Chapter: Layout Strategy

Course: OPERATIONS MANAGEMENT

Lecture 15 & 16

Week: 8th (31st November)

Dr. Waqas Ahmed

Department of Operations and Supply Chain
NUST Business School (NBS)
National University of Sciences & Technology, Islamabad, Pakistan
 »Dr. Waqas Ahmed

Innovations at McDonald’s

► Indoor seating (1950s)

► Drive-through window (1970s)
► Adding breakfast to the menu (1980s)
► Adding play areas (late 1980s)
► Redesign of the kitchens (1990s)
► Self-service kiosk (2004)
► Now three separate dining sections
© Dr. Waqas Ahmed 2
 »Dr. Waqas Ahmed

Innovations at McDonald’s

► Indoor seating (1950s)

► Drive-through windowSix(1970s)
out of the
► Adding breakfast to the seven are
menu (1980s)
layout
► Adding play areas (late decisions!
1980s)
► Redesign of the kitchens (1990s)
► Self-service kiosk (2004)
► Now three separate dining sections
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 »Dr. Waqas Ahmed

McDonald’s New Layout

eventh major innovation

edesigning all 30,000 outlets around the world

hree separate dining areas

⌂ Linger zone with comfortable chairs and Wi-Fi connections
⌂ Grab and go zone with tall counters
⌂ Flexible zone for kids and families © Dr. Waqas Ahmed 4
Strategic Importance of Layout Decisions
»Dr. Waqas Ahmed

The objective of layout strategy is to

develop an effective and efficient layout that
will meet the firm’s competitive
requirements

© Dr. Waqas Ahmed 5

 Layout Design Considerations »Dr. Waqas Ahmed

► 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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 »Dr. Waqas Ahmed

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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 »Dr. Waqas Ahmed

Layout Strategies
TYPE CHARACTERISTICS OBJECTIVES EXAMPLES

Office Position of workers, their Locate workers requiring Software house

equipment, and frequent contact close to Telenor Office
spaces/offices to provide one another
for movement of
information

Retail Allocates shelf space and Expose customer to high- Al-Fatah

responds to customer margin items Hyperstar
behavior Punjab Cash &
Carry

Warehouse Addresses trade-offs Balance low-cost storage Metro Warehouse

(storage) between space and with low-cost material Distribution center
material handling handling

Project Addresses the layout Move material to the Centaurus Mall

(fixed position) requirements of large, limited storage areas Airport
bulky projects such as around the site
ships and buildings

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 »Dr. Waqas Ahmed

Layout Strategies
TYPE CHARACTERISTICS OBJECTIVES EXAMPLES

Process oriented Deals with low-volume, Manage varied material Hospital

high-variety production flow for each product Printing
(also called job shop or
irregular production)

Work Cell (product Arranges machinery and Identify a product Wheeled Coach
families) equipment to focus on family, build teams, Ambulances
production of a single cross train team
product or group of related members
products

Repetitive/ Seeks the best personnel Equalize the task time Sony’s TV
Continuous and machine utilizations in at each workstation assembly line
(product oriented) repetitive or continuous
production Toyota

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 »Dr. Waqas Ahmed

Good Layouts Consider

► Material handling equipment

► Capacity and space requirements
► Environment and aesthetics
► Flows of information
► Cost of moving between various work areas

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 »Dr. Waqas Ahmed

Office Layout

► Grouping of workers, their equipment, and spaces to

provide comfort, safety, and movement of information
► Movement of information is main division

► Typically in state of flux due to

frequent technological changes

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 »Dr. Waqas Ahmed

Supermarket Retail Layout

bjective is to maximize profitability per square foot of

floor space

ales and profitability vary directly with customer

exposure

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 »Dr. Waqas Ahmed

Five Helpful Ideas for Supermarket Layout

1. Locate high-draw items (Dairy, Bakery etc) around the outlying 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 .

