PROCESS

SELECTION AND
FACILITY LAYOUT
Chapter 6

MIS 373: Basic Operations Management

 LEARNING OBJECTIVES

• After this lecture, students will be able to

1. Compare the four basic processing types
2. Describe product layouts and their main advantages and
disadvantages
3. Describe process layouts and their main advantages and
disadvantages
4. Develop simple product layouts
5. Develop simple process layouts

MIS 373: Basic Operations Management 2

 PROCESS SELECTION

• Process selection
• Deciding on the way production of goods or
services will be organized

• Occurs when:
• Planning of new products or services
• Technological changes in product or equipment
• Competitive pressure

MIS 373: Basic Operations Management 3

 PROCESS SELECTION AND
SYSTEM DESIGN

Facilities and
Forecasting Capacity Equipment
(demand)
Planning

Product and Layout

Service Design

Process
Technological Selection Work
Change Design

MIS 373: Basic Operations Management 4

 PROCESS STRATEGY

• Key aspects of process strategy:

• Capital Intensity
• The mix of equipment and labor that will be used by
the organization
• Process flexibility
• The degree to which the system can be adjusted to
changes in processing requirements due to such
factors as
• Product and service design changes
• Volume changes
• Changes in technology

MIS 373: Basic Operations Management 5

 NEW PROCESS STRATEGY
 HBR 12/6/12 Three Examples of New Process Strategy
 There are three fundamental ways that companies can improve their
processes in the coming decade:
1. expand the scope of work managed by a company to include customers,
suppliers, and partners;
• Shift to global, virtual, cross-organizational teams of specialized entities
that are knitted together to serve customers
• To keep such a multiparty system from degenerating into chaos, virtual
process teams must have aligned goals and support systems.
2. target the increasing amount of knowledge work; and
• Big data analytics
• Crowdsourcing, e.g., innocentive.com, TopCoder.com & Heritage Health Prize
• HBR : Using the Crowd as an Innovation Partner
3. reduce cycle times to durations previously considered impossible
• Agile processes
• Managers must speed the flow of information so that decisions can be made
faster at all levels, from top to bottom.
 PROCESS SELECTION

Process choice is demand driven:

1. Variety: How much?
2. Equipment flexibility: To what degree?
3. Volume: Expected output?

• Process Types

MIS 373: Basic Operations Management 7

 PROCESS SELECTION
Process choice is demand driven: Process Types
1. Variety • Job shop
• How much? • Small scale
2. Equipment flexibility • e.g., doctor, tailor
• To what degree? • Batch
• Moderate volume
3. Volume • e.g., bakery
• Expected output?
• Repetitive/assembly line
• High volumes of standardized
goods or services
• e.g., automobiles
• Continuous
• Very high volumes of non-
discrete goods
• e.g., petroleum products

MIS 373: Basic Operations Management 8

 TYPES OF PROCESSING
Repetitive/
Job Shop Batch Assembly Continuous
Description Customized Semi- Standardized Highly
goods or standardized goods or standardized
services goods or services goods or
services services
Advantages Able to handle a Flexibility; easy Low unit cost, Very efficient,
wide variety to add or high volume, very high
of work change efficient volume
products or
services
Disadvantages Slow, high cost Moderate cost Low flexibility, Very rigid, lack of
per unit, per unit, high cost of variety, costly
complex moderate downtime to change,
planning and scheduling very high cost
scheduling complexity of downtime

MIS 373: Basic Operations Management 9

 PRODUCT-PROCESS MATRIX
Flexibility/Variety

Opportunity
costs

Volume

Out of
pocket costs

• The diagonal represents the “ideal” match

• Hybrid process are possible (e.g., job-shop & batch)
• Process choice may change as products goes through its life-cycles
MIS 373: Basic Operations Management 10
 PROCESS CHOICE EFFECTS
Activity/
Function Projects Job Shop Batch Repetitive Continuous
Cost estimation Simple to complex Difficult Somewhat routine Routine Routine

Cost per unit Very high High Moderate Low Low

Equipment used Varied General purpose General purpose Special purpose Special purpose

Fixed costs Varied Low Moderate High Very high

Variable costs High High Moderate Low Very low

Labor skills Low to high High Moderate Low Low to high

Marketing Promote Promote Promote Promote Promote

capabilities capabilities capabilities; semi- standardized standardized
standardized goods and goods and
goods and services services services
Scheduling Complex, subject Complex Moderately complex Routine Routine
to change

