Layout Strategies 9 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Innovations at McDonald’s Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu (1980s) Adding play areas (late 1980s) Redesign of the kitchens (1990s) Self-service kiosk (2004) Now three separate dining sections © 2011 Pearson Education, Inc. publishing as Prentice Hall

Innovations at McDonald’s Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu (1980s) Adding play areas (late 1980s) Redesign of the kitchens (1990s) Self-service kiosk (2004) Now three separate dining sections Six out of the seven are layout decisions! © 2011 Pearson Education, Inc. publishing as Prentice Hall

Facility layout is a source of competitive advantage 30,000 McDonald’s outlets around the world are redesigned to have three separate dining areas: The "linger" zone with comfortable armchairs and Wi-Fi connections for young adults who want to socialize and hang out. The "grab and go" zone with tall counters and bar stools for customers who eat alone with plasma TVs. The "flexible" zone with comfortable and casual setting for families and large groups. Facility layout is a source of competitive advantage © 2011 Pearson Education, Inc. publishing as Prentice Hall

Strategic Importance of Layout Decisions Developing an effective and efficient layout that will meet the firm’s competitive requirements will contribute a lot to the profitabilitity of the firm © 2011 Pearson Education, Inc. publishing as Prentice Hall

Objectives in Layout Design 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 (to be changed later) © 2011 Pearson Education, Inc. publishing as Prentice Hall

A good Layout Requires Determining the Following Material handling equipment (manual hand trucks, conveyors, cranes, AGVs) Capacity and space requirements Environment and aesthetics (windows, height and walls of the offices to facilitate air flow, to reduce noise etc.) Flows of information (open offices versus dividers) Cost of moving material between work areas © 2011 Pearson Education, Inc. publishing as Prentice Hall

Types of Layout Office layout Retail layout Warehouse layout Fixed-position layout Process-oriented layout Work-cell layout Product-oriented layout © 2011 Pearson Education, Inc. publishing as Prentice Hall

1. Office Layout Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information Movement of information is main distinction Typically in state of flux due to frequent technological changes © 2011 Pearson Education, Inc. publishing as Prentice Hall

Relationship Chart: A tool to use in Office Layout Decisions Figure 9.1 © 2011 Pearson Education, Inc. publishing as Prentice Hall

2. Retail Layout Retail layouts (as are found in stores, banks, and restaurants) are based on the idea that sales and profitability vary directly with customer exposure to products Objective is to maximize profitability per square foot of floor space by exposing the customers to as many products as possible Sales and profitability vary directly with customer exposure © 2011 Pearson Education, Inc. publishing as Prentice Hall

Some Strategic Decisions in Supermarket Layout High-draw items like dairy products, meat, etc. are located around the periphery of the store For high-impulse and high-margin items prominent locations are used. Mission of the store is conveyed through careful positioning of lead-off department. For instance, positioning the bakery department upon entering the store. © 2011 Pearson Education, Inc. publishing as Prentice Hall

Store Layout Figure 9.2 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Retail Slotting Due to the limited shelf space and increasing number of new products, manufacturers pay fees to retailers to get the retailers to display (slot) their product. Retailers can demand up to $25000 to provide shelf space for a new product. Small companies complain about unfair competition. Wal-Mart is one of the few major retailers that does not demand slotting fees. © 2011 Pearson Education, Inc. publishing as Prentice Hall

Computerized tool for shelf-space management Retail Store Shelf Space, Planogram (computer generated, plan for displaying merchandise, on the shelves of a supermarket) 5 facings Shampoo Conditioner 2 ft. Computerized tool for shelf-space management Generated from store’s scanner data on sales Often supplied by manufacturer © 2011 Pearson Education, Inc. publishing as Prentice Hall

Servicescapes The physical surroundings in which a service takes place, and how they affect customers and employees Ambient conditions - background characteristics such as lighting, sound, smell, and temperature Spatial layout and functionality - which involve customer circulation path planning, aisle characteristics, and product grouping Signs, symbols, and artifacts - characteristics of building design that carry social significance © 2011 Pearson Education, Inc. publishing as Prentice Hall

3. 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 Minimize damage and spoilage © 2011 Pearson Education, Inc. publishing as Prentice Hall

Warehousing and Storage Layouts Automated Storage and Retrieval Systems (ASRSs) can significantly improve warehouse productivity. Random stocking: Typically requires automatic identification systems (AISs) and effective information systems. Allows more efficient use of space Dedicated Stocking © 2011 Pearson Education, Inc. publishing as Prentice Hall

Cross-Docking Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse Requires tight scheduling and accurate shipments, bar code or RFID identification used for advanced shipment notification as materials are unloaded © 2011 Pearson Education, Inc. publishing as Prentice Hall

