Facilities Location, Layout and Planning

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• Facilities Location, Layout and Planning

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FACILITY PLANNING

• The placement of facility customers, suppliers,
  other links in the supply chain
• Resources
• Strategy 99cents Only example
• Access to customers
• Government impacts

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Objectives of Facility Layout

• Minimize material handling costs
• Utilize space efficiently
• Utilize labor efficiently
• Eliminate bottlenecks
• Facilitate communication and interaction between
  workers, between workers and their supervisors,
  or between workers and customers
• Reduce manufacturing cycle time or customer
  service time

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Objectives of Facility Layout

• Eliminate waste or redundant movement
• Facilitate the entry, exit, and placement of
  material, products, or people
• Incorporate safety and security measures
• Promote product and service quality
• Encourage proper maintenance activities
• Provide a visual control of operations or
  activities
• Provide flexibility to adapt to changing
  conditions
• Increase capacity

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Questions on Layout Planning

• How should the facility be laid out?
• Does my layout cause unnecessary movement/excess
  travel time?
• Does my work flow in a logical manner?
• Does size dictate layout or does layout/product
  flow dictate the size?

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Basic Types of Layouts

• Process Layout
• Machines grouped by process they perform
• Product Layout
• Linear arrangement of workstations to produce a
  specific product
• Fixed Position Layout
• Used in projects where the product cannot be moved

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Manufacturing Process Layout
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Manufacturing Process Layout
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Manufacturing Process Layout
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A Product Layout
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Fixed-Position Layouts

• Typical of projects
• Equipment, workers, materials, other resources
  brought to the site
• Highly skilled labor
• Often low fixed
• Typically high variable costs

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Designing Process Layouts

• Minimize material handling costs
• Block Diagramming
• Minimize nonadjacent loads
• Use when quantitative data is available
• Relationship Diagramming
• Based on location preference between areas
• Use when quantitative data is not available

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Block Diagramming

• Create load summary chart
• Calculate composite (two way) movements
• Develop trial layouts minimizing number of
  nonadjacent loads
• Example

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Relationship Diagramming(Murthers Grid)

• Used when quantitative data is not available
• Muthers grid displays preferences
• Denote location preferences with weighted lines

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Relationship Diagramming Example
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Relationship Diagramming Example

• A Absolutely necessary
• E Especially important
• I Important
• O Okay
• U Unimportant
• X Undesirable

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Relationship Diagramming Example

• 1 Absolutely necessary
• 2 Especially important
• 3 Important
• 4 Okay
• 5 Unimportant
• 6 Undesirable

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• Facility Location Models

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Types Of Facilities

• Heavy manufacturing
• Auto plants, steel mills, chemical plants
• Light industry
• Small components mfg, assembly
• Warehouse distribution centers
• Retail service

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Factors in Heavy Manufacturing Location

• Construction costs
• Land costs
• Raw material and finished goods shipment modes
• Proximity to raw materials
• Utilities
• Labor availability

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Factors in Light Industry Location

• Construction costs
• Land costs
• Easily accessible geographic region
• Education training capabilities

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Factors in Warehouse Location

• Transportation costs
• Proximity to markets (Customers)

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Service Location Considerations

• Labor
• Cost of Living
• Real Estate
• Construction
• Government Incentives
• Examples Amoco, Mass St, Tattoo Parlors,
  Walgreens

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Global Location Factors

• Government stability
• Government regulations
• Political and economic systems
• Economic stability and growth
• Exchange rates
• Culture
• Climate
• Export import regulations, duties and tariffs

• Raw material availability
• Number and proximity of suppliers
• Transportation and distribution system
• Labor cost and education
• Available technology
• Commercial travel
• Technical expertise
• Cross-border trade regulations
• Group trade agreements

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Regional Location Factors

• Community government
• Local business regulations
• Government services
• Business climate
• Community services
• Taxes

• Availability of sites
• Financial Services
• Community inducements
• Proximity of suppliers
• Education system