Project: used for work that is none routine with a unique set of objective to be
accomplished in a limited time frame, e.g., launching a new product, publishing a book

MIS 373: Basic Operations Management 11

 PRODUCT AND SERVICE
PROFILING
 Product or service profiling
 Linking key product or service requirements to process
capabilities

 Key dimensions relate to

o Range of products or services that can be processed
o Expected order sizes
o Expected frequency of schedule changes

MIS 373: Basic Operations Management 12

 DISCUSSION
 Work with a partner and match the following products or
services with the best process

Products/Services Processes
Ice-cream manufacturer Job-shop
Automatic carwash
Batch
Steel
Repetitive
Books
Continuous
Airlines
Surgery
Movie theater
Sugar
Tips: Think in terms of those key dimensions:
Beer o Range of products or services that can be processed
Flour o Expected order sizes
o Expected frequency of schedule changes
 TECHNOLOGY

• Technological Innovation
• The discovery and development of new or improved products,
services, or processes for producing or providing them

• Technology
• The application of scientific discoveries to the development and
improvement of products and services and/or the processes that
produce or provide them

• Process technology includes methods, procedures, and

equipment used to produce goods and provide services.
• RFID, online banking, 3D printing, …

MIS 373: Basic Operations Management 14

 FACILITIES LAYOUT

• Layout
• The configuration of departments, work centers, and equipment, with
particular emphasis on movement of work (customers or materials)
through the system

• Facilities layout decisions arise when:

• Designing new facilities
• Re-designing existing facilities

• The basic objective of layout design is to facilitate a smooth flow of

work, material, and information through the system.

MIS 373: Basic Operations Management 15

 BASIC LAYOUT TYPES

• Product layout
• Layout that uses standardized processing operations to
achieve smooth, rapid, high-volume flow

• Process layout
• Layout that can handle varied processing requirements

• Fixed position layout

• Layout in which the product or project remains stationary,
and workers, materials, and equipment are moved as
needed

• Combination layouts
MIS 373: Basic Operations Management 16
 PRODUCT LAYOUTS

• Product layout
• Layout that uses standardized processing operations to achieve
smooth, rapid, high-volume flow
• How?

Raw materials Station Station Station Station Finished

or customer 1 2 3 4 item

Material Material Material Material

and/or and/or and/or and/or
labor labor labor labor

Used for Repetitive Processing

Repetitive or Continuous
MIS 373: Basic Operations Management 17
 PRODUCT LAYOUTS
• Although product layouts often follow a straight line, a straight
line is not always the best, and layouts may take an L, O, S,
or U shape. Why?

• L:
• O: Image source: mdcegypt.com

• S:
• U: more compact, increased communication facilitating team work,
minimize the material handling

MIS 373: Basic Operations Management 18

 NON-REPETITIVE PROCESSING:
PROCESS LAYOUTS
• Process layouts
• Layouts that can handle varied processing requirements

Dept. A Dept. C Dept. E

Dept. B Dept. D Dept. F

Used for Intermittent processing

Job Shop or Batch
MIS 373: Basic Operations Management 19

Advantages
• High rate of output
• Low unit cost
• Labor specialization
• Low material handling cost per
unit
• High utilization of labor and
equipment
• Established routing and
scheduling
• Routine accounting,
purchasing, and inventory
control
MIS 373: Basic Operations Management
PRODUCT LAYOUTS
Disadvantages
 Creates dull, repetitive jobs
 Poorly skilled workers may not
maintain equipment or quality of
output
 Fairly inflexible to changes in
volume or product or process
design
 Highly susceptible to shutdowns
 Preventive maintenance, capacity
for quick repair and spare-parts
inventories are necessary
expenses
 Individual incentive plans are
impractical
20

Advantages
• Can handle a variety of
processing requirements
• Not particularly vulnerable to
equipment failures
• General-purpose equipment is
often less costly and easier
and less costly to maintain
• It is possible to use individual
incentive systems
MIS 373: Basic Operations Management
PROCESS LAYOUTS
Disadvantages
• In-process inventories can be high
• Routing and scheduling pose
continual challenges
• Equipment utilization rates are low
• Material handling is slow and less
efficient
• Complicates supervision
• Special attention necessary for
each product or customer
• Accounting, inventory control, and
purchasing are more complex
21
 FIXED POSITION LAYOUTS

