locations = $2

20
1

100

100

50

4 10

50

9-34

Alternative Improved Layout

Room 1 Assembly Department (1) Room 2 Machine shop Department (3) Receiving Department (4) Room 5
9-35

Room 3 Testing Department (6)

Printing Department (2)

Room 4

Shipping Department (5)

Room 6

Layout Example 2
Given the following tables of interdepartmental flows and distances between locations A-E, locate the five departments to minimize the total distancexflow.

Interdepartmental flows
1 2 3 4

1 -

2 13 -

3 18 15 -

4 3 0 0 -

5 0 6 4 4

A B C D E

Distances between locations A B C D E 9 8 12 14 9 9 6 7 8 9 4 9 12 6 4 14

14 7 9 14 -

9-36

Layout Example 2
Largest flow 1-3 (flow=18) should be in closest locations: C&D Could have: Solution 1: C=1 and D=3 or Solution 2: C=3 and D=1

Interdepartmental flows
1 2 3 4

1 -

2 13 -

3 18 15 -

4 3 0 0 -

5 0 6 4 4

A B C D E

Distances between locations A B C D E 9 8 12 14 9 9 6 7 8 9 4 9 12 6 4 14

14 7 9 14 -

9-37

Layout Example 2
Next largest flow is 2-3, so 2 should be placed in location closest to 3. Solution 1: D=3 and closest open location to D is B, so B=2, C=1, D=3. Solution 2: C=3 and closest open location to C is A, so A=2, C=3, D=1.

Interdepartmental flows
1 2 3 4

1 -

2 13 -

3 18 15 -

4 3 0 0 -

5 0 6 4 4

A B C D E

Distances between locations A B C D E 9 8 12 14 9 9 6 7 8 9 4 9 12 6 4 14

14 7 9 14 -

9-38

Layout Example 2
Next largest flow is 1-2, but 1 and 2 are already located. So consider next largest flow 2-5. Solution 1: B=2 and closest open location to B is E, so A=4,B=2,C=1, D=3,E=5. Solution 2: A=2 and closest open location to A is B, so A=2,B=5,C=3, D=1,E=4.

Interdepartmental flows

1 2 3 4

1 -

2 13 -

3 18 15 -

4 3 0 0 -

5 0 6 4 4

A B C D
E
9-39

Distances between locations A B C D E 9 8 12 14 9 9 6 7 8 9 4 9 12 6 4 14 14 7 9 14 -

Layout Example 2
Solution 1: A=4,B=2,C=1, D=3,E=5. Distance = 13x9 + 18x4 + 3x8 + 15x6 + 6x7 + 4x14 + 4x14 = 457 Solution 2: A=2,B=5,C=3, D=1,E=4. Distance = 13x12 + 18x4 + 3x14 + 15x8 + 6x9 + 4x9 + 4x7 = 508 Interdepartmental flows Distances between locations A B C D E 9 8 12 14 9 9 6 7 8 9 4 9 12 6 4 14 14 7 9 14 Solution 1 is best!

1 2 3 4

1 -

2 13 -

3 18 15 -

4 3 0 0 -

5 0 6 4 4

A B C D
E
9-40

Computer Programs for Layout

Many different programs:
CRAFT SPACECRAFT CRAFT 3-D CORELAP ALDEP

All are heuristic - not necessarily optimal!!

9-41

Work Cells in Process Layouts

Special case of product-oriented layout - in a process-oriented facility.

Different machines brought together to make a product. Use when high volume warrants special arrangement.

For 1 product or a small group of products. Temporary arrangement.

Example: Assembly line set up to produce 3000 identical parts in a job shop.
9-42

Work Cell Floor Plan

Saws Drills Office

Tool Room

Work Cell

9-43

Work Cell Advantages

Lower: Inventory. Floor space. Direct labor costs.
Higher: Equipment utilization. Employee participation. Quality.

9-44

Work Cells, Focused Work Centers and the Focused Factory

Work Cell A temporary assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility. A permanent assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility.

Focused Work Center

Focused Factory A permanent facility to produce a product or component in a product-oriented facility.

9-45

4. Retail/Service Layout
Maximize product exposure to customers.

Maximize profitability per square foot of floor space or per linear foot of shelf space. Video

Decision variables:

Arrangement of store.

Store flow pattern.

Allocation of (shelf) space to products.
9-46

Retail Layouts - Rules of Thumb

Locate high-draw items around the periphery.
Use prominent locations (end aisle locations; first or last aisle) for high-impulse and high margin items.

Remove crossover aisles to prevent customers from moving between aisles.

Distribute power items (that dominate a shopping trip) around store to increase the viewing of other items.

Locate far apart. Locate on both sides of an aisle.

9-47

Grocery Store Layout

9-48

Retail Store Shelf Space

PERT
PERT PERT PERT

Can use computerized tools to manage shelf-space. Track sales and product location (scanner data).

9-49

PERT

Consider prominence of shelf location and number of facings.

5 facings

Servicescape Considerations
Ambient conditions.

