Operations Management

Topic 3 Plant Layout

UiTM Shah Alam Lecturer: Pn. Noriah Yusoff T1-A16-6C

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NY - KJP 585 2009

Outline
Global Company Profile: McDonalds The Strategic Importance of Layout Decisions Types of Layout Office Layout Retail Layout
Servicescapes
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Outline Continued
Warehousing and Storage Layouts
Cross-Docking Random Docking Customizing

Fixed-Position Layout Process Oriented Layout

Computer Software for Process Oriented Layout.
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Outline Continued
Work Cells
Requirements of Work Cells Staffing and Balancing Work Cells The Focused Work Center and the Focused Factor

Repetitive and Product-Oriented Layout

Assembly-Line Balancing
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Learning Objectives
When you complete this chapter you should be able to:
1. Discuss important issues in office layout 2. Define the objectives of retail layout 3. Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking 4. Identify when fixed-position layouts are appropriate
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Learning Objectives
When you complete this chapter, you should be able to:
5. Explain how to achieve a good processoriented facility layout 6. Define work cell and the requirements of a work cell 7. Define product-oriented layout 8. Explain how to balance production flow in a repetitive or product-oriented facility
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Innovations at McDonalds
Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu (1980s) Adding play areas (late 1980s) Redesign of the kitchens (1990s) Self-service kiosk (2004) Now three separate dining sections
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Innovations at McDonalds
Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu of the Six out (1980s) seven are layout Adding play areas (late 1980s) decisions! Redesign of the kitchens (1990s) Self-service kiosk (2004) Now three separate dining sections
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McDonalds New Layout

Seventh major innovation Redesigning all 30,000 outlets around the world Three separate dining areas
Linger zone with comfortable chairs and WiFi connections Grab and go zone with tall counters Flexible zone for kids and families

Facility layout is a source of competitive advantage

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Strategic Importance of Layout Decisions

The objective of layout strategy is to develop a cost-effective layout that will meet a firms competitive needs

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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
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Types of Layout
1. Office layout 2. Retail layout 3. Warehouse layout 4. Fixed-position layout 5. Process-oriented layout 6. Work-cell layout 7. Product-oriented layout
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Types of Layout
1. Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information 2. Retail layout: Allocates shelf space and responds to customer behavior 3. Warehouse layout: Addresses tradeoffs between space and material handling
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Types of Layout
4. Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings 5. Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)
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Types of Layout
6. Work cell layout: Arranges machinery and equipment to focus on production of a single product or group of related products 7. Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production
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Good Layouts Consider

1. Material handling equipment 2. Capacity and space requirements 3. Environment and aesthetics 4. Flows of information 5. Cost of moving between various work areas

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Layout Strategies
Office Retail Examples Allstate Insurance Microsoft Corp. Krogers Supermarket Walgreens Bloomingdales Problems/Issues Locate workers requiring frequent contact close to one another
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Warehouse (storage)

Federal-Moguls warehouse The Gaps distribution center

Expose customer to high-margin items

Balance low-cost storage with low-cost material handling

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Table 9.1

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Layout Strategies
Project (fixed position) Examples Ingall Ship Building Corp. Trump Plaza Pittsburgh Airport Arnold Palmer Hospital Hard Rock Caf Olive Garden Problems/Issues Move material to the limited Manage varied material flow storage areas around the site for each product Job Shop (process oriented)

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Layout Strategies
Work Cells (product families) Repetitive/ Continuous (product oriented) Examples Hallmark Cards Wheeled Coach Standard Aero Sonys TV assembly line Toyota Scion Problems/Issues Identify a product family, build teams, cross train team members Equalize the task time at each workstation

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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 05/04/12 NY - KJP 585 2009 20

Relationship Chart

Figure 9.1
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Supermarket Retail Layout

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

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Five Helpful Ideas for Supermarket Layout

1. Locate high-draw items around the periphery of the store 2. Use prominent locations for high-impulse and high-margin items 3. Distribute power items to both sides of an aisle and disperse them to increase viewing of other items 4. Use end-aisle locations 5. Convey mission of store through careful positioning of lead-off department
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Store Layout

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Figure 9.2

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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 controlKJP 585 2009 NY - of inventory

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Retail Store Shelf Space Planogram

Computerized tool for shelf-space management Generated from stores scanner data on sales Often supplied by manufacturer
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5 facings
Shampoo
Conditioner

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Shampoo
Conditioner

Shampoo

Shampoo

Shampoo Conditioner

Shampoo

2 ft.
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Shampoo

Shampoo

Shampoo

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 05/04/12 carry social significance NY - KJP 585 2009

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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
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Warehousing and Storage Layouts

Material Handling Costs
All costs associated with the transaction
Incoming transport Storage Finding and moving material Outgoing transport Equipment, people, material, supervision, insurance, depreciation
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Minimize damageKJP 585 2009 NY - and spoilage

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Warehousing and Storage Layouts

