9 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall 9 9 Layout Strategies

9 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline The Strategic Importance of Layout Decisions Types of Layout: 1. Office Layout 2. Retail Layout 3. Warehousing and Storage Layouts 4. Process-Oriented Layout 5. Fixed-Position Layout 6. Work Cells 7. Product-Oriented Layout How to balance production flow in a product- oriented facility

9 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

9 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall 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 Six out of the seven are layout decisions!

9 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall McDonald’s New Layout  Redesigning all 30,000 outlets around the world to have 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 (tables and chairs are movable)  Facility layout is a source of competitive advantage

9 - 6© 2011 Pearson Education, Inc. publishing as Prentice Hall Strategic Importance of Layout Decisions Developing an effective and efficient layout that will meet the firm’s competitive requirements will contribute a lot to the profitabilitity of the firm

9 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall Objectives in Layout Design  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

9 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall A good Layout Requires Determining the Following  Material handling equipment (manual hand trucks, conveyors, cranes, AGVs)  Cost of moving material between work areas  Capacity and space requirements  Environment and aesthetics (windows, height and walls of the offices to facilitate air flow, to reduce noise etc.)  Information flow (open offices versus dividers)

9 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

9 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall 1. Office Layout  Grouping of employees, their equipment, and spaces to provide comfort, safety, and movement of information  Movement of information is main distinction  It is affected a lot by technological changes

9 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall Relationship Chart: A tool to use in Office Layout Decisions Figure 9.1

9 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall 2. Retail Layout Retail layouts (as are found in stores, and restaurants) are based on the idea that sales and profitability vary directly with customer exposure to products  Goal—maximize net profit per square foot of floor space by exposing the customers to as many products as possible  Sales and profitability vary directly with customer exposure

9 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall Store Layout Figure 9.2

9 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall Retail Slotting  Due to:  Limited shelf space  An increasing number of new products Manufacturers pay fees to retailers (up to $2500) to get the retailers to display (slot) their product Small companies complain about unfair competition Wal-Mart is one of the few major retailers that does not demand slotting fees.

9 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall Planogram  A planogram is a computerized marketing tool used in retail stores.  It is a diagram that shows where a product should be placed on a shelf and how many faces that product should hold. Often supplied by the manufacturerer 5 facings Shampoo Conditioner Shampoo Conditioner 2 ft.

9 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall Servicescapes The physical surroundings in which a service takes place, and how they affect customers and employees 1.Ambient conditions - background music, lighting, smell, and temperature (Leather chairs at Starbucks, Cinnamon smell at Tarchy) 2.Layout/Functionality – The wide aisles at METRO, Carpeted areas of a department store that encourage shoppers to slow down and browse) 3.Signs, symbols, and artifacts – Guitars on Hard Rock Cafes’s Walls.

9 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall 3. 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

9 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall Automated Storage and Retrieval Systems (ASRSs)  ASRSs can significantly improve warehouse productivity.  Random stocking Vs Dedicated Stocking: Typically requires Automatic Identification Systems (AISs) and effective information systems.

9 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall Cross-Docking  Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse  Requires tight scheduling and accurate product identification  The global retail giant, Wal-Mart uses this strategy to gain a huge competitive advantage over it’s competitors.

Advantages of retail cross- docking  Streamlines the supply chain, from point of origin to point of sale  Reduces labor costs through less inventory handling  Reduces inventory holding costs by reducing storage times and also eliminating the need to keep safety stock  Reduces the time to deliver products the distributor, and finally the customer  Reduces or eliminates warehousing costs © 2011 Pearson Education, Inc. publishing as Prentice Hall

9 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall Customizing  Value-added activities are performed at the warehouse (warehouse assembly jobs are common nowadays)  Enable low cost and rapid response strategies (Warehouses adjacent to major Airports)  Assembly of components  Loading software  Repairs  Customized labeling and packaging

9 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall 4. Fixed-Position Layout  Product remains in one place, workers and equipment come to site  Preferred where the size of the job is bulky and heavy. Example of such type of layout is locomotives, ships, wagon building, aircraft manufacturing, etc.