Background characteristics such as lighting, sound, smell, and temperature.

Spatial layout and functionality.

Customer circulation, aisle width, shelf spacing, etc.

Signs, Symbols, and Artifacts.

Various other characteristics of design (carpeting, greeters, etc.).

9-50

5. Warehouse Layout
Balance space utilization & handling cost.
Similar to process layout.
Items moved between loading docks

& various storage areas. Optimum layout depends on:

Variety of items stored.

Number of items picked.

9-51

Space Utilization vs. Handling Costs

High space utilization (for storage).

Small, narrow aisles. Product stacked high and deep (not easily accessible).

Ease of material handling.

Wide, short aisles. Product easily accessible.

Design facility to optimize space utilization and handling costs tradeoff.

9-52

Assigned vs. Random Stock Locations

Assigned locations for products:

May be inefficient use of space. Easier order picking and re-stocking. More efficient use of space. Added costs to track location of inventory and open space. More difficult order picking and re-stocking.

Random locations:

Stock products to optimize cost and efficiencies tradeoffs.

9-53

Cross Docking (Wal-Mart)

Transferring goods:

From incoming trucks at receiving docks. To outgoing trucks at shipping docks.

Incoming

Avoids placing goods into storage. Requires suppliers provide effective addressing (bar codes) and packaging for rapid transshipment.
9-54

Outgoing

Order Picking
Collecting items on a customer order from various locations in the warehouse. Sequence items to minimize travel time in warehouse to pick order.

Also, should locate items to be efficient to pick.

Combine several orders to reduce picking time. Zoning: Assign separate pickers to different zones in the warehouse.

Split order among several pickers.

9-55

6. Product-Oriented Layout
Used with product-focussed processes.

Facility organized around product. High volume, low variety.

Types:

Fabrication line - Builds components. Assembly line - Assembles components into products.

9-56

Product-Oriented Layout
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.
9-57

Product-Oriented Requirements
Standardized product.

High production volume.

Stable production quantities.

Uniform quality of raw materials & components.

9-58

Product-Oriented Layout Advantages

Lower variable cost per unit. Lower material handling costs.

Lower work-in-process inventories.

Rapid throughput. Easier training & supervision.

9-59

Product-Oriented Layout Disadvantages

Higher capital investment for special equipment.
Any work stoppage stops whole process. Lack of flexibility in volume and product.

9-60

Repetitive Layout
Work Station 1 T1

T3

T4 Work Station 3

Work Station 2

T2

T5

Belt Conveyor
Office

Note: 5 tasks or operations (T1-T5); 3 work stations (orange rectangles)

9-61

Assembly Line Balancing Steps

1. 2. Determine tasks (operations) & task times. Determine sequence of tasks.

3.
4. 5. 6. 7.

Draw precedence diagram.

Calculate cycle time . Calculate minimum number of work stations, N. Assign tasks. Calculate efficiency.
9-62

Assembly Line Balancing Data

Usually we are given: Production rate.

Units of product to be produced per unit time.

Production time available per day.

Tasks (operations) & task times.

Sequence of tasks.

9-63

Assembly Line Balancing General Procedure

1. Determine cycle time - The time between production of successive units. (May be measured in seconds, minutes, etc.) 2. Calculate the theoretical minimum number of workstations, denoted N. (May not be achievable.) 3. Assign tasks to workstations to balance the line. Compute the efficiency.
9-64

Assembly Line Balancing Equations

Cycle time =
Production time available Production rate Task times Cycle time Task times

Minimum number of = N = work stations

Rounded up

Efficiency

(Actual number * (Cycle time) of work stations)

9-65

Assembly Line Balancing Example

Task A B C D E Time 0.1 min. 0.7 min. 1.0 min. 0.5 min. 0.2 min. 2.5 min. B
0.7

Immediate Predecessor A B C D

Suppose we want to produce 300 units/day and 8 hours are available each day.

A
0.1

C
1. 0

D
0.5
9-66

E
0.2

Assembly Line Balancing Example

Task A B C D E Time 0.1 min. 0.7 min. 1.0 min. 0.5 min. 0.2 min. 2.5 min. Immediate Predecessor A B C D

Suppose we want to produce 300 units/day and 8 hours are available each day.
1.6 minutes / unit

cycle time

480 minutes / day

300 units / day 2.5 minutes N 1.5625 or 2 workstations 1.6 minutes

So assign tasks A-E to 2 workstations, where neither workstation should exceed 1.6 minutes.
9-67

Assembly Line Balancing Example

Task A B C D E Time 0.1 min. 0.7 min. 1.0 min. 0.5 min. 0.2 min. 2.5 min. Immediate Predecessor A B C D

Suppose we want to produce 300 units/day and 8 hours are available each day.

A
0.1

B
0.7

C
1. 0

D
0.5

E
0.2

Can not use only 2 workstations! Efficiency=2.5/(3*1.6) = 52.1%

9-68

Must use 3.

Assembly Line Balancing Example

A
0.1

B
0.7

C
1. 0

D
0.5

E
0.2

Both of these can produce 300/day in 8 hours.