Customizing Value-added activities performed at the warehouse (warehouse assembly jobs are common nowadays) Enable low cost and rapid response strategies Assembly of components Loading software Repairs Customized labeling and packaging © 2011 Pearson Education, Inc. publishing as Prentice Hall

Warehouse Layout Traditional Layout Storage racks Customization Shipping and receiving docks Office Customization Conveyor Storage racks Staging © 2011 Pearson Education, Inc. publishing as Prentice Hall

Warehouse Layout Cross-Docking Layout Office Shipping and receiving docks Office © 2011 Pearson Education, Inc. publishing as Prentice Hall

4. Fixed-Position Layout Product remains in one place, workers and equipment come to site Preferred where the size of the job is bulky and heavy. Example of such type of layout is locomotives, ships, wagon building, aircraft manufacturing, etc. Complicating factors Limited space at site Different materials required at different stages of the project Volume of materials needed is dynamic © 2011 Pearson Education, Inc. publishing as Prentice Hall

5. Process-Oriented Layout Similar 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process-Oriented Layout Surgery Radiology ER triage room ER Beds Pharmacy Emergency room admissions Billing/exit Laboratories Patient A - broken leg Patient B - erratic heart pacemaker Figure 9.3 © 2011 Pearson Education, Inc. publishing as Prentice Hall

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

Process-Oriented Layout Arrange work centers so as to minimize the costs of material handling Basic cost elements are Number of loads (or people) moving between centers Distance loads (or people) move between centers © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process-Oriented Layout Minimize cost = ∑ ∑ Xij Cij n i = 1 j = 1 where n = total number of work centers or departments i, j = individual departments Xij = number of loads moved from department i to department j Cij = cost to move a load between department i and department j © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Arrange six departments in a factory to minimize the material handling costs. Each department is 20 x 20 feet and the building is 60 feet long and 40 feet wide. Construct a “from-to matrix” Determine the space requirements Develop an initial schematic diagram Determine the cost of this layout Try to improve the layout Prepare a detailed plan © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Area 1 Area 2 Area 3 Area 4 Area 5 Area 6 60’ 40’ Assembly Painting Machine Shop Department Department Department (1) (2) (3) Receiving Shipping Testing Department Department Department (4) (5) (6) Figure 9.5 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Department Assembly Painting Machine Receiving Shipping Testing (1) (2) Shop (3) (4) (5) (6) Assembly (1) Painting (2) Machine Shop (3) Receiving (4) Shipping (5) Testing (6) Number of loads per week 50 100 0 0 20 30 50 10 0 20 0 100 50 0 Figure 9.4 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Interdepartmental Flow Graph 100 50 20 10 30 Machine Shop (3) Testing (6) Shipping (5) Receiving (4) Assembly (1) Painting (2) Figure 9.6 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example The cost of moving one load between adjacent departments is estimated to be $1. Moving a load between nonadjecent departments costs $2. © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Cost = ∑ ∑ Xij Cij n i = 1 j = 1 Cost = $50 + $200 + $40 (1 and 2) (1 and 3) (1 and 6) + $30 + $50 + $10 (2 and 3) (2 and 4) (2 and 5) + $40 + $100 + $50 (3 and 4) (3 and 6) (4 and 5) = $570 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Revised Interdepartmental Flow Graph 30 50 20 10 100 Machine Shop (3) Testing (6) Shipping (5) Receiving (4) Painting (2) Assembly (1) Figure 9.7 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Cost = ∑ ∑ Xij Cij n i = 1 j = 1 Cost = $50 + $100 + $20 (1 and 2) (1 and 3) (1 and 6) + $60 + $50 + $10 (2 and 3) (2 and 4) (2 and 5) + $40 + $100 + $50 (3 and 4) (3 and 6) (4 and 5) = $480 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Process Layout Example Area 1 Area 2 Area 3 Area 4 Area 5 Area 6 60’ 40’ Painting Assembly Machine Shop Department Department Department (2) (1) (3) Receiving Shipping Testing Department Department Department (4) (5) (6) Figure 9.8 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Computer Software Graphical approach only works for small problems Computer programs are available to solve bigger problems CRAFT ALDEP CORELAP Factory Flow © 2011 Pearson Education, Inc. publishing as Prentice Hall

CRAFT Example (a) (b) A A A A B B D D D D B B D D D D D D D D D E E E TOTAL COST 20,100 EST. COST REDUCTION .00 ITERATION 0 (a) A A A A B B D D D D D D C C D D D D F F F F F D E E E E E D TOTAL COST 14,390 EST. COST REDUCTION 70 ITERATION 3 (b) D D D D B B D D D E E E C C D E E F A A A A A F A A A F F F Figure 9.9 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Computer Software Three dimensional visualization software allows managers to view possible layouts and assess process, material handling, efficiency, and safety issues © 2011 Pearson Education, Inc. publishing as Prentice Hall

