Operations Management Layout Strategy Chapter 9

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Operations ManagementLayout StrategyChapter 9
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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).

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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.

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Facility Layout

• Helps achieve competitive advantage
• Better, faster, cheaper.
• Determines productivity, cost, quality,
  flexibility, image, etc.
• May involve a blend of strategies.

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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.

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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.

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Layout Strategies
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Layout Strategies
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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.

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Constraints on Layout Objectives

• Product/service design.
• Volume of business.
• Process equipment capacity.
• Quality of work life.
• Building and site.

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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.

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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.

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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

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Relationship (Proximity) Chart
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Relationship (Proximity) Chart
Can determine layout using proximity diagram
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Office Layout
Locate 5 offices in a rectangular space. Offices
2-5 are to be same size. Office 1 (Presidents)
is twice as large.
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Office Layout
Presidents
Photocopiers
Secretary
(5)
(4)
President
Corridor
(1)
Engineering
Costing
(3)
(2)
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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.

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Emergency Room Layout
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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.

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Process-Oriented Layout Disadvantages

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

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Developing a Process-Oriented Layout by Hand

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

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Cost of Process-Oriented Layout
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Flows of Parts (loads/week)
to
from
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Interdepartmental Flow of Parts
Number of loads/week between departments
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Initial Layout
Room 1 Room 2 Room 3
Room 4 Room 5 Room 6
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Initial Layout Flow Graph Showing Loads/Week
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Cost of Initial Layout
Cost per load for adjacent locations 1 Cost
per load for non-adjacent locations 2
1-2 50 501 1-3 200 1002 1-6 40
202 2-3 30 301 2-4 50 501 2-5
10 101 3-4 40 202 3-6 100
1001 4-5 50 501 Total 570
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Large Flows in Initial Layout
100
2
1
3
50
30
20
100
50
20
10
4
5
6
50
Largest Flows 100 for 1-3 3-6, so put 3 close
to 1 and 6. 50 for 1-2, 2-4 4-5 ,
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Improved Layout Flow Graph
100
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Improved Layout
Room 1 Room 2 Room 3
Printing
Assembly
Machine shop
Department
Department
Department
(2)
(1)
(3)
Receiving
Shipping
Testing
Department
Department
Department
(4)
(5)
(6)
Room 4 Room 5 Room 6
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Cost of Improved Layout
Cost per load for adjacent locations 1 Cost
per load for non-adjacent locations 2
1-2 50 501 1-3 100 1001 1-6 20
201 2-3 60 302 2-4 50 501 2-5
10 101 3-4 40 202 3-6 100
1001 4-5 50 501 Total 480
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2
3
1
100
50
100
20
50
20
10
4
5
6
50
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Alternative Improved Layout
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Cost of Alternative Improved Layout
Cost per load for adjacent locations 1 Cost
per load for non-adjacent locations 2
1-2 50 501 1-3 100 1001 1-6 40
202 2-3 30 301 2-4 50 501 2-5
20 102 3-4 20 201 3-6 100
1001 4-5 50 501 Total 460
Is this best?
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Alternative Improved Layout
Room 1 Room 2 Room 3
Assembly
Machine shop
Testing
Department
Department
Department
(1)
(3)
(6)
Printing
Shipping
Receiving
Department
Department
Department
(2)
(5)
(4)
Room 4 Room 5 Room 6
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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
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Layout Example 2
Largest flow 1-3 (flow18) should be in closest
locations CD Could have Solution 1 C1 and
D3 or Solution 2
C3 and D1
Interdepartmental flows
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Layout Example 2
Next largest flow is 2-3, so 2 should be placed
in location closest to 3. Solution 1 D3 and
closest open location to D is B, so B2, C1,
D3. Solution 2 C3 and closest open
location to C is A, so A2, C3, D1.
Interdepartmental flows
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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 B2 and closest open location to
B is E, so A4,B2,C1, D3,E5. Solution 2
A2 and closest open location to A is B, so
A2,B5,C3, D1,E4.
Interdepartmental flows
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Layout Example 2
Solution 1 A4,B2,C1, D3,E5. Distance
13x9 18x4 3x8 15x6 6x7 4x14 4x14
457 Solution 2 A2,B5,C3, D1,E4. Distance
13x12 18x4 3x14 15x8 6x9 4x9 4x7
508
Solution 1 is best!
Interdepartmental flows
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Computer Programs for Layout

• Many different programs
• CRAFT
• SPACECRAFT
• CRAFT 3-D
• CORELAP
• ALDEP
• All are heuristic - not necessarily optimal!!

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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.

