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PROCESS SELECTION AND FACILITY LAYOUT Chapter 6 MIS 373: Basic Operations Management.

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Presentation on theme: "PROCESS SELECTION AND FACILITY LAYOUT Chapter 6 MIS 373: Basic Operations Management."— Presentation transcript:

1 PROCESS SELECTION AND FACILITY LAYOUT Chapter 6 MIS 373: Basic Operations Management

2 LEARNING OBJECTIVES After this lecture, students will be able to 1.Compare the four basic processing types 2.Describe product layouts and their main advantages and disadvantages 3.Describe process layouts and their main advantages and disadvantages 4.Develop simple product layouts 5.Develop simple process layouts MIS 373: Basic Operations Management2

3 PROCESS SELECTION Process selection Deciding on the way production of goods or services will be organized Occurs when: Planning of new products or services Technological changes in product or equipment Competitive pressure MIS 373: Basic Operations Management3

4 PROCESS SELECTION AND SYSTEM DESIGN MIS 373: Basic Operations Management4

5 PROCESS STRATEGY Key aspects of process strategy: Capital Intensity The mix of equipment and labor that will be used by the organization Process flexibility The degree to which the system can be adjusted to changes in processing requirements due to such factors as Product and service design changes Volume changes Changes in technology MIS 373: Basic Operations Management5

6 NEW PROCESS STRATEGY HBR 12/6/12 Three Examples of New Process StrategyThree Examples of New Process Strategy There are three fundamental ways that companies can improve their processes in the coming decade: 1.expand the scope of work managed by a company to include customers, suppliers, and partners; Shift to global, virtual, cross-organizational teams of specialized entities that are knitted together to serve customers To keep such a multiparty system from degenerating into chaos, virtual process teams must have aligned goals and support systems. 2.target the increasing amount of knowledge work; and Big data analytics Crowdsourcing, e.g., innocentive.com, TopCoder.com & Heritage Health Prizeinnocentive.comTopCoder.comHeritage Health Prize HBR : Using the Crowd as an Innovation PartnerUsing the Crowd as an Innovation Partner 3.reduce cycle times to durations previously considered impossible Agile processes Managers must speed the flow of information so that decisions can be made faster at all levels, from top to bottom.

7 PROCESS SELECTION Process choice is demand driven: 1.Variety: How much? 2.Equipment flexibility: To what degree? 3.Volume: Expected output? Process Types MIS 373: Basic Operations Management7

8 PROCESS SELECTION Process choice is demand driven: 1.Variety How much? 2.Equipment flexibility To what degree? 3.Volume Expected output? Process Types Job shop Small scale e.g., doctor, tailor Batch Moderate volume e.g., bakery Repetitive/assembly line High volumes of standardized goods or services e.g., automobiles Continuous Very high volumes of non- discrete goods e.g., petroleum products MIS 373: Basic Operations Management8

9 TYPES OF PROCESSING MIS 373: Basic Operations Management Job ShopBatch Repetitive/ AssemblyContinuous DescriptionCustomized goods or services Semi- standardized goods or services Standardized goods or services Highly standardized goods or services AdvantagesAble to handle a wide variety of work Flexibility; easy to add or change products or services Low unit cost, high volume, efficient Very efficient, very high volume DisadvantagesSlow, high cost per unit, complex planning and scheduling Moderate cost per unit, moderate scheduling complexity Low flexibility, high cost of downtime Very rigid, lack of variety, costly to change, very high cost of downtime 9

10 PRODUCT-PROCESS MATRIX The diagonal represents the “ideal” match Hybrid process are possible (e.g., job-shop & batch) Process choice may change as products goes through its life-cycles MIS 373: Basic Operations Management Volume Flexibility/Variety Out of pocket costs Opportunity costs 10

11 PROCESS CHOICE EFFECTS Project: used for work that is none routine with a unique set of objective to be accomplished in a limited time frame, e.g., launching a new product, publishing a book MIS 373: Basic Operations Management Activity/ FunctionProjectsJob ShopBatchRepetitiveContinuous Cost estimationSimple to complexDifficultSomewhat routineRoutine Cost per unitVery highHighModerateLow Equipment usedVariedGeneral purpose Special purpose Fixed costsVariedLowModerateHighVery high Variable costsHigh ModerateLowVery low Labor skillsLow to highHighModerateLowLow to high MarketingPromote capabilities Promote capabilities Promote capabilities; semi- standardized goods and services Promote standardized goods and services Promote standardized goods and services SchedulingComplex, subject to change ComplexModerately complexRoutine 11

