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Abstract: The type of plant layout has very significant impact on the structure and operation of a
manufacturing system. The current common and intuitive methods of selecting a suitable type of
layout by using simple graphs of production volume versus number of parts manufactured in the
plant, or production volume versus flexibility, can result in inaccurate decisions for such an
important issue. This paper presents an alternative approach to the choice of plant layouts, which
applies the Analytic Hierarchy Process (AHP). The methodology considers three main objectives for
the selection of layouts: increasing flexibility, increasing production volume and reducing manufac-
turing costs. Each objective has a number of subobjectives. Three main types of layout are
considered: functional (process) layout, group technology (cellular) layout and transfer (flow) lines.
The AHP methodology has been applied as a knowledge-based system, which is integrated with
another three knowledge-based systems for the technical and social conditions required for the
successful implementation of each of the above types of layout. An example of the application of the
AHP methodology is presented, which represents an important step towards proper validation of the
methodology.
However, there are many disadvantages with this type (c) flexibility in meeting customers orders,
of layout: (d) types of machinery,
(e) levels of labour skills,
(a) substantial materials handling cost;
(f) production control and scheduling difficulties,
(b) higher labour skill requirements;
(g) machine and labour utilization,
(c) large work-in-progress inventory;
(h) lead times and
(d) more complicated production planning and
(i) the materials handling systems required [1–10].
control; and
(e) long lead times. Some books and papers present production volume
versus number of parts manufactured in the plant
For the production of large quantities (mass produc- graphs or in production volume versus flexibility graphs
tion) of similar products, the product (or line) layout is [2, 6, 8, 11–13]. These graphs may include, in addition
generally used. In this layout the parts undergo the to the three main types of layout, other layouts such as
same sequence of operations, with special-purpose ma- flexible manufacturing systems or cells. The purpose of
chines. It has the advantages of smooth and logical flow these graphs is to aid the production engineer in select-
of production, which enables the use of specialized ing the suitable layout, after defining the production
materials handling equipment. It also has a small work- volume and number of parts to be manufactured. How-
in-progress inventory, a short cycle time, low materials ever, there are two main problems in using these
handling cost, low labour skill requirements and simple graphs:
production planning and control. Its main disadvantage
is the lack of flexibility, making it very difficult to 1. Contained within these graphs are many ‘grey’
introduce new products in the plant or to accommodate areas, where two layouts can be selected for the
substantial changes in the existing product design. Be- same volume/variety parameters.
cause of the speciality of machines and materials han- 2. It is not always easy and feasible to define accu-
dling equipment, this layout requires a high level of rately these two parameters, especially if it is a
capital investment to be set up. The extensive use of fabrication or manufacturing plant and not an as-
automated machinery and materials handling equip- sembly plant.
ment in product layouts has resulted in the develop- Therefore, there is a need to use other more detailed
ment of transfer lines, where the above characteristics techniques to make such an important decision. This
are more clear and distinct. paper proposes the use of the Analytic Hierarchy Pro-
The group technology (or cellular) layout groups pro- cess (AHP) as a multiattribute decision-making
cesses, people and machines in some rational manner to methodology to select the most suitable type of manu-
produce a family of similar parts. By applying this facturing plant layout.
grouping, the efficiency of mass production in product
layouts can be gained without much loss in the flexibil-
ity of producing different parts; i.e. it combines the
2 ANALYTIC HIERARCHY PROCESS (AHP)
advantages of both functional and product layouts. It
has many reported benefits for batch manufacture, e.g.
reduction in set-up time, lead time, work-in-progress As the decision for selecting a suitable layout is depen-
and materials handling, and improved product quality. dent on many factors of the manufacturing environ-
These advantages result in a reduction in many cost ment, the use of scoring models for multiattribute
elements in the manufacturing process, such as inven- decision-making represents a rational approach. The
tory cost and general operating costs. In addition, the basic purpose of using a scoring model for the different
labour costs are lower in this layout than in the process alternatives is to generate a score for each alternative
layout owing to application of the multifunctional such that an evaluation of the alternatives based on the
worker concept, which results in a reduction in the score is possible. The scoring is based on the contribu-
levels of staffing. Group technology also has an inte- tion of common attributes for each alternative towards
grated relationship with just-in-time (JIT) manufactur- a common objective. These may be subjective or objec-
tive attributes. The alternative that yields the ‘best’
ing systems and is considered as one of the main
score is chosen.
elements of JIT.
