1. 9 - 1 Layout Decisions PowerPoint presentation to accompany Heizer and Render Operations Management, Global Edition, Eleventh Edition Principles of Operations Management, Global Edition, Ninth Edition PowerPoint slides by Jeff Heyl 9 © 2014 Pearson Education

2. 9 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline The Strategic Importance of Layout Decisions Types of Layout: 1. Office Layout 2. Retail Layout 3. Warehousing and Storage Layouts 4. Process-Oriented Layout 5. Fixed-Position Layout 6. Work Cells 7. Product-Oriented Layout How to balance production flow in a product- oriented facility

3. 9 - 3© 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

4. 9 - 4© 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!

5. 9 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall McDonald’s New Layout  Redesigning all 30,000 outlets around the world to have three separate dining areas:  Linger zone with comfortable chairs and Wi-Fi connections  Grab and go zone with tall counters  Flexible zone for kids and families (tables and chairs are movable)  Facility layout is a source of competitive advantage

6. 9 - 6 6-6 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

7. 9 - 7 Objectives of Facility Layout  A facility layout problem may have many objectives. In the context of manufacturing plants, minimizing material handling costs is the most common one.  Other objectives include efficient utilization of  space  labor  Eliminate  bottlenecks  waste or redundant movement

8. 9 - 8  Facilitate  communication and interaction between workers  visual control  Minimize  manufacturing cycle time or customer flow time  investment  Provide  convenience, safety and comfort of the employees  flexibility to adapt to changing conditions Objectives of Facility Layout

9. 9 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall Types of Layout 1.Office layout 2.Retail layout 3.Warehouse layout 4.Fixed-position layout 5.Process-oriented layout 6.Work-cell layout 7.Product-oriented layout

10. 9 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall 1. Office Layout  Grouping of employees, their equipment, and spaces to provide comfort, safety, and movement of information  Movement of information is main distinction  It is affected a lot by technological changes

11. 9 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall Relationship Chart: A tool to use in Office Layout Decisions Figure 9.1

12. 9 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall 2. Retail Layout Retail layouts (as are found in stores, and restaurants) are based on the idea that sales and profitability vary directly with customer exposure to products  Goal—maximize net profit per square foot of floor space by exposing the customers to as many products as possible  Sales and profitability vary directly with customer exposure

13. 9 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall Store Layout Figure 9.2

14. 9 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall Retail Slotting  Due to:  Limited shelf space  An increasing number of new products Manufacturers pay fees to retailers (up to $25000) to get the retailers to display (slot) their product Small companies complain about unfair competition Wal-Mart is one of the few major retailers that does not demand slotting fees.

15. 9 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall Planogram  A planogram is a computerized marketing tool used in retail stores. Often supplied by the manufacturer.  It is a diagram that shows where a product should be placed on a shelf and how many faces that product should hold. 5 facings Shampoo Conditioner Shampoo Conditioner 2 ft.

16. 9 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall Servicescape. Such as, Servicescape is a concept that emphasizes the impact of the physical environment in which a service process takes place. A servicescape gives businesses the opportunity to differentiate from competitors. Such as, 1.Ambient conditions - background music, lighting, smell, and temperature (Leather chairs at Starbucks, Cinnamon smell at Tarchy) 2.Layout/Functionality –Carpeted areas of a department store that encourage shoppers to slow down and browse) 3.Signs, symbols, and artifacts – Guitars on Hard Rock Cafes’s Walls.

17. 9 - 17© 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

18. 9 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall Automated Storage and Retrieval Systems (ASRSs)  ASRSs can significantly improve warehouse productivity.  Typically requires Automatic Identification Systems (AISs) and effective information systems.

19. 9 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall Cross-Docking  A logistics procedure where products from a supplier or manufacturing plant are distributed directly to a customer or retail chain with marginal to no handling or storage time.  A computerized logistics system is required for accurate product identification.  The global retail giant, Wal-Mart uses this strategy to gain a huge competitive advantage over it’s competitors.

20. 9 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall Warehouses for Product Customization  Value-added activities are performed at the warehouse (warehouse assembly jobs are common nowadays)  Enable low cost and rapid response strategies (Warehouses adjacent to major Airports)  Assembly of components  Loading software  Repairs  Customized labeling and packaging

21. 9 - 21 Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed Fixed Position Layouts

22. 9 - 22© 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

23. 9 - 23 Process Layouts: Advantages & Disadvantages 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 Disadvantages  In-process inventories can be high  Routing and scheduling pose continual challenges  Equipment utilization rates are low  Material handling is slow and inefficient  High variable cost per unit

24. 9 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall Surgery Radiology ER triage room ER BedsPharmacy Emergency room admissions Billing/exit Laboratories Process-Oriented Layout Patient A - broken leg Patient B -erratic heart pacemaker Figure 9.3

25. 9 - 25 Manufacturing Process Layout L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

