1. Operations Management Layout Strategy Chapter 9
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2. Outline GLOBAL COMPANY PROFILE: MCDONALD’S
THE STRATEGIC IMPORTANCE OF LAYOUT DECISIONS
TYPES OF LAYOUT
FIXED-POSITION LAYOUT
PROCESS-ORIENTED LAYOUT
Computer Software for Process-Oriented Layouts
Work Cells
The Focused Work Center and the Focused Factory
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3. Outline - Continued OFFICE LAYOUT RETAIL LAYOUT
Servicescapes
WAREHOUSING AND STORAGE LAYOUTS
Cross-Docking
Random Stocking
Customizing
REPETITIVE AND PRODUCT-ORIENTED LAYOUT
Assembly-Line Balancing
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4. Learning Objectives
When you complete this chapter, you should be able to :
Identify or Define:
Fixed-position layout
Process-oriented layout
Work cells
Focused work center
Office layout
Retail layout
Warehouse layout
Product-oriented layout
Assembly-line factory
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5. Learning Objectives
When you complete this chapter, you should be able to :
Describe or explain:
How to achieve a good layout for the process facility
How to balance production flow in a repetitive or product-oriented facility
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6. McDonald’s - New Kitchen Layout
Fifth major innovation - kitchen design
No food prepared ahead except patty
Elimination of some steps, shortening of others
New bun toasting machine (11 seconds vs 30 seconds)
Repositioning condiment containers (one motion, not two)
Sandwiches assembled in order
Production levels controlled by computer
Discard only meat when sandwiches do not sell fast enough
Savings of $100,000,000 per year in food costs
Students should be asked to consider how these features contribute to a competitive advantage for Pittsburgh Airport. Perhaps the first question they should answer is “Who is the customer?” You may need to point out to them that passengers flying through a hub are basically captive to the airlines’ decisions.
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7. McDonald’s - New Kitchen Layout
No food prepared ahead except patty
Elimination of some steps, shortening of others
New bun toasting machine (11 seconds vs 30 seconds)
Repositioning condiment containers (one motion, not two)
Students should be asked to consider how these features contribute to a competitive advantage for Pittsburgh Airport. Perhaps the first question they should answer is “Who is the customer?” You may need to point out to them that passengers flying through a hub are basically captive to the airlines’ decisions.
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8. Innovation at McDonald’s
Indoor seating (1950’s)
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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9. Objectives of the Layout Strategy
Develop an economical layout which will meet the requirements of:
product design and volume (product strategy)
process equipment and capacity (process strategy)
quality of work life (human resource strategy)
building and site constraints (location strategy)
This may be again a good time to reinforce the point that all of an organization’s strategies must work together.
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10. Types of Layouts Fixed-position layout Process-oriented layout
Office layout
Retail layout
Warehouse layout
Product-oriented layout
Give a brief description of each. You might also ask students for an example of each.
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11. What is Facility Layout
Location or arrangement of everything within & around buildings
Objectives are to maximize
Customer satisfaction
Utilization of space, equipment, & people
Efficient flow of information, material, & people
Employee morale & safety
In addition to discussing what facility layout is, you might also raise some of the issues that may make it problematic.
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12. Strategic Importance of Layout
Proper layout enables:
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
May be useful here to present a brief discussion of each benefit.
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13. Six Layout Strategies Fixed-position layout Process-oriented layout
large bulky projects such as ships and buildings
Process-oriented layout
deals with low-volume, high-variety production (“job shop”, intermittent production)
Office layout
positions workers, their equipment, and spaces/offices to provide for movement of information
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14. Six Layout Strategies - continued
Retail/service layout
allocates shelf space and responds to customer behavior
Warehouse layout
addresses trade-offs between space and material handling
Product-oriented layout
seeks the best personnel and machine use in repetitive or continuous production
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15. Layout Strategies Project Job Shop Office Retail Warehouse Repetitive
(fixed-position)
Job Shop
(Process-
oriented)
Office
Retail
Warehouse
(storage)
Repetitive
/Continuous
(product-
Examples
Pittsburgh Airport
Problem
Ingal Ship Building Corp.
Trump Plaza
Shouldice Hospital
Olive Garden
Allstate Insurance
Microsoft
Kroger’s Supermarket
Walgreens
Bloomingdales
Federal-Mogul’s Warehouse
The Gap’s distribution center
Sony’s TV Assembly Line
Dodge Caravans Minivans
Move material to the limited storage areas around the site
Manage varied material flow for each product
Locate workers requiring frequent contact close to each other
Expose customer to high-margin items
Balance low-cost storage with low-cost material handling
Equalize the task time at each workstation
This slide enables some comparing and contrasting of the six strategies.
