Date : 23.01.

2018 Shekhar Chowdhury, Associate Professor, Christ Session 8

Plant Location over-view
Location decisions are an integral part of supply-chain design for an organisation as it
determines the flow of material or services from vendors to plant and finally to the
customers.

Location decision pertains to the choice of appropriate geographical sites for locating various
manufacturing and service facilities of an organisation.

Plant location can be highly centralized or single location type– Eg. Aircraft manufacturer –
Boeing and Airbus. Petro-chemical plants like Reliance Jamnagar.

Or decentralized like automobile manufacturers Ford, Toyota or software services companies

like TCS, Infosys.

Location decision are made as part of Operations Strategy in view of getting cost advantage
or improving the speed of response for customer.
 Plant Location in the context of increased Globalisation

▪ Improved globalisation due economic reforms undertaken by developing nations have

provided multi-national organisations new opportunities to set up plant and service
facilities across different geographies to access these markets. Eg. Bosch, ABB have
expanded manufacturing footprint in India taking advantage of economic reforms
undertaken by India.

▪ It allowed companies to set up shops ( plant and Services) in cheaper economies

(China, India, Mexico) and export it back to their own country to improve their product
competitiveness and profitability. Eg. Bearing manufacturers like Timken produces
products in India for their US market. BPOs out of India service it’s American clients at
1/3 their cost.

▪ Served as export hub for other emerging economies. India is export hub for Suzuki,
Hyundai, Ford for exporting to South East Asia, Africa, Europe.
 Cost Related Issues
Market for products and Services
Factor cost of inputs
Raw Material availability
Transportation costs
Nos. and proximity of suppliers
Taxes and other tariff issues.
Availability of skilled labour
Cost of manufacture / service.
Quality of infrastructure
Currency and Exchange rate fluctuation
Demand-supply gap
Nature of competition
Factors
Factorsaffecting
influencing
location
locationdecision
decisions of
Organisation Other Issues
Regulatory and policy issues
Government and economic stability Culture
Quality of legal and other institutions Climate
Trading blocks and trading agreements Quality of life
Problem : A manufacturer of garments is actively considering 5 alternative locations for
setting up a garment factory. The location vary in terms of advantages to the firm. Hence the
firm needs a method for identification of the most appropriate location. Based on a survey of
its senior executives, the firm arrived at six factors to be considered for final site selection.
Each factor is rated on a scale of 1 – 100. Based on quantitative and qualitative evaluation
ratings of each location against each factor is also arrived at. Using the information provided,
arrive at ranking of all locations.

Factor Ratings
Factors Ratings Relative Wts. Step 1:
Availability of infrastructure 90 0.28 Establish relative importance
Size of the market 60 0.18 of each factor. Sum of all
Industrial Relations climate 50 0.15 factor is 325. Therefore
Tax benefits and concession 30 0.09 dividing each factor by 325
Availability of cheap labour 30 0.09 (total sum), one can obtain
Nearness to port 65 0.2 the relative weights of each
Total 325 1.0 factor.
 Rating of each location against each factor
Factors Loc. 1 Loc. 2 Loc. 3 Loc. 4 Loc. 5 Step 2 : Compute the
Availability of 20 40 60 35 55 performance of each
infrastructure location
Size of Market 30 30 40 60 80
Since weights of each
Industrial Relations 80 30 50 60 50 factor is available, one
Climate can compute how
Tax Benefit and 80 20 10 20 20 each location fares by
concessions weighing the rating of
Availability of cheap 70 70 45 50 50 each location against
labour each factor with the
wt. of the factor.
Nearness to port 20 40 90 50 60

Rating of location 1 = ( 20 x 0.28) + ( 30 x 0.18 ) + ( 80 x 0.15 ) + (80 x 0.09) + ( 70 x 0.09) + (

20 x 0.2 ) = 40.5
 Factors Loc. 1 Loc. 2 Loc. 3 Loc. 4 Loc. 5 Relative Wts.
Availability of 20 40 60 35 55
infrastructure 0.28
Size of Market 30 30 40 60 80 0.18
Industrial Relations 80 30 50 60 50
Climate 0.15
Tax Benefit and 80 20 10 20 20
concessions 0.09
Availability of cheap 70 70 45 50 50
labour 0.09
Nearness to port 20 40 90 50 60 0.2
Overall Score for 40.5 37.2 54.45 45.9 55.6
locations
Rank 4 5 2 3 1
Plant Layout - Introduction

Plant layout designing or process design is an integral part of Operations Strategy and
Operations Management.