9 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall 5. Process-Oriented Layout  Similar 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

9 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall Surgery Radiology ER triage room ER BedsPharmacy Emergency room admissions Billing/exit Laboratories Process-Oriented Layout Patient A - broken leg Patient B -erratic heart pacemaker Figure 9.3

Manufacturing Process Layout L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

9 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

9 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall Process-Oriented Layout Minimize cost = ∑ ∑ X ij C ij n i = 1 n j = 1 wheren=total number of work centers or departments i, j=individual departments X ij =number of loads moved from department i to department j C ij =cost to move a load between department i and department j

9 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall Area 1Area 2Area 3 Area 4Area 5Area 6 60’ 40’ Process Layout Example ReceivingShippingTesting DepartmentDepartmentDepartment (4)(5)(6) Figure 9.5 AssemblyPaintingMachine Shop DepartmentDepartmentDepartment (1)(2)(3)

9 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall DepartmentAssemblyPaintingMachineReceivingShippingTesting (1)(2)Shop (3)(4)(5)(6) Assembly (1) Painting (2) Machine Shop (3) Receiving (4) Shipping (5) Testing (6) Number of loads per week From-to Matrix Figure 9.4

9 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Layout Example Interdepartmental Flow Graph Figure Machine Shop (3) Testing (6) Shipping (5) Receiving (4) Assembly (1) Painting (2)

Process Layout Example  The cost of moving one load between adjacent departments is estimated to be $1.  Moving a load between nonadjecent departments costs $2. © 2011 Pearson Education, Inc. publishing as Prentice Hall

9 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall 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 Cost = ∑ ∑ X ij C ij n i = 1 n j = 1

9 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Layout Example Revised Interdepartmental Flow Graph Figure Machine Shop (3) Testing (6) Shipping (5) Receiving (4) Painting (2) Assembly (1)

9 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall 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 Cost = ∑ ∑ X ij C ij n i = 1 n j = 1

9 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall Area 1Area 2Area 3 Area 4Area 5Area 6 60’ 40’ Process Layout Example ReceivingShippingTesting DepartmentDepartmentDepartment (4)(5)(6) Figure 9.8 Painting Assembly Machine Shop DepartmentDepartmentDepartment (2)(1)(3)

9 - 36© 2011 Pearson Education, Inc. publishing as Prentice Hall Computer Software  Graphical approach only works for small problems  Computer programs are available to solve bigger problems  CRAFT  ALDEP  CORELAP  Factory Flow

9 - 37© 2011 Pearson Education, Inc. publishing as Prentice Hall 6. Work Cells  Reorganizes people and machines into groups to focus on single products or product groups (PART FAMILIES)  Group technology is a philosophy wherein similar products are grouped together  Processes required to make these similar parts are arranged as Work Cells  Similarity can be either in shape, size or in manufacturing process  Production Volume must justify forming the cells

Part families Part families with similarity in shape Part families with similarity in manufacturing process

Original Process Layout CABRaw materials Assembly

Part Routing Matrix Machines Parts Axxxxx Bxxxx Cxxx Dxxxxx Exxx Fxxx Gxxxx Hxxx Figure 5.8

Reordered Routing Matrix Machines Parts Axxxxx Dxxxxx Fxxx Cxxx Gxxxx Bxxxx Hxxx Exxx

Revised Cellular Layout Assembly A B C Raw materials Cell 1 Cell 2 Cell 3

9 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall Advantages of Work Cells 1.Reduced work-in-process inventory 2.Less floor space required 3.Reduced direct labor, and setup cost 4.More employee participation 5.Increased use of equipment and machinery

9 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall Staffing and Balancing Work Cells Determine the takt time (Also called cycle time) Takt time = Total work time available per day Required output per day (in units) Determine the number of operators required Workers required = Total operation time required Takt time

9 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall Staffing Work Cells Example Required output: 600 Auto Mirrors per day Total work time: 8 hours per day Total operation time per mirror =140 seconds Standard time required Operations AssemblePaintTestLabelPack for shipment Takt time? # of workers required?

9 - 46© 2011 Pearson Education, Inc. publishing as Prentice Hall 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 mins = 48 seconds Workers required= Total operation time required Takt time = 140 / 48 = 2.91

9 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall 7. Repetitive and Product- Oriented Layout 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 Organized around products or families of similar high-volume, low-variety products

9 - 48© 2011 Pearson Education, Inc. publishing as Prentice Hall Product-Oriented Layouts  Fabrication line  Builds components 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  Balanced by moving tasks Both types of lines must be balanced so that the time to perform the work at each station is the same

9 - 49© 2011 Pearson Education, Inc. publishing as Prentice Hall Product-Oriented Layouts 1.Low variable cost per unit 2.Low material handling costs 3.Reduced work-in-process inventories 4.Easier training and supervision 5.Rapid throughputAdvantages 1.High production volume is required to be justifiable 2.Work stoppage at any point ties up the whole operation 3.Lack of flexibility in product or production ratesDisadvantages

Production/Assembly Line Raw materials or customer Finished item Station 2 Station 2 Station 3 Station 3 Station 4 Station 4 Materials and/or labor Materials and/or labor Materials and/or labor Materials and/or labor Used for Repetitive or Continuous Processing Example: automobile assembly lines, cafeteria serving line Station 1 Station 1

