Process Selection and Facility Layout

1. Process Selection and Facility Layout Chapter 6 MIS 373: Basic Operations Management

2. Learning Objectives • After this lecture, students will be able to • Compare the four basic processing types • Describe product layouts and their main advantages and disadvantages • Describe process layouts and their main advantages and disadvantages • Develop simple product layouts • Develop simple process layouts MIS 373: Basic Operations Management

3. Process Selection • Process selection • Deciding on the way production of goods or services will be organized • Occurs when: • Planning of new products or services • Technological changes in product or equipment • Competitive pressure MIS 373: Basic Operations Management

4. CapacityPlanning ProcessSelection Process Selection and System Design Facilities andEquipment Forecasting (demand) Layout Product andService Design WorkDesign TechnologicalChange MIS 373: Basic Operations Management

5. Process Strategy • Key aspects of process strategy: • Capital Intensity • The mix of equipment and labor that will be used by the organization • Process flexibility • The degree to which the system can be adjusted to changes in processing requirements due to such factors as • Product and service design changes • Volume changes • Changes in technology MIS 373: Basic Operations Management

6. New Process Strategy • HBR 12/6/12 Three Examples of New Process Strategy • There are three fundamental ways that companies can improve their processes in the coming decade: • expand the scope of work managed by a company to include customers, suppliers, and partners; • Shift to global, virtual, cross-organizational teams of specialized entities that are knitted together to serve customers • To keep such a multiparty system from degenerating into chaos, virtual process teams must have aligned goals and support systems. • target the increasing amount of knowledge work; and • Big data analytics • Crowdsourcing, e.g., innocentive.com, TopCoder.com & Heritage Health Prize • HBR : Using the Crowd as an Innovation Partner • reduce cycle times to durations previously considered impossible • Agile processes • Managers must speed the flow of information so that decisions can be made faster at all levels, from top to bottom.

7. Process Selection Process choice is demand driven: • Variety: How much? • Equipment flexibility: To what degree? • Volume: Expected output? • Process Types MIS 373: Basic Operations Management

8. Process Selection Process choice is demand driven: • Variety • How much? • Equipment flexibility • To what degree? • Volume • Expected output? Process Types • Job shop • Small scale • e.g., doctor, tailor • Batch • Moderate volume • e.g., bakery • Repetitive/assembly line • High volumes of standardized goods or services • e.g., automobiles • Continuous • Very high volumes of non-discrete goods • e.g., petroleum products MIS 373: Basic Operations Management

9. Types of Processing MIS 373: Basic Operations Management

10. Product-Process Matrix Flexibility/Variety • The diagonal represents the “ideal” match • Hybrid process are possible (e.g., job-shop & batch) • Process choice may change as products goes through its life-cycles Opportunity costs Volume Out of pocket costs MIS 373: Basic Operations Management

11. Process Choice Effects Project: used for work that is none routine with a unique set of objective to be accomplished in a limited time frame, e.g., launching a new product, publishing a book MIS 373: Basic Operations Management

12. Product and Service Profiling • Product or service profiling • Linking key product or service requirements to process capabilities • Key dimensions relate to • Range of products or services that can be processed • Expected order sizes • Expected frequency of schedule changes MIS 373: Basic Operations Management

13. Discussion • Work with a partner and match the following products or services with the best process Products/Services Processes Ice-cream manufacturer Job-shop Automatic carwash Batch Steel Repetitive Books Continuous Airlines Surgery Movie theater Sugar • Tips: Think in terms of those key dimensions: • Range of products or services that can be processed • Expected order sizes • Expected frequency of schedule changes Beer Flour

14. Technology • Technological Innovation • The discovery and development of new or improved products, services, or processes for producing or providing them • Technology • The application of scientific discoveries to the development and improvement of products and services and/or the processes that produce or provide them • Process technology includes methods, procedures, and equipment used to produce goods and provide services. • RFID, online banking, 3D printing, … MIS 373: Basic Operations Management

15. Facilities Layout • Layout • The configuration of departments, work centers, and equipment, with particular emphasis on movement of work (customers or materials) through the system • Facilities layout decisions arise when: • Designing new facilities • Re-designing existing facilities • The basic objective of layout design is to facilitate a smooth flow of work, material, and information through the system. MIS 373: Basic Operations Management

16. Basic Layout Types • Product layout • Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow • Process layout • Layout that can handle varied processing requirements • Fixed position layout • Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed • Combination layouts MIS 373: Basic Operations Management

17. Product Layouts • Product layout • Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow • How? Raw materials or customer Station 2 Station 3 Station 4 Finished item Station 1 Material and/or labor Material and/or labor Material and/or labor Material and/or labor Used for Repetitive Processing Repetitive or Continuous MIS 373: Basic Operations Management

18. Product Layouts • Although product layouts often follow a straight line, a straight line is not always the best, and layouts may take an L, O, S, or U shape. Why? • L: • O: • S: • U: more compact, increased communication facilitating team work, minimize the material handling Image source: mdcegypt.com MIS 373: Basic Operations Management

19. Non-repetitive Processing: Process Layouts • Process layouts • Layouts that can handle varied processing requirements Dept. A Dept. C Dept. E Dept. B Dept. D Dept. F Used for Intermittent processing Job Shop or Batch MIS 373: Basic Operations Management