A significant drawback of many unweighted and
Many production engineering and management text-
weighted scoring models is that they neglect the issue of
books and a few published papers address the problem
inconsistency on the part of the decision-maker [14].
of selecting a suitable layout for a given manufacturing
Inconsistency is a major bias in human judgement that
environment. The majority of these textbooks and pa-
accounts for a large portion of human deficiencies
pers describe the characteristics of each layout, such as:
in planning and evaluation. The more alternatives
(a) the production volume, and attributes or factors in the evaluation problem,
(b) batch sizes, the more significant the inconsistency becomes. This
Proc Instn Mech Engrs Vol 213 Part B B07598 © IMechE 1999
AN ANALYTIC HIERARCHY PROCESS APPROACH TO MANUFACTURING PLANT LAYOUT 399
problem of inconsistency can be overcome by using the (c) evaluation and selection of materials handling al-
Analytical Hierarchy Process (AHP). ternatives [31, 32];
The AHP is a simple method, developed by Saaty (d) the selection of vendors [33];
[15, 16], to structure a complex multiattribute evalua- (e) rating the pairs of potentially adjacent departments
tion problem hierarchically. It very closely mimics the in the facility layout problem [34]; and
human decision-making process and incorporates in- (f) determining what to benchmark in industry [17].
consistency. The hierarchy consists of the overall objec-
tive at the top level, attributes and subattributes, if any,
3 HIERARCHY OF PLANT LAYOUT
at the middle level and the different alternatives at the
SELECTION
lowest level. Pairwise comparisons of the hierarchy
elements in each level (such as attributes and alterna-
tives) can then be established using a scale indicating The problem of selecting the best plant layout for
the strength with which one element dominates another certain production conditions has been structured in a
with respect to a higher-level element. An indicator of four-level hierarchy. The first level contains the main
consistency in making the pairwise comparison can be objective (the focus), which is the best suitable type of
calculated. If good consistency is not obtained, the user layout. The second level consists of the three main
can repeat the comparison. The scaling process can attributes (objectives), which are the major consider-
then be transformed into priority weights (scores) to ations for all manufacturers [6] and which affect di-
rectly the selected layout. They are: flexibility, 6olume
compare the suitability of the alternatives in achieving
and cost. Each of these attributes consists of a number
the overall objective.
of subattributes. The subattributes are included in the
The AHP methodology has many advantages:
third level of the hierarchy. The fourth and last level
1. Because of the hierarchical structure, a subjective consists of the three alternative layouts: transfer lines
decision process can be formalized and made sys- (product layout), group technology, and functional lay-
tematic, and thereby more accurate decisions can be out (process layout). Figure 1 shows the structure of the
reached. This structure also gives a great deal of hierarchy.
information on the structure and function of a In the following sections, the three main attributes
system and thereafter on the evaluation of the dif- and their subattributes are discussed. In addition, the
ferent factors and alternatives. degree of preference or comparison of the three differ-
2. It is possible to conduct sensitivity analysis of the ent types of layouts with respect to the attributes and
results (especially through the use of computers). subattributes is discussed.
3. It results in better communication, leading to clearer
understanding for the decision-maker [15, 17]. 3.1 Flexibility
This last advantage makes AHP ‘probably the recom- This attribute measures the level of flexibility required
mended approach for use with expert systems’ in multi- in the plant, i.e. the preference of flexibility over other
attribute decision-making [18]. The main problem with factors in the planned manufacturing system. Flexibility
AHP is the need for very tedious calculations, which can be defined as ‘the capability, as well as the ease (i.e.
can be made much easier using personal computer time, cost or any other resource) with which any change
software. An example of such software is the Expert can be accommodated by a manufacturing system’ [34].
Choice software package, which can greatly facilitate It is obvious that different types of layout will have
the use of AHP in the workplace [19, 20]. different levels of flexibility.
The Analytic Hierarchy Process has many reported Four types (subattributes) of flexibility are consid-
applications in many different fields of decision-making ered in the hierarchy to compare the flexibility of the
and its popularity has increased in recent years in alternative layouts. These are:
manufacturing and industrial applications. The most
reported applications in manufacturing are the selection 1. Wide range of products. This represents the ability of
and justification of advanced automated manufacturing the plant to manufacture a wide range of different
types of product, with different processing
systems and flexible manufacturing systems, such as the
requirements.
research studies presented in references [21] to [28].
2. Design changes. This represents the ability of the
Such applications need to include many different intan-
plant easily to accommodate design changes for the
gible factors, in addition to monetary factors. This need
manufactured products.
justifies the many applications of AHP because of its
3. Changes in capacity. This is related to the type of
ability to consider both types of factors in evaluating
production volume demand for the manufactured
alternatives. Other reported applications are:
products and measures the ability of the plant to
(a) the selection of assembly systems [29]; operate profitably at different production volumes,
(b) inventory management and control [19, 30]; i.e. production volume flexibility.
