Operations Management

Chapter 9 Layout Strategy

PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e
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Innovations at McDonalds
Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu (1980s) Adding play areas (1990s) Three out of the four are layout decisions!
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McDonalds New Kitchen Layout

Fifth major innovation
Sandwiches assembled to order Elimination of some steps, shortening of others No food prepared ahead except patty New bun toasting machine and new bun formulation Repositioning condiment containers Savings of $100,000,000 per year in food costs
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McDonalds New Kitchen Layout

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Strategic Importance of Layout Decisions

The objective of layout strategy is to develop an economic layout that will meet the firms competitive requirements

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Layout Design 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
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Types of Layout
1. Office layout 2. Retail layout

3. Warehouse layout
4. Fixed-position layout

5. Process-oriented layout
6. Work cell layout 7. Product-oriented layout
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Types of Layout
1. Office layout - positions workers, their equipment, and spaces/offices to provide for movement of information 2. Retail layout - allocates shelf space and responds to customer behavior 3. Warehouse layout - addresses tradeoffs between space and material handling
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Types of Layout
4. Fixed-position layout - addresses the layout requirements of large, bulky projects such as ships and buildings 5. Process-oriented layout - deals with low-volume, high-variety production (also called job shop or intermittent production)

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Types of Layout
6. Work cell layout - a special arrangement of machinery and equipment to focus on production of a single product or group of related products

7. Product-oriented layout - seeks the best personnel and machine utilizations in repetitive or continuous production

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Supermarket Retail Layout

Objective is to maximize profitability per square foot of floor space Sales and profitability vary directly with customer exposure

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Five Helpful Ideas for Supermarket Layout

1. Locate high-draw items around the periphery of the store 2. Use prominent locations for high-impulse and high-margin items 3. Distribute power items to both sides of an aisle and disperse them to increase viewing of other items 4. Use end-aisle locations 5. Convey mission of store through careful positioning of lead-off department
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Retail Slotting
Manufacturers pay fees to retailers to get the retailers to display (slot) their product Contributing factors
Limited shelf space An increasing number of new products

Better information about sales through POS data collection

Closer control of inventory
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Retail Store Shelf Space Planogram

Computerized tool for shelf-space management
5 facings
Shampoo Shampoo Shampoo Shampoo Shampoo

Generated from stores scanner data on sales

Conditioner Conditioner

Conditioner

Shampoo

Shampoo

Shampoo

Shampoo

Often supplied by manufacturer

2 ft.
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Warehousing and Storage Layouts

Objective is to optimize trade-offs between handling costs and costs associated with warehouse space Maximize the total cube of the warehouse utilize its full volume while maintaining low material handling costs

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Warehousing and Storage Layouts

Material Handling Costs
All costs associated with the transaction
Incoming transport

Storage
Finding and moving material Outgoing transport

Equipment, people, material, supervision, insurance, depreciation

Minimize damage and spoilage

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Warehousing and Storage Layouts

Warehouse density tends to vary inversely with the number of different items stored Automated Storage and Retrieval Systems (ASRS) can significantly improve warehouse productivity Dock location is a key design element
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Cross-Docking
Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse Requires tight scheduling and accurate shipments, typically with bar code identification

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Random Stocking
Typically requires automatic identification systems (AISs) and effective information systems Random assignment of stocking locations allows more efficient use of space
1. Maintain list of open locations 2. Maintain accurate records

3. Sequence items to minimize travel time

4. Combine picking orders 5. Assign classes of items to particular areas
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Warehouse Layout
Traditional Layout
Storage racks Customization

Conveyor Staging Shipping and receiving docks

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Office

Warehouse Layout
Cross-Docking Layout

Shipping and receiving docks

Shipping and receiving docks

Office

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Fixed-Position Layout
Product remains in one place Workers and equipment come to site Complicating factors
Limited space at site Different materials required at different stages of the project

Volume of materials needed is dynamic

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Process-Oriented Layout
Like machines and equipment are grouped together Flexible and capable of handling a wide variety of products or services

Scheduling can be difficult and setup, material handling, and labor costs can be high

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Process-Oriented Layout
Patient A - broken leg ER triage room Surgery

Emergency room admissions

Patient B - erratic heart pacemaker Laboratories

Radiology

ER Beds

Pharmacy

Billing/exit

Figure 9.3
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Process-Oriented Layout
Arrange work centers so as to minimize the costs of material handling Basic cost elements are
Number of loads (or people) moving between centers Distance loads (or people) move between centers
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Process-Oriented Layout
Minimize cost =
where
n

Xij Cij

i=1 j=1

n = total number of work centers or departments i, j = individual departments Xij = number of loads moved from department i to department j Cij = cost to move a load between department i and department j
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Process Layout Example

Arrange six departments in a factory to minimize the material handling costs. Each department is 20 x 20 feet and the building is 60 feet long and 40 feet wide.
1. Construct a from-to matrix

2. Determine the space requirements

3. Develop an initial schematic diagram 4. Determine the cost of this layout

5. Try to improve the layout

6. Prepare a detailed plan
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Process Layout Example

Number of loads per week
Department Assembly Painting (1) (2) Assembly (1) Painting (2) Machine Shop (3) Receiving (4) Shipping (5) Testing (6) Machine Receiving Shop (3) (4) Shipping (5) Testing (6)