Warehouse density tends to vary inversely with the number of different items stored Automated Storage and Retrieval Systems (ASRSs) can significantly improve warehouse productivity by an estimated 500% Dock location is a key design element - KJP 585 2009 05/04/12 NY

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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, bar code or RFID identification used for advanced shipment notification as materials 05/04/12 are unloaded NY - KJP 585 2009

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Random Stocking
Typically requires automatic identification systems (AISs) and effective information systems Random assignment of stocking locations allows more efficient use of space Key tasks
1. Maintain list of open locations 2. Maintain accurate records 3. Sequence items to minimize travel, pick time 4. Combine picking orders
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Customizing
Value-added activities performed at the warehouse Enable low cost and rapid response strategies
Assembly of components Loading software Repairs Customized labeling and packaging
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Warehouse Layout
Traditional Layout
Storage racks Customization

Conveyor Staging
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Office
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Shipping and NY - KJP 585 2009 receiving docks

Warehouse Layout
Cross-Docking Layout
Shipping and receiving docks

Shipping and receiving docks

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Office

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

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Alternative Strategy
As much of the project as possible is completed off-site in a productoriented facility This can significantly improve efficiency but is only possible when multiple similar be created 05/04/12 units need to NY - KJP 585 2009

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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
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Process-Oriented Layout
ER triage room Surgery Patient A - broken leg Emergency room admissions Patient B - erratic heart pacemaker Laboratories

Radiology

ER Beds

Pharmacy

Billing/exit

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Figure 9.3

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Layout at Arnold Palmer Hospital

Central break and medical supply rooms Local linen supply Pie-shaped rooms

Central nurses station

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nursing pod

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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
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Process-Oriented Layout
Minimize cost = Xij Cij
i=1 j=1 n n

where

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n = total number of work centers or departments i, j = individual departments Xij = number of loads moved from department i to department j Cij NY - KJP 585 2009 to move a load = cost between department i and

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Process Layout Example

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.
1. Construct a from-to matrix 2. Determine the space requirements 3. Develop an initial schematic diagram 4. Determine the cost of this layout 5. Try to improve the layout
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Process Layout Example

Number of loads per week
Department Assembly Painting (1) (2) Assembly (1) Painting (2) Machine Shop (3) Receiving (4) Shipping (5) Testing (6) Figure 9.4
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Machine Receiving Shop (3) (4)

Shipping (5)

Testing (6)

50

100 30

0 50 20

0 10 0 50

20 0 100 0 0

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Process Layout Example

Area 1 Area 2 Area 3 Assembly Department (1) Painting Department (2) Machine Shop Department (3) 40 Receiving Department (4) Shipping Department (5) Testing Department (6)

Figure 9.5
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Area 4

Area 5 NY - KJP 585 2009 60

Area 6
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Process Layout Example

Interdepartmental Flow Graph
100

50
20
50

2 10

30
20

3 100

4
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50

5
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6
Figure 9.6
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Process Layout Example

Cost = Xij Cij
i=1 j=1 n n

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
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Process Layout Example

Revised Interdepartmental Flow Graph
30

2 50

50
10

1
20

100

3 100

50

4
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50

5
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6
Figure 9.7
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Process Layout Example

Cost = Xij Cij
i=1 j=1 n n

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
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Process Layout Example

Area 1 Area 2 Area 3 Painting Department (2) Assembly Department (1) Machine Shop Department (3) 40 Receiving Department (4) Shipping Department (5) Testing Department (6)

Figure 9.8
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Area 4

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Area 6
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Computer Software
Graphical approach only works for small problems Computer programs are available to solve bigger problems
CRAFT ALDEP CORELAP Factory Flow
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CRAFT Example
1 1 2 3 4 5 6 A A D C F E PATTERN 2 3 4 5 A A D C F E A A D D F E A A D D F E B B D D F E 6 B B D D D D 1 2 3 4 5 6 1 D D D C A A PATTERN 2 3 4 5 D D D C A A D D D D A A D D E E A F B B E E A F 6 B B E F F F

TOTAL COST 20,100 EST. COST REDUCTION ITERATION 0

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.00

TOTAL COST 14,390 EST. COST REDUCTION ITERATION 3

70. Figure52 9.9

(a)

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(b)

Computer Software
Three dimensional visualization software allows managers to view possible layouts and assess process, material handling, efficiency, and safety issues

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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
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Advantages of Work Cells

1. Reduced work-in-process inventory 2. Less floor space required 3. Reduced raw material and finished goods inventory 4. Reduced direct labor 5. Heightened sense of employee participation 6. Increased use of equipment and machinery 7. Reduced investment in machinery and equipment
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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)

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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)

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U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection
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Requirements of Work Cells

1. Identification of families of products 2. A high level of training, flexibility and empowerment of employees 3. Being self-contained, with its own equipment and resources 4. Test (poka-yoke) at each station in the cell
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Staffing and Balancing Work Cells

