1. © 2006 Prentice Hall, Inc.9 – 1 Operations Management Chapter 9 – Layout Strategy © 2006 Prentice Hall, Inc. PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e

2. © 2006 Prentice Hall, Inc.9 – 2 Innovations at McDonald’s  Indoor seating (1950s)  Drive-through window (1970s)  Adding breakfast to the menu (1980s)  Adding play areas (1990s) Three out of the four are layout decisions!

3. © 2006 Prentice Hall, Inc.9 – 3 McDonald’s New Kitchen Layout  Fifth major innovation  Sandwiches assembled in order  Elimination of some steps, shortening of others  No food prepared ahead except patty  New bun toasting machine and new bun formulation  Repositioning condiment containers  Savings of $100,000,000 per year in food costs

4. © 2006 Prentice Hall, Inc.9 – 4 McDonald’s New Kitchen Layout

5. © 2006 Prentice Hall, Inc.9 – 5 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

6. © 2006 Prentice Hall, Inc.9 – 6 Diagramming a process to identify the bottleneck in operations:Diagramming a process to identify the bottleneck in operations: –Operation –Decision –Wait –Flow Analyzing Service Processes

7. © 2006 Prentice Hall, Inc.9 – 7 Process Analysis Terminology Cycle Time – the average time between completions of successive unitsCycle Time – the average time between completions of successive units Bottleneck – the factor that limits production. A bottleneck is a constraint on the output of the system and could arise from several sources.Bottleneck – the factor that limits production. A bottleneck is a constraint on the output of the system and could arise from several sources.

8. © 2006 Prentice Hall, Inc.9 – 8 Capacity – measure of output per unit of time when the system is fully busyCapacity – measure of output per unit of time when the system is fully busy Capacity Utilization – measure of how much output is actually achieved when the system is fully busyCapacity Utilization – measure of how much output is actually achieved when the system is fully busy Process Analysis Terminology

9. © 2006 Prentice Hall, Inc.9 – 9 Throughput Time – the time it takes to complete a process from time of arrival to time of exit. It is the sum of the critical path and the average time spent waiting.Throughput Time – the time it takes to complete a process from time of arrival to time of exit. It is the sum of the critical path and the average time spent waiting. Rush Order Flow Time – the time it takes to go through the system from beginning to end without the waiting time.Rush Order Flow Time – the time it takes to go through the system from beginning to end without the waiting time. Process Analysis Terminology

10. © 2006 Prentice Hall, Inc.9 – 10 Process Analysis Terminology Direct Labor Utilization – measure of the percentage of time that workers are actually contributing value to the serviceDirect Labor Utilization – measure of the percentage of time that workers are actually contributing value to the service Equal to: Total Direct Labor ContentEqual to: Total Direct Labor Content (Process Cycle Time) (Number of Workers)

11. © 2006 Prentice Hall, Inc.9 – 11 Example Drivers license office is under pressure to increase productivity to accommodate 120 license renewal applicants per hourDrivers license office is under pressure to increase productivity to accommodate 120 license renewal applicants per hour One clerk will be added to the staffOne clerk will be added to the staff How can the system be changed to meet this goal?How can the system be changed to meet this goal?

12. © 2006 Prentice Hall, Inc.9 – 12 Driver’s License Example ActivityDescription CT in seconds 1 Review app for correctness 15 2 Process & record payment 30 3 Check for traffic violations 60 4 Conduct eye test 40 5Photo20 6 Issue updated license 30

13. © 2006 Prentice Hall, Inc.9 – 13 Example 120/hr130/hr Can process 120 apps/hour With 1 additional staff Can only process 60 applications/hr

14. © 2006 Prentice Hall, Inc.9 – 14 Driver’s License Example 132/hr Can process 120 apps/hour With 1 additional staff

15. © 2006 Prentice Hall, Inc.9 – 15 Servicescapes  Ambient conditions - background characteristics such as lighting, sound, smell, and temperature  Spatial layout and functionality - which involve customer circulation path planning, aisle characteristics, and product grouping  Signs, symbols, and artifacts - characteristics of building design that carry social significance