1. Process Selection and Facility Layout
Chapter 6
MIS 373: Basic Operations Management

2. Learning Objectives After this lecture, students will be able to
Compare the four basic processing types
Describe product layouts and their main advantages and disadvantages
Describe process layouts and their main advantages and disadvantages
Develop simple product layouts
Develop simple process layouts
MIS 373: Basic Operations Management

3. Process Selection Process selection
Deciding on the way production of goods or services will be organized
Occurs when:
Planning of new products or services
Technological changes in product or equipment
Competitive pressure
MIS 373: Basic Operations Management

4. Process Selection and System Design
Forecasting
(demand)
Product and Service Design
Technological Change
Capacity Planning
Process Selection
Facilities and Equipment
Layout
Work Design
MIS 373: Basic Operations Management

5. Process Strategy Key aspects of process strategy: Capital Intensity
The mix of equipment and labor that will be used by the organization
Process flexibility
The degree to which the system can be adjusted to changes in processing requirements due to such factors as
Product and service design changes
Volume changes
Changes in technology
MIS 373: Basic Operations Management

6. New Process Strategy
HBR 12/6/12 Three Examples of New Process Strategy
There are three fundamental ways that companies can improve their processes in the coming decade:
expand the scope of work managed by a company to include customers, suppliers, and partners;
Shift to global, virtual, cross-organizational teams of specialized entities that are knitted together to serve customers
To keep such a multiparty system from degenerating into chaos, virtual process teams must have aligned goals and support systems.
target the increasing amount of knowledge work; and
Big data analytics
Crowdsourcing, e.g., innocentive.com, TopCoder.com & Heritage Health Prize
HBR : Using the Crowd as an Innovation Partner
reduce cycle times to durations previously considered impossible
Agile processes
Managers must speed the flow of information so that decisions can be made faster at all levels, from top to bottom.

7. Process Selection Process choice is demand driven: Variety: How much?
Equipment flexibility: To what degree?
Volume: Expected output?
Process Types
MIS 373: Basic Operations Management

8. Process Selection Process choice is demand driven: Variety
How much?
Equipment flexibility
To what degree?
Volume
Expected output?
Process Types
Job shop
Small scale
e.g., doctor, tailor
Batch
Moderate volume
e.g., bakery
Repetitive/assembly line
High volumes of standardized goods or services
e.g., automobiles
Continuous
Very high volumes of non- discrete goods
e.g., petroleum products
MIS 373: Basic Operations Management

9. Types of Processing Job Shop Batch Repetitive/ Assembly Continuous
Description
Customized
goods or
services
Semi-
standardized
Standardized
Highly standardized
goods or services
Advantages
Able to handle a
wide variety
of work
Flexibility; easy
to add or change products or services
Low unit cost, high volume, efficient
Very efficient, very high volume
Disadvantages
Slow, high cost
per unit,
complex
planning and
scheduling
Moderate cost
moderate
complexity
Low flexibility,
high cost of downtime
Very rigid, lack of
variety, costly to change, very high cost of downtime
MIS 373: Basic Operations Management

10. Product-Process Matrix
Flexibility/Variety
Opportunity costs
Volume
Out of pocket costs
The diagonal represents the “ideal” match
Hybrid process are possible (e.g., job-shop & batch)
Process choice may change as products goes through its life-cycles
MIS 373: Basic Operations Management

11. Process Choice Effects
Activity/
Function
Projects
Job Shop
Batch
Repetitive
Continuous
Cost estimation
Simple to complex
Difficult
Somewhat routine
Routine
Cost per unit
Very high
High
Moderate
Low
Equipment used
Varied
General purpose
Special purpose
Fixed costs
Variable costs
Very low
Labor skills
Low to high
Marketing
Promote
capabilities
capabilities; semi-standardized goods and services
standardized goods and services
Scheduling
Complex, subject
to change
Complex
Moderately complex
Project: used for work that is none routine with a unique set of objective to be accomplished in a limited time frame, e.g., launching a new product, publishing a book
MIS 373: Basic Operations Management

12. Product and Service Profiling
Product or service profiling
Linking key product or service requirements to process capabilities
Key dimensions relate to
Range of products or services that can be processed
Expected order sizes
Expected frequency of schedule changes
MIS 373: Basic Operations Management