U-Shaped Production Line U-Shaped Production Line In Out Workers

9 - 52© 2011 Pearson Education, Inc. publishing as Prentice Hall McDonald’s Assembly Line Figure 9.12

9 - 53© 2011 Pearson Education, Inc. publishing as Prentice Hall Disassembly Lines  Disassembly is being considered in new product designs  “Green” issues and recycling standards are important consideration  Automotive disassembly is the 16 th largest industry in the US

9 - 54© 2011 Pearson Education, Inc. publishing as Prentice Hall Assembly-Line Balancing  Line Balancing is the process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements.  Starts with the precedence relationships  Determine cycle time  Calculate theoretical minimum number of workstations  Balance the line by assigning specific tasks to workstations  Compute efficiency

 Goal is to minimize idle time along the line, which leads to high utilization of labor and equipment  Perfect balance is often impossible to achieve Line Balancing

Cycle Time Cycle time is the maximum time allowed at each workstation to complete its set of tasks on a unit.

Example 1: Cycle Times With 5 workstations, CT = 0.5 min.1.0 min.0.7 min.0.1 min.0.2 min. 1.0 minute. Cycle time of a system = longest processing time in a workstation.

Example 1: Cycle Times With 1 workstation, CT = 0.5 min.1.0 min.0.7 min.0.1 min.0.2 min. 2.5 minutes. 0.5 min.1.0 min.0.7 min.0.1 min.0.2 min. Workstation 1Workstation 2Workstation 3 With 3 workstations, can CT = 1.0 minute? Cycle time of workstation = total processing time in of tasks.

Output Capacity Output capacity = OT CT OT = operating time per day CT = cycle time Example: 8 hours per day OT = 8 x 60 = 480 minutes per day Cycle Time = CT = 1.0 min Output = OT/CT = 480/1.0 = 480 units per day (Maximum Capacity) Cycle Time = CT = 2.5 min Output = OT/CT = 480/2.5 = 192 units per day

Cycle Time Determined by Desired Output Example: 8 hours per day OT = 8 x 60 = 480 minutes per day D = 480 units per day CT = OT/D = 480/480 = 1.0 Minute D = Desired output rate CT = cycle time = OT D

Theoretical Minimum Number of Stations Required N min = CT  t t= sum of task times  N min = theoretical Minimum Number of Workstations Required Example: 8 hours per day, desired output rate is 480 units per day CT = OT/D = 480/480 = 1.0 Minute N min = ∑t /CT = 2.5/1.0 = 2.5 stations ≈ 3 stations

9 - 62© 2011 Pearson Education, Inc. publishing as Prentice Hall Example 1 This means that tasks B and E cannot be done until task A has been completed Performance Time Immediate Task(minutes) Predecessors A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66

9 - 63© 2011 Pearson Education, Inc. publishing as Prentice Hall Wing Component Example Performance Time Immediate Task(minutes) A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 I G F C D H B E A Figure 9.13 Predecessors

9 - 64© 2011 Pearson Education, Inc. publishing as Prentice Hall I G F C D H B E A Figure 9.13 PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 Wing Component Example 480available mins per day 40units required Cycle time = Production time available per day Units required per day = 480 / 40 = 12 minutes per unit Minimum number of workstations = ∑ Time for task i Cycle time n i = 1 = 66 / 12 = 5.5 or 6 stations

9 - 65© 2011 Pearson Education, Inc. publishing as Prentice Hall Wing Component Example I G F C D H B E A Figure 9.13 PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time available mins per day 40units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 Line-Balancing Heuristics 1.Longest task timeChoose the available task with the longest task time 2.Most following tasksChoose the available task with the largest number of following tasks 3.Ranked positional weight Choose the available task for which the sum of following task times is the longest 4.Shortest task timeChoose the available task with the shortest task time 5.Least number of following tasks Choose the available task with the least number of following tasks Table 9.4

9 - 66© 2011 Pearson Education, Inc. publishing as Prentice Hall 480available mins per day 40units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 Station 1 Wing Component Example Station 2 Station 3 Station 4 Station 5 Station 6 I GF H C D B E A Figure 9.14

9 - 67© 2011 Pearson Education, Inc. publishing as Prentice Hall PerformanceTask Must Follow TimeTask Listed Task(minutes)Below A10— B11A C5B D4B E12A F3C, D G7F H11E I3G, H Total time 66 Wing Component Example 480available mins per day 40units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 Efficiency = ∑ Task times (Actual number of workstations) x (Largest WS time) = 66 minutes / (6 stations) x (12 minutes) = 91.7%

Example 2 Desired production: 500 units/day Production time:7 hrs/day 8-68

Example: Precedence Graph 8-69

Example: C and N t 8-70

Example: Assignment 8-71

Example: Efficiency 8-72