Operations Management Layout Strategy Chapter 9

1. Operations ManagementLayout StrategyChapter 9

2. Importance of Layout. Six Layouts: 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. 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.

8. 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.

9. 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.

10. 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

11. 1 President O U 2 Costing E A I X 3 Engineering U U 4 President’s Secretary E A 5 Photocopiers Relationship (Proximity) Chart

12. 1 President O U 2 Costing E A I X 3 Engineering 2 U U 1 E 4 President’s Secretary E I A 3 A 5 Photocopiers X E 4 5 A Relationship (Proximity) Chart Can determine layout using proximity diagram

13. 1 President O 2 1 U 2 Costing E I E A 3 I X 3 Engineering A X U U E 4 President’s Secretary E 4 5 A A 5 Photocopiers Office Layout Locate 5 offices in a linear space. All offices are to be the same size.

14. 1 President 2 O 1 E U 2 Costing I E 3 A A X I X 3 Engineering E U U 4 5 A 4 President’s Secretary E A 3 4 5 2 1 5 Photocopiers 3 4 2 5 1 Office Layout Locate 5 offices in a linear space. All offices are to be the same size. Which is better?

15. 1 President 2 O 1 E U 2 Costing I E 3 A A X I X 3 Engineering E U U 4 5 A 4 President’s Secretary E 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.

16. 1 President O U 2 Costing E A President’s Photocopiers I X 3 Engineering Secretary 5 U U 4 4 President’s Secretary E President Corridor A 1 5 Photocopiers Engineering Costing 3 2 Office Layout Solution

17. 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.

18. 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

19. 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.

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

21. Process-Oriented Layout Steps Goal: Minimize cost of moving between departments. • Construct a matrix of interdepartmental flows. • Determine space requirements for each department. • Develop an initial layout by placing 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.

22. Cost of Process-Oriented Layout

23. 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

24. 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

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

26. 100 50 30 20 100 50 20 10 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 2 1 3 4 5 6

27. Large Flows in Initial Layout 100 2 1 3 50 30 20 100 50 20 10 4 5 6 50 Note that Largest Flows are not close together: 100 for 1-3 & 3-6

28. 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 Start Over with Largest Flows Number of loads/week between departments Flow = 100 for 1-3 & 3-6, so put 3 close to 1 and 6. Flow = 50 for 1-2, 2-4 & 4-5, so put these close.

29. Improved Layout Room 1 Room 2 Room 3 Department Department Department (1) (3) (6) Department Department Department (2) (4) (5) Room 4 Room 5 Room 6

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

31. 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?

32. 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 distance x flow. Interdepartmental flows

33. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 There are two options: Solution 1 Solution 2 A = A = B = B = C = 1 C = 3 D = 3D = 1 E =E =

34. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 Next largest flow is 2-3 (flow=15). Since 3 is already located, 2 should be placed in location closest to 3. Solution 1 A = B = 2 C = 1 D = 3 E = Solution 1: 3 is in D, and closest open location to D is B, so put 2 in B.

35. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 2 Next largest flow is 2-3 (flow=15). Since 3 is already located, 2 should be placed in location closest to 3. Solution 1 Solution 2 A = A = 2 B = 2 B = C = 1 C = 3 D = 3D = 1 E =E = Solution 2: 3 is in C, and closest open location to C is A, so put 2 in A.

36. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 Next largest flow is 1-2 (flow=13), but 1 and 2 are already located. So consider next largest flow 2-5. Solution 1 Solution 2 A = A = 2 B = 2 B = C = 1 C = 3 D = 3D = 1 E = 5E = Solution 1: 2 is in B, and closest open location to B is E, so put 5 in E.

37. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 2 Next largest flow is 1-2 (flow=13), but 1 and 2 are already located. So consider next largest flow 2-5. Solution 1 Solution 2 A = A = 2 B = 2 B = 5 C = 1 C = 3 D = 3D = 1 E = 5E = Solution 2: 2 is in A, and closest open location to A is B, so put 5 in B.

38. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 2 Only one location and one department are left. Solution 1 Solution 2 A = 4 A = 2 B = 2 B = 5 C = 1 C = 3 D = 3D = 1 E = 5E = 4 Solution 1: Put 4 in A. Solution 2: Put 4 in E.

39. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 – Cost Solution 1:Distance = 13x9 + 18x4 + 3x8 + 15x6 + 6x7 + 4x14 + 4x14 = 457 Solution 2: Distance = 13x12 + 18x4 + 3x14 + 15x8 + 6x9 + 4x9 + 4x7 = 508 Solution 1 Solution 2 A = 4 A = 2 B = 2 B = 5 C = 1 C = 3 D = 3D = 1 E = 5E = 4 Solution 1 is best (lowest cost)!

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 3 Given the following tables of interdepartmental flows and distances between locations A-E, locate the five departments to minimize the total distance x flow. Also, now assume that 1 must be in A. Interdepartmental flows

41. 1 2 3 4 5 1 - 13 18 3 0 2 - 15 0 6 Distances between locations Interdepartmental flows 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 3 1. Largest flow is 1-3 (flow=18) and 1 is already in A. So, place 3 in C. 2. Next largest flow is 2-3, so place 2 in D. 3. Next largest flow is 1-2, but both are already located. 4. Next largest flow is 2-5, so place 5 in B. 5. Last dept is 4, so place 4 in E. Solution 1 A = 1 B = 5 C = 3 D = 2 E = 4

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

43. 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.

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

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

46. 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

47. 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.

48. Retail Layouts - Rules of Thumb • 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. • 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. • Slotting fees are paid by vendors for product placement.

49. Grocery Store Layout

50. 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).