1. 6. Processes Selection and Layout
Operations Management
Dr. Ron Lembke

2. Process Flow Structures
Job Shop - low standardization, every order is a different product, new design
Batch Shop - Stable line of products, produced in batches
Assembly Line - Discrete parts moving from workstation to workstation
Continuous Flow - Undifferentiated flow of product (beer, paper, etc.)

3. Process Strategy Variety Volume project Manufacturing Cell Workcenter
High
Manufacturing
Cell
Workcenter
Assembly
Line
Medium
Continuous
Process
Low
Low
Medium
High
Volume

4. Process Strategy Variety Volume Process Focus (job shops) High
Repetitive (cars, motorcycles)
Medium
Product Focus (steel, glass)
Low
Low
Medium
High
Volume

5. Process Focus (Job Shop)
Low volume, high variety, “do it all”
“Job shop” environment (e.g. Kinko’s)
High amount of flexibility
Each job is different
Relatively high cost per unit
Very high flexibility

6. Process Selection / Evolution
Products tend to move through the four stages over life cycle.
Unit costs decrease as standardization increases, and production increases.
Flexibility decreases as volume, standardization increase

7. Designing the System
How do we decide where to put things?

8. Layout Types Project or Fixed-position layout Process-oriented layout
Product-oriented layout
Office layout
Warehouse layout
Retail/service layout

9. Project or Fixed-Position
Design is for stationary project
Workers & equipment come to site
Complicating factors
Limited space at site
Changing material needs
Examples
Ship building
Highway construction

10. Process-Oriented Layout
Design places departments with large flows of material or people together
Dept. areas have similar processes
e.g., All x-ray machines in same area
Used with process-focused processes
Examples
Hospitals
Machine shops

11. Process-Oriented Layout Floor Plan
Office
Table Saws
© 1995 Corel Corp.
Drill Presses
Tool Room
© 1995 Corel Corp.

12. Process Layout
+ Allows specialization - focus on one skill + Allows economies of scale - worker can watch several machines at once + High level of product flexibility -- Encourages large lot sizes -- Difficult to incorporate into JIT -- Makes cross-training difficult

13. Product-Oriented Layout
Facility organized around product
Design minimizes line imbalance
Delay between work stations
Types: Fabrication line; assembly line
Examples
Auto assembly line
Brewery
Paper manufacturing.

14. Cellular Layout (Work Cells)
Special case of process-oriented layout
Consists of different machines brought together to make a product
May be temporary or permanent
Example: Assembly line set up to produce 3000 identical parts in a job shop

15. Work Cell Floor Plan
Saws
Drills
Office
Work Cell
Tool Room

16. Work Cell Advantages
Increases: Equipment utilization Employee participation Quality
Reduces: Inventory Floor space Direct labor costs

17. Work Cell Layout
+ Facilitates cross-training + Can easily adjust production volumes + Easy to incorporate into JIT -- Requires higher volumes to justify -- May require more capital for equipment

18. Process-Oriented Example
You work in facilities engineering. You want to find the cost of this layout. The cost of moving 1 load between adjacent dept. is $1. The cost between nonadjacent dept. is $2.
Dept. 1
Dept. 2
Dept. 3
40 ft.
Dept. 4
Dept. 5
Dept. 6
60 ft.
There are 6! or 720 possibilities! Clearly, we can’t look at them all.

19. From-to-Matrix Department 1 2 3 4 5 6 1 2 3 Dept. Number of Trips 4 5

20. Schematic Diagram & Cost
100
Dept. Dept. Cost $ 200
1 2 $ 50
1 6 $ 40
4 2 $ 50
4 3 $ 40
4 5 $ 50
2 5 $ 10
2 3 $ 30
3 6 $ 100 50 30 1 2 3 10 20 50
100 20 4 5 6
Total Cost $570 50

21. Schematic Diagram & Cost
Dept. Dept. Cost $ 50
1 3 $ 100
1 6 $ 20
4 2 $ 50
4 3 $ 40
4 5 $ 50
2 5 $ 10
2 3 $ 60
3 6 $ 100 30 50
100 2 1 3 10 50
100 20 20 4 5 6 50
Total Cost $480

24. Line Balancing Situation: Assembly-line production.
Many tasks must be performed, and the sequence is flexible
Parts at each station same time
Tasks take different amounts of time
How to give everyone enough, but not too much work for the limited time.

