Operations Management- I

Faculty – Dr. CP Garg, IIM Rohtak

 Operations Management
Facility Location Factors :
Local
 Taxes and Incentives
 Attractiveness of the Community
 Compatible Industry
 Transportation Network
 Government Policy and Attitude
 Environmental Regulations
 Operations Management
Regional
 Market Proximity
 Proximity to Raw Materials
 Availability of Utilities
 Labour Supply and Unionization
International
 National Taxes
 Legal Restrictions
Service
 Access & Exposure
 Operations Management
Methods for Facility Location
 Factor rating method
 Bridgeman method
 Centre of gravity method
 Factor Rating

• Factor Rating
– General approach to evaluating locations that includes quantitative and
qualitative inputs
• Procedure:
1. Determine which factors are relevant
2. Assign a weight to each factor that indicates its relative importance compared
with all other factors.
• Weights typically sum to 1.00
3. Decide on a common scale for all factors, and set a minimum acceptable score
if necessary
4. Score each location alternative
5. Multiply the factor weight by the score for each factor, and sum the results for
each location alternative
6. Choose the alternative that has the highest composite score, unless it fails to
meet the minimum acceptable score
 Example: Factor Rating

• A photo-processing company intends to open a new branch store. The following

table contains information on two potential locations. Which is better?

Scores
(Out of 100)
Factor Weight Alt 1 Alt 2
Proximity to
existing source
.10 100 60
Traffic volume .05 80 80
Rental costs .40 70 90
Size .10 86 92
Layout .20 40 70
Operating Cost .15 80 90
1.00
 Center of Gravity Method
• When the quantities to be shipped to every location are unequal, you can
obtain the coordinates of the center of gravity by finding the weighted
average of the x-coordinates and the average of the y-coordinates

x
 xQ i i

Q i

y
 yQ i i

Q i

where
Qi  Quantity t o be shipped to destination i
xi  x coordinate of destination i
yi  y coordinate of destination i
 Example: Center of Gravity
• Suppose the shipments for the problem depicted in Figure 8.1a are not all
equal. Determine the center of gravity based on the following information.

Weekly
Destination x y Quantity
D1 2 2 800
D2 3 5 900
D3 5 4 200
D4 8 5 100
18 16 2,000

8-10
 Example: Center of Gravity

x
 xQ i i

2(800)  3(900)  5(200)  8(100) 6,100
  3.05
Q i 2,000 2,000

y
 yQ
i
i 2(800)  5(900)  4(200)  5(100) 7,400
i
  3.7
Q i 2,000 2,000

• The coordinates for the center of gravity are (3.05, 3.7). You may round
the x-coordinate down to 3.0, so the coordinates for the center of gravity
are (3.0, 3.7). This is south of destination D2 (3, 5).
 Operations Management
Characteristics of Good Layout
 Planned activity inter-relationship
 Planned straight line materials flow
 Minimum back-tracking
 Minimum handling and Scrap Removal
 Layout adaptable to changing operations
 Adequate storage space and density
 Adequate employee service functions
 Planned control of noise, dirt, fumes, humidity
 Receiving and shipping in logical locations
 Maximum flexibility and visibility - safety
 Operations Management
Types of Layouts
 Product layout
 Process layout
 Mixed or Combination layout
 Fixed layout
 Cellular layout
Development of Layout
 Systematic layout (SLP) – REL Chart
 Computerized layout (CLP) – CRAFT, ALDEP, CORELAP
Systematic Layout Planning for a Floor of a Department Store