OPERATIONS

MANAGEMENT
7th Ed. By Slack

SESSION 4
PART II: Chapter 7: Layout & Flow

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PART II (continued): DESIGN

CHAPTER 7: LAYOUT & FLOW

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PART II: DESIGN INTRODUCTION

All operations managers are designers, because design is the process of satisfying people’s requirements through
shaping or configuring products, services and processes.

 At the most strategic level ‘design’ means shaping the networks of operations that supply products and services.
 At a more operational level it means the arrangements of the processes, technology and people that constitute
operations processes.

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 Chapter 7: Layout and flow
INTRODUCTION

The layout of an operation is concerned with the physical positioning of its transforming resources. Deciding where to put
all the facilities, machines, equipment and staff in the operation determined the way in which transformed resources –
the materials, information and customers – flow through an operation.

WHAT IS LAYOUT?

The ‘layout’ of an operation or process means how its transforming resources are positioned relative to each other and
how its various tasks are allocated to these transforming resources.

What makes a good layout?

All layouts should be inherently safe; constituting no danger to either staff or customers. Generally, layout should (usually)
minimize the length of flow through the operation and preferably make the flow clear. Staff should be located away from
noisy or unpleasant parts of the operation and all equipment should be accessible. Layouts should achieve an appropriate
use of space and allow for flexibility in the longer term.

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THE BASIC LAYOUT TYPES
Most practical layouts are derived from only four basic layout types. These are: fixed-position layout; functional layout;
cell layout; and product (line) layout.

Fixed-position layout
 Motorway construction – the product is too large to move.
 Open-heart surgery – patients are too delicate to move.
 Shipbuilding – the product is too large to move.
 Mainframe computer maintenance – the product is too big and probably also too delicate to move, and the customer
might object to bringing it in for repair.
Functional layout
Similar resources or processes are located together.
 Hospital – some processes (e.g. X-ray machines and laboratories) are required by several types of patient; some
processes (e.g. general wards) can achieve high staff and bed utilization.
 Machining the parts which go into aircraft engines – some processes (e.g. heat treatment) need specialist support (heat
and fume extraction); some processes (e.g. machining centers) require the same technical support from specialist
setter–operators; some processes (e.g. grinding machines) get high machine utilization as all parts which need grinding
pass through a single grinding section.
 Supermarket – frozen food section, canned goods section, vegetables section, liquor & beverages section, etc.

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Cell layout (typically associated with manufacturing)
A cell layout is one where the transformed resources entering the operation are pre-selected (or pre-select themselves)
to move to one part of the operation (or cell) in which all the transforming resources, to meet their immediate
processing needs, are located. The cell itself may be arranged in either a functional or product layout. Examples of cell
layouts include: Some computer component manufacture (mother board); maternity unit in a hospital – give birth only.

Product (line) layout

 Automobile assembly – almost all variants of the same model require the same sequence of processes.
 Self-service cafeteria – generally the sequence of customer requirements (starter, main course, dessert, and drink) is
common to all customers, but layout also helps control customer flow.
 Mass-immunization program – all customers require the same sequence of clerical, medical and counselling activities.

Mixed layouts combination of the above four types.

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 Cost analysis

Of all the characteristics of the various

layout types, perhaps the most
generally significant are the unit cost
implications of layout choice. This is
best understood by distinguishing
between the fixed- and variable-cost
elements of adopting each layout type.

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WHAT TYPE OF LAYOUT SHOULD AN OPERATION CHOOSE?
The importance of flow to an operation will depend on its volume and variety characteristics & customers/suppliers
involvement.

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Service Process Structuring

Krajewski – pg 113

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Manufacturing Process
Structuring

Krajewski – pg 115

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 HOW SHOULD EACH BASIC LAYOUT TYPE BE DESIGNED IN DETAIL?
(Krajewski – page 117 – 124)

A layout is the physical arrangement of operations (or departments) created from the various processes and puts them in
tangible form. For organizational purposes, processes tend to be clustered together into operations or departments.

An operation is a group of human and capital resources performing all or part of one or more processes. For example, an
operation could be several customer service representatives in a customer reception area; a group of machines and workers
producing cell phones; or a marketing department. Regardless of how processes are grouped together organizationally,
many of them cut across departmental boundaries. The flows across departmental lines could be
informational, services, or products. Process structures that create more flows across departmental lines, as with job or
batch processes, are the most challenging layout problems.

