1. Operations ManagementChapter 9Layout Strategy

2. OM Strategy Decisions • Design of Goods and Services • Managing Quality • Process Strategy • Location Strategies • Layout Strategies • Human Resources • Supply-Chain Management • Inventory Management • Scheduling • Maintenance

3. Strategic Importance of Layout Decisions Types of Layout Layout development Outline

4. What is Facility Layout Location or arrangement of everything within & around buildings

5. Innovations at McDonald’s • Indoor seating (1950s) • Drive-through window (1970s) • Adding play areas (1990s)

6. Strategic Importance of Layout Decisions The objective of layout strategy is to develop an economic layout that will meet the firm’s competitive requirements

7. Layout Design Considerations • Higher utilization of space, equipment, and people • Improved flow of information, materials, or people • Improved employee morale and safer working conditions • Improved customer/client interaction • Flexibility

8. Types of Layout 1. Fixed-position layout 2. Process-oriented layout 3. Product-oriented layout 4.Others • Office layout • Retail/service layout • Warehouse layout

9. 1. Fixed-Position Layout • Product remains in one place • Workers and equipment come to site • Complicating factors • Limited space at site • Different materials required at different stages of the project • Volume of materials needed is dynamic

10. 2. Process-Oriented Layout • Like machines and equipment are grouped together • Flexible and capable of handling a wide variety of products or services • Scheduling can be difficult and setup, material handling, and labor costs can be high

11. 4 6 7 9 5 8 2 10 12 1 3 11 Process Layout Assembly A B C Raw materials

12. Milling Department Lathe Department Drilling Department M M D D D D L L M M D D D D L L G G G P L L G G G P L L Painting Department Grinding Department L L A A A Receiving and Shipping Assembly Manufacturing Process Layout

13. Milling Department Lathe Department Drilling Department M M D D D D L L M M D D D D L L G G G P L L G G G P L L Painting Department Grinding Department L L A A A Receiving and Shipping Assembly Manufacturing Process Layout

14. Health Clinic Process Physical exam Flu Physical exam D R P Broken arm Broken arm B T Flu D: Doctor (examination rooms) R: Radiology (X-ray) T: Triage (assess severity of illness) B: Blood (lab test) P: Pharmacy (fill prescriptions)

15. Women’s lingerie Shoes Housewares Women’s dresses Cosmetics and jewelry Children’s department Women’s sportswear Entry and display area Men’s department Process Layout in Services

16. Designing Process Layouts • Minimize material handlingcosts • Relationship Diagramming • Based on location preference between areas • Use when quantitative data is not available

17. 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

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

19. 40’ 60’ Possible Layout 1 Room 1 Room 2 Room 2 Room 4 Room 5 Room 6

20. Interdepartmental Flow Graph Showing Number of Weekly Loads 100 2 1 3 50 30 20 100 50 20 10 4 5 6 50

21. Cost = $50 (1 and 2) + $200 (1 and 3) + $40 (1 and 6) + $30 (2 and 3) + $50 (2 and 4) + $10 (2 and 5) + $40 (3 and 4) + $100 (3 and 6) + $50 (4 and 5) = $570

22. Interdepartmental Flow Graph Showing Number of Weekly Loads 30 2 2 3 1 50 100 100 20 50 20 10 4 5 6 50

23. New cost = $50 (1 and 2) + $100 (1 and 3) +$20 (1 and 6) + $60 (2 and 3) + $50 (2 and 4) + $10 (2 and 5) + $40 (3 and 4) + $100 (3 and 6) + $50 (4 and 5) = $ 480

24. 40’ 60’ Possible Layout 2 Room 1 Room 2 Room 2 Room 4 Room 5 Room 6

25. Expert system in layout:Computer Programs to Assist in Layout • CRAFT • SPACECRAFT • CRAFT 3-D • MULTIPLE • CORELAP • ALDEP • COFAD • FADES - expert system

26. Relationship Diagramming • Used when quantitative data is not available • Muther’s grid displays preferences • Denote location preferences with weighted lines

