International Operations Management

1. International Operations Management MGMT 6367 Lecture 05 Instructor: Yan Qin

2. Outline • Production Facility Layouts • Basic production Layouts • Suitable products for each layout • Design of Process Layout • CRAFT • Systematic Layout Planning • Design of Assembly Line • Assembly line balancing • How to speed up

3. Production Facility Layout • Within a production facility, the layout decisions entail determining the placement of • Departments; • Work groups within the departments; • Workstations; • Machines; and • Inventories. • The objective is to arrange resources in a way to ensure a smooth work flow in a factory.

4. Layout Inputs • The inputs to the layout decision include: • Criteria to be used to evaluate layout designs; • Estimates of product demand; • Processing requirements in terms of the number of operations and the amount of flow between the elements in the layout; • Space requirements for the elements in the layout; • Space availability within the production facility.

5. Basic Production Layouts • Process Layout (Also known as Job-shop) • A format in which similar equipment or functions are grouped together. Example:

6. Basic Production Layouts • Product Layout (Also known as Flow-shop layout) • A format in which equipment or processes are arranged based on the progressive steps by which the product is made. • The path for each product is, in effect, a straight line.

7. Basic Production Layouts • Fixed-position Layout • A format in which the product remains at the same location, while materials, workers, and equipment are moved to the product.

8. Basic Production Layouts • Group Technology • A layout that groups different machines into work centers or cells to work on products/components with similar shapes and/or processing requirements.

9. Suitable Products for Different Layouts • Process layout features the production of a wide variety of products in small volumes. • Process layout is suitable for: • Non-standardized products; • Small production volumes; • Frequent change in design or style of a product; • Expensive equipment required;

10. Suitable Products • Product layout features high volume production of few products. • Product layout is suitable for: • Mass production of standardized products; • Simple and repetitive production processes; • Processes with more or less equal operation time; • Reasonably stable demand for the product; • Continuous supply of materials.

11. Suitable Products • Fixed-position layout is suitable for: • Hospitals • Manufacture of bulky and heavy products such as locomotives, ships, boilers, generators, wagon building, aircraft manufacturing, etc. • Construction of building, flyovers, dams.

12. Process Layout Design • The most common approach in designing a process layout is to place departments with large amounts of interdepartmental traffic adjacent to each other. • In the subsection, we will • Illustrate the basic idea using a toy factory example; • Introduce the Computerized Relative Allocation of Facilities Technique (CRAFT); • Introduce the Systematic Layout Planning technique.

13. Example: Process Layout at a Toy Factory • Suppose that we want to arrange the 8 departments of a toy factory to minimize the interdepartmental material handling cost. • All departments have the same amount of space requirement, 40 feet by 40 feet. The production facility is 80 feet by 160 feet. • Materials are transported in a standard-size crate by forklift truck. Transportation costs are $1 to move a crate between adjacent departments and $1 extra for each department in between. Diagonal moves are allowed in this example.

14. Example: Interdepartmental flows We need to design a process layout to minimize the total material handling cost.

15. Example: the 1st step • Given the information, our 1st step is to illustrate the interdepartmental flows by a diagram. • We will use the following layout as the starting point.

16. Example: the 1ststep (Cont.) • Here is the output of Step 1, the interdepartmental flow graph.

17. Example: the 2nd step • The 2nd step is to determine the cost of the initial layout by multiplying the material handling cost by the number of crates moved between each pair of departments. • For example, • How much does it cost to move 175 crates from Dept 1 to 2 in the current layout? • How much does it cost to move 50 crates Dept 1 to 3? • The 99 crates from Dept 3 to 7? • The 180 crates from Dept 3 to 8?

18. Example: the 2nd step (Cont.) • Here is the summary of the total material handling costs for the material flows given the initial layout of the 8 departments. The total cost is just the sum of the material handling costs of all the flows involved.

19. Example: the 3rd step • The 3rd step is to search for departmental changes in the layout that will reduce cost. • Suppose we switch the locations of department 4 and department 8 in the layout. • After the switch, the unit material handling costs for flows going into or coming out of departments 4 and 8 will be affected. • We need to re-calculate the total material handing cost based on the new layout.

20. Example: the 3rdstep (Cont.)

21. Example: the 3rd step (Cont.) How much is the net change in the total material handling cost?

22. Example: the 3rd step (Cont.) • So the switch between department 4 and department 8 in the layout is considered as appropriate since it reduces the total material handling cost. • Then we need to repeat Step 3 to reduce the total material handling cost until the total cost becomes acceptable. • Sometimes, “Acceptable” is acceptable.