https://www.youtube.com/watch?v=RjgkQ6bq7aE
© Dr. Waqas Ahmed 13
 »Dr. Waqas Ahmed

Warehousing and Storage Layouts

bjective is to optimize trade-offs between handling

costs and costs associated with warehouse space

aximize the total “cube” of the warehouse – utilize its

full volume while maintaining low material handling
costs © Dr. Waqas Ahmed 14
 »Dr. Waqas Ahmed

Cross-Docking

aterials are moved directly from receiving to shipping and are not
placed in storage in the warehouse

equires tight scheduling and accurate shipments, bar code or RFID

identification used for advanced shipment notification as materials are
unloaded

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 »Dr. Waqas Ahmed

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 »Dr. Waqas Ahmed

Fixed-Position Layout

roduct remains in one place

orkers and equipment come to site

omplicating factors
⌂ Limited space at site
⌂ Different materials required at different
stages of the project
⌂ Volume of materials needed is changes

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 »Dr. Waqas Ahmed

Work Cells

eorganizes people and machines into groups to focus on single products or product
groups

roup technology identifies products that have similar characteristics for particular cells

olume must justify cells

Advantage
s

educed work-in-process inventory

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ess floor space required
 »Dr. Waqas Ahmed

Improving Layouts Using Work Cells

Material

Current layout - workers in

small closed areas.

Improved layout - cross-trained

workers can assist each other. May
be able to add a third worker as
additional output is needed.

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Improving Layouts Using Work Cells
»Dr. Waqas Ahmed

Current layout - straight lines

make it hard to balance tasks Improved layout - in U shape,
because work may not be workers have better access.
divided evenly Four cross-trained workers
were reduced.

U-shaped line may reduce employee movement

and space requirements while enhancing
communication, reducing the number of workers,
and facilitating inspection

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 »Dr. Waqas Ahmed

Staffing and Balancing Work Cells

Takt time is the rate at which you must complete production in order to meet customer demand.
Takt Time = Net Production Time/Customer Demand.

Cycle time is the time it takes to complete the production of one unit from start to finish
Cycle Time = Net Production Time/Number of Units made.

Lead Time is the time it takes for one unit to make its way through your operation from front to end
Lead Time (manufacturing) = Pre-processing time + Processing time + Post-processing time.

Determine the Takt time =

Total work time available
takt time Units required

Determine the number Total operation time required

of operators required Workers required = Takt time

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 »Dr. Waqas Ahmed

Staffing Work Cells Example

600 Mirrors per day required

Mirror production scheduled for 8 hours per day
60

From a work balance chart total operation 50

Standard time required

time = 140 seconds
40

30

20

10

0 Assemble Paint Test Label Pack for

shipment
Operations

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 »Dr. Waqas Ahmed

Staffing Work Cells Example

600 Mirrors per day required

Mirror production scheduled for 8 hours per day
From a work balance chart total operation time = 140 seconds

Takt time = (8 hrs x 60 mins) / 600 units

= .8 min = 48 seconds
Total operation time required
Workers required =
Takt time
= 140 / 48 = 2.92
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 »Dr. Waqas Ahmed

Repetitive and Product-Oriented Layout

Organized around products or families of similar high-
volume, low-variety products
1. Volume is adequate for high equipment utilization
2. Product demand is stable enough to justify high investment in specialized
equipment
3. Product is standardized or approaching a phase of life cycle that justifies
investment
4. Supplies of raw materials and components are sufficient and of uniform quality

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 »Dr. Waqas Ahmed

Product-Oriented Layouts
► Fabrication line
► Builds components on a series of machines
► Automobile tires or metal parts for a refrigerator, 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 Both types of lines
must be balanced
► Balanced by moving tasks so that the time to
perform the work at
each station is the
same
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 »Dr. Waqas Ahmed

Product-Oriented Layouts
Advantages
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
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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 »Dr. Waqas Ahmed

