Industrial Management

and
Engineering Economy
Chapter -3

BASICS OF PLANT LAYOUT

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 Plant layout
Plant layout has been defined as a plan of, or
the act of planning an optimum arrangement
of industrial facilities, including
 personnel,
 operating equipment,
 storage space,
 materials handling equipment and
 all other supporting services along with the
design of the best structure to contain these
facilities
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 Locate All Areas In and Around
Buildings
– Equipment
– Work stations
– Material storage
– Rest/break areas
– Utilities
– Eating areas
– Aisles
– Offices

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Problems of layout develop when needed:
• to start a new product,

• to change the product design,

• to reduce the cost;

And when
• the market demand changes,

• the plant, the product, the building become obsolete,

• accidents occur frequently,

• the working environment is poor.

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 The resulting problems involve

• planning a completely new plant,

• re-arranging a presently installed layout,
• making adjustments to existing layout.

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 The objectives of a good study of plant
layout are:
• ensure effective space utilization,
• minimize the cost of material handling (internal
transports),
• foresee future developments of the plant according
to a rational master plan,
• improve workers convenience as well as safety and
create job satisfaction, and
• avoid unnecessary capital investment.

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 Types of Layout

• Product Layout: In this type of layout, only

one product or one type of product is
produced in a given area.
• The product must be standardized and
manufactured in large quantities in order to
justify the product layout.

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 Some of the Advantages of Product
Layout are:
• lower total material handling cost,
• lower total production time,
• less work in process,
• greater incentive for groups of workers to raise
level of performance,
• less floor area required per unit of production and
• greater simplicity of production control, fewer
control records needed and lower accounting cost.

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 Product Layout is Used When:

• one or few standard products are to be produced,

• large volume of production of each item over a
considerable time is needed,
• minimum of inspection is required during sequence
of operations,
• minimum of very heavy equipment or equipment
requiring special facilities are needed,
• materials and products permit bulk or continuous
handling of mechanical means and
• one machine is always used for one purpose.
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 Process Layout

Process Layout: Similar equipment and similar

operations are grouped together in the
process or functional layout. It is particularly
useful where low volume is required.

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 Some of the Advantages of Process
Layout are:
• less duplication of equipment, hence lower
investment cost,
• greater flexibility of production,
• better and more efficient supervision,
• greater incentive for individual workers to raise
level of performance,
• better control of complicated or precision
processes,
• easier to handle breakdowns of equipment by
transferring work to another machine or station.
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 Process Layout is Used when

• many types or styles of products are on special order ,

• relatively low volume of production on individual items is
needed,
• many inspections are required during a sequence of
operations,
• high proportion of very heavy equipment or equipment
requiring special treatment exist,
• materials or products become too large or too heavy to permit
bulk or continuous flow and
• one machine is used for different operations.

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 Fixed-Position Layout

• Fixed-Position Layout: In this type of layout, the

material or major component remains in a fixed
location, and tools, machinery, men as well as other
pieces of material are brought to this location.
Typical examples are ship building, construction
industries, aircraft building and bench work
exercises. This type of layout is not frequently used
in industrial enterprises. For this reason we are not
going to look into its advantage and disadvantages.

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 Developing Simulating Layout Problems
Product Market
Design New Obsolete Poor
Market Cost
Demand Worker
Change product Facility Relocation Reduction
Change Environment

Move to Rearrange Minor

Build New Existing changes
existing
Plant Plant
Plant

Class of layout problems

Relation between causes and classes of layout problems

Cause and result occur very frequently

Cause and result occur less frequently
Cause and result occur occasionally
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 STUDY OF PLANT LAYOUT

• The solution of any size and type of plant

layout problems could be facilitated by using
a systematic and logical approach.
• An early pioneer in this area was Richard
Muther, developer of the Systematic Layout
Planning (SLP) methodology.