12 PRODUCT AND SERVICE PROFILING Product or service profiling Linking key product or service requirements to process capabilities Key dimensions relate to o Range of products or services that can be processed o Expected order sizes o Expected frequency of schedule changes MIS 373: Basic Operations Management12

13 DISCUSSION Work with a partner and match the following products or services with the best process Ice-cream manufacturer Automatic carwash Steel Books Airlines Surgery Movie theater Sugar Beer Flour Job-shop Repetitive Continuous Batch Products/Services Processes Tips: Think in terms of those key dimensions: o Range of products or services that can be processed o Expected order sizes o Expected frequency of schedule changes

14 TECHNOLOGY Technological Innovation The discovery and development of new or improved products, services, or processes for producing or providing them Technology The application of scientific discoveries to the development and improvement of products and services and/or the processes that produce or provide them Process technology includes methods, procedures, and equipment used to produce goods and provide services. RFID, online banking, 3D printing, … MIS 373: Basic Operations Management14

15 FACILITIES LAYOUT Layout The configuration of departments, work centers, and equipment, with particular emphasis on movement of work (customers or materials) through the system Facilities layout decisions arise when: Designing new facilities Re-designing existing facilities The basic objective of layout design is to facilitate a smooth flow of work, material, and information through the system. MIS 373: Basic Operations Management15

16 BASIC LAYOUT TYPES Product layout Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow Process layout Layout that can handle varied processing requirements Fixed position layout Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed Combination layouts MIS 373: Basic Operations Management16

17 PRODUCT LAYOUTS Product layout Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow How? MIS 373: Basic Operations Management Used for Repetitive Processing Repetitive or Continuous Raw materials or customer Finished item Station 2 Station 3 Station 4 Material and/or labor Material and/or labor Material and/or labor Material and/or labor Station 1 17

18 PRODUCT LAYOUTS Although product layouts often follow a straight line, a straight line is not always the best, and layouts may take an L, O, S, or U shape. Why? L: O: S: U: more compact, increased communication facilitating team work, minimize the material handling MIS 373: Basic Operations Management18 Image source: mdcegypt.com

19 NON-REPETITIVE PROCESSING: PROCESS LAYOUTS Process layouts Layouts that can handle varied processing requirements MIS 373: Basic Operations Management Used for Intermittent processing Job Shop or Batch Dept. A Dept. BDept. D Dept. C Dept. F Dept. E 19

20 PRODUCT LAYOUTS Advantages High rate of output Low unit cost Labor specialization Low material handling cost per unit High utilization of labor and equipment Established routing and scheduling Routine accounting, purchasing, and inventory control Disadvantages Creates dull, repetitive jobs Poorly skilled workers may not maintain equipment or quality of output Fairly inflexible to changes in volume or product or process design Highly susceptible to shutdowns Preventive maintenance, capacity for quick repair and spare-parts inventories are necessary expenses Individual incentive plans are impractical MIS 373: Basic Operations Management20

21 PROCESS LAYOUTS Advantages Can handle a variety of processing requirements Not particularly vulnerable to equipment failures General-purpose equipment is often less costly and easier and less costly to maintain It is possible to use individual incentive systems Disadvantages In-process inventories can be high Routing and scheduling pose continual challenges Equipment utilization rates are low Material handling is slow and less efficient Complicates supervision Special attention necessary for each product or customer Accounting, inventory control, and purchasing are more complex MIS 373: Basic Operations Management21

22 FIXED POSITION LAYOUTS Fixed Position Layout Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed E.g., farming, firefighting, road building, home building, remodeling and repair, and drilling for oil MIS 373: Basic Operations Management22

23 COMBINATION LAYOUTS Some operational environments use a combination of the three basic layout types: Hospitals Supermarket Shipyards Some organizations are moving away from process layouts in an effort to capture the benefits of product layouts MIS 373: Basic Operations Management23

24 LINE BALANCING Line balancing The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements Goal: Obtain task grouping that represent approximately equal time requirements since this minimizes idle time along the line and results in a high utilization of equipment and labor Why is line balancing important? 1.It allows us to use labor and equipment more efficiently. 2.To avoid fairness issues that arise when one workstation must work harder than another. Input Tasks sequencing (precedence diagram) Tasks time Operating time MIS 373: Basic Operations Management24

25 PRECEDENCE DIAGRAM Precedence diagram A diagram that shows elemental tasks and their precedence requirements MIS 373: Basic Operations Management TaskDuration (min) Immediate predecessor aSelect material0.1- bMake petals1.0a cSelect rhinestones 0.7- dGlue rhinestones 0.5b, c ePackage0.2d 25

