Operations

Management
Layout Strategies
 Learning Objectives
When you complete this topic you
should be able to:

1. Discuss important issues in office layout

2. Define the objectives of retail layout
3. Discuss modern warehouse management
and terms such as ASRS, cross-docking,
and random stocking
4. Identify when fixed-position layouts are
appropriate
 Learning Objectives
When you complete this topic, you
should be able to:

5. Explain how to achieve a good process-

oriented facility layout
6. Define work cell and the requirements of
a work cell
7. Define product-oriented layout
8. Explain how to balance production flow
in a repetitive or product-oriented facility
 Innovations at McDonald’s
 Indoor seating (1950s)
 Drive-through window (1970s)
Six out of the
 Adding breakfast to the menu
seven are
(1980s)
layout
 Adding play areas (late 1980s)
decisions!
 Redesign of the kitchens (1990s)
 Self-service kiosk (2004)
 Now three separate dining sections
 McDonald’s New Layout
 Seventh major innovation
 Redesigning all 30,000 outlets around
the world
 Three 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
 Facility layout is a source of
competitive advantage
Strategic Importance of
Layout Decisions

The objective of layout strategy

is to develop a cost-effective
layout that will meet a firm’s
competitive needs
 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
 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
 Good Layouts Consider

1. Material handling equipment

2. Capacity and space requirements
3. Environment and aesthetics
4. Flows of information
5. Cost of moving between various
work areas
 Office Layout
 Grouping of workers, their equipment,
and spaces to provide comfort,
safety, and movement of information
 Movement of
information is main
distinction
 Typically in state of
flux due to frequent
technological
changes
Relationship Chart
Supermarket Retail Layout

 Objective is to maximize
profitability per square foot of
floor space
 Sales and profitability vary
directly with customer exposure
 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
Store Layout
 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
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
 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
 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,
bar code or RFID
identification used for
advanced shipment
notification as materials
are unloaded
Example - Walmart
 Random Stocking
 Typically requires automatic identification
systems (AISs) and effective information
systems
 Random assignment of stocking locations
allows more efficient use of space
 Key tasks
1. Maintain list of open locations
2. Maintain accurate records
3. Sequence items to minimize travel, pick time
4. Combine picking orders
5. Assign classes of items to particular areas
 Customizing
 Value-added activities performed at
the warehouse
 Enable low cost and rapid response
strategies
 Assembly of components
 Loading software
 Repairs
 Customized labeling and packaging
 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
 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
Process-Oriented Layout

Patient A - broken leg

ER
triage Emergency room admissions
room
Patient B - erratic heart
Surgery pacemaker

Laboratories

Radiology ER Beds Pharmacy Billing/exit

 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
Process-Oriented Layout
n n

Minimize cost = ∑ ∑ Xij Cij

i=1 j=1

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
 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
 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)

Estimate cost of moving one load between adjacent

departments to be $1 and non-adjacent departments $2
Diagonal treated as adjacent
Process Layout Example
Area 1 Area 2 Area 3

Assembly Painting Machine Shop

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

40’

Receiving Shipping Testing

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

Area 4 Area 5 Area 6

60’
 Process Layout Example
Interdepartmental Flow Graph
100

50 30
1 2 3
20 20
10
50 100

4 5 6
50
Process Layout Example
n n

Cost = ∑ ∑ Xij Cij

i=1 j=1

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
 Process Layout Example
Revised Interdepartmental Flow Graph
30

50 100
2 1 3

10
50 20 50 100

50
4 5 6
Process Layout Example
n n

Cost = ∑ ∑ Xij Cij

i=1 j=1

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
Process Layout Example
Area 1 Area 2 Area 3

Painting Assembly Machine Shop

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

40’

Receiving Shipping Testing

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

Area 4 Area 5 Area 6

60’
 To do
• 9.1, 9.2, 9.3, 9.4
 Work Cells
 Reorganizes people and machines
into groups to focus on single
products or product groups
 Group technology identifies
products that have similar
characteristics for particular cells
 Volume must justify cells
 Cells can be reconfigured as
designs or volume changes
 Part Families

A family of A family of related

similar parts grocery items
Group Technology Scheme
(b) Grouped Cylindrical Parts (families of parts)
(a) Ungrouped Parts
Grooved Slotted Threaded Drilled Machined

