1. © 2006 Prentice Hall, Inc.9 – 1 Operations Management Chapter 9 – Layout Strategy © 2006 Prentice Hall, Inc. PowerPoint presentation to accompany Heizer/Render Operations Management, 8e

2. © 2006 Prentice Hall, Inc.9 – 2 Innovations at McDonald’s  Indoor seating (1950s)  Drive-through window (1970s)  Adding breakfast to the menu (1980s)  Adding play areas (1990s)  Redesign of sandwich preparation process Three out of the four innovations are layout decisions! Layout decisions impact operations because they often impact movement of goods, people and capacity decisions, such as inventory and machines.

3. © 2006 Prentice Hall, Inc.9 – 3 McDonald’s New Kitchen Layout

4. © 2006 Prentice Hall, Inc.9 – 4 Quantitative Metrics: Comparing the Two Processes 1.What was the bottleneck of the old process? 2.What was the throughput time? 3.What is the bottleneck of the new process? 4.What was the new throughput time? Assemble & wrap (34s) Toast (20-30s) Microwave patties & bun (15s) Store (1s) Assemble (20s) Toast (11s) Final assembly of patties & wrap (14s) Store (1s) New process Old process

5. © 2006 Prentice Hall, Inc.9 – 5 Qualitative Metrics: Comparing the Two Processes 1.Which qualitative differences do you see between the two processes? 2.What made the changes possible? Assemble & wrap Toast Microwave patties & bun Store Assemble Assemble Toast Final assembly of patties & wrap Store New process Old process Pre-grilled patties

6. © 2006 Prentice Hall, Inc.9 – 6 Qualitative Metrics: Comparing the Two Processes 1.Which qualitative differences do you see between the two processes? - separation of assembly into two activities - elimination of microwave step - preheating and storage of patties - changing texture of bun (see textbook) 1.Which qualitative differences do you see between the two processes? - separation of assembly into two activities - elimination of microwave step - preheating and storage of patties - changing texture of bun (see textbook) 2.What made the changes possible? - innovation in food technology - innovation in oven technology - innovation in storage technology

7. © 2006 Prentice Hall, Inc.9 – 7 Types of Layout 1.Building/space layout 2.Process/work station layout 3.Resources/Equipment layout 4.Group/Departmental layout 5.Product to shelf layout Layouts, in operations management, involve more than space/building layout

8. © 2006 Prentice Hall, Inc.9 – 8 Dimensions of Space Layout 1.Space size (sq. ft) impacts storage 2.Space layout impacts flow of resources, flexibility for re-arrangements 3.Space design impacts accessibility, safety, customer interaction and lighting Space design (an activity) is not the same thing as space layout (an outcome)!

9. © 2006 Prentice Hall, Inc.9 – 9 Objectives of Layout Strategy 1.Maximize space utilization 2.Lower operational cost of maintenance 3.Lower operational costs of flows 4.Increase profits or sales per unit space 5.Increase access to shared resources 6.Match customer behavior and needs 7.Match equipment uniqueness and needs 8.Match work/task needs Layout decision making always involves resolving conflicting needs and goals.

10. © 2006 Prentice Hall, Inc.9 – 10 Methods for Layout Decisions 1.Create generic layouts for each industry segment for managers to choose from, e.g. retail, warehouse, and office layouts. 2.Create generic layouts for production types for managers to choose from, e.g. fixed position, process-oriented, work cells and product-oriented layouts. 3.Create mathematical tools that managers could use to determine the costs of their layouts.

11. © 2006 Prentice Hall, Inc.9 – 11 Types of Office Space Layouts Closed layout Semi-open layout Open layout Appropriateness - isolated work - less work collaboration -less information sharing -High need for privacy Appropriateness - some field work -direct customer interaction - some work collaboration -some information sharing -low need for privacy Appropriateness - heavy field work - heavy worker-to worker interaction -heavy information sharing -no need for privacy Office space layout decisions

12. © 2006 Prentice Hall, Inc.9 – 12 Relationship Chart After a layout is chosen, the next challenge is the assignment of workers/activities to rooms. Assign activities to the following rooms. Use relationship chart provided in textbook. Semi-open layout 6 Rest Rest 0 5 4 3 2 1 8 7 Door

13. © 2006 Prentice Hall, Inc.9 – 13 Relationship Chart ValueCloseness A Absolutely necessary E Especially important IImportant OOrdinary OK UUnimportant XNot desirable President Chief Technology Officer Engineer’s area Secretary Office entrance Central files Equipment cabinet Photocopy equipment Storage room O U A X O U A I O A I O U A I I A U O A U O U X O I U O I I I E E E E E12 3 4 5 6 7 8 9 Figure 9.1 Resources layout decisions

14. © 2006 Prentice Hall, Inc.9 – 14 Types of Retail Layouts (Store level) Shelf-centered layout Product-centered layout Open layout Appropriateness - high customer traffic - use of carts -High volume of SKUs -High variety of SKUs Appropriateness - medium customer traffic - use of baskets -Medium volume of SKUs -Medium variety of SKUs Appropriateness - low - medium traffic -very heavy items -Low volume of SKUs -Low variety of SKUs