B07598 © IMechE 1999 Proc Instn Mech Engrs Vol 213 Part B
400 Y T ABDUL-HAMID, A K KOCHHAR AND M K KHAN
4. Process flexibility. This is the ability to change to maximize the number of items produced in a unit
products within a given mix and with low set-up time interval in order to compete economically in the
times. It is measured by set-up times [35]. This high-volume market. This attribute is evaluated accord-
aspect is very important for the implementation of ing to the following two subattributes:
just-in-time manufacturing systems, where the batch
1. High annual production 6olume. This represents the
size is required to be very small and therefore the
ability of the plant to produce large quantities of
set-up of machines should be short.
parts annually (total number of each type of part).
Functional layout and group technology layout are the 2. Large customer order size (batch size). This repre-
best for satisfying the first three aspects of flexibility sents the ability of the plant to produce a large
owing to the generality of machines, the ease of chang- number of units in an uninterrupted run of the
ing processing routes in such systems and the ease of machines. Large customer orders are usually in tens
duplicating resources, and in the assignment or removal of thousands to millions of specific units per order.
of resources for the production of specific products. On
Transfer lines are preferred over other layouts in satis-
the other hand, it is nearly impossible for such aspects
fying this main attribute and its subattributes. They are
of flexibility to be satisfied in transfer lines. Transfer
usually designed for a high annual production volume,
lines are designed and built to manufacture only a very
tens or hundreds of thousands to millions, of a few
few and limited number of standard parts, with specific
standard products, with short cycle times. In addition,
production volumes.
they are mostly designed for a manufacturing environ-
For the fourth aspect of flexibility, it is clear that
ment where the required orders are known and stable
group technology layouts are the best in gaining high
for the foreseeable future. In contrast, functional and
process flexibility. A short set-up time is one of the
group layouts are most suitable for small to medium
main requirements and characteristics of GT layouts.
production volumes and small batch sizes, where
Transfer lines are in the other extreme position, where
throughput times are much longer than in transfer
changing the set-up (if it is possible) is very difficult and
lines.
long. Changing the set-up in functional layouts is much
easier than in transfer lines but more difficult than in
group technology or cellular layouts [36]. 3.3 Cost reduction
1. Reduction in operating cost. This is the general cost tem (KBS). This AHP KBS is one of four integrated
required to run the plant efficiently, for example knowledge-based systems. The main objectives of these
overhead costs, materials handling costs, repair and KBSs are to select a suitable type of layout and to
maintenance costs and cost of indirect materials ensure the presence of all technical and social (environ-
used by the machines. mental) conditions required for the successful imple-
2. Reduction in capital in6estment. This is the total cost mentation of any selected type of layout. The technical
to establish the plant, from the first plans to the and environmental conditions and subconditions, for
final testing and proving of machines and equip- each of the layouts, were incorporated in a separate
ment, including the costs of buildings, machines and KBS and are not discussed in this paper. However, they
the engineering costs. are integrated with the present AHP KBS. Two main
3. Reduction in in6entory cost. This includes the costs reasons were behind the decision to apply the AHP
of raw materials, work-in-progress and finished model as a KBS:
goods inventories. These costs vary with the differ-
(a) the very tedious calculations of the AHP model,
ent types of layout.
which can be eased greatly by using personal
4. Reduction in labour cost. This represents the total
computers;
costs of direct operators, who run the machines, and
(b) the excellent user–system facilities of knowledge-
indirect workers in the plant, who perform other
based systems, which allow the user to understand
jobs in the plant such as maintenance, transporta-
easily the decision-making process of the model
tion, cleaning and others.
and the effect of changing any input data on the
Operating costs usually vary with the volume of pro- final decision.
duction and are often estimated as a multiple factor of
the direct labour cost. In general, the burden of these
costs on a manufactured part cost is lowest in transfer 4.1 Structure of the AHP knowledge base
lines and highest in functional layouts. In contrast,
The AHP knowledge base consists of 15 subprograms
transfer lines have the highest capital investment, be-
based on the AHP hierarchy for the selection of layouts
cause most of the machines and materials handling
described earlier. The first program (AHP1) calculates
equipment are specially designed and built for auto-
the relative importance of the three main attributes in
mated manufacture of specific parts.