• Fixed Position Layout

• Layout in which the product or project remains stationary, and
workers, materials, and equipment are moved as needed
• E.g., farming, firefighting, road building, home building, remodeling
and repair, and drilling for oil

MIS 373: Basic Operations Management 22

 COMBINATION LAYOUTS

• Some operational environments use a combination of the

three basic layout types:
• Hospitals
• Supermarket
• Shipyards

• Some organizations are moving away from process layouts in

an effort to capture the benefits of product layouts

MIS 373: Basic Operations Management 23

 LINE BALANCING
 Line balancing
 The process of assigning tasks to workstations in such a way that the
workstations have approximately equal time requirements
 Goal:
 Obtain task grouping that represent approximately equal time
requirements since this minimizes idle time along the line and results in a
high utilization of equipment and labor
 Why is line balancing important?
1. It allows us to use labor and equipment more efficiently.
2. To avoid fairness issues that arise when one workstation must
work harder than another.
• Input
• Tasks sequencing (precedence diagram)
• Tasks time
• Operating time

MIS 373: Basic Operations Management 24

 PRECEDENCE DIAGRAM
• Precedence diagram
• A diagram that shows elemental tasks and their
precedence requirements
Task Duration Immediate
(min) predecessor
a Select material 0.1 -
b Make petals 1.0 a
c Select 0.7 -
rhinestones
d Glue 0.5 b, c
rhinestones
e Package 0.2 d

MIS 373: Basic Operations Management 25

 CYCLE TIME

• Cycle time
• The maximum time allowed at each workstation to
complete its set of tasks on a unit
• Minimum Cycle Time = longest task time = 1.0 min
• Maximum Cycle time = Σt = sum of task time = 2.5 min

MIS 373: Basic Operations Management 26

 OUTPUT RATE OF A LINE

• Cycle time also establishes the output rate of a line

Operating time per day

Cycle time =
Desired output rate

Operating time per day

Output rate =
Cycle time

MIS 373: Basic Operations Management 27

 HOW MANY WORKSTATIONS
ARE NEEDED?
• The required number of workstations is a function of:
• Desired output rate
• The ability to combine tasks into a workstation

• (theoretical) Minimum number of stations

∑t
Nmin=
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
MIS 373: Basic Operations Management 28
 HOW MANY WORKSTATIONS
ARE NEEDED?
• The required number of workstations is a function of:
• Desired output rate
Q:• Why
The ability
this isto a
combine tasks into
theoretical a workstation
value?
A: There are often scraps or idle times.
• (theoretical) Minimum number of stations
Example:
4 tasks, each require 6 hours ∑ tto finish
Nmin=
A station can handle 8 hours
Cycle amount
time of tasks a day.
You will need 4 stations to complete all tasks, instead of 3.
where
Nmin = (6+6+6+6) / 8 = 3
Nmin = theoretical minimum number of stations
∑ t = sum of task times
MIS 373: Basic Operations Management 29
 DESIGNING PRODUCT
LAYOUTS
 Some Heuristic (Intuitive, may not result in optimal solution)
Rules:
 Assign tasks in order of most following tasks
 Count the number of tasks that follow

 Assign tasks in order of greatest positional weight.

 Positional weight is the sum of each task’s time and the times of all
following tasks.

MIS 373: Basic Operations Management 30

 EXAMPLE:
ASSEMBLY LINE BALANCING
• Arrange tasks (shown in the figure) into three workstations
• Assume the cycle time of each workstation is 1.2 min.
• Assign tasks in order of the most number of followers
• Break tie using greatest positional weight

MIS 373: Basic Operations Management 31

• Assign tasks in order of the most number of followers
Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c

2
3

Start with CT
(1.2 min. in this
example)
MIS 373: Basic Operations Management 32
• Assign tasks in order of the most number of followers
Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1

2
3

MIS 373: Basic Operations Management 33

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b

2
3

MIS 373: Basic Operations Management 34

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1

2
3

Break tie using

greatest
positional weight

MIS 373: Basic Operations Management 35

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1
0.1 c
2
3

MIS 373: Basic Operations Management 36

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1
0.1 c - 0.1
2
3

Can’t assign c to this

workstation because the
workstation doesn’t have
enough time (0.1) to
complete c (0.7).