Here we demonstrate an approach to layout design that positions those departments close together that have strong
interactions between them. It involves three basic steps, whether the design is for a new layout or for revising an existing
layout: (1) gather information, (2) develop a block plan, and (3) design a detailed layout. We illustrate these steps with
the Office of Budget Management (OBM), which is a major division in a large state government.

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1) Gather
Information
OBM consists of 120 employees assigned to six different departments. Workloads have expanded to the extent that 30
new employees must be hired and somehow housed in the space allocated to OBM. The goal is to improve
communication (goal satisfied by phone/emails) among people who must interact with each other effectively, creating a
good work environment.

Three types of information are needed to begin designing

the revised layout for OBM: (1) space requirements by
center, (2) available space, and (3) closeness factors.
OBM has grouped its processes into six different
departments: (1) administration, (2) social services, (3)
institutions, (4) accounting, (5) education, and (6) internal
audit. The exact space requirements of each department,
in square feet, are as follows:
Management must tie space requirements to capacity and
staffing plans; calculate the specific equipment and space
needs for each center; and allow circulation space, such as
aisles and the like. At OBM, a way must be found to include all
150 employees in its assigned area. Consulting
with the managers and employees involved can help avoid
excessive resistance to change and make the transition
smoother.

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1) Gather information
(cont.)
A block plan allocates space and indicates placement of each operation. To describe a new
facility layout, the plan need only provide the facility’s dimensions and space allocations.
When an existing facility layout is being modified, the current block plan is also needed.
OBM’s available space is 150 feet by 100 feet, or 15,000 square feet. The designer could
begin the design by dividing the total amount of space into six equal blocks (2,500 square
feet each). The equal-space approximation shown in Figure 3.4 is sufficient until the detailed
layout stage, when larger departments (such as administration) are assigned more space
than smaller departments.

The layout designer must also know which operations need to be located
close to one another. The table on the left shows OBM’s closeness matrix,
which gives a measure of the relative importance of each pair of operations
being located close together. The metric used depends on the type of
processes
involved and the organizational setting. It can be a qualitative judgment on
a scale from 0 to 10 that the manager uses to account for multiple
performance criteria, as in the OBM’s case. Only the right-hand portion of
the matrix is used. The closeness factors are indicators of the need for
proximity based on an analysis of information flows and the need for face-
to-face meetings. They give clues as to which departments should be
located close together. 13
1) Gather information
(cont.)
The layout designer must also know which operations need to be located
close to one another. The table on the right shows OBM’s closeness matrix,
which gives a measure of the relative importance of each pair of operations
being located close together. The metric used depends on the type of
processes involved and the organizational setting. It can be a qualitative
judgment on a scale from 0 to 10 that the manager uses to account for
multiple performance criteria, as in the OBM’s case. Only the right-hand
portion of the matrix is used.
The closeness factors are indicators of the need for proximity based on an analysis of information flows and the need for
face-to-face meetings. They give clues as to which departments should be located close together. For example, the most
important interaction is between the administration and internal audit departments for OBM, with a score of 10. This
closeness factor is given in the first row and last column. Thus, the designer should locate departments 1 and 6 close
together, which is not the arrangement in the current layout. Entries in both the columns and rows result in five factor
scores for each department.
At a manufacturing plant, the closeness factor could be the number of trips (or other measure of materials movement)
between each pair of operations per day. This information can be gleaned by conducting a statistical sampling, polling
supervisors and materials handlers, or using the routings and ordering frequencies for typical items made at the plant.
Finally, the information gathered for OBM includes performance criteria that depend not on the relative location of
department pairs, but the absolute location of a single department. OBM has two such criteria: (1) Education (depart. 5)
should remain where it is because it is next to the office library; (2) Administration (department 1) should remain where it is
because that location has the largest conference room, which administration uses often. Relocating the conference room14
would be costly.
2) Develop a block plan
Once all info. Is gathered, to best satisfies performance criteria and area requirements, the designer can:
(a) Trial and error approach: Because success depends on the designer’s ability to spot patterns in the data, this approach
does not guarantee the selection of the best or even a nearly best solution. When supplemented by the use of a computer
to evaluate solutions, however, research shows that such an approach compares quite favorably with more sophisticated
computerized techniques. (Chapter 8: Process Technology)
(b) Applying the Weighted-Distance Method: When relative locations are a primary concern, such as for effective
information flow, communication, material handling, and stock picking, the weighted-distance method can be used to
compare alternative block plans. The weighted-distance method is a mathematical model used to evaluate layouts based on
closeness factors. A similar approach, sometimes called the load-distance method, can be used to evaluate facility locations.
The objective is to select a layout (or facility location) that minimizes the total weighted distances. The distance between two
points is expressed by assigning the points to grid coordinates on a block diagram or map. An alternative approach is to use
time rather than distance. For a rough calculation, which is all that is needed for the weighted-distance method, either
a Euclidean or rectilinear distance measure may be used.

