Operations Management Layout Strategy Chapter 9

1. Operations ManagementLayout StrategyChapter 9

2. 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). Outline

3. 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.

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

5. 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.

6. 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.

7. Project Job Shop Office (fixed-position) (Process-oriented) Allstate Insurance Microsoft Ingal Ship Building Pittsburgh Airport Shouldice Hospital Olive Garden Examples Move material to limited storage areas at the site. Manage varied material flow for each product. Locate workers requiring contact close to each other. Problem Layout Strategies

8. Repetitive /Continuous Warehouse (Product-oriented) Retail (storage) Federal-Mogul’s Warehouse The Gap’s distribution center Sony’s TV Assembly Line Dodge Caravans Kroger’s Supermarket Famous-Barr Examples Equalize the task time at each workstation. Balance cost for storage and material handling. Expose customer to high-margin items. Problem Layout Strategies

9. 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.

10. Constraints on Layout Objectives • Product/service design. • Volume of business. • Process equipment & capacity. • Quality of work life. • Building and site.

11. 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.

12. 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.

13. 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

14. 1 President O 2 Costing U E A 3 Engineering I X U U 4 President’s Secretary E A 5 Photocopiers Relationship (Proximity) Chart

15. 1 President O 2 Costing U E A 3 Engineering I X U U 4 President’s Secretary E A 2 5 Photocopiers 1 E I 3 A X E 4 5 A Relationship (Proximity) Chart Can determine layout using proximity diagram

16. 2 1 E I 3 1 President O A X 2 Costing U E A E 3 Engineering I X 4 5 U U 4 President’s Secretary E A A 5 Photocopiers Office Layout Locate 5 offices in a rectangular space. Offices 2-5 are to be same size. Office 1 (President’s) is twice as large.

17. Office Layout President’s Photocopiers Secretary (5) (4) President Corridor (1) Engineering Costing (3) (2)

18. 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.

19. E.R.Triage room Patient A - broken leg E.R. Admissions Patient B - erratic pacemaker Surgery Hallway Radiology E.R. beds Pharmacy Billing/exit Emergency Room Layout

20. 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.

21. Process-Oriented Layout Disadvantages • Scheduling is difficult. • High variable cost. • High work-in-process inventory and waiting. • High labor skills required.

22. 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.

23. Cost of Process-Oriented Layout

24. 1 2 3 4 5 6 40 100 0 0 0 1 10 10 2 0 40 10 0 0 80 20 0 3 4 10 0 20 0 50 0 0 0 5 0 0 0 0 20 20 0 6 Flows of Parts (loads/week) to from

25. 1 2 3 4 5 6 50 100 0 0 20 1 10 2 0 50 30 100 20 0 3 4 0 50 5 0 6 Interdepartmental Flow of Parts Number of loads/week between departments

26. Initial Layout Room 1 Room 2 Room 3 Room 4 Room 5 Room 6

27. 100 2 1 3 50 30 20 100 50 20 10 4 5 6 50 Initial Layout Flow Graph Showing Loads/Week

28. 100 2 1 3 50 30 20 100 50 20 10 4 5 6 50 Cost of Initial Layout Cost per load for adjacent locations = $1 Cost per load for non-adjacent locations = $2 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

29. 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 ,

30. 30 2 1 3 50 100 20 50 20 10 4 5 6 50 Improved Layout Flow Graph 100

31. 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

32. Cost of Improved Layout Cost per load for adjacent locations = $1 Cost per load for non-adjacent locations = $2 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 30 2 1 3 50 100 100 20 50 20 10 4 5 6 50

33. 20 1 3 6 100 100 30 20 50 50 2 4 5 50 10 Alternative Improved Layout

34. 20 1 3 6 100 100 30 20 50 50 2 4 5 50 10 Cost of Alternative Improved Layout Cost per load for adjacent locations = $1 Cost per load for non-adjacent locations = $2 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?

35. Alternative Improved Layout Room 1 Room 2 Room 3 Assembly Machine shop Testing Department Department Department (6) (1) (3) Printing Shipping Receiving Department Department Department (2) (5) (4) Room 4 Room 5 Room 6

36. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations 3 - 0 4 A B C D E 4 - 4 A - 9 8 12 14 B 9 - 9 6 7 C 8 9 - 4 9 D 12 6 4 - 14 E 14 7 9 14 - 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

37. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations 3 - 0 4 A B C D E 4 - 4 A - 9 8 12 14 B 9 - 9 6 7 C 8 9 - 4 9 D 12 6 4 - 14 E 14 7 9 14 - 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

38. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations 3 - 0 4 A B C D E 4 - 4 A - 9 8 12 14 B 9 - 9 6 7 C 8 9 - 4 9 D 12 6 4 - 14 E 14 7 9 14 - 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

39. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations 3 - 0 4 A B C D E 4 - 4 A - 9 8 12 14 B 9 - 9 6 7 C 8 9 - 4 9 D 12 6 4 - 14 E 14 7 9 14 - 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

40. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations 3 - 0 4 A B C D E 4 - 4 A - 9 8 12 14 B 9 - 9 6 7 C 8 9 - 4 9 D 12 6 4 - 14 E 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 Solution 1 is best! Interdepartmental flows

41. Computer Programs for Layout • Many different programs: • CRAFT • SPACECRAFT • CRAFT 3-D • CORELAP • ALDEP • All are heuristic - not necessarily optimal!!

42. Work Cells in Process Layouts • Special case of product-oriented layout - in a process-oriented facility. • Differentmachines 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.

43. Saws Drills Office Work Cell Tool Room Work Cell Floor Plan

44. Work Cell Advantages Lower: Inventory. Floor space. Direct labor costs. Higher: Equipment utilization. Employee participation. Quality.

45. Work Cells, Focused Work Centers and the Focused Factory A temporary assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility. Work Cell A permanent assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility. Focused Work Center A permanent facility to produce a product or component in a product-oriented facility. Focused Factory

46. Video 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.

47. 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.

48. Grocery Store Layout

49. 5facings PERT PERT PERT PERT PERT 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).

50. 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.).