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16. Layout Example - Office
Students should be asked to consider the working conditions in each of the rooms depicted.
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17. Requirements of a Good Layout
an understanding of capacity and space requirements
selection of appropriate material handling equipment
decisions regarding environment and aesthetics
identification and understanding of the requirements for information flow
identification of the cost of moving between the various work areas
Students should be asked if they perceive the relative importance of these requirements to be changing with the increased use of automated information technology.
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18. Constraints on Layout Objectives
Product design & volume
Process equipment & capacity
Quality of work life
Building and site
Having discussed each of these constraints in turn, you might ask students what other constraints they might expect to find in a practical situation.
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19. Layout Strategies, Examples, and Criteria
Service/retail
Drug store
Grocery store
Department store
Expose customer to high
margin items
Storage
Distributor
Warehouse
Minimize storage and
handling costs
Product oriented
TV assembly line
Minimize line imbalance,
delay, and idle time
Layout strategy Example Criteria
It is most important that students understand the choice of criteria by which to evaluate layouts. They should be asked to consider why these as opposed to other criteria were chosen.
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20. Areas of Concern in Layout Strategy
Communication
Service
Areas
Material
Attributes
Layout
Strategy
Warehousing
Work
Cell
Safety
Material
Flow
Students might be asked to suggest instances when one or another of these concerns might be given especially high or low priority.
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21. Fixed-Position Layout
Design is for stationary project
Workers and equipment come to site
Complicating factors
Limited space at site
Changing material needs
Students should be able to supply examples of the use of this layout strategy.
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22. Factors Complicating a Fixed Position Layout
There is limited space at virtually all sites
At different stages in the construction process, different materials are needed – therefore, different items become critical as the project develops
The volume of materials needed is dynamic
Students should be asked to suggest additional limitations or complications related to the fixed-positions layout
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23. Process-Oriented Layout
Design places departments with large flows of material or people together
Department areas having similar processes located in close proximity
e.g., All x-ray machines in same area
Used with process-focused processes
Students should be asked to suggest why this is not our “standard” layout - at least where the product is movable or transportable.
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24. Emergency Room Layout Surgery Radiology E.R. beds Pharmacy
Billing/exit
E.R.Triage room
E.R. Admissions
Patient B - erratic pacemaker
Patient A - broken leg
Hallway
Students may be asked to evaluate alternative layouts for an emergency room. Perhaps a visit to view a local emergency room might be helpful.
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25. Steps in Developing a Process-Oriented Layout
Construct a “from-to matrix”
Determine space requirements for each department
Develop an initial schematic diagram
Determine the cost of this layout
By trial-and-error (or more sophisticated means), try to improve the initial layout
Prepare a detailed plan that evaluates factors in addition to transportation cost
The criterion for this methodology is basically a number-of-parts (or people)-times-distance measure. Is this always useful or appropriate?
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26. Cost of Process-Oriented Layout
Now that cost can be determined, ask students (1) whether this is an appropriate criteria, and (2) how they would go about minimizing cost.
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27. Interdepartmental Flow of Parts1 2 3 4 5 6 50
100 20 30 10
Note that the matrix above basically measures the flow between sites, direction is immaterial. We can also develop entries for the remainder of the matrix if a different cost or route applies depending upon whether one is coming or going.
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28. Interdepartmental Flow Graph Showing Number of Weekly Loads
100 1 2 3 50 30 20
100 50 20 10 4 5 6 50
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29. Possible Layout 1 Assembly Department (1) Printing (2) Machine Shop
(3)
Receiving
(4)
Shipping
(5)
Testing
(6)
Room 1 Room 2 Room 2
Room 4 Room 5 Room 6
60’
40’
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30. Interdepartmental Flow Graph Showing Number of Weekly Loads30 1 2 3 50
100
100 20 50 20 10 4 5 6 50
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31. Possible Layout 3 Painting Department (2) Assembly (1) Machine Shop
(3)
Receiving
(4)
Shipping
(5)
Testing
(6)
Room 1 Room 2 Room 2
Room 4 Room 5 Room 6
60’
40’
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32. Computer Programs to Assist in Layout
CRAFT
SPACECRAFT
CRAFT 3-D
MULTIPLE
CORELAP
ALDEP
COFAD
FADES - expert system
It is probably useful to note that these programs operate on the basis of heuristics - and do not necessarily produce the optimal answer.
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33. Out-Patient Hospital Example CRAFT
Legend:
A = xray/MRI rooms
B = laboratories
C = admissions
D = exam rooms
E = operating rooms
F = recovery rooms 1 2 3 4 5 6 A B D C F E D B E C F A 1 2 3 4 5 6
Total cost: 20,100
Est. Cost Reduction .00
Iteration 0
Total cost: 14,390
Est. Cost Reduction 70.