50

100 30

0 50 20

0 10 0 50

20 0 100 0 0

Figure 9.4
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Process Layout Example

Room 1 Room 2 Room 3 Assembly Department (1) Painting Department (2) Machine Shop Department (3) 40 Receiving Department (4) Shipping Department (5) Testing Department (6)

Figure 9.5
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Room 4

Room 5 60

Room 6
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Process Layout Example

Cost =
Cost = + +
n

Xij Cij

i=1 j=1

$50 + $200 + $40 (1 and 2) (1 and 3) (1 and 6) $30 + $100 + $10 (2 and 3) (2 and 4) (2 and 5) $40 + $100 + $50 (3 and 4) (3 and 6) (4 and 5)

= $620
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Process Layout Example

Interdepartmental Flow Graph
100

50

2 10

30

100

50

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Process Layout Example

Room 1 Room 2 Room 3 Assembly Department (1) Machine Shop Department (3) Testing Department (6) 40 Painting Department (2) Receiving Department (4) Shipping Department (5)

Room 4
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Room 5 60

Room 6
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Process Layout Example

Interdepartmental Flow Graph
20

100

3 20 50

100

50 50

4 10

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Process Layout Example

Cost =
Cost = + +
n

Xij Cij

i=1 j=1

$50 + $100 + $40 (1 and 2) (1 and 3) (1 and 6) $60 + $50 + $20 (2 and 3) (2 and 4) (2 and 5) $20 + $100 + $50 (3 and 4) (3 and 6) (4 and 5)

= $490
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Computer Software
Graphical approach only works for small problems Computer programs are available to solve bigger problems
CRAFT

ALDEP
CORELAP Factory Flow
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Repetitive and ProductOriented Layout

Organized around products or families of similar high-volume, low-variety products
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 life cycle that justifies investment Supplies of raw materials and components are adequate and of uniform quality
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Product-Oriented Layouts
Fabrication line Builds components on a series of machines Machine-paced Require mechanical or engineering changes to balance Assembly line Puts fabricated parts together at a series of workstations Paced by work tasks Balanced by moving tasks Both types of lines must be balanced so that the time to perform the work at each station is the same
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Product-Oriented Layouts
Advantages
1. 2. 3. 4. 5. Low variable cost per unit Low material handling costs Reduced work-in-process inventories Easier training and supervision Rapid throughput

Disadvantages
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
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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

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Copier Example
Performance Time Task (minutes) A 10 B 11 C 5 D 4 E 12 F 3 G 7 H 11 I 3 Total time 66 Task Must Follow Task Listed Below A B B A C, D F E G, H
This means that tasks B and E cannot be done until task A has been completed

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Copier Example
Performance Time Task (minutes) A 10 B 11 C 5 D 4 E 12 F 3 G 7 H 11 I 3 Total time 66 Task Must Follow Task Listed Below A B B A C, D F E G, H

10

11

B
4

G
3

12

11

H
Figure 9.13

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Copier Example
Performance Time Task (minutes) A 10 B 11 C 5 D 4 E 12 F 3 G 7 H 11 I 3 Total time 66 Task Must Follow Task Listed Below 480 available mins per day 40 units required

workstations

A Production time B available per day Cycle time = Units required per day B A = 480 / 40 5 C, D = 12 minutes per unit C F 10 11 3 7 n E i B G Minimum A i1Time for taskF G, H = 4 number of =
Cycle D time
12 11

= 66 / 12 E H = 5.5 or 6 stations
Figure 9.13
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Line-Balancing Heuristics

Copier Example

1. Longest task time Choose the available task 480 available Performance Task Must Followlongest task time with the mins per day Time Task Listed Task Most following tasksBelow 40 units 2. (minutes) Choose the available task required with the largestCycle time = 12 mins number of A 10 following tasks B 11 A Minimum = 5.5 C 3. Ranked positional 5 B workstations for or 6 Choose the available task D B weight4 which the sum of following E 12 A task times is the longest 5 F 3 C, D Choose the available task C G 4. Shortest task time 7 F 10 shortest task time 11 3 7 with the H 11 E A B G F I 5. Least number of 3 G,Choose the available task H 4 3 following with the least number of Total time 66 tasks D I 12 11 following tasks
E

H Table 9.4
Figure 9.13
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Copier Example
Performance Time Task (minutes) A 10 B 11 Station C 5 2 D 4 11 E 10 12 F A B 3 G 7 H 11 I 3 12 Station Total time 66 E 1
Station 3
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Task Must Follow Task Listed Below A 5 B C B A C, D 4 F D E G, H

480 available mins per day 40 units required Cycle time = 12 mins Minimum workstations = 5.5 or 6
3 7

F
Station 4

I
11
Station 6

H
Station 5 Figure 9.14
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Copier Example
Performance Time Task (minutes) Task Must Follow Task Listed Below 480 available mins per day 40 units required

A 10 Cycle time = 12 mins B 11 A Minimum C 5 B workstations = 5.5 or 6 D 4 B E 12 A F 3 C, D G 7 F Task times Efficiency = (actual number of workstations) x (largest cycle time) H 11 E I 3 G, H = 66 minutes / (6 stations) x (12 minutes) Total time 66 = 91.7%

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