13. Discussion
Work with a partner and match the following products or services with the best process
Products/Services
Processes
Ice-cream manufacturer
Job-shop
Automatic carwash
Batch
Steel
Repetitive
Books
Ice-cream manufacturer
Batch
Automatic carwash
Repetitive
Steel
Continuous
Books
Airlines
Surgery
Job-shop
Movie theater
Sugar
TVs
Beer
Flour
Continuous
Airlines
Surgery
Movie theater
Sugar
Tips: Think in terms of those key dimensions:
Range of products or services that can be processed
Expected order sizes
Expected frequency of schedule changes
Beer
Flour

14. Technology Technological Innovation Technology
The discovery and development of new or improved products, services, or processes for producing or providing them
Technology
The application of scientific discoveries to the development and improvement of products and services and/or the processes that produce or provide them
Process technology includes methods, procedures, and equipment used to produce goods and provide services.
RFID, online banking, 3D printing, …
MIS 373: Basic Operations Management

15. 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
The basic objective of layout design is to facilitate a smooth flow of work, material, and information through the system.
MIS 373: Basic Operations Management

16. Basic Layout Types Product layout Process layout Fixed position layout
Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow
Process layout
Layout that can handle varied processing requirements
Fixed position layout
Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed
Combination layouts
MIS 373: Basic Operations Management

17. Used for Repetitive Processing Repetitive or Continuous
Product Layouts
Product layout
Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow
How?
Raw materials
or customer
Finished item
Station 2 3 4
Material
and/or labor 1
Used for Repetitive Processing
Repetitive or Continuous
MIS 373: Basic Operations Management

18. Product Layouts
Although product layouts often follow a straight line, a straight line is not always the best, and layouts may take an L, O, S, or U shape. Why? L: O: S:
U: more compact, increased communication facilitating team work, minimize the material handling
Image source: mdcegypt.com
MIS 373: Basic Operations Management

19. Non-repetitive Processing: Process Layouts
Layouts that can handle varied processing requirements
Dept. A
Dept. B
Dept. D
Dept. C
Dept. F
Dept. E
Used for Intermittent processing
Job Shop or Batch
MIS 373: Basic Operations Management

20. Product Layouts Advantages High rate of output Low unit cost
Labor specialization
Low material handling cost per unit
High utilization of labor and equipment
Established routing and scheduling
Routine accounting, purchasing, and inventory control
Disadvantages
Creates dull, repetitive jobs
Poorly skilled workers may not maintain equipment or quality of output
Fairly inflexible to changes in volume or product or process design
Highly susceptible to shutdowns
Preventive maintenance, capacity for quick repair and spare-parts inventories are necessary expenses
Individual incentive plans are impractical
MIS 373: Basic Operations Management

21. Process Layouts 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
It is possible to use individual incentive systems
Disadvantages
In-process inventories can be high
Routing and scheduling pose continual challenges
Equipment utilization rates are low
Material handling is slow and less efficient
Complicates supervision
Special attention necessary for each product or customer
Accounting, inventory control, and purchasing are more complex
MIS 373: Basic Operations Management

22. Fixed Position Layouts
Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed
E.g., farming, firefighting, road building, home building, remodeling and repair, and drilling for oil
MIS 373: Basic Operations Management

23. Combination Layouts
Some operational environments use a combination of the three basic layout types:
Hospitals
Supermarket
Shipyards
Some organizations are moving away from process layouts in an effort to capture the benefits of product layouts
MIS 373: Basic Operations Management

24. Line Balancing Line balancing
The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements
Goal:
Obtain task grouping that represent approximately equal time requirements since this minimizes idle time along the line and results in a high utilization of equipment and labor
Why is line balancing important?
It allows us to use labor and equipment more efficiently.
To avoid fairness issues that arise when one workstation must work harder than another.
Input
Tasks sequencing (precedence diagram)
Tasks time
Operating time
MIS 373: Basic Operations Management

25. Precedence Diagram Precedence diagram
A diagram that shows elemental tasks and their precedence requirements
Task
Duration (min)
Immediate predecessor a
Select material
0.1 - b
Make petals
1.0 c
Select rhinestones
0.7 d
Glue rhinestones
0.5
b, c e
Package
0.2
MIS 373: Basic Operations Management

26. Cycle Time
Cycle time
The maximum time allowed at each workstation to complete its set of tasks on a unit
Minimum Cycle Time = longest task time = 1.0 min
Maximum Cycle time = Σt = sum of task time = 2.5 min
MIS 373: Basic Operations Management

27. Output rate of a line Cycle time = Operating time per day
Cycle time also establishes the output rate of a line
Cycle time =
Operating time per day
Desired output rate
Output rate =
Operating time per day
Cycle time
MIS 373: Basic Operations Management