Iteration 3
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34. Cellular Layout - Work Cells
Special case of product-oriented layout - in what is ordinarily a process-oriented facility
Consists of different machines brought together to make a product
Temporary arrangement only
Example: Assembly line set up to produce 3000 identical parts in a job shop
Students should be asked to comment upon the technology required to implement the concept of work cells. Under what conditions is such a cellular arrangement possible?
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35. Improving Layouts by Moving to the Work Cell Concept
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36. Work Cells - Some Advantages
Reduced work-in-process inventory
Less floor space required
Reduced raw material and finished goods inventories required
Reduced direct labor costs
Heightened sense of employee participation
Increased utilization of equipment machinery
Reduced investment in machinery and equipment
Students should be reminded here to consider both the advantages and the disadvantages. They might also be asked to consider why this approach might require a larger capital investment and result in a lower machine utilization than other approaches (Green and Sadowski).
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37. Work Cell Advantages Inventory Equipment utilization Floor space
Direct labor costs
Equipment utilization
Employee participation
Quality
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38. Work Cell Floor Plan Office Tool Room Work Cell Saws Drills
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39. Requirements for Cellular Production
Identification of families of products - group technology codes
High level of training and flexibility on the part of the employees
Either staff support or flexible, imaginative employees to establish the work cells initially
Test (poka-yoke) at each station in the cell
Students should be asked to consider if worker union activities have an impact on the organization’s ability to use cellular production.
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40. Work Cells, Focused Work Centers and the Focused Factory
A temporary assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility
Example: job shop with rearranged machinery and personnel to produce 30 unique control panels
Focused Work
A permanent assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility
Center
Example: manufacturing of pipe brackets at a shipyard
Focused Factory
A permanent facility to produce a product or component in a product-oriented facility
Example: a plant to produce window mechanisms for automobiles
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41. Number of Product Lines and Operating Performance15
D(6)
J(1)
I(2)
G(1)
H(2)
K(2)
More focused
plants
E(4)
A(6)
F(6)
C(5)
B(5)
Less focused 10 5
The more focused the plant, the larger the number of product lines for equivalent sales performance. -5
100
Sales ($M)
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42. Office Layout
Design positions people, equipment, & offices for maximum information flow
Arranged by process or product
Example: Payroll dept. is by process
Relationship chart used
Examples
Insurance company
Software company
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© 1995 Corel Corp.

43. Office Layout Floor Plan
Accounting
Manager
Brand X
Finance
Fin.
Acct.
This slide could be used to initiate a discussion of layout designed around product flow as opposed to layout designed around information flow.
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44. Relationship Chart 1 2 3 4 1 President O 2 Costing U A A 3 Engineering
Ordinary closeness: President (1) & Costing (2)
1 President 2 O 3
2 Costing U 4 A A
3 Engineering I
Absolutely necessary: President (1) & Secretary (4) O
4 President’s Secretary
I = Important
U = Unimportant
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45. Office Relationship Shart
1 President
2 Chief Technology Officer
3 Engineer’s Area
4 Secretary
5 Office entrance
7 Equipment cabinet
8 Photocopy equipment
9 Storage room U I A O E X
Val.
Closeness A
Absolutely necessary E
Especially important I
Important O
Ordinary OK U
Unimportant X
Not desirable
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46. Retail/Service Layout
Design maximizes product exposure to customers
Decision variables
Store flow pattern
Allocation of (shelf) space to products
Types
Grid design
Free-flow design
Video
Students should be asked for examples of features they find common to the design of retail layouts with which they are familiar.
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47. Retail Layouts - Some Rules of Thumb
Locate high-draw items around the periphery of the store
Use prominent locations such as the first or last aisle for high-impulse and high margin items
Remove crossover aisles that allow customers the opportunity to move between aisles
Distribute what are known in the trade as “power items” (items that may dominate a shopping trip) to both sides of an aisle, and disperse them to increase the viewing of other items
Use end aisle locations because they have a very high exposure rate
Students can be asked to provide examples of instances in which these rules were implemented.
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48. Retail /Service Layout - Grid Design
Office
Carts
Check- out
Grocery Store
Meat
Bread
Milk
Produce
Frozen Foods
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49. Store Layout - with Dairy, Bread, High Drawer Items in Corners
Students should be asked to identify differences between this and the previous slide.
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50. Retail/Service Layout - Free-Flow Design
Feature
Display Table
Trans. Counter
Apparel Store
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51. Retail Store Shelf Space Planogram
Computerized tool for shelf-space management
Generated from store’s scanner data on sales
Often supplied by manufacturer
Example: P&G
2 ft.
