Slide1: Operations Management Chapter 9 – Layout Strategy © 2006 Prentice Hall, Inc.


Innovations at McDonald’s: 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!


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 Retail layout Warehouse layout Fixed-position layout Process-oriented layout Work cell layout Product-oriented layout


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


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 Things at the counter have the most exposure.


Store Layout: Store Layout Figure 9.2


Retail Slotting: Retail Slotting Manufacturers pay fees to retailers to get the retailers to display (slot) their product Contributing factors Limited shelf space An increasing number of new products Better information about sales through POS data collection Closer control of inventory


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 More location than layout decision.


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


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 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


Layout at Arnold Palmer Hospital: Layout at Arnold Palmer Hospital


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


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


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 Interdepartmental Flow Graph Figure 9.7


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 Volume must justify cells Cells can be reconfigured as designs or volume changes


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


Requirements of Work Cells: Requirements of Work Cells Identification of families of products A high level of training and flexibility on the part of employees Either staff support or flexible, imaginative employees to establish work cells initially Test (poka-yoke) at each station in the cell


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


Work Balance Charts: Work Balance Charts Used for evaluating operation times in work cells Can help identify bottleneck operations Flexible, cross-trained employees can help address labor bottlenecks Machine bottlenecks may require other approaches


Focused Work Center and Focused Factory: Focused Work Center and Focused Factory Focused Work Center Identify a large family of similar products that have a large and stable demand Moves production from a general-purpose, process-oriented facility to a large work cell Focused Factory A focused work cell in a separate facility May be focused by product line, layout, quality, new product introduction, flexibility, or other requirements


Focused Work Center and Focused Factory: Focused Work Center and Focused Factory Table 9.2


Repetitive and Product-Oriented Layout: Repetitive and Product-Oriented Layout 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 life cycle that justifies investment Supplies of raw materials and components are adequate and of uniform quality Organized around products or families of similar high-volume, low-variety products


Product-Oriented Layouts: 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


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