Figure 5.10
Original Process Layout
Assembly

4 6 7 9

5 8

2 10 12

1 3 11

A B C Raw materials
Revised Cellular Layout
Assembly

8 10 9 12

11
4 Cell 1 Cell 2 6 Cell 3
7

2 1 3 5

A B C
Raw materials
Improving Layouts Using
Work Cells

Current layout - workers in

small closed areas.
Cannot increase output
without a third worker and
third set of equipment. Improved layout - cross-trained
workers can assist each other.
May be able to add a third worker
as additional output is needed.
Improving Layouts Using
Work Cells

Current layout - straight

lines make it hard to balance Improved layout - in U
tasks because work may not shape, workers have better
be divided evenly access. 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
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
 Staffing and Balancing
Work Cells
• Efficient production in work cells
requires appropriate staffing!!!!
 Staffing and Balancing
Work Cells
Determine the takt time = frequency of
production units
Total work time available
Takt time =
Units required

Determine the number

of operators required

Total operation time required

Workers required =
Takt time
Staffing Work Cells Example
• Kurtz’s International Inc.company in
WHK makes mirrors for cars.
Customers expects 600 mirrors/day
and work cell producing the mirrors
is scheduled for 8hrs. What’s the takt
time and number of workers
required?
Staffing Work Cells Example
600 Mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance chart 60
total operation time
50
= 140 seconds

Standard time required

40

30

20
Determine takt time
& 10
Workers required
0 Assemble Paint Test Label Pack for
shipment
Operations
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
If testing increases to 20 what happens
= 140 seconds
to staffing requirement??
Takt time = (8 hrs x 60 mins) / 600 units
= .8 mins = 48 seconds

Total operation time required

Workers required =
Takt time
= 140 / 48 = 2.91
 Assembly-Line Balancing
 Objective is to minimize the imbalance
between machines or personnel while
meeting required output
McDonald’s Assembly Line
 Line Balancing Process
1. Draw and label a precedence diagram.
2. Calculate the desired cycle time required for the
line.
3. Calculate the theoretical
minimum number of workstations.
4. Group elements into workstations,
recognizing cycle time and
precedence constraints.
5. Calculate the efficiency of the line.
6. Stop if theoretical minimum number of
workstations on an acceptable efficiency level
reached. If not, go back to step 4.
 Line Balancing
 Precedence diagram
 Network showing order
of tasks and restrictions
on their performance
 Cycle time
 Maximum time product
spends at any one
workstation
 Flow Time vs Cycle Time
 Cycle time = max time spent at any
station
 Flow time = time to complete all
stations
 Minimum number of workstations, N
= flow time/cycle time = ∑ Time for task i
Cycle time
 Flow Time vs Cycle Time
 Cycle time = max time spent at any
station
 Flow time = time to complete all
stations

1 2 3
4 minutes 4 minutes 4 minutes

Flow time = 4 + 4 + 4 = 12 minutes

Cycle time = max (4, 4, 4) = 4 minutes
 Line Balancing
 Precedence diagram
Cycle time example
 Network showing
Cycle time order
= production time available
desired units of output
of tasks and restrictions
on their performance
= (8hrsx60 minutes/hr)/120units
 Cycle time
= 480/120 = 4 minutes
 Maximum time product
spends at any one
workstation
Suppose a company wants to produce 120 units
in an 8hr day!!!!
 Line Balancing
WORK ELEMENT PRECEDENCE TIME (MIN)
A Press out sheet of fruit — 0.1
B Cut into strips A 0.2
C Outline fun shapes A 0.4
D Roll up and package B, C 0.3

Real Fruit need to produce 6000 fruit strips

every 40-hour week – Design an assembly line with the
fewest number of workstations without violating
precedence constraints and to achieve the production quota
 Line Balancing
WORK ELEMENT PRECEDENCE TIME (MIN)
A Press out sheet of fruit — 0.1
B Cut into strips A 0.2
C Outline fun shapes A 0.4
D Roll up and package B, C 0.3

0.2
B

0.1 A D 0.3

C
0.4
 Line Balancing
WORK ELEMENT PRECEDENCE TIME (MIN)
A Press out sheet of fruit — 0.1
B Cut into strips A 0.2
C Outline fun shapes A 0.4
D Roll up and package B, C 0.3