15. © 2006 Prentice Hall, Inc.9 – 15 Types of Retail Layouts (Warehouses) Manual picking layout Mechanized picking layout Automated layout Appropriateness - Low number of SKUs - Low-medium storage area -Medium volume of SKUs -Low-med variety of SKUs -Small units SKUs -Manual picking of items Appropriateness - Med number of SKUs - Med-large storage area -Med-high volume of SKUs -Low-med variety of SKUs -Large SKU packages -Mechanized picking Appropriateness - Med-large no. of SKUs - Med-large storage area -Med-high volume of SKUs -Low-high variety of SKUs -Small-med SKU packages --Automated picking

16. © 2006 Prentice Hall, Inc.9 – 16 Warehousing and Storage Layouts  Warehouse density tends to vary inversely with the number of different items stored.  Density is mass divided by volume (units stored). The lower the number of items stored the larger the total size of each item could be, i.e. higher density.  Automated Storage and Retrieval Systems (ASRS) can significantly improve warehouse productivity  Dock location is a key design element

17. © 2006 Prentice Hall, Inc.9 – 17 Warehouse Layout What is wrong with this layout? Receiving docks Office Shipping docks

18. © 2006 Prentice Hall, Inc.9 – 18 Warehouse Layout Cross-Docking Layout Shipping and receiving docks Office Shipping and receiving docks

19. © 2006 Prentice Hall, Inc.9 – 19 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

20. © 2006 Prentice Hall, Inc.9 – 20 Street Exercise: Resources Layouts We have to assign some of the following businesses that we own in the blue areas that we own. How would you do it? Convenience store (3,000 sq. ft.) Dentist (1,500 sq. ft.) Driving school (3,000 sq. ft.) Clothing boutique (4,500 sq. ft.) Bookstore (1,500 sq. ft.) Private homes AREA 2 1,500 sq. feet AREA 3 3,000 sq. feet AREA 1 4,500 sq. feet Private homes Door Displaywindow Street

21. © 2006 Prentice Hall, Inc.9 – 21 Street Common Response: Resources Layouts We have to assign some of the following businesses that we own in the blue areas that we own. How would you do it? Convenience store (3,000 sq. ft.) Dentist (1,500 sq. ft.) Driving school (3,000 sq. ft.) Clothing boutique (4,500 sq. ft.) Bookstore (1,500 sq. ft.) Private homes AREA 2 1,500 sq. feet Bookstore AREA 3 3,000 sq. feet Conveniencestore AREA 1 4,500 sq. feet Clothing store Private homes Door Displaywindow Street

22. © 2006 Prentice Hall, Inc.9 – 22 Street Better Response: Resources Layouts We have to assign some of the following businesses that we own in the blue areas that we own. How would you do it? If one may change space layout! Convenience store (3,000 sq. ft.) Dentist (1,500 sq. ft.) Driving school (3,000 sq. ft.) Clothing boutique (4,500 sq. ft.) Bookstore (1,500 sq. ft.) Private homes AREA 2 4,500 sq. feet Clothing store AREA 3 3,000 sq. feet Conveniencestore AREA 1 1,500 sq. feet Dentist Private homes Door Displaywindow Street

23. © 2006 Prentice Hall, Inc.9 – 23 How is Good is our Layout?

24. © 2006 Prentice Hall, Inc.9 – 24 Process-Oriented Layout 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 Cij = Cij * dij (cost per feet to move a load between department i and department j multiplied by distance between department i and department j (dij) Cij = Cij * dij (cost per feet to move a load between department i and department j multiplied by distance between department i and department j (dij)

25. © 2006 Prentice Hall, Inc.9 – 25 In-class exercise

26. © 2006 Prentice Hall, Inc.9 – 26 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 Textbook Example: Loadings ( X ij ) Figure 9.4

27. © 2006 Prentice Hall, Inc.9 – 2710050 20 50 50 20 10 100 30 Process Layout Example Interdepartmental Flow Graph (old layout) 123 456 Figure 9.6

28. © 2006 Prentice Hall, Inc.9 – 28 Room 1Room 2Room 3 Room 4Room 5Room 6 60’ 40’ Layout Example: Distances (C ij ) ReceivingShippingTesting DepartmentDepartmentDepartment (4)(5)(6) Figure 9.5 AssemblyPaintingMachine Shop DepartmentDepartmentDepartment (1)(2)(3)

29. © 2006 Prentice Hall, Inc.9 – 29 Process Layout Example 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 of moving goods between adjacent rooms $1 Cost of moving goods between nonadjacent rooms $2 Cost = ∑ ∑ X ij C ij n i = 1 n j = 1

30. © 2006 Prentice Hall, Inc.9 – 302050 100 100 50 50 50 20 30 Class Activity Interdepartmental Flow Graph (old layout) Which dept will you switch? 123 456 Figure 9.6