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 The SLP procedure leads the
planner through
• Abstraction (Analysis): Gathering
appropriate information and analyzing the
flow of materials and the activity
relationships to form a relationship diagram.
Space considerations when combined with
the relationship diagram develop the space
relationship diagram.

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 Search (for possible solution):
• The overall layout is designed by combining space
consideration with the relationship diagram.
• The search phase is the phase in which alternative
layouts are developed by examining the space
relationship diagram under modifying consideration
such as materials handling, storage facilities, site
conditions and surroundings, building types,
personnel convenience, etc., and practical
limitations.

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 Selection:
• The most efficient general method of
evaluating layout alternatives is termed
factor analysis. It follows the engineering
concept of breaking down the problem into
its elements and analyzing each one.

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 INPUT ACTIVITIES
AND DATA

ABSTRACTION
Flow of Activity
Material Relationship

(ANALYSIS)
Relationship
Diagram

Space Space
Required Available

Space
Computerized
Relationship
Layout Planning

SEARCH
Diagram

Modifying Practical
Consideration limitation

Layout X Layout Z
Layout Y

Layout

EVALUATION
Selected

Detail a
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Detail b
27
Systematic layout Planning Procedure Detail c
 Abstraction (Analysis)

• There are two basic elements on which

every layout problem rests
• Product (or material)
• Quantity (or volume)
• These two elements underline all other
features or conditions directly or indirectly
in layout work.

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 S. Support services
P. Product-Material
With what support will
What is to be produced
production be backed
R. Routing-Process
How will it (they) be produced

T. Time
Q. Quantity-Volume When will it be produced
How much of each
Item will be produced H
W Y

Key PQRST to unlock layout problems

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 This phase will require the assembly of
different data. In general, information about
the following is needed:
• the list of items to produce and store, and
the relative quantity;
• successive operations needed for every
product;
• the volume, the weight and the
characteristics of materials to transport
along the production line;
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• the number, type and technical data of
machines and plants necessary;
• the manpower needed;
• the necessary electric energy, steam, water,
compressed air, fuel, oil, etc.
• the necessary general service (offices, labs,
cafeteria etc.);
• the necessary auxiliary services like
maintenance department, tool store, etc;
• the possible variation of the product in the
future.
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• If the study is on an existing plant, it is
necessary to have drawings of the plant
layout and the building with all the technical
data.

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 Search for Possible Solution
• The systematic approach of generating possible
alternatives of plant layout is conducted by
taking in to consideration:
1. Type of layout,
2. The possible internal transport systems and
3. The working condition.

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• Type of Layout: It is necessary to determine
which type of layout to select, product (line)
or process (functional) layout.
• In addition to the selection of type of layout it
is also important to fix the arrangement of
machines

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 Q
Q A
Product α P= Product
Product β Q=Quantity
B
Product y

P P

P-Q Diagram

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• In region A there are few types of products
but in a great quantity. For these products it
is advisable to have product layout.
• In region C there are very many products in
small quantity. Hence, preferred to have
process layout.
• For products in region B (medium types of
products and medium quantity) the case has
to be studied closely so as to be able which
layout to select.

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• There are different types of machine
arrangements. The form of an industrial
building is mainly dependent on machine
arrangements and the advancement of a
workpiece. The usual forms are shown

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 a) IN PARALLEL

a) IN SERIES

a) COMBINED

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 The Possible Internal Transport
System:
• After considering the type of workpiece
advancement, the production capacity and
the machineries required, it is necessary to
examine the volume and weight of materials
that has to be transported from one machine
to the other, or from one department to the
other

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 Cont’d…
• The type of material handling equipment
influences directly the plant layout and also
the building. The working position, the form
of the layout, the height, width and length of
the building, the loading and unloading of
materials, the positions and dimensions of
accessibility depends in general, on the type
of internal transport system adopted.