0.2
B
40 hours x 60 minutes / hour 2400
Cd= = = 0.4 minute
6,000 units 6000
0.1 A D 0.3
0.1 + 0.2 + 0.3 + 0.4 1.0
N= = = 2.5 workstations
0.4
C 0.4
Example 5.2 0.4
 Line Balancing
WORK ELEMENT PRECEDENCE TIME (MIN)
A Press out sheet of fruit — 0.1
B Cut into strips A 0.2
C Outline fun shapes A 0.4
D Roll up and package B, C 0.3

0.2
B
40 hours x 60 minutes / hour 2400
Cd = = = 0.4 minute
6,000 units 6000
0.1 A D 0.3
0.1 + 0.2 + 0.3 + 0.4 1.0
N= = = 2.5 workstations
0.4
C 0.4 3
Example 5.2 0.4 workstations
 Line Balancing
WORK ELEMENT PRECEDENCE TIME (MIN)
A Press out sheet of fruit — 0.1
B Cut into strips A 0.2
C Outline fun shapes A 0.4
D Roll up and package B, C 0.3

Cd = 0.4
0.2
B N = 2.5

0.1 A D 0.3

C
0.4
Line Balancing

Cd = 0.4
0.2
B N = 2.5

0.1 A D 0.3

C
0.4
Line Balancing

Cd = 0.4
0.2
B N = 2.5

0.1 A D 0.3

C
0.4
Line Balancing

Cd = 0.4
0.2
B N = 2.5

0.1 A D 0.3

C
0.4
Line Balancing

Cd = 0.4
0.2
B N = 2.5

0.1 A D 0.3

C
0.4
Line Balancing

Cd = 0.4
0.2
B N = 2.5

0.1 A D 0.3

C
0.4
Line Balancing
Work Work Work
station 1 station 2 station 3

A, B C D
0.3 0.4 0.3
minute minute minute

Cd = 0.4
0.2
B N = 2.5

0.1 A D 0.3

C
0.4
 Wing Component Example
Performance Task Must Follow
Time Task Listed
Task (minutes) Below
A 10 —
B 11 A This means that
C 5 B tasks B and E
cannot be done
D 4 B until task A has
E 12 A been completed
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 66
 Wing Component Example
Performance Task Must Follow
Time Task Listed
Task (minutes) Below
A 10 —
B 11 A
C 5 B
D 4 B
E 12 A
F 3 C, D 5

G 7 F 10 11
C
3 7
H 11 E
A B F G
I 3 G, H 4
3
Total time 66 12
D
11 I
E H
 Wing Component Example
Performance Task Must Follow 480 available
Time Task Listed mins per day
Task (minutes) Below 40 units required
A 10 —
B 11 A Production time
C 5 B available per day
D 4 CycleB time = Units required per day
E 12 A = 480 / 40
F 3 C, D 5
= 12 minutes per unit
G 7 F 10 11
C
3 7
H 11 E n
Minimum A ∑ TimeB for taskFi G
I 3 G, H 4
number of = i = 1 3
Total time 66 workstations Cycle Dtime
12 11 I
= 66 / 12
E H
= 5.5 or 6 stations
Figure 9.13
 Wing Component Example
Performance Task Must Follow 480 available
Time Task Listed mins per day
Task (minutes) Below 40 units required
A 10 — Cycle time = 12 mins
B 11 A Minimum
Station
workstations = 5.5 or 6
5
C 52 B
D 4 C B
E 10 11
12 A 3 7
F A B3 C, D F G
4 3
G 7 F
H 11 D E Station 3 I
I 3 12 G, H 11
Station 6
Total
Stationtime 66
1 E H
Station Station
4 5
 Wing Component Example
Performance Task Must Follow 480 available
Time Task Listed mins per day
Task (minutes) Below 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
∑ Task times
G 7 F
Efficiency = (Actual number of workstations) x (Largest assigned cycle time)
H 11 E
I 3 G, H
= 66 minutes / (6 stations) x (12 minutes)
Total time 66
= 91.7%
 To do
• 9.11, 9.12, 9.13
• 9.12f, 9.13c, 9.14f