27. President Chief Technology Officer Engineer’s area Secretary Office entrance Central files Equipment cabinet Photocopy equipment Storage room 1 2 3 O 4 U 5 A A I I 6 7 O I I U 8 I I 9 A O O I O U A E E X E U U A O U I O X O U A E E Relationship Chart

28. Ranking System For Departments A - Absolutely necessary E - Especially important I - Important O - Okay U - Unimportant X - Undesirable

29. Relationship Diagramming Example Production O A Offices U I O Stockroom E A A X Shipping and Receiving U U U O O Locker Room O Toolroom

32. 3. Product-Oriented Layout • Facility organized around product or families of similar high volume,low variety products

33. Product-Oriented Layout - Assumptions • Volume is adequate for high equipment utilization • Product demand is stable enough to justify high investment in specialized equipment • Product is standardized or approaching a phase of its life cycle that justifies investment in specialized equipment • Supplies of raw materials and components are adequate and of uniform quality ensure they will work with specialized equipment

34. IN OUT A Product Layout

35. Advantages Low variable cost per unit Low material handling costs Reduced work-in-process inventories Easier training and supervision Rapid throughput Disadvantages High volume is required Work stoppage at any point ties up the whole operation Lack of flexibility in product or production rates Product-Oriented Layouts

36. Assembly-Line Balancing • Objective is to minimize the imbalance between machines or personnel while meeting required output • Starts with the precedence relationships • Determine cycle time • Calculate theoretical minimum number of workstations • Balance the line by assigning specific tasks to workstations

37. Performance Task Must Follow Time Task Listed Task (minutes) Below A 10— B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 This means that tasks B and E cannot be done until task A has been completed Copier Example

38. C G F A B D I 5 E H 10 11 7 3 4 3 12 11 Copier Example

39. Copier Example 480 available mins per day 40 units required

40. Production time available per day Units required per day Cycle time = = 480 / 40 = 12 minutes per unit Minimum number of workstations = n i = 1 = 66 / 12 = 5.5 or 6 stations ∑ Time for task i Cycle time Copier Example

41. 5 Station 2 10 11 3 7 G A D C H B E I F 4 3 Station 4 12 11 Station 6 Station 1 Station 3 Station 5 Copier Example

42. = 66 minutes / (6 stations) x (12 minutes) = 91.7% ∑ Task times (actual number of workstations) x (largest cycle time) Efficiency = Copier Example

43. Comparison Of Product & Process PRODUCT LAYOUTPROCESS LAYOUT 1. Description Sequential arrangement Functional grouping of machine of machines 2. Type of Process Continuous, mass Intermittent, job shop production, mainly batch production, assembly mainly fabrication 3. Product Standardized Varied, made to stock made to order 4. Demand Stable Fluctuating 5. Volume High Low 6. Equipment Special purpose General purpose 7. Workers Limited skills Varied skills

44. PRODUCT LAYOUTPROCESS LAYOUT 8. Inventory Low in-process, High in-process, high finished goods low finished goods 9. Storage space Small Large 10. Material Fixed path Variable path handling (conveyor) (forklift) 11. Aisles Narrow Wide 12. Scheduling Part of balancing Dynamic 13. Layout decision Line balancing Machine location 14. Goal Equalize work at Minimize material each station handling cost 15. Advantage Efficiency Flexibility

45. 4. Others Office layout - positions workers, their equipment, and spaces/offices to provide for movement of information Retail layout - allocates shelf space and responds to customer behavior Warehouse layout - addresses trade-offs between space and material handling

46. Office Layout • Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information • Movement of information is main distinction

47. Retail Layout (supermarket) • Objective is to maximize profitability per square foot of floor space • Sales and profitability vary directly with customer exposure

48. Five Helpful Ideas for Supermarket 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

49. Warehousing and Storage Layouts • Objective is to optimize trade-offs between handling costs and costs associated with warehouse space • Maximize the total “cube” of the warehouse – utilize its full volume while maintaining low material handling costs

50. Warehousing and Storage Layouts Material Handling Costs • All costs associated with the transaction • Incoming transport • Storage • Finding and moving material • Outgoing transport • Equipment, people, material, supervision, insurance, depreciation • Minimize damage and spoilage