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• A good study of internal transport system may boil
down to the following major benefits:
Reduce costs by
- utilizing space to better advantage,
- increasing productivity and
- making few number of effective movements.
Reduce waste by
- eliminating damage to material during the
handling process and
- maintaining proper control over in-and-out of
stock handling process.
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 Improve working conditions by
• providing safer working conditions and
• reducing worker fatigue.
Improve the efficiency of the plant by
• improving location of storage facilities,
• improving routing and
• increasing productivity.

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 Raw Material
Finished Good
Store
Working Dep’t

Future Expansion
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Typical One Floor Industrial Building
• In some plants, the cost of repeated handling
constitutes a very high proportion of the total
cost of the end product, and in some others, the
distance, materials have to move is not the sole
criterion, and often is not even the primary
concern for locating an area or an operation.
Hence, more realistic value assessment of the
factors that truly affect total cost in different
kinds of layout planning situations is needed.
• The available computer aided layout algorithms
fall into, either improvement, or construction
routine categories.

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 IMPROVEMENT ROUTINE:

• The basic approach is to find a suboptimum design

by making improvements in sequential fashion.
First, a given layout has to be evaluated to
determine what the effect will be if department
locations are interchanged.
• If improvements can be made by making pairwise
exchanges, the exchange producing the greatest
improvement can be adopted.
• The process continues until no improvement is
possible by pairwise exchanges.
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The objective function to be evaluated is:
n n
TC =   W ij C ij Dij
i -1 j -i

TC = Total internal transport cost

 Cij = Cost of internal transport, per unit distance per
unit weight, for material movement between
department i and j
 Wij =Weight of material transported, per unit time,
from department i to j
 Dij = Distance from department i to j
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• The routine accepts input data of Wij and Cij in the
form of a FROM - TO chart. It may also accept Dij in the
form of a FROM - TO charter, or it may accept the co-
ordinates of the work centers.
• A FROM - TO chart is a square matrix whose elements
represent flow or distance between departments.
• The chart is constructed by listing the departments
down the left hand column and then across the top in
the same order.
• The departments on the left are the originating
(FROM) departments and the ones at the top are the
receiving (TO) ones.
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 To 2
From 1 3 4 ... j ... n
1
2
= Wij x C ij x D
3 ij

4
...

i
...

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• A relationship chart is a triangular matrix
whose elements represent the relationships
among plant layout departments. Letter
codes are also used to represent desirable
or undesirable levels of closeness between
departments.

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• Six standard letter codes are used to show
closeness relationships.
• "A" indicates an absolutely necessary closeness
relationship;
• "E" indicates especially important;
• "I" important;
• "O" ordinary;
• "U" unimportant;
• "X" indicates a not desirable closeness relationship.
Although the letter codes are standard, the ratings
reflect the user's own reasons for assigning the
letter codes.
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 CONSTRUCTION ROUTINE:
• This routine constructs layouts without the
need for an existing (preliminary) layout.

• Basically find the starting point or initial

activity placement and then add the
remaining activity areas in accordance with
logical rule. Thus, the routine accepts
qualitative information from the relationship
chart with closeness value numerically rated.
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• The relationship chart and the numerically
weighted ratings, assigned to the closeness
values, are the basis for the order and
placement in which departments enter the
layout. The ratings assigned for A,E,I,O,U
and X are used to calculate the Total
Closeness Rating (TCR) for each department.

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 n

TCRi = 
j=1
V( r ij ); i = 1 ... m

where
• TCRj =Total Closeness Rating for department;
• V(rij)=Numerical value assigned to the closeness value for
department i and j.
• n = Total number of departments.

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 DEPT.

2
...

k
...

The relation between the K th and the

...

Mth dept. can have any closeness value

(A,E,I,O,U or X)
n

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• The first department to be placed in the layout is
assigned by taking the department with the greatest
TCR. Next, the relationship chart is scanned to see
if there is any department that has an A value with
the department already placed. If no A value exists,
a check is made for E value, and if no E value
appears, a check is made for I value, followed by O
value. If ties develop, the department having the
greatest TCR is chosen. This process is continually
used until finally all departments are placed in the
layout.

