1. SECTION 2 STRATEGIC DESIGN
Operations Management I
Dirección de Operaciones I- English teaching
Departamento de Organización de Empresas y Marketing
Área de Organización de Empresas
SECTION 2 STRATEGIC DESIGN
3º GADI- 5º DG-ADI-DER
Slide presentation Chapter 8

2. 8.1. The Strategic Importance of Layout Decisions
CHAPTER 8
FACILITY LAYOUT
8.1. The Strategic Importance of Layout Decisions
8.2. Basic Production Layout Formats
Fixed-Position Layout
Process-Oriented Layout
Repetitive and Product-Oriented Layout
Group Technology (Cellular) Layout
Office Layout
Retail Layout
Warehousing and Storage Layouts

3. 8.1 The Strategic Importance of Layout Decisions
Determines the long-run efficiency of operations
Objective: develop an economic layout that will meet the firm’s competitive requirements
Considerations:
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

4. 8.1 The Strategic Importance of Layout Decisions
Types of layout:
Fixed-Position
Process-Oriented
Repetitive and Product-Oriented
Group technology (cellular)
Office
Retail
Warehousing and storage
A good layout considers:
Material handling equipment
Capacity and space requirements
Environment and aesthetics
Flows of information
Cost of moving between various work areas

5. 8.2 Basic Production Layout Formats
Fixed-Position
Process-Oriented
Repetitive and Product-Oriented
Group technology (cellular)

6. 8.2.1 Fixed-Position Layout
The project remains in one place and workers and equipment come to that one work area
Examples: ship, highway, bridge, house, …
Techniques not well developed. Complicating factors:
Limited space
Different items become critical as the project develops
Volume of materials needed is dynamic
Construction industry: “meeting of the trades”
Alternative: complete as much of the project as possible off-site in a product-oriented facility
It can significantly improve efficiency but is only possible when multiple similar units need to be created

7. 8.2.2 Process-Oriented Layout
A layout that deals with low-volume, high-variety production; like machines and equipment are grouped together
Support a product differentiation strategy
Each product or small group of products undergoes a different sequence of operations
Example: hospital, job lots, …
Advantage: flexibility in equipment and labor assignments
Disadvantage: general-purpose use of equipment; orders take more time to move through the system, high labor skills needed, work-in-process inventories are higher
Strategy: arrange departments or work centers so as to minimize the costs of material handling.

8. 8.2.2 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

9. 8.2.3 Repetitive and Product-Oriented Layout
Organized around products or families of similar high-volume, low-variety products
Used with repetitive production and continuous production
Assumptions:
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 its life cycle that justifies investment in specialized equipment
Supplies of raw materials and components are adequate and of uniform quality (adequately standardized) to ensure that they will work with the specialized equipment
Fabrication line: builds components on a series of machines
Assembly line: puts the fabricated parts together at a series of workstations
The line must be “balanced”, that is, the time spent to perform work on one machine must equal or “balance” the time spent to perform work on the next machine in the fabrication line

10. 8.2.3 Repetitive and Product-Oriented Layout
Central problem is to balance the tasks at each workstation on the production line so that it is nearly the same while obtaining the desired amount of output
Management’s goal is to create a smooth, continuous flow along the assembly line with a minimum of idle time at each workstation
A well-balanced assembly line has the advantage of high personnel and facility utilization and equity among employees’ work loads
Objective: minimize imbalance in the fabrication or assembly line

11. 8.2.3 Repetitive and Product-Oriented Layout
Advantages
Low variable cost per unit usually associated with high-volume, standardized products
Low material handling costs
Reduced work-in-process inventories
Easier training and supervision
Rapid throughput
Disadvantages
High volume required because of the large investment needed to establish the process
Work stoppage at any one point ties up the whole operation
Lack of flexibility when handling a variety of products or production rates
Product-oriented layouts use more automated and specially designed equipment than do process layouts

12. Assembly-Line Balancing
Objective is to minimize the imbalance between machines or personnel while meeting required output
Starts with determining the time requirements for each assembly task and the precedence relationships
Determine cycle time
Calculate theoretical minimum number of workstations
Balance the line by assigning specific tasks to workstations

13. Assembly-Line Balancing
Determine cycle time: maximum time that the product is allowed at each workstation if the production rate is to be achieved
Cycle time =
Calculate the theoretical minimum number of workstations. Fractions are rounded to the next higher whole number, n is the number of assembly tasks
Minimum number of workstations =
Production time available per day
Units required per day
Σi=1nTime for task i
Cycle time