25. Product-Oriented Layout
Operations
Belt Conveyor

26. Precedence Diagram B A G E I J C D H F
Draw precedence graph (times in seconds) B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

27. Cycle Time Production Time in each day CT =
The more units you want to produce per hour, the less time a part can spend at each station.
Cycle time = time spent at each spot
C = 800 min / 32 = 25 min
800 min = 13:20
CT =
Production Time in each day
Required output per day (in units)

28. Number of Workstations
Given required cycle time, find out the theoretical minimum number of stations
Nt = 97 / 25 = 3.88 = 4 (must round up)
Nt =
Sum of task times (T)
Cycle Time (C)

29. Assignments Assign tasks by choosing tasks:
with largest number of following tasks
OR by longest time to complete
Break ties by using the other rule

30. Number of Following Tasks
Nodes # after C 6 D 5 A 4 B,E,F 3 G,H 2 I 1
Choose C first, then, if possible,
add D to it, then A, if possible.

31. Precedence Diagram B A G E I J C D H F
Draw precedence graph (times in seconds) B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

32. Number of Following Tasks
Nodes # after A 4 B,E,F 3 G,H 2 I 1
A could not be added to first
station, so a new station must be
created with A.
B, E, F all have 3 stations after,
so use tiebreaker rule: time.
B = 5
E = 8
F = 3
Use E, then B, then F.

33. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
E cannot be added to A, but E can be added to C&D. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

34. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
Next priority B can be added to A. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

35. Precedence Diagram B A G E I J C D H F
Next priority B can be added to A. Next priority F can’t be added to either. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

36. Number of Following Tasks
Nodes # after G,H 2 I 1
G and H tie on number coming after.
G takes 15, H is 12, so G goes first.

37. Precedence Diagram B A G E I J C D H F
G can be added to F. H cannot be added. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

38. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
I is next, and can be added to H, but J cannot be added also. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

39. Calculate Efficiency Sum of task times (T) Efficiencyt =
We know that at least 4 workstations will be needed. We needed 5.
= 97 / ( 5 * 25 ) = 0.776
We are paying for 125 minutes of work, where it only takes 97.
Sum of task times (T)
Efficiencyt =
Actual # WS * Cycle Time

40. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
Try choosing longest activities first. A is first, then G, which can’t be added to A. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

41. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
H and I both take 12, but H has more coming after it, then add I. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

42. Precedence Diagram B A G E I J C D H F
D is next, followed by E, so we combine them, but we could have combined E&G. We’ll try that later. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

43. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
J is next, all alone, followed by C and B. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

44. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
F is last. We end up with 6 workstations. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

45. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
Go back and try combining G and E instead of D and E. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

46. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
J is next, all alone. C is added to D, and B is added to A. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

47. Can we do better? B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

48. Precedence Diagram B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
F can be added to C&D. Five WS again. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

49. Reduced CT Efficiency = 97/100 = 0.97. Much better.
If we set CT = 20, we can produce 3 units per hour.
Goal of 32 units can be produced in 20 * 32 = 640 minutes.
Significant savings over original 800 minutes.

50. Can we do better? B A G E I J C D H F 5 20 15 8 7 12 5 10 12 3
If we have to use 5 stations, we can get a solution with CT = 20. B A G 5 20 15 E I J C D 8 7 H 12 5 F 10 12 3

51. Calculate Efficiency Sum of task times (T) Efficiencyt =
With 5 WS at CT = 20
= 97 / ( 5 * 20 ) = 0.97
We are paying for 100 minutes of work, where it only takes 97.
Sum of task times (T)
Efficiencyt =
Actual # WS * Cycle Time

52. Output and Labor Costs With 20 min CT, and 800 minute workday
Output = 800 min / 20 min/unit = 40
Don’t need to work 800 min
Goal 25 units: 25 * 20 = 500 min/day
5 workers * 500 min = 2,500 labor min.
We were trying to achieve
4 stations * 800 min = 3,200 labor min.
Significant labor cost savings

53. Handling Long Tasks
Long tasks make it hard to get efficient combinations.
Consider splitting tasks, if physically possible.
If not:
Parallel workstations
use skilled (faster) worker to speed up

54. Warehouse Layout
Design balances space (cube) utilization & handling cost
Similar to process layout
Items moved between dock & various storage areas
Optimum layout depends on
Variety of items stored
No. items picked
© 1995 Corel Corp.