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2) Develop a block plan
(cont.)
(b) Applying the Weighted-Distance Method: For a rough calculation, which is all that is needed for the weighted-distance
method, either a Euclidean or rectilinear distance measure may be used.
(1) Euclidean distance is the straight-line distance, or shortest possible path, between two points. To calculate this
distance, we create a graph. The distance between two points, say, points A and B, is:

Where:

(2) Rectilinear distance measures the distance between two points with a series of 90-degree turns, as along city
blocks. The distance traveled in the x-direction is the absolute value of the difference between the x-coordinates.
Adding this result to the absolute value of the difference between the y-coordinates gives:

The layout designer seeks to minimize the weighted-distance (wd) score by locating centers that have high-closeness
ratings close together. To calculate a layout’s wd score, we use either of the distance measures and simply multiply the
proximity scores by the distances between centers. The sum of those products becomes the layout’s final wd score—the
lower the better. The location of a center (department) is defined by its x-coordinate and y-coordinate.

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EXAMPLE 3.1 - Calculating the Weighted-Distance
Score (pg.plan
The block 119-120)
in Figure 3.5 was developed using trial and error. A
good place to start was to fix Departments 1 and 5 in their current
locations. Then, the department pairs that had the largest closeness
factors were located. The rest of the layout fell into place rather easily.
How much better, in terms of the wd score, is the proposed block plan
shown in Figure 3.5 than the current plan shown in Figure 3.4? Use the
rectilinear distance measure.
The accompanying table lists each pair of departments Department Closeness Current Plan Current Plan Propose Plan Propose
that has a nonzero closeness factor in the closeness Pair factor (w) Distance (d) (wd) Distance (d) Plan (wd)
1,2 3 1 3 2 6
matrix. For the third column, calculate the rectilinear 1,3 6 1 6 3 18
1,4 5 3 15 1 5
distances between the departments in the current 1,5 6 2 12 2 12
1,6 10 2 20 1 10
layout. For example, departments 3 and 5 in the current 2,3 8 2 16 1 8
plan are in the upper-left corner and bottom-right 2,4
2,5
1
1
2
1
2
1
1
2
1
2
corner of the building, respectively. The distance 3,4 3 2 6 2 6
3,5 9 3 27 1 9
between the centers of these blocks is three units (two 4,5 2 1 2 1 2
horizontally and one vertically). For the fourth column, 5,6 1 2 2
112
3
>
3
82
we multiply the weights (closeness factors) by the
distances, and then add the results for a total wd score
of 112 for the current plan. Similar calculations for the The wd score for the proposed layout makes a sizeable drop
proposed plan produce a wd score of only 82. For from 112 to 82, but management is not sure the improvement
example, between departments 3 and 5 is just one unit outweighs the cost of relocating four of the six departments
of distance (one vertically and zero horizontally). (i.e., all departments but 1 and 5). 17
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3) Design a detailed layout
After finding a satisfactory block plan, the final step translates it into a detailed representation, showing the exact size
and shape of each center; the arrangement of elements (e.g., desks, machines, and storage areas); and the location of
aisles, stairways, and other service space. These visual representations can be two-dimensional drawings, three-
dimensional models, or computer-aided graphics. This step helps decision makers discuss the proposal and problems
that might otherwise be overlooked. Such visual representations can be particularly important when evaluating high
customer-contact processes.

Detailed design in cell layout Slack pages 209 – 211 Figure 7.15 shows how a functional
layout has been divided into 4-cells,
each of which has the resources to
process a ‘family’ of parts. OM takes
two interrelated decisions:
(1) the extent and nature of the cells
it has chosen to adopt;
(2) which resources to allocate to
which cells.

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Detailed design in product layout
The nature of the product layout design decision is a little different to the other layout types. Rather than ‘where to place
what’, product layout is concerned more with ‘what to place where’. Locations are frequently decided upon and then
work tasks are allocated to each location. For example, it may have been decided that four stations are needed to make
computer cases. The decision then is which of the tasks that go into making the cases should be allocated to each station.
The main product layout decisions are as follows:
 What cycle time is needed?
 How many stages are needed?
 How should the task-time variation be dealt with?
 How should the layout be balanced?