14. Assembly-Line Balancing
Balance the line by assigning specific assembly tasks to each workstation. An efficient balance is one that will complete the required assembly, follow the specified sequence, and keep the idle time at each workstation to a minimum. Procedure:
a. Identify a master list of tasks
b. Eliminate those tasks that have been assigned
c. Eliminate those tasks whose precedence relationship has not been satisfied
d. Eliminate those tasks for which inadequate time is available at the workstation
e. Use one of the line-balancing “heuristics” (next slide) Heuristics provide solutions but there is no guarantee of optimal solution

15. Copier 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
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

16. Assembly-Line Balancing
We can compute the efficiency of a line balance by dividing the total task time by the product of the number of workstations required times the assigned (actual) cycle time of the longest workstation
Efficiency =
Σ Task times
(Actual number of workstations)x(Largest assigned cycle time)

17. Copier Example 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
This means that tasks B and E cannot be done until task A has been completed

18. Copier Example 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 10 11 12 5 4 3 7 C D F A B E G I H
Figure 9.13

19. Production time available per day Minimum number of workstations
Copier 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

20. Copier 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

21. Copier 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

22. (actual number of workstations) x (largest cycle time)
Copier 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%

23. 8.2.4 Group Technology (Cellular) Layout
Work cell: an arrangement of machines and personnel that focuses on making a single product or family of related products
Advantages of work cells:
Reduced work-in-process inventory
Less floor space
Reduced raw material and finished goods inventories
Reduced direct labor cost
Heightened sense of employee participation
Increased use of equipment and machinery
Reduced investment in machinery and equipment

24. 8.2.4 Group Technology (Cellular) Layout
Requirements of work cells:
Identification of families of products, often through the use of group technology codes or equivalents
A high level of training and flexibility on the part of employees
Either staff support or flexibility, imaginative employees to establish work cells initially
Test at each station in the cell
Advantages of work cells over assembly lines and process facilities:
Inspection is often immediate
Fewer workers
Workers can reach more of the work area
Work area can be more efficiently balanced
Communication is enhanced

25. Improving Layouts Using Work Cells
Current layout - workers in small closed areas. Cannot increase output without a third worker and third set of equipment.
Improved layout - cross-trained workers can assist each other. May be able to add a third worker as additional output is needed.

26. 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

27. 8.3. Office Layout
The grouping of workers, their equipment, and spaces/offices to provide for comfort, safety, and movement of information
Importance placed on the flow of information
Analysis of office layouts requires a task-based approach. Paper correspondence, contracts, legal documents, confidential patient records, and hard-copy scripts, artwork, and designs still play a major role in many offices. Not all electronic!!
Considerations: working conditions, teamwork, authority, and status

28. 8.4. Retail Layout
Are based on the idea that sales and profitability vary directly with customer exposure to products
An approach that addresses flow, allocates space, and responds to customer behavior
Consider:
Locate the high-draw items around the periphery of the store
Use prominent locations for high-impulse and high-margin items
Distribute what are known as “power items”, that is, items that may dominate a purchasing trip, to both sides of an aisle, and disperse them to increase the viewing of other items
Use end-aisle locations because they have a very high exposure rate
Convey the mission of the store by carefully selecting the position of the lead-off department

29. 8.4. Retail Layout
Objective: maximize profitability per square foot of floor space
Slotting fees: fees manufacturers pay to get shelf space for their products (common for new products)

30. 8.5. Warehousing and Storage Layouts
A design that attempts to minimize total cost by addressing trade-offs between space and material handling
Material handling costs: all the costs related to the transaction (incoming transport, storage, and outgoing transport). Include equipment, people, material, supervision, insurance, and depreciation
Management minimizes the sum of the resources spent on finding and moving material plus the deterioration and damage to the material itself
Use of automated storage and retrieval systems, are reported to improve productivity by an estimated 500% over manual methods
Important: location of the docks

31. 8.5. Warehousing and Storage Layouts
Cross-Docking: avoiding the placing of materials or supplies in storage by processing them as they are received for shipment
Although cross-docking reduces product handling, inventory, and facility costs, it requires both tight scheduling and that shipments received include accurate product identification, usually with bar codes so they can be promptly moved to the proper shipping dock