Efficiency=2.5/(3*1.6) = 52.1% D
0.5

A
0.1

B
0.7

C
1. 0

E
0.2

Better balance!

Efficiency=2.5/(3*1.6) = 52.1% Note: this line could produce 300 units in 5 hours (1 per minute) Efficiency=2.5/(3*1.0) = 83.3%
9-69

Assembly Line Balancing Example

If 2 workstations were required, then it will take more than 8 hours to produce 300 units. A
0.1

B
0.7

C
1. 0

D
0.5

E
0.2

Cycle time = 1.7 minutes Efficiency=2.5/(2*1.7) = 73.5% Time to produce 300 units 1.7 min/unit*300 units = 510 minutes = 8.5 hours
9-70

Assembly Line Balancing Heuristics

Longest (or shortest) task time.

Choose task with longest (or shortest) operation time.

Most following tasks.

Choose task with largest number of following tasks.

Ranked positional weight.

Choose task where the sum of the times for each following task is longest.

Least number of following tasks.

Choose task with fewest subsequent tasks.

9-71

Ranked Positional Weight Heuristic

Positional weight = Sum of times for a task and all tasks that must follow it. 1. Calculate positional weight for each task.

2. Assign task with largest positional weight to the earliest workstation where it fits. - Obey precedence relations. - Do not exceed cycle time.
3. Repeat step 2 until all tasks are assigned.
9-72

Line Balancing Example 2

Task A B C D E F G Time 0.2 min. 0.6 min. 0.5 min. 0.3 min. 1.0 min. 0.2 min. 0.9 min. 3.7 min. Immediate Predecessor A,C B,D D E,F Suppose we want to produce 450 units/day and 8 hours are available each day.

9-73

Line Balancing Example 2

Task A B C D E F G Time 0.2 min. 0.6 min. 0.5 min. 0.3 min. 1.0 min. 0.2 min. 0.9 min. 3.7 min. Immediate Predecessor A,C B,D D E,F

Suppose we want to produce 450 units/day and 8 hours are available each day.

cycle time

480 minutes / day

450 units / day 3.7 minutes N 3.47... or 4 workstations 1.0667 minutes

9-74

1.0667 minutes / unit

Precedence Diagram - Example 2

A
0.5

0.2

B D
0.3

0.6

1.0

G
0.2

0.9

F
9-75

Example 2 - Positional Weight

Task A B C D E F G Time 0.2 min. 0.6 min. 0.5 min. 0.3 min. 1.0 min. 0.2 min. 0.9 min. 3.7 min. Immediate Positional Predecessor weight 2.7 A,C 2.5 3.0 2.4 B,D 1.9 D 1.1 E,F 0.9

9-76

Example 2 - Assign Tasks

Task A B C D E F G Time 0.2 min. 0.6 min. 0.5 min. 0.3 min. 1.0 min. 0.2 min. 0.9 min. 3.7 min. Immediate Predecessor A,C B,D D E,F Positional weight 2.7 2.5 3.0 2.4 1.9 1.1 0.9

Cycle time = 1.07 min. N = 4 workstations

WS1 WS2 C(0.5)

WS3

WS4

A(0.2)
9-77

Example 2 - Assign Tasks (cont.)

Task A B C D E F G Time 0.2 min. 0.6 min. 0.5 min. 0.3 min. 1.0 min. 0.2 min. 0.9 min. 3.7 min. Immediate Predecessor A,C B,D D E,F Positional weight 2.7 2.5 3.0 2.4 1.9 1.1 0.9

Cycle time = 1.07 min. N = 4 workstations

WS1 WS2 WS3 C(0.5) B(0.6)

WS4

A(0.2)
D(0.3)
9-78

Example 2 - Assign Tasks (cont.)

Task A B C D E F G Time 0.2 min. 0.6 min. 0.5 min. 0.3 min. 1.0 min. 0.2 min. 0.9 min. 3.7 min.
Immediate Predecessor A,C B,D D E,F Positional weight 2.7 2.5 3.0 2.4 1.9 1.1 0.9

Cycle time = 1.07 min. N = 4 workstations

Efficiency = 3.7/(4*1.07) = 86.4%

WS1 WS2 WS3 WS4 C(0.5) B(0.6) E(1.0) G(0.9) A(0.2) F(0.2) D(0.3)
9-79

Precedence Diagram - Example 2

A
0.5

0.2

B D
0.3

0.6

WS3

C
WS1 WS2
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1.0

G
0.2

0.9

WS4

Example 2 - Final Comment

Task A B C D E F G Time 0.2 min. 0.6 min. 0.5 min. 0.3 min. 1.0 min. 0.2 min. 0.9 min. 3.7 min.
Immediate Predecessor A,C B,D D E,F

Could use a cycle time of 1 minute & produce 450 units in 7.5 hours Efficiency = 3.7/(4*1.0) = 92.5%

WS1 WS2 WS3 WS4 C(0.5) B(0.6) E(1.0) G(0.9) A(0.2) F(0.2) D(0.3)
9-81