5 facings
VO-5
SUAVE
PERT
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52. A Good Service Layout (Servicescape) Considers
Ambient conditions - background characteristics such as lighting, sound, smell, and temperature.
Spatial layout and functionality - which involve customer circulation path planning
Signs, Symbols, and Artifacts - characteristics of building design that carry social significance
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53. Warehouse Layout
Design balances space (cube) utilization & handling cost
Similar to process layout
Items moved between dock & various storage areas
Optimum layout depends on
Variety of items stored
Number of items picked
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54. Warehouse Layout Floor Plan
Zones
Conveyor
Truck
Order Picker
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55. Cross Docking Transferring goods Avoids placing goods into storage
from incoming trucks at receiving docks
to outgoing trucks at shipping docks
Avoids placing goods into storage
Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transhipment
In-coming
Outgoing
© T/Maker Co.
© 1995 Corel Corp.
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56. Random Stocking Systems Often:
Maintain a list of “open” locations
Maintain accurate records of existing inventory and its locations
Sequence items on orders to minimize travel time required to pick orders
Combine orders to reduce picking time
Assign certain items or classes of items, such as high usage items, to particular warehouse areas so that distance traveled is minimized
Some of the options to be considered when developing a random stocking system
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57. Product-Oriented Layout
Facility organized around product
Design minimizes line imbalance
Delay between work stations
Types: Fabrication line; assembly line
Students should be asked to suggest the conditions under which a product-oriented layout is most appropriate.
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58. Product-Oriented Requirements
Standardized product
High production volume
Stable production quantities
Uniform quality of raw materials & components
Some answers to the previous question.
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59. Product-Oriented Layout - Assumptions
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 its life cycle that justifies investment in specialized equipment
Supplies of raw materials and components are adequate and of uniform quality to ensure they will work with specialized equipment
Having discussed the individual assumptions, one should then turn to the question of what is “adequate,” or “enough,” i.e., how does one go about making these decisions.
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60. Product-Oriented Layout Types
Fabrication Line
Assembly Line
Builds components
Uses series of machines
Repetitive process
Machine paced
Balanced by physical redesign
Assembles fabricated parts
Uses workstation
Repetitive process
Paced by tasks
Balanced by moving tasks
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61. Product-Oriented Layout Advantages
Lower variable cost per unit
Lower material handling costs
Lower work-in-process inventories
Easier training & supervision
Rapid throughput
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62. Product-Oriented Layout Disadvantages
Higher capital investment
Special equipment
Any work stoppage stops whole process
Lack of flexibility
Volume
Product
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63. An Assembly Line Layout
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64. Repetitive Layout 1 3 2 4 5 Work Office Belt Conveyor Work Station
Note: 5 tasks or operations; 3 work stations
Station
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65. Assembly Line Balancing
Analysis of production lines
Nearly equally divides work between workstations while meeting required output
Objectives
Maximize efficiency
Minimize number of work stations
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66. Assembly Line Balancing The General Procedure
Determine cycle time by taking the demand (or production rate) per day and dividing it into the productive time available per day
Calculate the theoretical minimum number of work stations by dividing total task time by cycle time
Perform the line balance and assign specific assembly tasks to each work station
Students should be aware that it is best to run balanced assembly lines - if they are not, then the need for balancing should be covered before discussing the process.
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67. Assembly Line Balancing Steps
1. Determine tasks (operations)
2. Determine sequence
3. Draw precedence diagram
4. Estimate task times
5. Calculate cycle time
6. Calculate number of work stations
7. Assign tasks
8. Calculate efficiency
Students should be walked through an example in class. One of the most useful examples is typically the student registration system. Students are familiar with it, they are able to estimate task time, and they are certainly impacted by the overall process,
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© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J

68. Precedence Diagram ExampleB E H C D F G I
10 Min. 5 11 12 3 7 4
Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J

69. Assembly Line Balancing Equations
Cycle time =
Production time available
Demand per day
Minimum number of work stations
 Task times
Cycle time
Efficiency = =
* (Cycle time)
(Actual number of work stations)
Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J

70. Six Station Solution 5 11 10 3 7 12 A B C E D F G I H
Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J

71. Layout Heuristics for Assigning Tasks in Assembly Line Balancing
Longest task time - choose task with longest operation time
Most following tasks - choose task with largest number of following tasks
Ranked positional weight - choose task where the sum of the times for each following task is longest
Shortest task time - choose task with shortest operation time
Least number of following tasks - choose task with fewest subsequent tasks
Transparency Masters to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J