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 Working Condition
• Proper working conditions are considered
important by management because they
increase production effectiveness.
Employee working conditions are influenced
by many factors, over which the employee
has very little or no control.

• A good layout considers the factors

influencing working conditions.
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 LIGHTING
• Good lighting facilitates accuracy and ease of seeing.
A lighting system that aids these two demands means
that the worker is able to see the critical details
required in his job without excessive visual strain.
• The lighting fixtures are described according to the
way they distribute light.
 Direct lighting 0-10% of flux directed to the roof
 Semi direct 10-40% " " "
 General diffuse 40-60% " " “
 Semi indirect 60-90% " " “
 Indirect 90-110% " " "

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• In most European countries, the law
requires for a minimum level of illumination.
The following ranges are accepted
internationally

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TYPE OF WORK ILLUMINATION VALUE IN FLUX
• Store and rarely accessible
working places 100 - 200
• Rough work (Brewery) 200 - 500
• Medium work (automobile assembly) 500 - 1000
• Precise work (wool work) 500 – 1000
• Fine work (Radio and TV assembly) 1000 - 2000
• Very fine work (controlling wool work) 1000 - 2000
• Working on a very small pieces
(watch assembly) 2000 - 7500

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 AIR CONDITIONING
• Air conditioning is used for many plants to
control contamination by dust, bacteria and
toxic gases in addition to air temperature
and humidity.
• Air conditioning is a system which provides
an atmosphere comfortable to the human
being and maintain an atmospheric
environment demanded by a manufacturing
process or storage of products.
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 NOISE
• A wide variety of sound exists in industry.
Continuous exposure to high noise levels
frequently results in temporary or even
permanent loss of hearing.

• But there is no clear cut line to indicate how

much noise results in hearing loss.

• The following are standard measurements

for different sound sources in decibels:
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 SOURCE dB
- Hydraulic process at one meter 140
- Automobile horn push at one meter 120
- Automatic lathe at one meter 100
- Conversation at one meter 70
- Workshop (mechanical) 80

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 The reduction of noise may be brought about
by a variety of methods. Some of these
methods are:
 Control of the noise at the source.
 Isolation of the noise.
 Use of baffles and sound absorbers.
 Acoustical treatment.
 Use of ear protection devices.

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 USE OF COLOR
• The objective of utilizing scientifically selected
colors is to bring about a clear three dimensional
vision.
• Color codes have been developed for particular
uses. The red, yellow and green of traffic lights is a
well known example of color coding.
Red - danger; stop
Yellow - caution
Green - safety equipment
• It is advisable to paint the roof of the industrial
building with a minimum reflection index of 0.7, the
walls
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Different colors have different psychological effects.
• Red - Hot and heavy, exciting, stimulating.
• Orange - Hot, exciting and stimulating less than red.
• Yellow - Hot, exciting lovely.
• Green - Fresh and light, pacific.
• Blue - Light, pacific.
• Violet - Light, loneliness.
• White - Cold, brilliant (seems to increase volume).
• Black - Hot (seems to decrease volume) depressing.

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 SPACE REQUIREMENTS
• The layout man often finds himself involved in work space
arrangement; at any rate, he must determine the floor space
that will be required by an operator. The study of floor space
needed considers the following points:
• While at work, the operator's arms and hands should move as
easily as possible and he ought to reduce, to the minimum the
movement of his shoulders, his body and his person from one
position to another.

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• Fixed posts for utensils and materials should be assured.
• The disposition of utensils, materials and organs of maneuver
near and infront of the operator.
• Avoidance of the standing operator wherever possible. The
study of the working area should consider a proper and
comfortable position for the legs of the operator in an
armchair or on a stool.
• When the operator is transporting material, or when he is in a
position to push, or pull he should do it in such a way that:
• he is in an equilibrium position and
• he applies the possible minimum force to produce the effect.