It’s an essential early step in Operations planning and management which essentially
consists of choices made with regards to flow of parts in a manufacturing system.

As a part of layout design, detailed process planning in terms of sequence of operation,

machine requirement, time taken for each operation.

Process design follows process planning in establishing how operations resource are
organised in the Operations System so that the flow patterns are optimized.

Process design for differentiated products would be different from that of standardized
products.
Criteria
Factors affecting Process Choices

▪ Volume – Average quantity of products produced in the

manufacturing system.

▪ Variety – Refers to the number of alternate products and

variants of each product produced in the manufacturing system.

▪ Flow – Velocity of goods passing through the manufacturing

system.
Features / Characteristics of flow pattern in manufacturing systems

Flow Continuous Flow Intermittent Flow Jumbled Flow

Characteristics
Product High Volume – Low Variety Mid Volume – Mid Variety Very high variety – Low
Characteristics Volume
Examples of Process Industry, mass Batch production in process Project organisation, tool
production system production systems in and discrete manufacturing. room, fabricators.
discrete manufacturing
Important Issues Flow, line balancing, Manufacturing system & Capacity estimation,
debottlenecking, layout design, changeover scheduling, production
maintenance management control, cost estimation
Operations Line balancing, process Forecasting, capacity Project management and
Management optimization, product layout planning and estimation, scheduling, capacity
Tools and design, pull-type scheduling, layout design, optimized planning and scheduling,
Technique single-piece flow. production and materials functional layout design, job
management. order costing.
 Process Design – Productive System Types
▪ The strategies adopted for Process Design or Productive System types must be
related to Product Strategies
▪ High volume production and single product v/s low volume and high variety.
Process focussed System Product Focussed System Intermediate Productive
(Differentiated Product) (Standardized Product) System (Mixed Category)
▪ Flexible Manufacturing (CNC ▪ High Volume Continuous ▪ Mix of Flexible and
machines ) manufacturing (SPMs) Continuous Manufacturing
▪ Process layout – Machines are ▪ Product layout ( machines ▪ Process layout (paint shop)
placed in clusters are laid in sequence of and Product layout (final
operations assembly)
▪ Highly skilled direct manpower ▪ Semi- skilled direct ▪ Mix of high skilled and
suitable for different manpower is required semi-skilled
▪ Intermittent demand and ▪ Continuous demand and ▪ Demand pattern is mixed –
material flow is non-linear linear flow of material, high & low. Flow non-linear.
 Process Design – Productive System Types
▪ The strategies adopted for Process Design or Productive System types must be
related to Product Strategies
▪ High volume production and single product v/s low volume and high variety.
Process focussed System Product Focussed System Intermediate Productive
(Differentiated Product) (Standardized Product) System (Mixed Category)
▪ Flexible Manufacturing (CNC ▪ High Volume Continuous ▪ Mix of Flexible and
machines ) manufacturing (SPMs) Continuous Manufacturing
▪ Process layout – Machines are ▪ Product layout ( machines ▪ Process layout (paint shop)
placed in clusters are laid in sequence of and Product layout (final
Process operations assembly)Cellular
Layout Product
▪ Highly skilled direct manpower ▪ Semi- skilled direct
Layout ▪ Mix of highLayout
skilled and
suitable for different manpower is required semi-skilled
▪ Intermittent demand and ▪ Continuous demand and ▪ Demand pattern is mixed –
material flow is non-linear linear flow of material, high & low. Flow non-linear.
Layout Planning

Layout planning in manufacturing and service organisations involves physical arrangement

of various resources available in the system to improve the performance of the operating
system, there providing better customer service, efficiency and cost effectiveness.

Best possible location for resources in an organisation can be carried out through layout
planning.

A good layout in a manufacturing set up would ensure vast majority of jobs require
minimum travel before completing their processing requirement.

A good layout in service would ensure that customers need to travel a minimum distance
and spend less time to complete their service requirement.
Product Layout – In product layout the arrangement of resources follows the
process sequence dictated by the product. As each product will have its own set of
resources, material handling would be simpler and it is possible to invest in
dedicated resources to speed up the production. Production control systems are
simpler as compared to process layout.

Product Layout
Product Layout
 Product Layout
Car
 Product Layout Design

Objective of Product Layout design is line balancing – in which all tasks are balanced by
optimally combining tasks without violating precedence relationship of tasks and
constraints. A certain number of work stations are designed in Product layout to complete
the tasks.