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The cycle time of product layouts
The cycle time (mentioned in Chapter 4) is the time between completed products, pieces of information or customers
emerging from the process. Cycle time is a vital factor in the design of product layouts and has a significant influence on
most of the other detailed design decisions. It is calculated by considering the likely demand for the products or services
over a period and the amount of production time available in that period.

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The number of stages
The next decision concerns the number of stages in the layout and depends on the cycle time required and the total
quantity of work involved in producing the product or service. This latter piece of information is called the total work
content. The larger the total work content and the smaller the required cycle time, the more stages will be necessary.

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Task-time variation
Imagine a line of four stages, each contributing a quarter of the total work content of processing the mortgage, and passing
the documentation on to the next stage every 15 minutes. In practice, of course, the flow would not be so regular. Each
station’s allocation of work might on average take 15 minutes, but almost certainly the time will vary each time a mortgage
application is processed. This is a general characteristic of all repetitive processing (and indeed of all work performed by
humans) and can be caused by such factors as differences between each product or service being processed along the line
(in the mortgage-processing example, the time some tasks require will vary depending on the personal circumstances of
the person applying for the loan), or slight variations in coordination and effort on the part of staff performing the task. This
variation can introduce irregularity into the flow along the line, which in turn can lead to both periodic queues at the stages
and lost processing time. It may even prove necessary to introduce more resources into the operation to compensate for
the loss of efficiency resulting from work-time variation.

Balancing work-time allocation

One of the most important design decisions in product layout is that of line balancing. In the mortgage-processing example
we have assumed that the 15 minutes of work content are allocated equally to the four stations. This is nearly always
impossible to achieve in practice and some imbalance in the work allocation results. Inevitably this will increase the effective
cycle time of the line. If it becomes greater than the required cycle time, it may be necessary to devote extra resources (add
another stage, for example) to compensate for the imbalance. The effectiveness of the line-balancing activity is measured by
balancing=loss. This is the time wasted through the unequal allocation of work as a percentage of the total time invested in
processing the product or service.

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Balancing techniques (From Slack book)
There are a number of techniques available to help in the line-balancing task. In practice, the most useful (and most used)
‘techniques’ are relatively simple such as the precedence diagram. This is a representation of the ordering of the elements
which comprise the total work content of the product or service. Each element is represented by a circle. The circles are
connected by arrows which signify the ordering of the elements. Two rules apply when constructing the diagram:

 the circles which represent the elements are drawn as far to the left as possible;
 none of the arrows which show the precedence of the elements should be vertical.

The precedence diagram, either using circles and arrows or transposed into tabular form, is the most common starting point
for most balancing techniques.

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 This general approach is to allocate elements from the
precedence diagram to the first stage, starting from the left,
in order of the columns until the work allocated to the stage
is as close to, but less than, the cycle time. When that stage
is as full of work as is possible without exceeding the cycle
time, move on to the next stage, and so on until all the work
elements are allocated. The key issue is how to select an
element to be allocated to a stage when more than one
element could be chosen. Two heuristic rules (tự tìm tòi)
have been found to be particularly useful in deciding this:

 Simply choose the largest that will ‘fit’ into the time
remaining at the stage.
 Choose the element with the most ‘followers’: that is the
highest number of elements which can only be allocated
when that element has been allocated.

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Karlstad Kakes (KK) is a manufacturer of specialty
cakes, which has recently obtained a contract to
supply a major supermarket chain with a specialty
cake in the shape of a space rocket. It has been
decided that the volumes required by the
supermarket warrant a special production line to
perform the finishing, decorating and packing of the
cake. This line would have to carry out the elements
shown in Figure 7.18, which also shows the
precedence diagram for the total job. The initial
order from the supermarket is for 5,000 cakes a
week and the number of hours worked by the
factory is 40 per week. From this:

or 4.0 stages 26
 Working from the left on the precedence
diagram, elements a and b can be allocated
to stage 1. Allocating element c to stage 1
would exceed the cycle time. In fact, only
element c can be allocated to stage 2
because including element d would again
exceed the cycle time. Element d can be
allocated to stage 3. Either element e or
element f can also be allocated to stage 3,
but not both or the cycle time would be
exceeded. Following the ‘largest element’
heuristic rule, element e is chosen. The
remaining elements then are allocated to
stage 4. Figure 7.19 shows the final
allocation and the balancing loss of the line.