McDonald’s Assembly Line

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 »Dr. Waqas Ahmed

Assembly-Line Balancing

bjective is to minimize the imbalance between machines or personnel while

meeting required output

tarts with the precedence relationships

⌂ Determine cycle time (The maximum time that a product is allowed at each workstation)
⌂ Calculate theoretical minimum number of workstations
⌂ Balance the line by assigning specific tasks to workstations

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 »Dr. Waqas Ahmed

Wing Component Example

Precedence Data for Wing Component
ASSEMBLY TIME TASK MUST FOLLOW
TASK (MINUTES) TASK LISTED BELOW
A 10 – This means that
B 11 A tasks B and E
cannot be done
C 5 B until task A has
D 4 B
been completed

E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65

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 »Dr. Waqas Ahmed

Wing Component Example

Precedence Data for Wing
Component 480 available mins
TASK MUST
per day
ASSEMBLY TIME FOLLOW TASK 40 units required
TASK (MINUTES) LISTED BELOW
A 10 –
B 11 A
Production time available per day
C 5 Cycle
B time =
Units required per day
D 4 B
= 480 / 40
E 11 A 5
F 3 C, D = 12 minutes per unit
C
G 7 F 10 11 3 7

H 11 Minimum
E number
A B F G
4
I 3 ofG,workstations
H = 3
D I
Total time 65 11 11
= 65E / 12 H
=5.42, or 6 stations
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 »Dr. Waqas Ahmed

Wing Component Example

Layout Heuristics That May Be Used to Assign Tasks to
Workstations in Assembly-Line Balancing
1. Longest task time From the available tasks, choose the task with the
largest (longest) task time
2. Most following tasks From the available tasks, choose the task with the
largest number of following tasks

3. Ranked positional weight From the available tasks, choose the task for which
the sum of following task times is the longest

4. Shortest task time From the available tasks, choose the task with the
shortest task time
5. Least number of following From the available tasks, choose the task with the
tasks least number of subsequent tasks

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 »Dr. Waqas Ahmed

Wing Component Example

5
C
10 11 3 7
A B F G
4 3
D I
11 11
E H

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Line Balancing »Dr. Waqas Ahmed

Station Task Task Time Time Left Task ready

(A)

1 A 10 2 B, E

2 B 11 1 C,D, E

3 E 11 1 H,C,D

4 H 11 1 C,D

C 5 7 D
5 D 4 3 F
F 3 0 G
G 7 5 I
6
I 3 2

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 »Dr. Waqas Ahmed

Wing Component Example

480 available mins
per day
40 units required
Cycle time = 12 mins
Minimum
Station 5 workstations = 5.42 or 6
2
C
10 11 3 7
A B F G
4 3
D Station 3
Station 5 I
11 11
Station 6
Station Station 6
1 E H
Station Station
3 4
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 »Dr. Waqas Ahmed

Wing Component Example

Precedence Data for Wing 480 available mins
Component per day
TASK MUST
ASSEMBLY TIME FOLLOW TASK
40 units required
TASK (MINUTES) LISTED BELOW Takt time = 12 mins
A 10 –
Minimum
B 11 A
workstations = 5.42 or 6
C 5 B
D 4 B
E 11 A 5
F 3 C, D
∑ Task times C
Efficiency
G = 7 F 10 11 3 7

H
(Actual11number of workstations)
E A x (Largest
B assigned
F cycle
G time)
4
3
I = 65 minutes
3 / ((6 stations)
G, H x (12 minutes))
D I
Total time 65 11 11
= 90.3%
E H

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 »Dr. Waqas Ahmed

Wing Component Example

Idle time = (Actual number of workstations x Largest assigned cycle time) -∑ Task times

= (6 stations x 12 minutes) - 65
= 7 minutes

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 »Dr. Waqas Ahmed

Wing Component Example

Station 5
2
C
10 11 3 7
A B F G
4 3
Station 3 Station 6
D I
Station 5
11 11 Station 7
Station
1 E H
Station Station
3 4