In a balanced line

▪ No workmen / staff is over-burdened – Everyone is doing the same amount of work

▪ Work done to meet customer requirement
▪ Variation is smoothed
▪ No one waiting
▪ Everyone working in a balanced fashion
Product Layout Design
Product Layout Design
 Product Layout Design

2 important pre-requisites of Line Balancing

• Takt time

• Standard Work
 Product Layout Design
Standard Work
Standard Work instruction sheets provide a detailed description of HOW to do a
particular step of a work operation. These provide a standard method of carrying
out any particular task ensuring each task is repeatable and reproducible.
 Product Layout Design
Takt Time : Takt is a German word meaning conductor baton
Takt Time : Total Available Time
Total Customer Demand

• Takt Time matches the pace of the manufacturing process to customer demand.
• Each manufacturing process work to the Takt time.

Takt time maximises the productivity due to:

· Easily managed processes
. Workflow is matched to customer demand
· Output of each process matches customer demand
Takt Time needs to match the Cycle Time of production to meet the customer demand.

Cycle Time < = Takt Time to meet customer demand.

Cycle Time = Available Time

Desired Production

No. of workstation required = Sum of all task times

Cycle Time

Average Resource Utilization = Sum of all Tasks

No. of Workstation x Cycle Time
Example : A factory working in 2 shifts each of 8 hours produces 24000 electric bulbs using a set of work
stations. Compute cycle time of the plant ? There are 8 tasks required to manufacture a bulb. The sum of all
task times equals 12 seconds. How many work stations are required to maintain the level of production
assuming that combining of tasks into those workstations is a feasible alternative.

Available Time = 2 x 8 x 60 x 60 = 57,600 seconds

Actual Production = 24,000 electric bulbs

Cycle Time for each bulb = Total Available Time

Actual Production

= 57,600 / 24000 = 2.4 seconds.

(1 bulb is produced in every 2.4 seconds )

No. of workstations = Sum of all Task Time = 12 / 2.4 = 5 stations

Cycle Time

Tasks have to be split among 5 work station so that each work station will have a task time of 2.4 seconds
Problem :

A manufacturer of spark plug for the mass market would like to design the final assembly shop
and requires certain data for the process. The factory works in 2 shifts and available time is 15
hours / day.

a] There are 5 tasks involved in final assembly and the task times are 3.5, 4.5, 2.0, 3.0 and 4.0
seconds respectively. What are the minimum and maximum output possible from the factory.

b] The daily production need to be 4000 plugs. What should be the cycle time of operation at
the assembly shop.

c] If the firm wants to use 3 work stations, what will be the best output possible ? By how
much would the output increase if it adds one more workstation
A manufacturer of spark plug for the mass market would like to design the final assembly shop
and requires certain data for the process. The factory works in 2 shifts and available time is 15
hours / day.
a] There are 5 tasks involved in final assembly and the task times are 3.5, 4.5, 2.0, 3.0 and 4.0
seconds respectively. What are the minimum and maximum output possible from the factory.
Soln. : Minimum output = When there is 1 work station.
Cycle time = 3.5+4.5+2+3+4 = 17 seconds.
Min. Output = 15 x 60 x 60 / 17
= 3176 units / day

Maximum output – If task is done in 5 stages (but tasks can’t be divided and redistributed )
Cycle time of 5 stage operation = 4.5 secs.
Max Output = 15 x60 x 60 / 4.5 = 12000 units /day

Maximum output ( if task done in 5 stages and each task can be divided and redistributed)
Average time taken for each work station = 17 /5 = 3.4 seconds ( Min Cycle time)
Max Output = 15 x 60 x 60 / 3.4 = 15882 units /day
b] The daily production need to be 4000 plugs. What should be the cycle time of operation at
the assembly shop.

Cycle Time of Operation = Available Time / Desired Production

= 15 x 60 x 60 / 4000
= 13.5 seconds

c] If the firm wants to use 3 work stations, what will be the best output possible ? By how
much would the output increase if it adds one more workstation.
For 3 station
Average time for each stations = 17 /3 = 5.67 ( Min cycle time for 3 stations)
Max Output = Available Time / Min Cycle Time = 15 x 60 x 60 / 5.67
Max Output= 9523 units / day

For 4 station : Avg. time for each station = 17/4 = 4.25 seconds (Min Cycle time for 4 station)
Max Output = Available Time /Min Cycle Time = 15 x 60 x 60 / 4.25 = 12,705 units/ day.
Increase in output = 3182 units /day