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 Arranging the stages
All the stages necessary to fulfil the
requirements of the layout may not be
arranged in a sequential ‘single line’.
Return to the mortgage-processing
example, which requires four stages
working on the task to maintain a cycle
time of one processed application
every 15 minutes. The conventional
arrangement of the four stages would
be to lay them out in one line, each
stage having 15 minutes’ worth of
work. However, nominally, the same
output rate could also be achieved by
arranging the four stages as two shorter
lines, each of two stages with 30
minutes’ worth of work each.
Alternatively, following this logic to its
ultimate conclusion, the stages could
be arranged as four parallel stages,
each responsible for the whole work
content. Figure 7.20 shows these
options. 28
The advantages of the long thin arrangement
 Controlled flow of materials or customers – which is
easy to manage.
 Simple materials handling – if a product being
manufactured is heavy, large or difficult to move.
 Lower capital requirements. If a specialist piece of
equipment is needed for one element in the job, only
one piece of equipment would need to be purchased;
on short fat arrangements every stage would need
one.
 More efficient operation. If each stage is performing
only a small part of the total job, the person at the
stage will have a higher proportion of direct productive
work as opposed to the non-productive parts of the
job, such as picking up tools and materials.
discussed in Chapter 9 – Job design
The advantages of the short fat arrangement
 Higher mix flexibility. If the layout needs to process several
types of product or service, each stage or line could
specialize in different types.
 Higher volume flexibility. As volume varies, stages can
simply be closed down or started up as required; long thin
arrangements would need rebalancing each time the cycle
time changed.
 Higher robustness. If one stage breaks down or ceases
operation in some way, the other parallel stages are
unaffected; a long thin arrangement would cease operating
completely.
 Less monotonous work. In the mortgage example, the staff
in the short fat arrangement are repeating their tasks only
every hour; in the long thin arrangement it is every 15
minutes.
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 SUMMARY ANSWERS TO KEY QUESTIONS

1) What is layout?
 The ‘layout’ of an operation or process is how its transforming resources are positioned relative to each other and
how its various tasks are allocated to these transforming resources.
 These two decisions will dictate the pattern of fl ow for transformed resources as they progress through the
operation or process.

2) What are the basic layout types used in operations?

 There are four basic layout types – fixed-position layout, functional layout, cell layout and product (line) layout.

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 SUMMARY ANSWERS TO KEY QUESTIONS (cont.)

3) What type of layout should an operation choose?

 Partly this is influenced by the nature of the process type, which in turn depends on the volume–variety characteristics
of the operation. Partly also the decision will depend on the objectives of the operation. Cost and flexibility are
particularly affected by the layout decision.
 The fixed and variable costs implied by each layout differ such that, in theory, one particular layout will have the
minimum costs for a particular volume level. However, in practice, uncertainty over the real costs involved in layout
make it difficult to be precise on which is the minimum-cost layout.
 In addition to the conventional operations objectives which will be influenced by the feel and general impression of the
layout design, this is often called the ‘service-scape’ of the operation.

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 SUMMARY ANSWERS TO KEY QUESTIONS (cont.)
4) How should each basic layout type be designed in detail?
 In fixed-position layout the materials or people being transformed do not move but the transforming resources move
around them. Techniques are rarely used in this type of layout.
 The fixed and variable costs implied by each layout differ such that, in theory, one particular layout will have the
minimum costs for a particular volume level. However, in practice, uncertainty over the real costs involved in layout
make it difficult to be precise on which is the minimum-cost layout, but some, such as resource location analysis, bring a
systematic approach to minimizing the costs and inconvenience of flow at a fixed-position location.
 In functional layout all similar transforming resources are grouped together in the operation. The detailed design task is
usually (although not always) to minimize the distance travelled by the transformed resources through the operation.
Either manual or computer-based methods can be used to devise the detailed design.
 In cell layout the resources needed for a particular class of product or service are grouped together in some way. The
detailed design task is to group the products or customer types such that convenient cells can be designed around their
needs. Techniques such as production flow analysis can be used to allocate products or services to cells.
 In product (line) layout, the transforming resources are located in sequence specifically for the convenience of products
or product types. The detailed design of product layouts includes a number of decisions, such as the cycle time to which
the design must conform, the number of stages in the operation, the way tasks are allocated to the stages in the line,
and the arrangement of the stages in the line. The cycle time of each part of the design, together with the number of
stages, is a function of where the design lies on the ‘long thin’ to ‘short fat’ spectrum of arrangements. This position
affects costs, flexibility, robustness and staff attitude to work. The allocation of tasks to stages is called line balancing,
which can be performed either manually or through computer-based algorithms 32