26 CYCLE TIME Cycle time The maximum time allowed at each workstation to complete its set of tasks on a unit Minimum Cycle Time = longest task time = 1.0 min Maximum Cycle time = Σt = sum of task time = 2.5 min MIS 373: Basic Operations Management26

27 OUTPUT RATE OF A LINE Cycle time also establishes the output rate of a line MIS 373: Basic Operations Management Cycle time = Operating time per day Desired output rate Output rate = Operating time per day Cycle time 27

28 HOW MANY WORKSTATIONS ARE NEEDED? The required number of workstations is a function of: Desired output rate The ability to combine tasks into a workstation (theoretical) Minimum number of stations MIS 373: Basic Operations Management N min = ∑ t Cycle time where N min = theoretical minimum number of stations ∑ t = sum of task times 28

29 HOW MANY WORKSTATIONS ARE NEEDED? The required number of workstations is a function of: Desired output rate The ability to combine tasks into a workstation (theoretical) Minimum number of stations MIS 373: Basic Operations Management N min = ∑ t Cycle time where N min = theoretical minimum number of stations ∑ t = sum of task times 29 Q: Why this is a theoretical value? A: There are often scraps or idle times. Example: 4 tasks, each require 6 hours to finish A station can handle 8 hours amount of tasks a day. You will need 4 stations to complete all tasks, instead of 3. N min = ( ) / 8 = 3 Q: Why this is a theoretical value? A: There are often scraps or idle times. Example: 4 tasks, each require 6 hours to finish A station can handle 8 hours amount of tasks a day. You will need 4 stations to complete all tasks, instead of 3. N min = ( ) / 8 = 3

30 DESIGNING PRODUCT LAYOUTS Some Heuristic (Intuitive, may not result in optimal solution) Rules: Assign tasks in order of most following tasks Count the number of tasks that follow Assign tasks in order of greatest positional weight. Positional weight is the sum of each task’s time and the times of all following tasks. MIS 373: Basic Operations Management30

31 EXAMPLE: ASSEMBLY LINE BALANCING Arrange tasks (shown in the figure) into three workstations Assume the cycle time of each workstation is 1.2 min. Assign tasks in order of the most number of followers Break tie using greatest positional weight MIS 373: Basic Operations Management31

32 Assign tasks in order of the most number of followers MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time 11.2a, c 2 3 Start with CT (1.2 min. in this example) 32

33 Assign tasks in order of the most number of followers MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time 11.2a, ca

34 MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b a

35 MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b abab Break tie using greatest positional weight 35

36 MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b c abab

37 MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b c ab-ab Can’t assign c to this workstation because the workstation doesn’t have enough time (0.1) to complete c (0.7).

38 MIS 373: Basic Operations Management Start with CT (1.2 min. in this example) Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b c ab-ab cc

39 MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b c ab-ab cdcd cdcd

40 MIS 373: Basic Operations Management Start with CT (1.2 min. in this example) Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b c ab-ab cdcd cdcd ee

41 MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b c ab-ab cdcd cdcd ee1 1.0 Idle time per cycle = =1.1 41

42 LAYOUT MIS 373: Basic Operations Management a & b ( ) c & d ( ) e (0.2) TaskDuration (min) Immediate predecessor aSelect material0.1- bMake petals1.0a cSelect rhinestones 0.7- dGlue rhinestones 0.5b, c ePackage0.2d 42

43 MEASURING EFFECTIVENESS Balance delay (percentage of idle time) Percentage of idle time of a line Efficiency Percentage of busy time of a line MIS 373: Basic Operations Management Balance Delay = Idle time per cycle × 100% N actual × Cycle time where N actual = actual number of stations Efficiency = 100% − Balance Delay 43

44 EXAMPLE: MEASURING EFFECTIVENESS MIS 373: Basic Operations Management Workstation Time RemainingEligible Assign Task Revised Time Remaining Station Idle Time a, c c, b c ab-ab cdcd cdcd ee1.0 Efficiency = 100% – 30.55% = 69.45% Percentage of idle time = [( ) ÷ (3 × 1.2)] × 100% = 30.55% 44

45 EXERCISE PROBLEMS (Textbook page 267) Using the information contained in the table shown, do each of the following: 1.Draw a precedence diagram. 2.Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day. 3.Determine the minimum number of workstations required. 4.Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first. 5.Compute the resulting percent idle time and efficiency of the system

46 EXERCISE SOLUTION 1. Draw a precedence diagram

47 EXERCISE SOLUTION 2. Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day Cycle time = Operating time per day = 480 minutes per day = 1.2 minutes per cycle Desired output rate 400 units per day