23. Example: Other factors to consider • We still have other factors to consider. For example, • It would be preferable to have the shipping and receiving department closer to the doors; • If the sewing department is next to the painting department, lint, thread, and cloth particles might drift onto painted items; • If the small toy assembly and large toy assembly are located at opposite ends, it might increase the travel time for workers who would be needed in both departments at various times. • And etc.

24. CRAFT • The most widely applied design software is the Computerized Relative Allocation of Facilities Techniques (CRAFT). • Using CRAFT, the material handling cost between departments = Number of loads * Rectilinear distance between department centroids * Cost per unit distance. • It makes improvements by exchanging pairs of departments iteratively until no further cost reduction is possible.

25. CRAFT (Cont.) • Distinguishing features of CRAFT: • This is a heuristic program that does not guarantee an optimal solution. • CRAFT is biased by its starting layout. That is, the acceptable layout it reaches is determined by the starting layout. • CRAFT departments consist of combinations of square modules. Users need to modify strange departmental shapes manually. • There is a limit on the number of departments it can handle.

26. Systematic Layout Planning • Systematic Layout Planning (SLP) is used when it is important for some departments to be close to each other. • SLP involves developing a relationship chart showing the degree of importance of having each department adjacent to every other department. • The layout with the highest total closeness score is selected.

27. Example: SLP for a department store • The 1st step would be to develop a relationship chart showing the importance of closeness.

28. Example: the 1st step (Cont.)

29. Example: the 2nd step • Determine the initial layout and calculate the overall closeness rating. • For example, the overall closeness rating of the following initial layout would be 32. (The note says 40, which is incorrect.)

30. Example: the 3rdstep • The last step would be to make improvements based on the initial layout until no more increase can be made in the overall closeness rating. • Note that the numerical weightings are just for illustration only. Your team can assign any weightings appropriate in a particular situation.

31. Product Layout – Assembly lines • Assembly lines are a special case of product layout. • The most common assembly line is a moving conveyor that passes a series of workstations in a uniform time interval. • The workstation cycle time is the amount of the time between successive units coming off the end of an assembly line.

32. Assembly-line Balancing • The problem of assembly-line balancing is the one that assigns work tasks to a series of workstations so that • Each workstation has no more than can be done in the workstation cycle time, and • The idle time across all workstations is minimized. • Work tasks are groupings of work that cannot be subdivided without penalty. • The balancing problem is complicated by the sequential relationships among work tasks.

33. Assembly-line Balancing (Cont.) • Steps to follow in solving a balancing problem: • Specify the sequential relationships among work tasks using a diagram; • Determine the required workstation cycle time (C), using the formula • Determine the theoretical minimum number of workstations () required to satisfy the workstation cycle time, using the following formula

34. Assembly-line Balancing (Cont.) • Steps to follow: (Cont.) • Select the primary rule by which tasks are to assigned to workstations, and a secondary rule to break ties; • Assign tasks, one at a time, to a workstation until the sum of the task times is equal to the workstation cycle time or no other tasks are feasible because of time or sequence restriction. • Evaluate the efficiency of the balance derived using the formula • If efficiency is unsatisfactory, rebalance using a different decision rule.

35. Example: Balancing • The Model J Wagon is to be assembled on a conveyor belt. 500 wagons are required per day. Production time per day is 420 minutes, and the assembly steps and times are listed on the next slide. • The company wishes to find the balance that minimizes the number of workstations, subject to workstation cycle time and sequential relationship constraint.

36. Example: Balancing

37. Example: Cont. • 1st step: Draw a sequential relationship diagram as follows.

38. Example: Cont. • 2nd step: Determine workstation cycle time. • 3rd step: Determine the theoretical minimum number of workstations required. (Always round up!)

39. Example: Cont. • 4th step: Select assignment rules • Primary rule: prioritize tasks in order of the largest number of following tasks; • Secondary rule: prioritize tasks in order of longest task time to break ties. • The table is formulated based on the primary rule.

40. Example: Cont. • 5th Step: Assign the tasks to Workstation 1, Workstation 2, and so forth.

41. Example: Cont. • 6th step: Calculate the efficiency of the assignment. • 7th step: An efficiency of 77% indicates idle time of 23% across the assembly time. If this is considered as acceptable, then we don’t need to make any changes to the current assignment. Otherwise, we probably need to find a way to either split certain tasks to speed up.

42. How to speed up? • There are several ways to accommodate a 40-second task in a 36-second cycle time: • Split the task: Is it worthwhile to split the task? • Share the task: Can the task be shared so an adjacent workstation does part of the work? • Use parallel workstations • Use a more skilled worker to speed up • Work overtime so that the workstation cycle time can be extended • Redesign the product to reduce the task times

43. Line layout Comparison VS.

44. Line layout Comparison VS.

45. Line layout Comparison

46. Next Week • Case study • Case: New Balance • Case: Crocs • Review for Mid-term