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Site Location Factors

• Customer base
• Construction/ leasing cost
• Land cost
• Site size
• Transportation
• Utilities

• Zoning restrictions
• Traffic
• Safety/security
• Competition
• Area business climate
• Income level

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Location Incentives

• Tax credits Wal-Mart in Wyandotte
• Relaxed government regulation
• Job training
• Infrastructure improvement
• Money

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Center-of-Gravity Technique

• Locate facility at center of geographic area
• Based on weight and distance traveled
• Establish grid-map of area
• Identify coordinates and weights shipped for
  each location

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Facility Summary

• Why is it important?
• Location analysis
• Location Criteria global, local, regional -
  education
• Location and Strategy
• Location and Customers
• Layout planning

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Project Managementand Operations
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• Project Management

First Essay on Project Management 1697 An
Essay Upon Projects 1959 HBR Article The
Project Manager Air Force Manual 1964
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Project Management
In todays global marketplace, complexity and
speed are certainties. In such an environment, a
good axiom for project management is, Do It, Do
It Right, Do It Right Now. Creating clear
direction, efficiency, timely response, and
quality outcomes requires project managers who
are agile -- adept at change. The associated
disciplinary areas are clearly spelled out in the
following PMI definition.Project management is
the application of knowledge, skills, tools, and
techniques to a broad range of activities in
order to meet the requirements of a particular
project. Project management is comprised of five
Project Management Process Groups Initiating
Processes, Planning Processes, Executing
Processes, Monitoring and Controlling Processes,
and Closing Processes.
Source Project Management Institute -
http//www.pmi.org/info/PP_AboutProfessionOverview
.asp?nav0501
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Elements of Project Management

• Project team
• Individuals from different departments within
  company
• Matrix organization
• Team structure with members from different
  functional areas depending on skills needed
• Project manager - Leader of project team
• Project Charter high level description of what
  is to be accomplished in a project and delegates
  authority to project manager to implement actions
  to complete project

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Project Planning

• Statement of work
• Written description of goals, work time frame
  of project
• Activities require labor, resources time
• Precedence relationship shows sequential
  relationship of project activities

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Elements of Project Planning

• Define project objective(s)
• Identify activities
• Establish precedence relationships
• Make time estimates
• Determine project completion time
• Compare project schedule objectives
• Determine resource requirements to meet objective

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Work Breakdown Structure

• Hierarchical organization of work to be done on a
  project
• Project broken down into modules
• Modules subdivided into subcomponents,
  activities, and tasks
• Identifies individual tasks, workloads, and
  resource requirements

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Project Control

• All activities identified and included
• Completed in proper sequence
• Resource needs identified
• Schedule adjusted
• Maintain schedule and budget
• Complete on time

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A Gantt Chart
Around since 1914

• Popular tool for project scheduling
• Graph with bar for representing the time for each
  task
• Provides visual display of project schedule
• Also shows slack for activities - amount of time
  activity can be delayed without delaying project

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A Gantt Chart
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CPM/PERT

• Critical Path Method (CPM)
• DuPont Remington-Rand (1956)
• Deterministic task times
• Project Evaluation Review Technique (PERT)
• US Navy, Lockheed
• Multiple task time estimates

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Project Network for a House
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Critical Path

• A path is a sequence of connected activities
  running from start to end node in network
• The critical path is the path with the longest
  duration in the network
• Project cannot be completed in less than the
  time of the critical path

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The Critical Path

• A 1-2-3-4-6-73 2 0 3 1 9 months
• B 1-2-3-4-5-6-73 2 0 1 1 1 8 months
• C 1-2-4-6-73 1 3 1 8 months
• D 1-2-4-5-6-73 1 1 1 1 7 months

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The Critical Path
Activity Start Times
Figure 6.6
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Project Crashing

• Crashing is reducing project time by expending
  additional resources
• Crash time is an amount of time an activity is
  reduced
• Crash cost is the cost of reducing the activity
  time
• Goal is to reduce project duration at minimum cost