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Wing Component Example
»Dr. Waqas Ahmed

∑ Task times
Efficiency =
(Actual number of workstations) x (Largest assigned cycle time)
= 65 minutes / ((7 stations) x (12 minutes))
=77.4%

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 »Dr. Waqas Ahmed

Wing Component Example

Station 5
2
C
10 11 3 7
A B F G
4 6
Station 3 Station 6
D I
Station 5
11 11 Station 7
Station
1 E H
Station Station
3 4

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 »Dr. Waqas Ahmed

Wing Component Example

∑ Task times
Efficiency =
(Actual number of workstations) x (Largest assigned cycle time)
= 68 minutes / ((7 stations) x (12 minutes))
=80.94%

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 »Dr. Waqas Ahmed

Wing Component Example

∑ Task times
Theoretical Efficiency =
(calculated number of workstations) x (Largest assigned cycle
time)
= 68 minutes / ((6 stations) x (12 minutes))
=94.4%

∑ Task times
Operational Efficiency =
(Actual number of workstations) x (Largest assigned cycle time)
= 68 minutes / ((7 stations) x (12 minutes))
=80.94%

© Dr. Waqas Ahmed 41

 »Dr. Waqas Ahmed

Process-Oriented Layout

ike machines and equipment are grouped together

lexible and capable of handling a wide variety of products or

services

cheduling can be difficult and setup, material handling, and

labor costs can be high

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 »Dr. Waqas Ahmed

Surgery ER triage room Emergency room admissions

Patient A - broken leg

Patient B - erratic heart

pacemaker

Laboratories

Radiology ER Beds Pharmacy Billing/exit

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 »Dr. Waqas Ahmed

Process-Oriented Layout

rrange work centers so as to minimize the costs of

material handling

asic cost elements are

⌂ Number of loads (or people) moving between centers
⌂ Distance loads (or people) move between centers
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 »Dr. Waqas Ahmed
Reading Assignment
Page 417 to 420

Heizer, Jay H._ Munson, Chuck_ Render, Barry - Principles of operations

management sustainability and supply chain management (2017, Pearson
Education Limited)
Example of Process-Oriented Layout

Thank you! Any Questions

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 »Dr. Waqas Ahmed

Process-Oriented Layout

where 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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 »Dr. Waqas Ahmed

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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 »Dr. Waqas Ahmed

Process Layout Example

Number of loads per week

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

Assembly (1) 50 100 0 0 20

Painting (2) 30 50 10 0

Machine Shop (3) 20 0 100

Receiving (4) 50 0

Shipping (5) 0

Testing (6)

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 »Dr. Waqas Ahmed

Process Layout Example

Figure 9.5 Area A Area B Area C

Assembly Painting Machine Shop

Department Department Department
(1) (2) (3)

40’

Receiving Shipping Testing

Department Department Department
(4) (5) (6)

Area D Area E Area F

60’
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 »Dr. Waqas Ahmed

Process Layout Example

Interdepartmental Flow Graph

100

Assembly 50 Painting 30 Machine

(1) (2) Shop (3)
20 20
10
50 100

Receiving Shipping Testing

(4) (5) (6)
50

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 »Dr. Waqas Ahmed

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

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 »Dr. Waqas Ahmed

Process Layout Example

Revised Interdepartmental Flow Graph

30

Painting 50 Assembly 100 Machine

(2) (1) Shop (3)

10
20 20 100
50

Receiving Shipping Testing

(4) (5) (6)
50

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 »Dr. Waqas Ahmed

Process Layout Example

Area A Area B Area C

Painting Assembly Machine Shop

Department Department Department
(2) (1) (3)

40’

Receiving Shipping Testing

Department Department Department
(4) (5) (6)

Area D Area E Area F

60’
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 »Dr. Waqas Ahmed

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

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