31. © 2006 Prentice Hall, Inc.9 – 31 Room 1Room 2Room 3 Room 4Room 5Room 6 60’ 40’ Process Layout Example (New) ReceivingShippingTesting DepartmentDepartmentDepartment (4)(5)(6) Figure 9.8 Painting Assembly Machine Shop DepartmentDepartmentDepartment (2)(1)(3)

32. © 2006 Prentice Hall, Inc.9 – 32 Process Layout Example 3050 10 50 20 20 50100 100 Interdepartmental Flow Graph (Loads only) 213 456 Figure 9.7

33. © 2006 Prentice Hall, Inc.9 – 33 Process Layout Example (2) 30 x $2 50 x $1 10 x $1 50 x $1 20 x $1 20 x $2 50 x $1 100 x $1 Interdepartmental Flow Graph (Loads and distance costs) 213 456 Figure 9.7

34. © 2006 Prentice Hall, Inc.9 – 34 Process Layout Example 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

35. © 2006 Prentice Hall, Inc.9 – 35 Redesign Hospital Layout Room 503 Room 504 Room 505 Room 501 Room 502 Room 509 Room 510 Rest room (F) Room 507 Room 508 Locker Room Medical Supplies Break Room Files Room Front desk Rest Room M Doctor’s Room Racetrack design

36. © 2006 Prentice Hall, Inc.9 – 36 Redesign Hospital Layout Servicescape design Elevator Elevator

37. © 2006 Prentice Hall, Inc.9 – 37 Process-Oriented Layouts Purpose Process-oriented layouts are designed to produce a high variety of products or components by grouping same or similar tasks, machines and equipments together. Work cell is the arrangement of people, resources, materials and work flow to enable the manufacture of a family of products or components by a group of multi- skilled workers. Requirement: Multiple skills, high autonomy and decision making for workers.

38. © 2006 Prentice Hall, Inc.9 – 38 Product-Oriented Layouts Straight line layout U shape layout U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and inspection Automated layout

39. © 2006 Prentice Hall, Inc.9 – 39 Three Layouts AB CDE Product-oriented layout A B C D E Process-oriented layout A B B C DD E B B C D E Work Cell-oriented layout A D E C AD D

40. © 2006 Prentice Hall, Inc.9 – 40 Product-Oriented Layouts (Automated type only) 1.Low variable cost per unit 2.Low material handling costs 3.Reduced work-in-process inventories 4.Easier training and supervision 5.Rapid throughput Advantages 1.High volume is required 2.Work stoppage at any point ties up the whole operation 3.Lack of flexibility in product or production rates Disadvantages

41. © 2006 Prentice Hall, Inc.9 – 41 Advantages of Work Cells 1.Reduced work-in-process inventory 2.Less floor space required 3.Reduced raw material and finished goods inventory 4.Reduced direct labor 5.Heightened sense of employee participation 6.Increased use of equipment and machinery 7.Reduced investment in machinery and equipment

42. © 2006 Prentice Hall, Inc.9 – 42 Balancing Work Cells Example 2 Textbook page 284

43. © 2006 Prentice Hall, Inc.9 – 43 Exercise: Balancing Work Cells (Activity) Required 560 documents per day Work schedule 7.5 hours/day Activity times Review (20 secs); Correction (20 secs); Dispatch (5 secs) Find minimum number of workers needed?

44. © 2006 Prentice Hall, Inc.9 – 44 Exercise: Balancing Work Cells (Activity) Required 1100 mirrors/day Work schedule 12 hours/day Operations total time = 140 secs How many workers needed to make one unit in the takt time? How many units will be made with 5 people?

45. © 2006 Prentice Hall, Inc.9 – 45 Assembly-Line Balancing  Objective is to minimize the imbalance between machines or personnel while meeting required output  Starts with the precedence relationships 1.Determine cycle time 2.Calculate theoretical minimum number of workstations 3.Balance the line by assigning specific tasks to workstations

46. © 2006 Prentice Hall, Inc.9 – 46 Assembly-Line Balancing  If the conveyor must move at uniform speed, at which speed should it move?  4 minutes  3 minutes  3.5 minutes  6.5 minutes  7 minutes  10.5 minutes  14 minutes F C BA 4 3.5 3

47. © 2006 Prentice Hall, Inc.9 – 47 Assembly-Line Balancing  If the conveyor must move at uniform speed, at which speed should it move?  4 minutes  3 minutes  3.5 minutes  6.5 minutes  7 minutes  10.5 minutes  14 minutes F C BA 4 3.5 3 F C BA 4 3

48. © 2006 Prentice Hall, Inc.9 – 48 Copier Example PerformanceTask Must Follow TimeTask Listed Task(minutes)Below 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

49. © 2006 Prentice Hall, Inc.9 – 49 Copier 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

50. © 2006 Prentice Hall, Inc.9 – 50 Copier Example I GF H C D B E A 1011 12 5 4 37 11 3 Station 1 Station 2 Station 3 Station 5 Station 4 Station 6 Figure 9.14  Every dis-aggregation process for automated processing could be done at different levels of detail.

51. © 2006 Prentice Hall, Inc.9 – 51 Copier 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 cycle time) = 66 minutes / (6 stations) x (12 minutes) = 91.7%