6. Work Cells Reorganizes people and machines into groups to focus on single products or product groups (PART FAMILIES) Group technology identifies products that have similar characteristics for particular cells Similarity can be either in shape, size or in manufacturing process Production Volume must justify cells Cells can be reconfigured as designs or volume changes © 2011 Pearson Education, Inc. publishing as Prentice Hall

Part families Part families with similarity in manufacturing process Part families with similarity in shape

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

Part Routing Matrix Machines Parts 1 2 3 4 5 6 7 8 9 10 11 12 A x x x x x B x x x x C x x x D x x x x x E x x x F x x x G x x x x H x x x Figure 5.8

Reordered Routing Matrix Machines Parts 1 2 4 8 10 3 6 9 5 7 11 12 A x x x x x D x x x x x F x x x C x x x G x x x x B x x x x H x x x E x x x

Revised Cellular Layout 3 6 9 Assembly 1 2 4 8 10 5 7 11 12 A B C Raw materials Cell 1 Cell 2 Cell 3

Process Flows before the Use of GT Cells

Process Flows after the Use of GT Cells

Automated Manufacturing Cell Source: J. T. Black, “Cellular Manufacturing Systems Reduce Setup Time, Make Small Lot Production Economical.” Industrial Engineering (November 1983)

Advantages of Work Cells Reduced work-in-process inventory Less floor space required Reduced raw material and finished goods inventory Reduced direct labor, and setup cost Heightened sense of employee participation Increased use of equipment and machinery Reduced investment in machinery and equipment © 2011 Pearson Education, Inc. publishing as Prentice Hall

Improving Layouts Using Work Cells Current layout - workers in small closed areas. Improved layout - cross-trained workers can assist each other. Figure 9.10 (a) © 2011 Pearson Education, Inc. publishing as Prentice Hall

Improving Layouts Using Work Cells Current layout - straight lines make it hard to balance tasks because work may not be divided evenly Improved layout - in U shape, workers have better access. Four cross-trained workers were reduced. U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection Figure 9.10 (b) © 2011 Pearson Education, Inc. publishing as Prentice Hall

Staffing and Balancing Work Cells Determine the takt time (Also called cycle time) Takt time = Total work time available per day Required output per day (in units) Determine the number of operators required Workers required = Total operation time required Takt time © 2011 Pearson Education, Inc. publishing as Prentice Hall

Staffing Work Cells Example Require output: 600 Mirrors per Total work time: 8 hours per day Total operation time per mirror =140 seconds Standard time required Operations Assemble Paint Test Label Pack for shipment 60 50 40 30 20 10 Takt time? # of workers required? © 2011 Pearson Education, Inc. publishing as Prentice Hall

Staffing Work Cells Example 600 Mirrors per day required Mirror production scheduled for 8 hours per day From a work balance chart total operation time = 140 seconds Takt time = (8 hrs x 60 mins) / 600 units = .8 mins = 48 seconds Workers required = Total operation time required Takt time = 140 / 48 = 2.91 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Focused Work Center (Cell)and Focused Factory When a firm identifies a family of similar products that have a large and stable demand It moves production from a general-purpose, process-oriented facility to a large work cell (product-oriented) Focused Factory If a focused work cell is in a separate facility, it is called focused factory © 2011 Pearson Education, Inc. publishing as Prentice Hall

7. Repetitive and Product-Oriented Layout Organized around products or families of similar high-volume, low-variety products Production 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 life cycle that justifies investment Supplies of raw materials and components are adequate and of uniform quality © 2011 Pearson Education, Inc. publishing as Prentice Hall

Product-Oriented Layouts Fabrication line Builds components on a series of machines Machine-paced Require mechanical or engineering changes to balance Assembly line Puts fabricated parts together at a series of workstations Paced by work tasks Balanced by moving tasks Both types of lines must be balanced so that the time to perform the work at each station is the same © 2011 Pearson Education, Inc. publishing as Prentice Hall

Product-Oriented Layouts Low variable cost per unit Low material handling costs Reduced work-in-process inventories Easier training and supervision Rapid throughput Advantages High production volume is required to be justifiable Work stoppage at any point ties up the whole operation Lack of flexibility in product or production rates Disadvantages © 2011 Pearson Education, Inc. publishing as Prentice Hall

Production/Assembly Line Raw materials or customer Finished item Station 2 3 4 Materials and/or labor Used for Repetitive or Continuous Processing Example: automobile assembly lines, cafeteria serving line 1 In manufacturing environments