MIS 373: Basic Operations Management 37

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1
0.1 c - 0.1
2 1.2 c c 0.5

Start with CT
(1.2 min. in this
example)

MIS 373: Basic Operations Management 38

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1
0.1 c - 0.1
2 1.2 c c 0.5
0.5 d d 0 0
3

MIS 373: Basic Operations Management 39

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1
0.1 c - 0.1
2 1.2 c c 0.5
0.5 d d 0 0.0
3 1.2 e e 1
1.0

Start with CT
(1.2 min. in this
example)

MIS 373: Basic Operations Management 40

 Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1
0.1 c - 0.1
2 1.2 c c 0.5
0.5 d d 0 0.0
3 1.2 e e 1
1.0

Idle time per cycle

=0.1+0.0+1.0=1.1

MIS 373: Basic Operations Management 41

 LAYOUT

a&b c&d e
(0.1+1.0) (0.7+0.5) (0.2)

Task Duration Immediate

(min) predecessor
a Select material 0.1 -
b Make petals 1.0 a
c Select 0.7 -
rhinestones
d Glue 0.5 b, c
rhinestones
e Package 0.2 d
MIS 373: Basic Operations Management 42
 MEASURING EFFECTIVENESS

• Balance delay (percentage of idle time)

• Percentage of idle time of a line
Idle time per cycle
Balance Delay = × 100%
Nactual × Cycle time
where
Nactual = actual number of stations

• Efficiency
• Percentage of busy time of a line

Efficiency = 100% − Balance Delay

MIS 373: Basic Operations Management 43
 EXAMPLE:
MEASURING EFFECTIVENESS
Revised
Time Assign Time Station
Workstation Remaining Eligible Task Remaining Idle Time
1 1.2 a, c a 1.1
1.1 c, b b 0.1
0.1 c - 0.1
2 1.2 c c 0.5
0.5 d d 0 0.0
3 1.2 e e 1.0
1.0

Percentage of idle time = [(0.1 + 0 + 1.0) ÷ (3 × 1.2)] × 100% = 30.55%

Efficiency = 100% – 30.55% = 69.45%

MIS 373: Basic Operations Management 44
 EXERCISE PROBLEMS
 (Textbook page 267) Using the information contained in the
table shown, do each of the following:
1. Draw a precedence diagram.
2. Assuming an eight-hour workday,
compute the cycle time needed to
obtain an output of 400 units per day.
3. Determine the minimum number of
workstations required.
4. Assign tasks to workstations using
this rule: Assign tasks according to
greatest number of following tasks.
In case of a tie, use the tiebreaker of
assigning the task with the longest
processing time first.
5. Compute the resulting percent idle
time and efficiency of the system
 EXERCISE SOLUTION
1. Draw a precedence diagram
 EXERCISE SOLUTION
2. Assuming an eight-hour
workday, compute the cycle time
needed to obtain an output of 400
units per day

Operating 480 minutes

time per day per day
Cycle time = = = 1.2 minutes per cycle
Desired 400 units per
output rate day
 EXERCISE SOLUTION
3. Determine the minimum number
of workstations required

∑t 3.8 minutes per unit

Nmin= = = 3.17 stations
Cycle time 1.2 minutes per cycle ( round to 4)
where time per station
Nmin = theoretical minimum number of stations
∑ t = sum of task times
 EXERCISE SOLUTION
4. Assign tasks to workstations using this rule: Assign tasks
according to greatest number of following tasks. In case of a
tie, use the tiebreaker of assigning the task with the longest
processing time first.
 EXERCISE SOLUTION
5. Compute the resulting percent idle time and efficiency of the
system

Idle time per cycle 1.0 min.

Percent idle time = = × 100%
Nactual × Cycle time 4 × 1.2 min.

= 20.83%
 DESIGNING PROCESS
LAYOUTS
• The main issue in designing process layouts concerns the
relative placement of the departments

• Measuring effectiveness
• key objectives in designing process layouts are to
minimize:
• transportation cost
• distance
• time

MIS 373: Basic Operations Management 51

 INFORMATION REQUIREMENTS

• In designing process layouts, the following

information is required:
1. A list of work stations (departments) to be arranged and
their dimensions
2. A projection of future work flows between the pairs of
work centers
3. The distance between locations - and the cost per unit of
distance to move loads between them
4. The amount of money to be invested in the layout
5. A list of any special considerations
6. The location of key utilities, access and exit points, etc.

