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Main Factors of Selecting a Location

• Proximity to Market • Availability of Suppliers

Facility Location and Layout
- Lecture 04- • Business Climate • Availability of Raw Material

• Total Costs • Free Trade Zones

• Infrastructure • Political Risks

• Availability of Labor • Trading blocs

Malindu Hapuarachchi
BSc. Eng (Hons) MSc. Eng, MBA, PMP, PMI-RMP

Facility Location Methods Factor Rating Method

In this method, all the important factors for the plant location are considered and they
are assigned with weights based on their importance. Proposed locations are evaluation
• Factor Rating Method based the weighted averages and highest value is selected for the plant location

• Transportation method for linear programming Factors

Locations Availability of Skilled Availability of RAW Proximity to the markets
Labour (W1=0.4) material(W2=0.35) (W3=0.25)
• Centroid method
X 70 60 55
Y 60 45 90
• Cost Volume Profit/Break even Analysis
Z 55 95 50
Factors
Locations Availability of Skilled Availability of RAW Proximity to the Total
Labor (W1=0.4) material (W2=0.35) markets (W3=0.25)
X 70x0.4=28 60x0.35 =21 55x0.25 = 13.75 62.75
Y 60x0.4=24 45x0.35 = 15.75 90x0.25 = 22.5 62.25
Z 55x0.4=22 95x0 50x0.25 =12.5 67.75

Centroidal Method Centroidal Method

This method is used determine the location for a warehouse or a Factory premises, which Location Annual shipping Coordinates (km)
will cover the most of the markets or distribution centers appropriately. volume(V1)
X1 Y1

Kolkata 7,500 280 170

Faridabad 12,500 180 140
Nagpur 25,000 130 100
Raipur 5,000 120 60

Annual shipping Coordinates (km) Weighted value of

Location
volume
X1 Y1 V1X1 V1Y1

Kolkata 7,500 280 170 2,100,000 1,275,000

Faridabad 12,500 180 140 2,250,000 1,750,000

Nagpur 25,000 130 100 3,250,000 2,500,000
∑  ∑  Raipur 5,000 120 60 600,000 300,000
X= ∑  Y= ∑  Total (∑) 50,000 710 470 8,200,000 5,825,000

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Breakeven Analysis Breakeven Analysis

Breakeven point is the instance where cost is equal to revenues. Therefore, this
method involves minimum cost for Fixed volume of Production.

Location Fixed costs per year (Rs) Variable costs per year (Rs)

A 7,500,000 300
B 1,500,000 150
C 25,000,000 125
D 30,000,000 150

Breakeven Analysis Facility/Plant Layout

A D
Factors affecting of selecting a layout

B
Cost • Objectives of the layout, space availability and total
distance of travelling for its elements
C
3000000
2500000
• Volume of the product

1500000
• Number of operations and amount of flow required
between the elements in the layout
750000

5000 10000 15000 40000

• Space requirement
Volume

Objectives of Plant Layout Types of Plant Layout

• Utilize the available Space Effectively

• Ensure smooth flow of material • Product Layout
• Improve the productivity
• Reduce the material handling
• Process Layout
• Provide safety
• Group Layout
• Utilize labor effectively
• Provide flexibility in operation
• Fixed position Layout
• Provide easy supervision and control
• Provide easy maintenance
• Facilitate coordination and face to face communication
• Reduce manufacturing cycle time and customer service time

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Product Layout Product Layout

In this layout, machines are arranged according to the sequence of Operations of a

Advantages
Product.
• Reduces Material handling time and material handling cost
• Increases Productivity due to ease of automation
• Reduces the manufacturing time
• Simplifies the Production planning and control systems
• Simplifies where unskilled worker to learn task quickly

Disadvantages
• Poor flexibility in accommodating a new product
• Breakdown of one machine will interrupt the entire operation
• High inventory
• Workers jobs get bored
• Less suitable for make to order

Process Layout Process Layout

Advantages
Similar machines are arranged based on their nature or functions of the
• It is more Flexible Compared to Product Layout as Equipment and personnel can be used
operations, but not according to the sequence of the operations.
for any Product
• Investment is less since duplication is possible when necessary
• Supervisors and workers get exposure of cross functional skills
• Changing work nature creates more job satisfactions
• Layout is more suitable for make to order
Disadvantages
• It required highly skilled workers
• Backtracking and long movements reduces the efficiency
• Waiting time is more
• Production planning and control is less
• Workers wages are high
• Due to frequent changes, productivity is less

Group Layout Facility Location Methods

Advantages
In this method, both Product layout and Process Layout method will be
• Control Required is reduced
utilized. And this method is used when multiple products are manufactured.
• Material Handling is reduced
Separate Manufacturing cells are planned for separate products.
• Set up time is reduced
• In process inventory is reduced
• Due to mixed properties and operations, operators expertize enhances

Disadvantages
• Shop flexibility is reduced
• Machine utilization is reduced compared to product layout
• High skilled person is required
• Unbalanced work load

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Fixed Position Layout Fixed Position Layout

In this layout, machines and workers are move to the site and Advantages
products remain in the fixed positions for its entire manufacturing • It reduces the movement of work items and minimizes
period. This method is used for bulky and fragile products such as
Planes, ships, railways etc. the Damages or cost of handling
• No Re-arrangements required

Disadvantages
• Skilled workforce is required
• Higher wages for the workers due to expertise
• Utilization of equipment will be low

Systematic Layout Planning Activity Relationship Chart

This is a tool used to arrange a workplace in a plant by locating two

areas with high frequency close to each other. This method also
referred as Relationship Diagramming Production area
U
Office rooms A
Value Closeness Code
U I
A absolutely necessary
Storage U O
A X A
E especially important
Dock area U U
I important U U
Locker room O
O ordinary importance U
Tool room
U unimportant

X undesirable

Initial Relationship Diagram Initial Relationship Diagram

1 3 4 1
3

2 5 6

2 5
6

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Final Layout Block Diagram

Block Diagramming is method to visualize the amount of movement that

occurs between departments

1 6 A B C D E F

A - 100 140 200 60

5
B - 40 50

C - 200
3 4 2
D - 10

E - 30

F -

Initial Layout Block Diagram

200

A C E
40
A C E
100 200 30
140
10

B D F
50
B D F

60

Block Diagram – Final Layout Assembly Line Balancing

Line balancing is the distribution of load on different

work stations to minimize the idle time. All the different
A E F activities in the assembly has different processing times
that lead to idle time on the workstations having shorter
processing time.

D B C

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Cycle Time Assembly Line Balancing

The time between the completion of two successive Sum of Task time
Theoretical Number of =
products, assumed constant for all products for a given workstations Cycle Time
production line speed.
• Draw the precedence diagram for the tasks of the work
Station

Production Time Per Day • The assign the tasks to workstations using following rules
Cycle Time = Assign the Task with longest time
Total Number of units required
per day Assign the task with greatest number of followers
If there is a tie, use one arbitrary

• Continue until all tasks are assigned to work stations

Assembly Line Balancing Assembly Line Balancing- Example

Sum of Task times

Efficiency = Task Task in Seconds Predecessor
Actual Number of A 55 -
x Cycle Time
Work Stations B 45 -
C 25 A
D 50 C
E 25 C
If efficiency is unsatisfactory, rebalance using a different F 30 D
decision rule G 15 E
H 40 B,F,G