26. 9 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

27. 9 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall Area 1Area 2Area 3 Area 4Area 5Area 6 60’ 40’ Current Process Layout Example ReceivingShippingTesting DepartmentDepartmentDepartment (4)(5)(6) Figure 9.5 AssemblyPaintingMachine Shop DepartmentDepartmentDepartment (1)(2)(3)

28. 9 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall DepartmentAssemblyPaintingMachineReceivingShippingTesting (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 501000020 3050100 200100 500 0 From-to Matrix Figure 9.4

29. 9 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall Current Interdepartmental Flow Graph Figure 9.6 100 50 20 50 20 10 100 30 Machine Shop (3) Testing (6) Shipping (5) Receiving (4) Assembly (1) Painting (2)

30. 9 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall The Cost of Material Handling Minimize cost = ∑ ∑ X ij C ij n i = 1 n j = 1 wheren=total number of work centers or departments i, j=individual departments X ij =number of loads moved from department i to department j C ij =cost to move a load between department i and department j

31. 9 - 31 The Cost of Material Handling: 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

32. 9 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall The Cost of Material Handling:Current Layout 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 Cost = ∑ ∑ X ij C ij n i = 1 n j = 1

33. 9 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall Area 1Area 2Area 3 Area 4Area 5Area 6 60’ 40’ Improved Process Layout Example ReceivingShippingTesting DepartmentDepartmentDepartment (4)(5)(6) Figure 9.8 Painting Assembly Machine Shop DepartmentDepartmentDepartment (2)(1)(3)

34. 9 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall Improved Interdepartmental Flow Graph Figure 9.7 30 50 20 50 10 20 50 100 Machine Shop (3) Testing (6) Shipping (5) Receiving (4) Painting (2) Assembly (1)

35. 9 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall The Cost of Material Handling: Improved Layout 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 Cost = ∑ ∑ X ij C ij n i = 1 n j = 1

36. 9 - 36© 2011 Pearson Education, Inc. publishing as Prentice Hall Computer Software  Graphical approach only works for small-size problems  Computer programs are available to solve bigger problems  CRAFT  ALDEP  CORELAP  Factory Flow

37. 9 - 37© 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 is a philosophy wherein similar products are grouped together  Processes required to make these similar parts are arranged as Work Cells  Similarity can be either in shape, size or in manufacturing process  Production Volume must justify forming the cells

38. 9 - 38 Part families Part families with similarity in shape Part families with similarity in manufacturing process

39. 9 - 39 Original Process Layout CABRaw materials Assembly 1 2 3 4 5 6 7 8 9 10 11 12

40. 9 - 40 Part Routing Matrix Machines Parts123456789101112 Axxxxx Bxxxx Cxxx Dxxxxx Exxx Fxxx Gxxxx Hxxx Figure 5.8

41. 9 - 41 Reordered Routing Matrix Machines Parts124810369571112 Axxxxx Dxxxxx Fxxx Cxxx Gxxxx Bxxxx Hxxx Exxx

42. 9 - 42 Revised Cellular Layout 3 6 9 Assembly 12 4 810 5 7 11 12 A B C Raw materials Cell 1 Cell 2 Cell 3

43. 9 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall Advantages of Work Cells 1.Reduced work-in-process inventory 2.Less floor space required 3.Reduced direct labor, and setup cost 4.More employee participation 5.Increased use of equipment and machinery

44. 9 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall Staffing and Balancing Work Cells 1. Determine the takt time (Also called cycle time) Takt time = Total work time available per day Required output per day (in units) 2. Determine the number of operators required Workers required = Total operation time required Takt time

45. 9 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall Staffing Work Cells Example Required output: 600 Auto Mirrors per day Total work time: 8 hours per day Total operation time per mirror =140 seconds Standard time required Operations AssemblePaintTestLabelPack for shipment 60 50 40 30 20 10 0 Takt time? # of workers required?

46. 9 - 46© 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

47. 9 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall 7. Repetitive and Product- Oriented Layout 1.Volume is adequate for high equipment utilization 2.Product demand is stable enough to justify high investment in specialized equipment 3.Product is standardized Organized around products or families of similar high-volume, low-variety products

48. 9 - 48 Production/Assembly Line Raw materials or customer Finished item Station 2 Station 2 Station 3 Station 3 Station 4 Station 4 Materials and/or labor Materials and/or labor Materials and/or labor Materials and/or labor Used for Repetitive or Continuous Processing Example: automobile assembly lines, cafeteria serving line Station 1 Station 1

49. 9 - 49 U-Shaped Production Line U-Shaped Production Line 1 234 5 6 7 8910 In Out Workers

50. 9 - 50© 2011 Pearson Education, Inc. publishing as Prentice Hall McDonald’s Assembly Line Figure 9.12

51. 9 - 51© 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

52. 9 - 52© 2011 Pearson Education, Inc. publishing as Prentice Hall Product-Oriented Layouts 1.Low variable cost per unit 2.Low material handling costs 3.Reduced work-in-process inventories 4.Easier training and supervision 5.Rapid throughputAdvantages 1.High production volume is required to be justifiable 2.Work stoppage at any point ties up the whole operation 3.Lack of flexibility in product or production ratesDisadvantages

