1. Facilities Location, Layout and Planning

2. FACILITY PLANNING
The placement of facility – customers, suppliers, other links in the supply chain
Resources
Strategy – 99cents Only example
Access to customers
Government impacts

3. Objectives of Facility Layout
Minimize material handling costs
Utilize space efficiently
Utilize labor efficiently
Eliminate bottlenecks
Facilitate communication and interaction between workers, between workers and their supervisors, or between workers and customers
Reduce manufacturing cycle time or customer service time

4. Objectives of Facility Layout
Eliminate waste or redundant movement
Facilitate the entry, exit, and placement of material, products, or people
Incorporate safety and security measures
Promote product and service quality
Encourage proper maintenance activities
Provide a visual control of operations or activities
Provide flexibility to adapt to changing conditions
Increase capacity

5. Questions on Layout Planning
How should the facility be laid out?
Does my layout cause unnecessary movement/excess travel time?
Does my work flow in a logical manner?
Does size dictate layout or does layout/product flow dictate the size?

6. Basic Types of Layouts Process Layout Product Layout
Machines grouped by process they perform
Product Layout
Linear arrangement of workstations to produce a specific product
Fixed Position Layout
Used in projects where the product cannot be moved

7. Manufacturing Process LayoutD G A
Receiving and
Shipping
Assembly
Painting Department
Lathe Department
Milling
Department
Drilling Department
Grinding P

8. Manufacturing Process LayoutD G A
Receiving and
Shipping
Assembly
Painting Department
Lathe Department
Milling
Department
Drilling Department
Grinding P

9. Manufacturing Process LayoutD G A
Receiving and
Shipping
Assembly
Painting Department
Lathe Department
Milling
Department
Drilling Department
Grinding P

10. A Product Layout In
Out

11. Fixed-Position Layouts
Typical of projects
Equipment, workers, materials, other resources brought to the site
Highly skilled labor
Often low fixed
Typically high variable costs

12. Designing Process Layouts
Minimize material handling costs
Block Diagramming
Minimize nonadjacent loads
Use when quantitative data is available
Relationship Diagramming
Based on location preference between areas
Use when quantitative data is not available

13. Block Diagramming Create load summary chart
Calculate composite (two way) movements
Develop trial layouts minimizing number of nonadjacent loads
Example

15. Relationship Diagramming (Murther’s Grid)
Used when quantitative data is not available
Muther’s grid displays preferences
Denote location preferences with weighted lines

16. Relationship Diagramming Example
Production
Offices
Stockroom
Shipping and receiving
Locker room
Toolroom

17. Relationship Diagramming Example
A Absolutely necessary
E Especially important
I Important
O Okay
U Unimportant
X Undesirable A O U E X I
Production
Offices
Stockroom
Shipping and receiving
Locker room
Toolroom

18. Relationship Diagramming Example
1 Absolutely necessary
2 Especially important
3 Important
4 Okay
5 Unimportant
6 Undesirable 1 4 5 2 6 3
Production
Offices
Stockroom
Shipping and receiving
Locker room
Toolroom

20. Facility Location Models

21. Types Of Facilities Heavy manufacturing Light industry
Auto plants, steel mills, chemical plants
Light industry
Small components mfg, assembly
Warehouse & distribution centers
Retail & service

22. Factors in Heavy Manufacturing Location
Construction costs
Land costs
Raw material and finished goods shipment modes
Proximity to raw materials
Utilities
Labor availability

23. Factors in Light Industry Location
Construction costs
Land costs
Easily accessible geographic region
Education & training capabilities
The biggest factor that is different between heavy and light manufacturing is education and training capability of the area. To have high tech type industries you have to have quality education institutions.

24. Factors in Warehouse Location
Transportation costs
Proximity to markets (Customers)

25. This is one example of a study to help companies with location analysis

27. Service Location Considerations
Labor
Cost of Living
Real Estate
Construction
Government Incentives
Examples – Amoco, Mass St, Tattoo Parlors, Walgreen’s

28. Global Location Factors
Government stability
Government regulations
Political and economic systems
Economic stability and growth
Exchange rates
Culture
Climate
Export import regulations, duties and tariffs
Raw material availability
Number and proximity of suppliers
Transportation and distribution system
Labor cost and education
Available technology
Commercial travel
Technical expertise
Cross-border trade regulations
Group trade agreements

29. Regional Location Factors
Community government
Local business regulations
Government services
Business climate
Community services
Taxes
Availability of sites
Financial Services
Community inducements
Proximity of suppliers
Education system

30. Site Location Factors Customer base Construction/ leasing cost
Land cost
Site size
Transportation
Utilities
Zoning restrictions
Traffic
Safety/security
Competition
Area business climate
Income level

31. Location Incentives Tax credits Wal-Mart in Wyandotte
Relaxed government regulation
Job training
Infrastructure improvement
Money

32. Center-of-Gravity Technique
Locate facility at center of geographic area
Based on weight and distance traveled
Establish grid-map of area
Identify coordinates and weights shipped for each location