Determine the takt time
Total work time available Takt time = Units required

Determine the number of operators required

Total operation time required Workers required = Takt time
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Staffing Work Cells Example

600 Mirrors per day required Mirror production scheduled for 8 hours per day From a work balance chart 60 total operation time 50 = 140 seconds 40
Standard time required 30 20 10 0

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Assemble Paint NY - KJP 585 2009

Test

Operations

Label Pack for shipment 60

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 Takt time = (8 hrs x 60 mins) / 600 units = .8 mins = 48 seconds Total operation time required Workers required = Takt time
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= 140 / 48 = 2.91
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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
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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
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Focused Work Center and Focused Factory

Work Cell Focused Work Center Focused Factory A work cell is a temporary A focused work center is a A focused factory is a product-oriented permanent productpermanent facility to arrangement of machines oriented arrangement of produce a product or and personnel in what is machines and personnel component in a productordinarily a processin what is ordinarily a oriented facility. Many oriented facility process-oriented facility. focused factories currently being built were originally part of a process-oriented facility. Example: A job shop with Example: Pipe bracket machinery and personnel manufacturing at a rearranged to produce shipyard. 300 unique control panels.
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Example: A plant to produce window mechanism for automobiles.

Table 9.2

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Repetitive and ProductOriented Layout

Organized around products or families of similar high-volume, low-variety products
1. Volume is adequate for high equipment utilization 2. Product demand is stable enough to justify high investment in specialized equipment 3. Product is standardized or approaching a phase of life cycle that justifies investment 4. Supplies of raw materials and components are adequate and of uniform quality
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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
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Product-Oriented Layouts
Advantages
1. 2. 3. 4. 5. Low variable cost per unit Low material handling costs Reduced work-in-process inventories Easier training and supervision Rapid throughput

Disadvantages
1. High volume is required 2. Work stoppage at any point ties up the whole operation 3. Lack of flexibility in product or production rates NY - KJP 585 2009 67

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McDonalds Assembly Line

Figure 9.12
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Disassembly Lines
Disassembly is being considered in new product designs Green issues and recycling standards are important consideration Automotive disassembly is the 16th largest industry in the US
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Assembly-Line Balancing
Objective is to minimize the imbalance between machines or personnel while meeting required output Starts with the precedence relationships 1. Determine cycle time 2. Calculate theoretical minimum number of workstations 3. Balance the line by assigning specific tasks to workstations
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Wing Component Example

Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66

This means that tasks B and E cannot be done until task A has been completed

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Wing Component Example

Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F 10 H 11 E A I 3 G, H Total time 66

5 11

C
4

B
12

F
11

G
3

E
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H Figure 9.13 72

Wing Component Example

480 available Performance Task Must Follow mins per day Time Task Listed Task (minutes) Below 40 units required A 10 B 11 A Production time C 5 B available per day Cycle time = Units required per day D 4 B E 12 A = 480 / 40 5 F 3 C, D = 12 minutes per unit C G 7 F 10 11 3 7 n H 11 E i B G = Minimum A i1Time for taskF I 3 G, H 4 3 number of = Cycle D time Total time 66 workstations I 12 11 = 66 / 12 E H = 5.5 or 6 stations
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Figure 9.13 73

Wing Component Example Line-Balancing Heuristics

1. Longest task time Choose the available task with 480 available the longest Performance Task Must Follow task time mins per day Time Task Listed 2. (minutes) Choose the available task withrequired Task Most following tasks Below 40 units the largest number of following A 10 Cycle time = 12 mins tasks B 11 A Minimum C 3. Ranked5 positional weightChoose the available task for = 5.5 or 6 B workstations which the sum of following task D 4 B times is the longest E 12 A 5 F 4. Shortest task time 3 C, D Choose the available task with C G 7 F the shortest task time 10 11 3 7 H 11 E B ChooseAthe available task F with G I 5. Least number of 3 G, H 4 3 following tasks the least number of following Total time 66 D tasks I 12 11
E
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H Table 9.4 Figure 9.13 74

Wing Component Example

480 available Performance Task Must Follow mins per day Time Task Listed Task (minutes) Below 40 units required A 10 Cycle time = 12 mins B 11 A Minimum Station 5 B C 5 workstations = 5.5 or 6 2 C B D 4 11 3 7 E 10 12 A B F G F A 3 C, D 4 3 G 7 F D E Station 3 H 11 I I 3 G, H 12 11 Station 6 Station Total time 66 E H 1
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Station 4

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Station 5

Figure 9.14

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Wing Component Example

480 available Performance Task Must Follow mins per day Time Task Listed Task (minutes) Below 40 units required A 10 Cycle time = 12 mins B 11 A Minimum C 5 B workstations = 5.5 or 6 D 4 B E 12 A F 3 C, D G 7 F Task times Efficiency = (Actual number of workstations) x (Largest cycle time) H 11 E I 3 G, H = 66 minutes / (6 stations) x (12 minutes) Total time 66 = 91.7%
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