53. 9 - 53© 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 16 th largest industry in the US

54. 9 - 54  Perfect balance is not possible  The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements Line Balancing

55. 9 - 55 Objective in Line Balancing  To minimize idle time along the line and increase utilization of equipment and labor  Why is line balancing important?  It allows us to use labor and equipment more efficiently.  It avoids chances that one workstation does not work harder than another. © 2011 Pearson Education, Inc. publishing as Prentice Hall

56. 9 - 56© 2011 Pearson Education, Inc. publishing as Prentice Hall Assembly-Line Balancing  Start drawing the precedence diagram  Determine cycle time  Calculate theoretical minimum number of workstations  Balance the line by assigning specific tasks to workstations  Compute efficiency

57. 9 - 57 6-57 Precedence Diagram  Precedence diagram  A diagram that shows elemental tasks and their precedence requirements

58. 6-58 The maximum time allowed at each workstation to complete its set of tasks on a unit Cycle time also establishes the output rate of a line

59. 6-59 The required number of workstations is a function of Desired output rate Our ability to combine tasks into a workstation Theoretical minimum number of stations

60. 6-60 Balance delay (percentage of idle time) Percentage of idle time of a line Efficiency Percentage of busy time of a line

61. 6-61 Efficiency Balance Delay=100% - Efficiency

62. 9 - 62 Example 1: Cycle Times With 5 workstations, CT = 0.5 min.1.0 min.0.7 min.0.1 min.0.2 min. 1.0 minute. Cycle time of a system = longest processing time in a workstation.

63. 9 - 63 Example 1: Cycle Times With 1 workstation, CT = 0.5 min.1.0 min.0.7 min.0.1 min.0.2 min. 2.5 minutes. 0.5 min.1.0 min.0.7 min.0.1 min.0.2 min. Workstation 1Workstation 2Workstation 3 With 3 workstations, can CT = 1.0 minute? Cycle time of workstation = total processing time in of tasks.

64. 9 - 64 Output Capacity Output capacity = OT 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 Maximum Output = OT/CT = 480/1.0 = 480 units per day Cycle Time = CT = 2.5 min Minimum Output = OT/CT = 480/2.5 = 192 units per day

65. 9 - 65 Cycle Time Determined by Desired Output 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 D = Desired output rate CT = cycle time = OT D

66. 9 - 66 Theoretical Minimum Number of Stations Required N min = CT  t t= sum of task times  N min = 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 N min = ∑t /CT = 2.5/1.0 = 2.5 stations ≈ 3 stations

67. 9 - 67© 2011 Pearson Education, Inc. publishing as Prentice Hall Example 1:available mins per day is 480 40 units are required to be produced per day This means that tasks B and E cannot be done until task A has been completed Performance Time Immediate Task(minutes) Predecessors A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 min.

68. 9 - 68© 2011 Pearson Education, Inc. publishing as Prentice Hall Wing Component Example Performance Time Immediate Task(minutes) A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 I G F C D H B E A 10 1112 5 4 3 7113 Figure 9.13 Predecessors

69. 9 - 69© 2011 Pearson Education, Inc. publishing as Prentice Hall I G F C D H B E A 10 1112 5 4 3 7113 Figure 9.13 PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 Wing Component Example 480available mins per day 40units required Cycle time = Production time available per day Units required per day = 480 / 40 = 12 minutes per unit Minimum number of workstations = ∑ Time for task i Cycle time n i = 1 = 66 / 12 = 5.5 or 6 stations

70. 9 - 70© 2011 Pearson Education, Inc. publishing as Prentice Hall Wing Component Example I G F C D H B E A 10 1112 5 4 3 7113 Figure 9.13 PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 480available mins per day 40units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 Line-Balancing Heuristics 1.Longest task timeChoose the available task with the longest task time 2.Most following tasksChoose 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 timeChoose 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 Table 9.4

71. 9 - 71© 2011 Pearson Education, Inc. publishing as Prentice Hall 480available mins per day 40units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 Station 1 Wing Component Example Station 2 Station 3 Station 4 Station 5 Station 6 I GF H C D B E A 1011 12 5 4 37 11 3 Figure 9.14

72. 9 - 72© 2011 Pearson Education, Inc. publishing as Prentice Hall PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 Wing Component Example 480available mins per day 40units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 Efficiency = ∑ Task times (Actual number of workstations) x (Largest WS time) = 66 minutes / (6 stations) x (12 minutes) = 91.7%

73. 9 - 73 Wing Component Example  Balance Delay=100% - Efficiency 1-0.917= 0.083 or Balance Delay=(2+1+1+2)/(12 * 6)= 0.083 © 2011 Pearson Education, Inc. publishing as Prentice Hall

74. 9 - 74 Example 2 Desired production: 500 units/day Production time:7 hrs/day 8-74

75. 9 - 75 Example: Precedence Graph 8-75

76. 9 - 76 Example: C and N t 8-76

77. 9 - 77 Example: Assignment 8-77

78. 9 - 78 Example: Efficiency 8-78