MIS 373: Basic Operations Management 52

 DESIGNING PROCESS LAYOUTS
MINIMIZE TRANSPORTATION COSTS
• Goal:
• Assign departments 1, 2, 3 to locations A, B, C in a way that
minimizes transportation costs.

A B C
• Heuristic:
• Assign departments with the greatest interdepartmental work flow first
to locations that are closet to each other.

MIS 373: Basic Operations Management 53

 EXAMPLE: MINIMIZE
Distance
TRANSPORTATION COSTS
40
Location Trip
From\To A B C A-B 20 Closest
C
A - 20 40 B-C 30 A B 30
20
B - 30 A-C 40
C -
Place dept. 1&3
Work flow in A&B
Department Pair Work flow
From\To 1 2 3 1-3 170 Highest work flow
1 - 30 170 2-3 100
2 - 100 1-2 30
3 -

MIS 373: Basic Operations Management 54

 EXAMPLE: MINIMIZE
TRANSPORTATION COSTS
• Place departments 1&3 in A&B (2 options) 40

1 3 3 1
A B C A B C C
A B 30
20
• 2&3 have higher work flow than 1&2
(100>30) Pair Work flow
Trip
• 2&3 should be located closer than 1&2
A-B 20 1-3 170
• C closer to B than to A (30<40)
B-C 30 2-3 100
• Solution:
A-C 40 1-2 30
30

170 100
1 3 2

A B C
MIS 373: Basic Operations Management 55
 CLOSENESS RATINGS

• Allows the considerations

of multiple qualitative
criteria

• Input from management or

subjective analysis

• Indicates the relative

importance of each
combination of department
pairs
Muther’s grid

MIS 373: Basic Operations Management 56

 CLOSENESS RATINGS

• Muther’s grid
A Absolutely necessary
E Very important
Dept. 1 I Important
A
Dept 2. A O Ordinary importance
E X U Unimportant
Dept 3. U U X Undesirable
X I O
Dept 4. A A
O X
Dept. 5 A
A Suppose this is the floor plan of
Dept 6. your company, how would you
arrange the six departments?

MIS 373: Basic Operations Management 57

 CLOSENESS RATINGS:
EXAMPLE
1. List critical departments (either A or X):

A X Dept. 1
A
1-2 1-4 Dept 2. A
E X
1-3 3-6 Dept 3. U U
2-6 3-4
X I O
Dept 4. A A
3-5 O X
Dept. 5 A
4-6 A
5-6 Dept 6.

MIS 373: Basic Operations Management 58

 CLOSENESS RATINGS:
EXAMPLE
A
2. Form a cluster of A links
1-2 Dept. 1
(beginning with the department A
that appears most frequently) 1-3 Dept 2. A
2-6
E X
4 Dept 3. U U
3-5 X I O
Dept 4. A A
2 6 4-6 O X
5 5-6 Dept. 5 A
A
Dept 6.

3. Take the remaining A links in order and 4

add them to this cluster where possible
(rearranging as necessary) 2 6
Form separate clusters for departments 1 5
that do not link with the main cluster.
MIS 373: Basic Operations Management 3 6-59
 CLOSENESS RATINGS:
EXAMPLE
4. Graphically portray the X links
X
Dept. 1
1 1-4 A
Dept 2. A
4 3-6 E X
3 U U
3-4 Dept 3.
6
X I O
Dept 4. A A
O X
Dept. 5 A
5. Adjust A cluster as necessary. A
Dept 6.
(in this case, the A cluster also satisfies
the X cluster).
4

2 6
1 5
MIS 373: Basic Operations Management 3 60
 CLOSENESS RATINGS:
4 EXAMPLE
2 6
Dept. 1
1 5 A
3 1 Dept 2. A
4
E X
Dept 3. U U
3 X I O
6
Dept 4. A A
O X
6. Fit cluster into arrangement (e.g., 2x3) Dept. 5 A
A
may require some trial and error. Dept 6.
Departments are considered close not only when they touch side
to side but also when they touch corner to corner.

1 2 6
3 5 4

7. Check for possible improvements

MIS 373: Basic Operations Management 61

 KEY POINTS
• Process choice is demand driven.
• Process type and layout are a function of expected demand
volume and the degree of customization that will be needed.
• Each process type and layout type has advantages and
limitations that should be clearly understood when making
process selection and layout decisions.
• Line balancing helps improving the efficiency of product
layouts whereas Muther’s grid helps deciding process layouts

MIS 373: Basic Operations Management 62