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Work Cell Floor Plan
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Work Cell Advantages
Lower Inventory. Floor space. Direct labor
costs.
Higher Equipment utilization. Employee
participation. Quality.
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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.
Focused Work
A permanent assembly-line-oriented arrangement of
machines and personnel in what is ordinarily a
process-oriented facility.
Center
A permanent facility to produce a product or
component in a product-oriented facility.
Focused Factory
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4. Retail/Service Layout

• Maximize product exposure to customers.
• Maximize profitability per square foot of floor
  space or per linear foot of shelf space.
• Decision variables
• Arrangement of store.
• Store flow pattern.
• Allocation of (shelf) space to products.

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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.

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Grocery Store Layout
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Retail Store Shelf Space

• Consider prominence of shelf location and number
  of facings.
• Can use computerized tools to manage shelf-space.
• Track sales and product location (scanner data).

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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.).

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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.

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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.

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Assigned vs. Random Stock Locations

• Assigned locations for products
• May be inefficient use of space.
• Easier order picking and re-stocking.
• Random locations
• More efficient use of space.
• Added costs to track location of inventory and
  open space.
• More difficult order picking and re-stocking.
• Stock products to optimize cost and efficiencies
  tradeoffs.

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Cross Docking (Wal-Mart)

• Transferring goods
• From incoming trucks at receiving docks.
• To outgoing trucks at shipping docks.
• Avoids placing goods into storage.
• Requires suppliers provide effective addressing
  (bar codes) and packaging for rapid transshipment.

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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.

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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.

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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.

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Product-Oriented Requirements

• Standardized product.
• High production volume.
• Stable production quantities.
• Uniform quality of raw materials components.

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Product-Oriented Layout Advantages

• Lower variable cost per unit.
• Lower material handling costs.
• Lower work-in-process inventories.
• Rapid throughput.
• Easier training supervision.

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Product-Oriented Layout Disadvantages

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

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Repetitive Layout
Note 5 tasks or operations (T1-T5) 3 work
stations (orange rectangles)
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Assembly Line Balancing Steps

• 1. Determine tasks (operations) task times.
• 2. Determine sequence of tasks.
• 3. Draw precedence diagram.
• 4. Calculate cycle time .
• 5. Calculate minimum number of work stations, N.
• 6. Assign tasks.
• 7. Calculate efficiency.

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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.

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Assembly Line BalancingGeneral 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.

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Assembly Line Balancing Equations

Production time available
Cycle time
Production rate
Minimum number of work stations
?? Task times
Rounded up

N

Cycle time
?? Task times
Efficiency
(Actual number of work stations)
(Cycle time)
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Assembly Line Balancing Example
Suppose we want to produce 300 units/day and 8
hours are available each day.
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Assembly Line Balancing Example
Suppose we want to produce 300 units/day and 8
hours are available each day.
So assign tasks A-E to 2 workstations, where
neither workstation should exceed 1.6 minutes.
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Assembly Line Balancing Example
Suppose we want to produce 300 units/day and 8
hours are available each day.
Can not use only 2 workstations! Must use
3. Efficiency2.5/(31.6) 52.1
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Assembly Line Balancing Example
Both of these can produce 300/day in 8 hours.
Efficiency2.5/(31.6) 52.1
Better balance!
Efficiency2.5/(31.6) 52.1
Note this line could produce 300 units in 5
hours (1 per minute) Efficiency2.5/(31.0)
83.3
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Assembly Line Balancing Example
If 2 workstations were required, then it will
take more than 8 hours to produce 300 units.
Cycle time 1.7 minutes Efficiency2.5/(21.7)
73.5
Time to produce 300 units 1.7 min/unit300 units
510 minutes 8.5 hours
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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.

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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.

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Line Balancing Example 2
Suppose we want to produce 450 units/day and 8
hours are available each day.
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Line Balancing Example 2
Suppose we want to produce 450 units/day and 8
hours are available each day.
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Precedence Diagram - Example 2
0.2
A
0.6
B
1.0
0.5
E
0.9
C
G
0.3
0.2
D
F
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Example 2 - Positional Weight
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Example 2 - Assign Tasks
Cycle time 1.07 min. N 4 workstations
WS1 WS2 WS3 WS4 C(0.5) A(0.2)
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Example 2 - Assign Tasks (cont.)
Cycle time 1.07 min. N 4 workstations
WS1 WS2 WS3 WS4 C(0.5) B(0.6) A(0.2)
D(0.3)
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Example 2 - Assign Tasks (cont.)
Cycle time 1.07 min. N 4 workstations
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)
Efficiency 3.7/(41.07) 86.4
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Precedence Diagram - Example 2
0.2
A
0.6
WS3
B
1.0
0.5
E
0.9
C
G
0.3
WS4
0.2
D
F
WS1
WS2
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Example 2 - Final Comment
Could use a cycle time of 1 minute produce 450
units in 7.5 hours
Efficiency 3.7/(41.0) 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)