U-Shaped Production Line 1 2 3 4 5 6 7 8 9 10 In Out Workers Advantages: … is more compact; its length is half the length of a straight line. Communication among workers is increased because workers are clustered. Compared to a straight line, flexibility in work assignments is increased because workers can handle more stations. Materials entering point is the same as finished product leaving point, minimize material handling

McDonald’s Assembly Line Figure 9.12 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Disassembly Lines Disassembly is being considered in new product designs “Green” issues and recycling standards are important consideration Automotive disassembly is the 16th largest industry in the US © 2011 Pearson Education, Inc. publishing as Prentice Hall

Assembly-Line Balancing As mentioned earlier, 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Design Product Layouts: Line Balancing Line Balancing is the process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements. Tasks are grouped into manageable bundles and assigned to workstations with one or two operators Goal is to minimize idle time along the line, which leads to high utilization of labor and equipment Perfect balance is often impossible to achieve

Steps in Assembly Line Balancing Step 1: Identify tasks & immediate predecessors Step 2: Determine the desired output rate Step 3: Calculate the cycle time Step 4: Compute the theoretical minimum number of workstations Step 5: Assign tasks to workstations (balance the line) by using line-balancing heuristics Step 6: Compute efficiency.

Cycle Time Cycle time is the maximum time allowed at each workstation to complete its set of tasks on a unit. The primary determinant is what the line’s cycle time will be. Cycle time also establishes the output rate of a line. For instance, if the cycle time is two minutes, units will come off the end of the line at the rate of one every two minutes.

Example 1: Cycle Times With 5 workstations, CT = 1.0 minute. Cycle time of a system = longest processing time in a workstation.

Example 1: Cycle Times With 1 workstation, CT = 2.5 minutes. Cycle time of workstation = total processing time in of tasks. With 3 workstations, can CT = 1.0 minute? 0.5 min. 1.0 min. 0.7 min. 0.1 min. 0.2 min. Workstation 1 Workstation 2 Workstation 3

Output Capacity OT Output capacity = CT OT = operating time per day CT = cycle time Example: 8 hours per day OT = 8 x 60 = 480 minutes per day Cycle Time = CT = 1.0 min Output = OT/CT = 480/1.0 = 480 units per day Cycle Time = CT = 2.5 min Output = OT/CT = 480/2.5 = 192 units per day

Cycle Time Determined by Desired Output OT D CT = cycle time = D = Desired output rate Example: 8 hours per day OT = 8 x 60 = 480 minutes per day D = 480 units per day CT = OT/D = 480/480 = 1.0 Minute

Theoretical Minimum Number of Stations Required Nmin = CT å t = sum of task times Nmin = theoretical Minimum Number of Workstations Required Example: 8 hours per day, desired output rate is 480 units per day CT = OT/D = 480/480 = 1.0 Minute Nmin = ∑t /CT = 2.5/1.0 = 2.5 stations ≈ 3 stations

Wing Component Example Performance Time Immediate Task (minutes) Predecessors 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Wing Component Example Performance Time Immediate Task (minutes) 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 Predecessors 10 11 12 5 4 3 7 C D F A B E G I H Figure 9.13 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Wing Component Example 480 available mins per day 40 units required 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 Cycle time = Production time available per day Units required per day = 480 / 40 = 12 minutes per unit I G F C D H B E A 10 11 12 5 4 3 7 Figure 9.13 Minimum number of workstations = ∑ Time for task i Cycle time n i = 1 = 66 / 12 = 5.5 or 6 stations © 2011 Pearson Education, Inc. publishing as Prentice Hall

Wing Component Example Line-Balancing Heuristics 1. Longest task time Choose the available task with the longest task time 2. Most following tasks Choose the available task with the largest number of following tasks 3. Ranked positional weight Choose the available task for which the sum of following task times is the longest 4. Shortest task time Choose the available task with the shortest task time 5. Least number of following tasks Choose the available task with the least number of following tasks 480 available mins per day 40 units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 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 I G F C D H B E A 10 11 12 5 4 3 7 Figure 9.13 Table 9.4 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Wing Component Example 480 available mins per day 40 units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 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 I G F H C D B E A 10 11 12 5 4 3 7 Station 2 Station 3 Station 1 Station 6 Station 4 Station 5 Figure 9.14 © 2011 Pearson Education, Inc. publishing as Prentice Hall

Wing Component Example 480 available mins per day 40 units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 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 Efficiency = ∑ Task times (Actual number of workstations) x (Largest cycle time) = 66 minutes / (6 stations) x (12 minutes) = 91.7% © 2011 Pearson Education, Inc. publishing as Prentice Hall