33. Facility Summary Why is it important? Location analysis
Location Criteria – global, local, regional - education
Location and Strategy
Location and Customers
Layout planning

34. Project Management and Operations

35. Project Management First Essay on Project Management:
1697 – “An Essay Upon Projects”
1959 HBR Article – “The Project Manager”
Air Force Manual 1964

36. Project Management
In today’s global marketplace, complexity and speed are certainties. In such an environment, a good axiom for project management is, Do It, Do It Right, Do It Right Now. Creating clear direction, efficiency, timely response, and quality outcomes requires project managers who are agile -- adept at change. The associated disciplinary areas are clearly spelled out in the following PMI definition. “Project management is the application of knowledge, skills, tools, and techniques to a broad range of activities in order to meet the requirements of a particular project. Project management is comprised of five Project Management Process Groups – Initiating Processes, Planning Processes, Executing Processes, Monitoring and Controlling Processes, and Closing Processes.
Source: Project Management Institute -

37. Elements of Project Management
Project team
Individuals from different departments within company
Matrix organization
Team structure with members from different functional areas depending on skills needed
Project manager - Leader of project team
Project Charter – high level description of what is to be accomplished in a project and delegates authority to project manager to implement actions to complete project

38. Project Planning Statement of work
Written description of goals, work & time frame of project
Activities require labor, resources & time
Precedence relationship shows sequential relationship of project activities

39. Elements of Project Planning
Define project objective(s)
Identify activities
Establish precedence relationships
Make time estimates
Determine project completion time
Compare project schedule objectives
Determine resource requirements to meet objective

40. Work Breakdown Structure
Hierarchical organization of work to be done on a project
Project broken down into modules
Modules subdivided into subcomponents, activities, and tasks
Identifies individual tasks, workloads, and resource requirements

41. Project Control All activities identified and included
Completed in proper sequence
Resource needs identified
Schedule adjusted
Maintain schedule and budget
Complete on time

42. A Gantt Chart Around since 1914
Popular tool for project scheduling
Graph with bar for representing the time for each task
Provides visual display of project schedule
Also shows slack for activities
Amount of time activity can be delayed without delaying project

43. Gantt Charts Gantt described two principles for his charts:
measure activities by the amount of time needed to complete them
the space on the chart can be used the represent the amount of the activity that should have been done in that time.
Gantt charts were employed on major infrastructure projects including the Hoover Dam and Interstate highway system and still are an important tool in project management.

44. A Gantt Chart Month 0 2 4 6 8 10 | | | | | 1 3 5 7 9 Figure 6.2
| | | | |
Activity
Design house and obtain financing
Lay foundation
Order and receive materials
Build house
Select paint
Select carpet
Finish work
Month
Figure 6.2

45. CPM/PERT Critical Path Method (CPM)
DuPont & Remington-Rand (1956)
Deterministic task times
Project Eval. & Review Technique (PERT)
US Navy, Lockheed
Multiple task time estimates

46. PERT/CPM
Program Evaluation and Review Technique (PERT): developed in conjunction with the development of the Polaris missile program for submarines – developed by the US Navy with Lockheed as the lead contractor
Critical Path Method (CPM): developed through a joint venture between the DuPont Corporation and the Remington Rand Corporation – the original purpose was to monitor and evaluate plant maintenance management projects.

47. Project Network for a House3 2 1 4 6 7 5
Lay foundation
Design house and obtain financing
Order and receive materials
Dummy
Finish work
Select carpet
Select paint
Build house
Figure 6.4

48. Critical Path
A path is a sequence of connected activities running from start to end node in network
The critical path is the path with the longest duration in the network
Project cannot be completed in less than the time of the critical path

49. The Critical Path A: 1-2-3-4-6-7 3 + 2 + 0 + 3 + 1 = 9 months1 4 6 7 5
Lay foundation
Design house and obtain financing
Order and receive materials
Dummy
Finish work
Select carpet
Select paint
Build house
A: = 9 months
B: = 8 months
C: = 8 months
D: = 7 months

50. The Critical Path 1 2 4 6 7 3 5 Activity Start Times1 4 6 7 5
Lay foundation
Design house and obtain financing
Order and receive materials
Dummy
Finish work
Select carpet
Select paint
Build house 1 2 4 6 7 3 5
Start at 3 months
Start at 5 months
Finish at 9 months
Start at 8 months
Activity Start Times
Figure 6.6

51. Project Crashing
Crashing is reducing project time by expending additional resources
Crash time is an amount of time an activity is reduced
Crash cost is the cost of reducing the activity time
Goal is to reduce project duration at minimum cost

52. Time-Cost Relationship
Crashing costs increase as project duration decreases
Indirect costs increase as project duration increases
Reduce project length as long as crashing costs are less than indirect costs

53. Life Cycle Management
Long term view of projects to guide decision making – solutions that provide life time success vice short term
Acquisition; development; production; introduction; sustainment; disposal
Links system costs to big picture; better use of resources; minimize total cost of ownership