20. Product Layouts Advantages • High rate of output • Low unit cost • Labor specialization • Low material handling cost per unit • High utilization of labor and equipment • Established routing and scheduling • Routine accounting, purchasing, and inventory control Disadvantages • Creates dull, repetitive jobs • Poorly skilled workers may not maintain equipment or quality of output • Fairly inflexible to changes in volume or product or process design • Highly susceptible to shutdowns • Preventive maintenance, capacity for quick repair and spare-parts inventories are necessary expenses • Individual incentive plans are impractical MIS 373: Basic Operations Management

21. Process Layouts Advantages • Can handle a variety of processing requirements • Not particularly vulnerable to equipment failures • General-purpose equipment is often less costly and easier and less costly to maintain • It is possible to use individual incentive systems Disadvantages • In-process inventories can be high • Routing and scheduling pose continual challenges • Equipment utilization rates are low • Material handling is slow and less efficient • Complicates supervision • Special attention necessary for each product or customer • Accounting, inventory control, and purchasing are more complex MIS 373: Basic Operations Management

22. Fixed Position Layouts • Fixed Position Layout • Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed • E.g., farming, firefighting, road building, home building, remodeling and repair, and drilling for oil MIS 373: Basic Operations Management

23. Combination Layouts • Some operational environments use a combination of the three basic layout types: • Hospitals • Supermarket • Shipyards • Some organizations are moving away from process layouts in an effort to capture the benefits of product layouts MIS 373: Basic Operations Management

24. Line Balancing • Line balancing • The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements • Goal: • Obtain task grouping that represent approximately equal time requirements since this minimizes idle time along the line and results in a high utilization of equipment and labor • Why is line balancing important? • It allows us to use labor and equipment more efficiently. • To avoid fairness issues that arise when one workstation must work harder than another. • Input • Tasks sequencing (precedence diagram) • Tasks time • Operating time MIS 373: Basic Operations Management

25. Precedence Diagram • Precedence diagram • A diagram that shows elemental tasks and their precedence requirements MIS 373: Basic Operations Management

26. Cycle Time • Cycle time • The maximum time allowed at each workstation to complete its set of tasks on a unit • Minimum Cycle Time = longest task time = 1.0 min • Maximum Cycle time = Σt = sum of task time = 2.5 min MIS 373: Basic Operations Management

27. Output rate of a line • Cycle time also establishes the output rate of a line MIS 373: Basic Operations Management

28. How Many Workstations are Needed? • The required number of workstations is a function of: • Desired output rate • The ability to combine tasks into a workstation • (theoretical) Minimum number of stations MIS 373: Basic Operations Management

29. How Many Workstations are Needed? • The required number of workstations is a function of: • Desired output rate • The ability to combine tasks into a workstation • (theoretical) Minimum number of stations Q: Why this is a theoretical value? A: There are often scraps or idle times. Example: 4 tasks, each require 6 hours to finish A station can handle 8 hours amount of tasks a day. You will need 4 stations to complete all tasks, instead of 3. Nmin = (6+6+6+6) / 8 = 3 MIS 373: Basic Operations Management

30. Designing Product Layouts • Some Heuristic (Intuitive, may not result in optimal solution) Rules: • Assign tasks in order of most following tasks • Count the number of tasks that follow • Assign tasks in order of greatest positional weight. • Positional weight is the sum of each task’s time and the times of all following tasks. MIS 373: Basic Operations Management

31. Example: Assembly Line Balancing • Arrange tasks (shown in the figure) into three workstations • Assume the cycle time of each workstation is 1.2 min. • Assign tasks in order of the most number of followers • Break tie using greatest positional weight MIS 373: Basic Operations Management

32. Assign tasks in order of the most number of followers Start with CT (1.2 min. in this example) MIS 373: Basic Operations Management

33. Assign tasks in order of the most number of followers MIS 373: Basic Operations Management

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35. Break tie using greatest positional weight MIS 373: Basic Operations Management

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37. Can’t assign c to this workstation because the workstation doesn’t have enough time (0.1) to complete c (0.7). MIS 373: Basic Operations Management

38. Start with CT (1.2 min. in this example) MIS 373: Basic Operations Management

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40. Start with CT (1.2 min. in this example) MIS 373: Basic Operations Management

41. Idle time per cycle =0.1+0.0+1.0=1.1 MIS 373: Basic Operations Management

42. Layout a & b (0.1+1.0) c & d (0.7+0.5) e (0.2) MIS 373: Basic Operations Management

43. Measuring Effectiveness • Balance delay (percentage of idle time) • Percentage of idle time of a line • Efficiency • Percentage of busy time of a line MIS 373: Basic Operations Management

44. Example:Measuring Effectiveness Percentage of idle time = [(0.1 + 0 + 1.0) ÷ (3 × 1.2)] × 100% = 30.55% Efficiency = 100% – 30.55% = 69.45% MIS 373: Basic Operations Management

45. Exercise Problems • (Textbook page 267) Using the information contained in the table shown, do each of the following: • Draw a precedence diagram. • Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day. • Determine the minimum number of workstations required. • Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first. • Compute the resulting percent idle time and efficiency of the system

46. Exercise Solution 1. Draw a precedence diagram

47. Exercise Solution 2. Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day

48. Exercise Solution 3. Determine the minimum number of workstations required = 3.17 stations ( round to 4)

49. Exercise Solution 4. Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.

50. Exercise Solution 5. Compute the resulting percent idle time and efficiency of the system = 20.83%