Operations Management Layout Strategy

What is Facility Layout Location or arrangement of everything within & around buildings Determines long-run efficiency of operations Helps achieve a strategy that supports differentiation, low cost or quick response In addition to discussing what facility layout is, you might also raise some of the issues that may make it problematic.

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 to change--use small, movable or modular equipment; etc May be useful here to present a brief discussion of each benefit.

Layout Strategies Office layout Retail/service layout Warehouse layout positions workers, their equipment, and spaces/offices to provide for movement of communication and information Retail/service layout allocates shelf space and responds to customer behavior Warehouse layout addresses trade-offs between space and material handling

Seven Layout Strategies Fixed-position layout large bulky projects such as ships and buildings Process-oriented layout deals with low-volume, high-variety production (“job shop”, intermittent production) Product-oriented layout seeks the best personnel and machine use in repetitive or continuous production, line balancing

Office Layout Design positions people, equipment, & offices for maximum people and information flow, comfort and safety Relationship chart used Examples Banks Software company

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.

Retail/Service Layout Design maximizes product exposure to customers Decision variables Store flow pattern Allocation of (shelf) space to products Students should be asked for examples of features they find common to the design of retail layouts with which they are familiar.

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 Distribute “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.

A Good Service Layout 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 significance

Warehouse Layout Design balances between space 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

Fixed-Position Layout Design is for stationary project Workers and equipment come to site Complicating factors Limited space at site House, shipyard etc…. Students should be able to supply examples of the use of this layout strategy.

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 Supports process-focused strategy i.e. product differentiation stategy Students should be asked to suggest why this is not our “standard” layout - at least where the product is movable or transportable.

Emergency Room Layout Surgery Radiology E.R. beds Pharmacy Billing/exit Triage room E.R. Admissions Patient B – heart problems Patient A - broken leg Labs Students may be asked to evaluate alternative layouts for an emergency room. Perhaps a visit to view a local emergency room might be helpful.

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.

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? 16

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. 17

Interdepartmental Flow of Parts 1 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. 18

Interdepartmental Flow Graph Showing Number of Weekly Loads 100 1 3 2 50 30 20 100 50 20 10 4 5 6 50 19

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’ 20

Interdepartmental Flow Graph Showing Number of Weekly Loads 30 2 221 3 1 50 100 100 20 50 20 10 4 5 6 50 21

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’ 22

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 23

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. 24

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, 25

Precedence Diagram Example B E H C D F G I 10 Min. 5 11 12 3 7 4 26

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) 27

Cycle time calc. On the basis of precedence diagram and activity times given above, the firm determines that there are 480 productive minutes of work available per day. Furthermore, production schedule requires that 40 units be completed as output from the assembly line each day. Cycle time:480/40=12 minutes per unit Min no. of workstations:66/12=5.5 or 6

Six Station Solution A B C E D F G I H 10 11 5 3 7 12 29