54. Capacity and Aggregate Planning

55. Capacity Outputs: Examples

56. The goal of capacity planning decisions
The capacity of the firm to produce the service or good
The processes for providing the service or making the good
The layout or arrangement of the work space
The design of work processes to enhance productivity

57. Capacity The max output that an organization be capable of producing
Measure a single facility:
Design vs. Effective capacity
Capacity Utilization: design vs. efficient utilization
For systems have more than one facility and flows of product
System capacity and bottleneck
Improve system capacity

58. Determinants of Effective Capacity
Facilities
Human considerations
Adding people
Increasing employee motivation
Operations
Improving operating rate of a machine
Improving quality of raw materials and components
External forces
Safety regulations

59. Capacity Utilization
Measures how much of the available capacity is actually being used:
Always <=1(percentage of usage)
Higher the better
Denominator:
If effective capacity used: efficient utilization
If design capacity used: design utilization

60. Aggregate Planning
The process of planning the quantity and timing of output over the intermediate range (3-18 months) by adjusting production rate, employment, inventory
Master Production Schedule: formalizes the production plan and translates it into specific end item requirements over the short to intermediate horizon

61. Capacity Planning
The process of determining the amount of capacity required to produce in the future. May be at the aggregate or product line level
Master Production Schedule - anticipated build schedule
Time horizon must exceed lead times for materials

62. Capacity Planning
Look at lead times, queue times, set up times, run times, wait times, move times
Resource availability
Material and capacity - should be in synch
driven by dispatch list - listing of manufacturing orders in priority sequence - ties to layout planning
load profiles - capacity of each section

63. the capacity decisions:
When to add capacity
How much capacity to add
Where to add capacity
What type of capacity to add
When to reduce capacity

64. Capacity Planning
Rough Cut Capacity Planning - process of converting the master production schedule into requirements for key resources
capacity requirements plan - time-phased display of present and future capacity required on all resources based on planned and released orders

65. Capacity Planning
Capacity Requirements Planning (CRP) - process of determining in detail the amount of labor and machine resources required to meet production plan
RCCP may indicate sufficient capacity but the CRP may indicate insufficient capacity during specific time periods

66. Theory of Constraints Every system has a bottle neck
capacity of the system is constrained by the capacity of the bottle neck
increasing capacity at other than bottle neck operations does not increase the overall capacity of the system

67. Theory of Constraints What needs to be changed What to change to
How to make the change happen

68. Theory of Constraints Identify the constraint Subordinate Inertia
Walk the process again
inertia of change can create new bottle necks

69. Capacity Planning Establishes overall level of productive resources
Affects lead time responsiveness, cost & competitiveness
Determines when and how much to increase capacity

70. Capacity Expansion Volume & certainty of anticipated demand
Strategic objectives for growth
Costs of expansion & operation
Incremental or one-step expansion

71. Sales and Operations Planning (S&OP)
Brings together all plans for business
performed at least once a month
Internal and external

72. Adjusting Capacity to Meet Demand
Producing at a constant rate and using inventory to absorb fluctuations in demand (level production)
Hiring and firing workers to match demand (chase demand)
Maintaining resources for high demand levels
Increase or decrease working hours (overtime and undertime)
Subcontracting work to other firms
Using part-time workers
Providing the service or product at a later time period (backordering)

73. Demand Management Shift demand into other periods
Incentives, sales promotions, advertising campaigns
Offer product or services with countercyclical demand patterns
Partnering with suppliers to reduce information distortion along the supply chain

74. Remedies for Underloads
Acquire more work
Pull work ahead that is scheduled for later time periods
Reduce normal capacity

75. Remedies for Overloads
Eliminate unnecessary requirements
Reroute jobs to alternative machines or work centers
Split lots between two or more machines
Increase normal capacity
Subcontract
Increase the efficiency of the operation
Push work back to later time periods
Revise master schedule

76. Scheduling as part of the Planning Process

77. Scheduling Scheduling is the last step in the planning process?
It is one of the most challenging areas of operations management.
Scheduling presents many day-to-day problems for operations managers because of
Changes in customer orders
Equipment breakdowns
Late deliveries from suppliers
A myriad of other disruptions

78. Objectives in Scheduling
Meet customer due dates
Minimize job lateness
Minimize response time
Minimize completion time
Minimize time in the system
Minimize overtime
Maximize machine or labor utilization
Minimize idle time
Minimize work-in-process inventory
Efficiency

79. Sequencing Rules FCFS - first-come, first-served
LCFS - last come, first served
DDATE - earliest due date
CUSTPR - highest customer priority
SETUP - similar required setups
SLACK - smallest slack
CR - critical ratio
SPT - shortest processing time
LPT - longest processing time

80. Critical Ratio Rule CR considers both time and work remaining
If CR > 1, job ahead of schedule
If CR < 1, job behind schedule
If CR = 1, job on schedule
time remaining due date - today’s date
work remaining remaining processing time
Ties scheduling to Gantt Chart or PERT/CPM