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 PASSAGE IN AN INDUSTRIAL
BUILDING
• From the very beginning of the study one has to determine the
corridors within the building. Their width is determined
according to the internal transport system selected and
according to the clearance needed for passages.
• Principal corridors which normally start from one end of the
building and end at the other end are 3 to 5 meters wide.
• Corridors within the department:
1. passage for one person 60 cm,
2. passage for two persons 120 cm,
3. passage for three persons 170 cm.

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 SAFETY

• A good plant layout should consider the

safety of all personnel.

• Lack of adequate storage space which is

beyond the control of the foreman, can lead
to unsafe practices in the storage of
materials. Some of the safety hazards to be
watched for in plant layout are:
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• inadequate passage,
• insufficient storage space allowance for safe handling
procedures,
• insufficient handling equipment capacity,
• floor load capacity,
• floor obstructions,
• slippery finish floors,
• inadequate exits,
• inadequate stairs, ramps and ladders,
• inaccessible fire extinguisher and first aid boxes
• unguarded moving parts of equipment ,
• workers located under the above hazards and
• improper ventilation for removal of dangerous or toxic gases.

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• The layout man should give due
consideration to the problem of safety.
Overlooking the problem will lead to
 lower morale of the workers,
 lower productivity and
 heavy accident liability costs.

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 Selection
• Every layout plan has intangible costs which
to all intents and purposes cannot be
measured in terms of birr and cents.
• Moreover, a comparative cost analysis of
alternative layouts is sometimes a standoff,
no one plan has a clear-cut financial
advantage over the other. Essentially,
however, there are three:
1. balancing advantages against disadvantages;
2. cost comparison and justification; and
3. factor analysis rating.
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 Advantages versus Disadvantages
• Probably the easiest of the three evaluation
methods mentioned above is the listing of
advantages and disadvantages.
• It is also the least accurate; therefore, it is used
more for preliminary screening out of rough
alternatives.
• This pros and cons system involves merely listing in
columns or on sheets placed adjacent to each other
all the advantages of each alternative, below them
are listed the disadvantages.
• This simple comparison is surprisingly effective and
certainly is not a time consuming procedure
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 Cost Comparisons
• A more economical approach to the
evaluation problem is cost comparison, by
establishing the total factory cost of a
product and added investment for machine
tools, a comparison between alternatives is
possible.

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• In preparing a cost analysis, there are
basically two approaches we can
follow.
– We may either consider total cost involved
or
– We may consider only those costs that will
be affected by the project under
considerations.

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• A systematic way of classifying cost
elements and accumulating cost figures are
required. For this the following procedures
are recommended.
– prepare a worksheet(s) that picks up investment
requirements for each alternatives;
– prepare a worksheet that establishes operating
cost estimates, and
– make calculations to compare and justify
expenditures for alternative layout plans.

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 Factor Analysis
• The overall desires of what is wanted in
layout being planned are broken down into
so-called factors or considerations. They
may also be termed criteria or objectives.
Follows a list of the most commonly involved
factors or considerations; not in order of
importance.
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• ease of future expansion,
• adaptability and versatility,
• flexibility of layout,
• flow of materials effectiveness,
• materials handling effectiveness,
• storage effectiveness,
• space utilization,
• effectiveness of supporting service integration,
• safety and housekeeping,

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• working conditions and employee satisfaction,
• ease of supervision and control,
• appearance, promotions value, public or community relations,
• quality of products,
• maintenance problems,
• fit with company organization structure,
• equipment utilization,
• utilization of natural conditions or surroundings ,
• ability to meet capacity or requirements,
• investment or capital required and
• savings, payout, returns, profitability.

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 PROCEDURE FOR EVALUATING
ALTERNATIVES BY FACTOR ANALYSIS ?

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