48 EXERCISE SOLUTION 3. Determine the minimum number of workstations required N min = ∑ t = Cycle time where N min = theoretical minimum number of stations ∑ t = sum of task times = 3.17 stations ( round to 4) 3.8 minutes per unit 1.2 minutes per cycle time per station

49 EXERCISE SOLUTION 4. Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.

50 EXERCISE SOLUTION 5. Compute the resulting percent idle time and efficiency of the system Percent idle time = Idle time per cycle = 1.0 min. × 100% N actual × Cycle time 4 × 1.2 min. = 20.83%

51 DESIGNING PROCESS LAYOUTS The main issue in designing process layouts concerns the relative placement of the departments Measuring effectiveness key objectives in designing process layouts are to minimize: transportation cost distance time MIS 373: Basic Operations Management51

52 INFORMATION REQUIREMENTS In designing process layouts, the following information is required: 1.A list of work stations (departments) to be arranged and their dimensions 2.A projection of future work flows between the pairs of work centers 3.The distance between locations - and the cost per unit of distance to move loads between them 4.The amount of money to be invested in the layout 5.A list of any special considerations 6.The location of key utilities, access and exit points, etc. MIS 373: Basic Operations Management52

53 DESIGNING PROCESS LAYOUTS MINIMIZE TRANSPORTATION COSTS Goal: Assign departments 1, 2, 3 to locations A, B, C in a way that minimizes transportation costs. Heuristic: Assign departments with the greatest interdepartmental work flow first to locations that are closet to each other. MIS 373: Basic Operations Management ABC 53

54 EXAMPLE: MINIMIZE TRANSPORTATION COSTS MIS 373: Basic Operations Management Location From\ToABC A-2040 B-30 C- Department From\To PairWork flow Trip A-B20 B-C30 A-C40 Distance Work flow AB C Highest work flow Closest Place dept. 1&3 in A&B 54

55 EXAMPLE: MINIMIZE TRANSPORTATION COSTS MIS 373: Basic Operations Management Place departments 1&3 in A&B (2 options) 2&3 have higher work flow than 1&2 (100>30) 2&3 should be located closer than 1&2 C closer to B than to A (30<40) Solution: AB C AB C AB C ABC Trip A-B20 B-C30 A-C40 PairWork flow

56 CLOSENESS RATINGS Allows the considerations of multiple qualitative criteria Input from management or subjective analysis Indicates the relative importance of each combination of department pairs MIS 373: Basic Operations Management Muther’s grid 56

57 CLOSENESS RATINGS MIS 373: Basic Operations Management A Absolutely necessary E Very important I Important O Ordinary importance U Unimportant X Undesirable A Absolutely necessary E Very important I Important O Ordinary importance U Unimportant X Undesirable Muther’s grid Dept. 1 Dept 2. Dept 3. Dept 4. Dept. 5 Dept 6. X O A A U A A X E A O A U I X 57 Suppose this is the floor plan of your company, how would you arrange the six departments?

58 Dept. 1 Dept 2. Dept 3. Dept 4. Dept. 5 Dept 6. X O A A U A A X E A O A U I X CLOSENESS RATINGS: EXAMPLE MIS 373: Basic Operations Management 1. List critical departments (either A or X): A X

59 CLOSENESS RATINGS: EXAMPLE MIS 373: Basic Operations Management Form a cluster of A links (beginning with the department that appears most frequently) A Take the remaining A links in order and add them to this cluster where possible (rearranging as necessary) Form separate clusters for departments that do not link with the main cluster Dept. 1 Dept 2. Dept 3. Dept 4. Dept. 5 Dept 6. X O A A U A A X E A O A U I X

60 CLOSENESS RATINGS: EXAMPLE MIS 373: Basic Operations Management 4. Graphically portray the X links Adjust A cluster as necessary. X (in this case, the A cluster also satisfies the X cluster). Dept. 1 Dept 2. Dept 3. Dept 4. Dept. 5 Dept 6. X O A A U A A X E A O A U I X 60

61 CLOSENESS RATINGS: EXAMPLE MIS 373: Basic Operations Management Fit cluster into arrangement (e.g., 2x3) may require some trial and error. Departments are considered close not only when they touch side to side but also when they touch corner to corner. 7. Check for possible improvements Dept. 1 Dept 2. Dept 3. Dept 4. Dept. 5 Dept 6. X O A A U A A X E A O A U I X 61

62 KEY POINTS Process choice is demand driven. Process type and layout are a function of expected demand volume and the degree of customization that will be needed. Each process type and layout type has advantages and limitations that should be clearly understood when making process selection and layout decisions. Line balancing helps improving the efficiency of product layouts whereas Muther’s grid helps deciding process layouts MIS 373: Basic Operations Management62


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