55. Warehouse Flow
Receiving
Shipping

56. Warehouse Layout
Try to organize storage in such a way that order pickers
can move through the product in a logical and timely
manner.

59. Warehouse Layout Fastest near the front Fastest within easy reach
Bulk storage vs. Single item picking
Serpentine vs. oval picking order
Restocking: frequency, safety stock

60. Cross-Docking Outgoing Transferring goods
In-coming
Outgoing
Transferring goods
from incoming trucks at receiving docks
to outgoing trucks at shipping docks
Avoids placing goods into storage
© T/Maker Co.
© 1995 Corel Corp.

61. Retail/Service Layout
Design maximizes product exposure to customers, profitability per square foot
Decision variables
Store flow pattern
Allocation of (shelf) space to products
Types
Grid design
Free-flow design
Video

62. Retail/Service Layout Grid Design
Grocery Store
Bread
Meat
Milk
Check- out
Office
Carts

63. Retail/Service Layout Free-Flow Design
Apparel Store
Trans. Counter
Feature
Display Table

68. Retail Store Flow Guidelines
“Prisoner” aisles make you enter store in a particular route, and pass by certain displays
Often contain less profitable (for the store) brands
“Decompression Zone” people walk past first rows of items before settling into shopping mode.

69. Retail Store Flow Guidelines
Bakery, coffee shop, restaurant spread aromas by entrance to stimulate taste buds
Siren song of the Starbucks (Safeway)
Food samplers throughout store do same

70. Retail Store Flow Guidelines
Meat
Frequently purchased items at far sides of stores so you have to go through entire store (produce or meat).
Profitable sections like produce placed where you keep running into them
Milk
Produce

71. Retail Store Flow Guidelines
Major items in middle of aisles so you have to walk down into middle of aisle (Cereal, peanut butter)
‘Power items’ on both sides of aisle so you have to look at both sides
Peanut
Butter
Cereal

72. Retail Store Flow Guidelines
Cereal
Quality of produce section important in customer decisions about which stores to visit, so produce is often prominently displayed upon entrance
People like to see what they’re looking for, not read signs
Peanut
Butter
produce

73. Retail Store Flow Guidelines
End caps for high-visibility sale items
Large quantities of inventory serve as “psychic stock”
If there is a lot of it, it must be on sale
Stimulates sales
© Corel Corp.

74. Retail Store Flow Guidelines
Eliminate cross-over aisles:
less wasted floor space,
you have to look at more items,
the more time you spend in the store, the more you will buy.

75. Shelf Space Planogram Computerized tool for shelf-space management
5 facings
Computerized tool for shelf-space management
Generated from store’s scanner data on sales
Often supplied by manufacturer
Example: P&G
PERT
PERT
PERT
PERT
PERT
VO-5
VO-5
VO-5
VO-5
VO-5
SUAVE
SUAVE
2 ft.

76. Shelf Placement
Companies prefer to be at eye-level or at child-reaching level
Close to leading brands or high-draw items: snack foods next to the peanut butter or across from the cereal:
Lots of kids visit the area

77. Slotting Fees Manufacturer pays retailer to get a product into a store
35,000 new grocery products per year
Grocery stores often stock 30,000 items
Impossible to evaluate all new products to choose the best new ones
Slotting fees guarantee grocer profits on a product, help balance risk of trying unknown product.
Grocery is a narrow margin business, slotting fees can represent a significant revenue source.

78. Slotting Fees
Senate Small Business Committee held hearings on them in 2000.
Industry refused to cooperate with GAO.
Growers of produce (not just brand names) now getting involved and complaining.
Small businesses claim they can’t afford the big payments big companies can make.
Advocates say small companies can “put their money where their mouths are” just like anyone else

79. Perimeter Items People follow perimeter pattern
Sale items on end – everyone sees
Half of a store’s profit comes from items on the perimeter
Breakfast cereal brings in the most dollars per square foot
Manufacturer incentives increase profitability of soft drinks
“Anchors” at ends of a section: milk and butter at opposite ends of dairy case