Slide1: Operations Management Chapter 9 – Layout Strategy © 2006 Prentice Hall, Inc. PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e


Strategic Importance of Layout Decisions: Strategic Importance of Layout Decisions The objective of layout strategy is to develop an economic layout that will meet the firm’s competitive requirements


Layout Design Considerations: 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


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


Types of Layout: Types of Layout Fixed-position layout - addresses the layout requirements of large, bulky projects such as ships and buildings Process-oriented layout - deals with low-volume, high-variety production (also called job shop or intermittent production)


Types of Layout: Types of Layout Work cell layout - a special arrangement of machinery and equipment to focus on production of a single product or group of related products Product-oriented layout - seeks the best personnel and machine utilizations in repetitive or continuous production


Good Layouts Consider: Good Layouts Consider Material handling equipment Capacity and space requirements Environment and aesthetics Flows of information Cost of moving between various work areas


Office Layout: Office Layout Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information Movement of information is main distinction Typically in state of flux due to frequent technological changes


Relationship Chart: Relationship Chart Figure 9.1 Notice the alphabetical order of importance!!!


Supermarket Retail Layout: Supermarket Retail Layout Objective is to maximize profitability per square foot of floor space Sales and profitability vary directly with customer exposure


Five Helpful Ideas for Supermarket Layout: Five Helpful Ideas for Supermarket Layout Locate high-draw items around the periphery of the store Use prominent locations for high-impulse and high-margin items Distribute power items to both sides of an aisle and disperse them to increase viewing of other items Use end-aisle locations Convey mission of store through careful positioning of lead-off department


Warehousing and Storage Layouts: 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 Automated Storage and Retrieval Systems (ASRS) can significantly improve warehouse productivity


Warehousing and Storage Layouts: Warehousing and Storage Layouts All costs associated with the transaction Incoming transport Storage Finding and moving material Outgoing transport Equipment, people, material, supervision, insurance, depreciation Minimize damage and spoilage Material Handling Costs


Cross-Docking: Cross-Docking Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse Requires tight scheduling and accurate shipments, typically with bar code identification


Warehouse Layout: Warehouse Layout Traditional Layout


Warehouse Layout: Warehouse Layout Cross-Docking Layout


Random Stocking: Random Stocking Typically requires automatic identification systems (AISs) and effective information systems Random assignment of stocking locations allows more efficient use of space Maintain list of open locations Maintain accurate records Combine picking orders Assign classes of items to particular areas


Customization: Customization Value-added activities performed at the warehouse Enable low cost and rapid response strategies Assembly of components Loading software Repairs Customized labeling and packaging


Fixed-Position Layout: Fixed-Position Layout Product remains in one place Workers and equipment come to site Complicating factors Limited space at site Different materials required at different stages of the project Volume of materials needed is dynamic


Alternative Strategy: Alternative Strategy As much of the project as possible is completed off-site in a product-oriented facility This can significantly improve efficiency but is only possible when multiple similar units need to be created


Process-Oriented Layout: Process-Oriented Layout Like 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


Process-Oriented Layout: Process-Oriented Layout Figure 9.3


Process-Oriented Layout: 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


Process-Oriented Layout: Process-Oriented Layout where n = total number of work centers or departments i, j = individual departments Xij = number of loads moved from department i to department j Cij = cost to move a load between department i and department j


Process Layout Example: Process Layout Example Construct a “from-to matrix” Determine the space requirements Develop an initial schematic diagram Determine the cost of this layout Try to improve the layout Prepare a detailed plan Arrange six departments in a factory to minimize the material handling costs. Each department is 20 x 20 feet and the building is 60 feet long and 40 feet wide.


Process Layout Example: 50 100 0 0 20 30 50 10 0 20 0 100 50 0 0 Process Layout Example Figure 9.4


Process Layout Example: Process Layout Example Receiving Shipping Testing Department Department Department (4) (5) (6) Figure 9.5 Assembly Painting Machine Shop Department Department Department (1) (2) (3)


Process Layout Example: 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) = $570 Cost of moving between adjacent departments: 1$ Cost of moving between non-adjacent departments: 2$


Process Layout Example: Process Layout Example Interdepartmental Flow Graph Figure 9.6


Process Layout Example: Process Layout Example Interdepartmental Flow Graph Figure 9.7


Process Layout Example: 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


Process Layout Example: Process Layout Example Receiving Shipping Testing Department Department Department (4) (5) (6) Figure 9.8 Painting Assembly Machine Shop Department Department Department (2) (1) (3)


Computer Software: Computer Software Graphical approach only works for small problems Computer programs are available to solve bigger problems CRAFT ALDEP CORELAP Factory Flow


Work Cells: Work Cells Reorganizes people and machines into groups to focus on single products or product groups Group technology identifies products that have similar characteristics for particular cells


Advantages of Work Cells: Advantages of Work Cells Reduced work-in-process inventory Less floor space required Reduced raw material and finished goods inventory Reduced direct labor Heightened sense of employee participation Increased use of equipment and machinery Reduced investment in machinery and equipment


Improving Layouts Using Work Cells: Improving Layouts Using Work Cells Current layout - workers in small closed areas. Cannot increase output without a third worker and third set of equipment. Improved layout - cross-trained workers can assist each other. May be able to add a third worker as additional output is needed. Figure 9.10 (a)


Improving Layouts Using Work Cells: Improving Layouts Using Work Cells Current layout - straight lines make it hard to balance tasks because work may not be divided evenly Improved layout - in U shape, workers have better access. Four cross-trained workers were reduced. Figure 9.10 (b) U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection


Staffing and Balancing Work Cells: Staffing and Balancing Work Cells


Staffing Work Cells Example: 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


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 Staffing Work Cells Example Takt time = (8 hrs x 60 mins) / 600 units = .8 mins = 48 seconds


Product-Oriented Layouts: Product-Oriented Layouts Fabrication line Builds components on a series of machines Machine-paced 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


Product-Oriented Layouts: Product-Oriented Layouts


Assembly-Line Balancing: Assembly-Line Balancing Objective is to minimize the imbalance between machines or personnel while meeting required output Starts with the precedence relationships Determine cycle time Calculate theoretical minimum number of workstations Balance the line by assigning specific tasks to workstations


Copier Example: Copier Example


Copier Example: Copier Example Figure 9.13


Copier Example: Copier Example 480 available mins per day 40 units required


Copier Example: Copier Example Line-Balancing Heuristics Table 9.4


Copier Example: Copier Example Figure 9.14


Copier Example: Copier Example