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Time-Cost Relationship

• Crashing costs increase as project duration
  decreases
• Indirect costs increase as project duration
  increases
• Reduce project length as long as crashing costs
  are less than indirect costs

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Life Cycle Management

• Long term view of projects to guide decision
  making solutions that provide life time success
  vice short term
• Acquisition development production
  introduction sustainment disposal
• Links system costs to big picture better use of
  resources minimize total cost of ownership

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• Capacity and Aggregate Planning

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Capacity Outputs Examples
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The goal of capacity planning decisions

1. The capacity of the firm to produce the service
   or good
2. The processes for providing the service or making
   the good
3. The layout or arrangement of the work space
4. The design of work processes to enhance
   productivity

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Capacity

• The max output that an organization be capable of
  producing
• Measure a single facility
• Design vs. Effective capacity
• Capacity Utilization design vs. efficient
  utilization
• For systems have more than one facility and flows
  of product
• System capacity and bottleneck
• Improve system capacity

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Determinants of Effective Capacity

• Facilities
• Human considerations
• Adding people
• Increasing employee motivation
• Operations
• Improving operating rate of a machine
• Improving quality of raw materials and components
• External forces
• Safety regulations

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Capacity Utilization

• Measures how much of the available capacity is
  actually being used
• Always lt1(percentage of usage)
• Higher the better
• Denominator
• If effective capacity used efficient utilization
• If design capacity used design utilization

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Capacity Planning

• The process of determining the amount of capacity
  required to produce in the future. May be at the
  aggregate or product line level
• Master Production Schedule - anticipated build
  schedule
• Time horizon must exceed lead times for materials

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Capacity Planning

• Look at lead times, queue times, set up times,
  run times, wait times, move times
• Resource availability
• Material and capacity - should be in synch
• driven by dispatch list - listing of
  manufacturing orders in priority sequence - ties
  to layout planning
• load profiles - capacity of each section

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the capacity decisions

• When to add capacity
• How much capacity to add
• Where to add capacity
• What type of capacity to add
• When to reduce capacity

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Capacity Planning

• Rough Cut Capacity Planning - process of
  converting the master production schedule into
  requirements for key resources
• capacity requirements plan - time-phased display
  of present and future capacity required on all
  resources based on planned and released orders

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Capacity Planning

• Capacity Requirements Planning (CRP) - process of
  determining in detail the amount of labor and
  machine resources required to meet production
  plan
• RCCP may indicate sufficient capacity but the CRP
  may indicate insufficient capacity during
  specific time periods

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Theory of Constraints

• Every system has a bottle neck
• capacity of the system is constrained by the
  capacity of the bottle neck
• increasing capacity at other than bottle neck
  operations does not increase the overall capacity
  of the system

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Theory of Constraints

• What needs to be changed
• What to change to
• How to make the change happen

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Capacity Planning

• Establishes overall level of productive resources
• Affects lead time responsiveness, cost
  competitiveness
• Determines when and how much to increase capacity

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Capacity Expansion

• Volume certainty of anticipated demand
• Strategic objectives for growth
• Costs of expansion operation
• Incremental or one-step expansion

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Sales and Operations Planning (SOP)

• Brings together all plans for business
• performed at least once a month
• Internal and external

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Adjusting Capacity to Meet Demand

1. Producing at a constant rate and using inventory
   to absorb fluctuations in demand (level
   production)
2. Hiring and firing workers to match demand (chase
   demand)
3. Maintaining resources for high demand levels
4. Increase or decrease working hours (overtime and
   undertime)
5. Subcontracting work to other firms
6. Using part-time workers
7. Providing the service or product at a later time
   period (backordering)

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Demand Management

• Shift demand into other periods
• Incentives, sales promotions, advertising
  campaigns
• Offer product or services with countercyclical
  demand patterns
• Partnering with suppliers to reduce information
  distortion along the supply chain