28. How Many Workstations are Needed?
The required number of workstations is a function of:
Desired output rate
The ability to combine tasks into a workstation
(theoretical) Minimum number of stations
Nmin=
∑ t
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
MIS 373: Basic Operations Management

29. How Many Workstations are Needed?
The required number of workstations is a function of:
Desired output rate
The ability to combine tasks into a workstation
(theoretical) Minimum number of stations
Q: Why this is a theoretical value?
A: There are often scraps or idle times.
Example:
4 tasks, each require 6 hours to finish
A station can handle 8 hours amount of tasks a day.
You will need 4 stations to complete all tasks, instead of 3.
Nmin = ( ) / 8 = 3
Nmin=
∑ t
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
MIS 373: Basic Operations Management

30. Designing Product Layouts
Some Heuristic (Intuitive, may not result in optimal solution) Rules:
Assign tasks in order of most following tasks
Count the number of tasks that follow
Assign tasks in order of greatest positional weight.
Positional weight is the sum of each task’s time and the times of all following tasks.
MIS 373: Basic Operations Management

31. Example: Assembly Line Balancing
Arrange tasks (shown in the figure) into three workstations
Assume the cycle time of each workstation is 1.2 min.
Assign tasks in order of the most number of followers
Break tie using greatest positional weight
MIS 373: Basic Operations Management

32. Assign tasks in order of the most number of followers
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
a, c 2 3
Start with CT (1.2 min. in this example)
MIS 373: Basic Operations Management

33. Assign tasks in order of the most number of followers
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
a, c a
1.1 2 3
MIS 373: Basic Operations Management

34. Revised Time Remaining Station Idle Time
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
a, c
c, b a 2 3
MIS 373: Basic Operations Management

35. Revised Time Remaining Station Idle Time
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
a, c
c, b a b
0.1 2 3
Break tie using greatest positional weight
MIS 373: Basic Operations Management

36. Revised Time Remaining Station Idle Time
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
0.1
a, c
c, b c a b 2 3
MIS 373: Basic Operations Management

37. Revised Time Remaining Station Idle Time
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
0.1
a, c
c, b c a b - 2 3
Can’t assign c to this workstation because the workstation doesn’t have enough time (0.1) to complete c (0.7).
MIS 373: Basic Operations Management

38. Revised Time Remaining Station Idle Time
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
0.1
a, c
c, b c a b - 2
0.5 3
Start with CT (1.2 min. in this example)
MIS 373: Basic Operations Management

39. Revised Time Remaining Station Idle Time
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
0.1
a, c
c, b c a b - 2
0.5 d 3
MIS 373: Basic Operations Management

40. Revised Time Remaining Station Idle Time
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
0.1
a, c
c, b c a b - 2
0.5 d
0.0 3 e
1.0
Start with CT (1.2 min. in this example)
MIS 373: Basic Operations Management

41. Idle time per cycle =0.1+0.0+1.0=1.1 Workstation Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
0.1
a, c
c, b c a b - 2
0.5 d
0.0 3 e
1.0
Idle time per cycle
= =1.1
MIS 373: Basic Operations Management

42. Layout a & b c & d e (0.1+1.0) (0.7+0.5) (0.2) Task Duration (min)
Immediate predecessor a
Select material
0.1 - b
Make petals
1.0 c
Select rhinestones
0.7 d
Glue rhinestones
0.5
b, c e
Package
0.2
MIS 373: Basic Operations Management

43. Measuring Effectiveness
Balance delay (percentage of idle time)
Percentage of idle time of a line
Efficiency
Percentage of busy time of a line
Balance Delay =
Idle time per cycle
× 100%
Nactual × Cycle time
where
Nactual = actual number of stations
Efficiency = 100% − Balance Delay
MIS 373: Basic Operations Management

44. Example: Measuring Effectiveness
Workstation
Time Remaining
Eligible
Assign Task
Revised Time Remaining
Station Idle Time 1
1.2
1.1
0.1
a, c
c, b c a b - 2
0.5 d
0.0 3 e
1.0
Percentage of idle time = [( ) ÷ (3 × 1.2)] × 100% = %
Efficiency = 100% – 30.55% = 69.45%
MIS 373: Basic Operations Management

45. Exercise Problems
(Textbook page 267) Using the information contained in the table shown, do each of the following:
Draw a precedence diagram.
Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day.
Determine the minimum number of workstations required.
Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.
Compute the resulting percent idle time and efficiency of the system

46. Exercise Solution
1. Draw a precedence diagram

47. Exercise Solution
2. Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day
Cycle time =
Operating time per day =
480 minutes per day
= 1.2 minutes per cycle
Desired output rate
400 units per day

48. 1.2 minutes per cycle time per station
Exercise Solution
3. Determine the minimum number of workstations required
Nmin=
∑ t =
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
3.8 minutes per unit
1.2 minutes per cycle time per station
= 3.17 stations ( round to 4)

49. Exercise Solution
4. Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.

50. Exercise Solution
5. Compute the resulting percent idle time and efficiency of the system
Percent idle time =
Idle time per cycle =
1.0 min.
× 100%
Nactual × Cycle time
4 × 1.2 min.
= 20.83%

51. Designing Process Layouts
The main issue in designing process layouts concerns the relative placement of the departments
Measuring effectiveness
key objectives in designing process layouts are to minimize:
transportation cost
distance
time
MIS 373: Basic Operations Management

52. Information Requirements
In designing process layouts, the following information is required:
A list of work stations (departments) to be arranged and their dimensions
A projection of future work flows between the pairs of work centers
The distance between locations - and the cost per unit of distance to move loads between them
The amount of money to be invested in the layout
A list of any special considerations
The location of key utilities, access and exit points, etc.
MIS 373: Basic Operations Management

53. Designing Process Layouts Minimize Transportation Costs
Goal:
Assign departments 1, 2, 3 to locations A, B, C in a way that minimizes transportation costs.
Heuristic:
Assign departments with the greatest interdepartmental work flow first to locations that are closet to each other. A B C
MIS 373: Basic Operations Management

54. Example: Minimize Transportation Costs
Distance 40
Location
From\To A B C - 20 40 30
Trip
A-B 20
B-C 30
A-C 40 A B C
Closest 30 20
Place dept. 1&3
in A&B
Work flow
Department
From\To 1 2 3 - 30
170
100
Pair
Work flow
1-3
170
2-3
100
1-2 30
Highest work flow
MIS 373: Basic Operations Management

55. Example: Minimize Transportation Costs40
Place departments 1&3 in A&B (2 options)
2&3 have higher work flow than 1&2 (100>30)
2&3 should be located closer than 1&2
C closer to B than to A (30<40)
Solution: 1 3 A B C 3 1 A B C A B C 30 20
Trip
A-B 20
B-C 30
A-C 40
Pair
Work flow
1-3
170
2-3
100
1-2 30 1 3 2 30
170
100 A B C
MIS 373: Basic Operations Management

56. Closeness Ratings
Allows the considerations of multiple qualitative criteria
Input from management or subjective analysis
Indicates the relative importance of each combination of department pairs
Muther’s grid
MIS 373: Basic Operations Management

57. Closeness Ratings Muther’s grid X O A U E I A Absolutely necessary
E Very important
I Important
O Ordinary importance
U Unimportant
X Undesirable
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6. X O A U E I
Suppose this is the floor plan of your company, how would you arrange the six departments?
MIS 373: Basic Operations Management

58. Closeness Ratings: Example
1. List critical departments (either A or X):
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6. X O A U E I A
1-2
1-3
2-6
3-5
4-6
5-6 X
1-4
3-6
3-4
MIS 373: Basic Operations Management

59. Closeness Ratings: Example
2. Form a cluster of A links (beginning with the department that appears most frequently) A
1-2
1-3
2-6
3-5
4-6
5-6
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6. X O A U E I 4 2 6 5
3. Take the remaining A links in order and add them to this cluster where possible (rearranging as necessary)
Form separate clusters for departments that do not link with the main cluster. 4 2 6 1 5 3
MIS 373: Basic Operations Management

60. Closeness Ratings: Example
4. Graphically portray the X links
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6. X O A U E I X
1-4
3-6
3-4 1 4 3 6
5. Adjust A cluster as necessary.
(in this case, the A cluster also satisfies the X cluster). 4 2 6 1 5 3
MIS 373: Basic Operations Management

61. Closeness Ratings: Example4
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6. X O A U E I 2 6 1 5 1 3 4 3 6
6. Fit cluster into arrangement (e.g., 2x3)
may require some trial and error.
Departments are considered close not only when they touch side to side but also when they touch corner to corner. 1 2 6 3 5 4
7. Check for possible improvements
MIS 373: Basic Operations Management

62. Key Points Process choice is demand driven.
Process type and layout are a function of expected demand volume and the degree of customization that will be needed.
Each process type and layout type has advantages and limitations that should be clearly understood when making process selection and layout decisions.
Line balancing helps improving the efficiency of product layouts whereas Muther’s grid helps deciding process layouts
MIS 373: Basic Operations Management