the second level (flexibility, volume and cost) with
A functional layout often requires less capital invest-
respect to the focus. The AHP2, AHP3 and AHP4
ment to establish than a group technology layout,
modules calculate the relative importance of the subat-
although both of them may have the same types of
tributes (in the third level) with regard to the attributes
machines and equipment to manufacture the parts. This
of flexibility, cost and volume respectively, whereas
is due to two factors:
modules AHP5 to AHP14 calculate the relative weights
(a) the need to establish part families and machine of the three alternatives (types of layout) with respect to
groups and the different subattributes. The last subprogram, called
(b) possibly the need to duplicate some machines in AHP, computes the priority weight of each type of
more than one cell [37]. plant layout by using the data from the previous 14
subprograms. Figure 2 shows the overall structure of
Although the inventory of raw materials and finished
the 15 AHP subprograms, where the outputs from
goods can be higher in transfer lines than in other
modules AHP1 to AHP14 are used by the final AHP
layouts, they have a much smaller work-in-progress
program to calculate the priority weights of the three
inventory. Therefore, transfer lines are the best in re-
types of layout.
ducing inventory cost, followed by GT layouts and then
The user compares the preference or importance of
functional layouts. Transfer lines have the lowest
any two elements by using a scale of 1 to 9 and their
labour cost when compared with other types of layout.
reciprocals, as suggested by Saaty [16]. The numbers
This is because of the reduction in the number of
used in the scale, with their values in terms of prefer-
skilled operators and indirect workers. This is followed
ence, are shown to the user with each question. Each
by GT, where applying the concept of multifunctional
question has an associated explanation, which can be
labour reduces the total number of workers.
retrieved by the user before answering the question.
Results of the pairwise comparisons, their consis-
tency ratio and the relative weight of each element are
4 APPLYING THE AHP MODEL AS A presented to the user at the end of each of the 14
KNOWLEDGE-BASED SYSTEM subprograms (AHP1–AHP14). In each subprogram the
answers are acceptable if the consistency ratio of the
The AHP model for the selection of plant layouts has comparisons is no greater than 0.1, otherwise the sub-
been developed in the form of a knowledge-based sys- program is repeated to get new consistent answers from
B07598 © IMechE 1999 Proc Instn Mech Engrs Vol 213 Part B
402 Y T ABDUL-HAMID, A K KOCHHAR AND M K KHAN
Overall structure of the integrated 15 AHP subprograms
Fig. 2
Proc Instn Mech Engrs Vol 213 Part B B07598 © IMechE 1999
AN ANALYTIC HIERARCHY PROCESS APPROACH TO MANUFACTURING PLANT LAYOUT 403
Fig. 4 Pairwise comparisons of the subattributes with respect to the main attributes (AHP2, AHP3 and
AHP4) for the industrial data
B07598 © IMechE 1999 Proc Instn Mech Engrs Vol 213 Part B
404 Y T ABDUL-HAMID, A K KOCHHAR AND M K KHAN
Fig. 5 Pairwise comparisons of the alternative layouts with respect to the subattributes (AHP5 – AHP14)
for the industrial data
first step, the matrix of weights of alternatives with 3. Reducing the capital investment expenditure was
respect to the subattributes is multiplied with the vector considered more important than other cost reduc-
of weights of subattributes (this is done for every group tion subattributes (Fig. 4, AHP3) in selecting the
of subattributes combining to form one attribute). In type of layout. This is because the company wants
the second step, the resulting matrix, which consists of to keep the same plant and the same machinery for
the vectors of priority weights of alternatives with its production. Reducing inventory costs was calcu-
respect to the attributes, is multiplied by the vector of lated as the second important subattribute. Before
weights of attributes to produce the weights of alterna- implementing the group technology layout, the com-
tives [15, 16]. From this validation process, and from pany was organized functionally, with all the associ-
Figs 3 to 6, the following can be concluded: ated high inventory costs of raw materials,
1. Flexibility has the highest level of relative weight work-in-progress and finished products. Therefore,
among the three main attributes, followed by cost a major criterion and objective of the company
reduction and finally attaining high production vol- management in selecting a suitable type of layout
umes (Fig. 3, AHP1). This is expected for a com- was to reduce inventory costs.
pany that has a wide range of products and 4. Satisfying large customer order sizes was considered
launches one new product range every year. The more important than attaining high annual produc-
main strength of such a company is to compete by tion volume (Fig. 4, AHP4). This can be explained
satisfying the market demands of production flexi- by the fact that the plant does not manufacture to
bility with lower costs. stock. Manufacturing to stock requires high annual
2. Accommodating design changes was considered the production volumes. This plant manufactures prod-
most important among other flexibility subattributes ucts to customer demands.
(Fig. 4, AHP2). In such a manufacturing company it 5. In satisfying the four flexibility subattributes, the
is expected that many customers will require special group technology layout has the highest rating in
features on the required machine tools. Therefore, three of them: accommodating design changes,
this subattribute was the most important. accommodating changes in capacity and process
Proc Instn Mech Engrs Vol 213 Part B B07598 © IMechE 1999
AN ANALYTIC HIERARCHY PROCESS APPROACH TO MANUFACTURING PLANT LAYOUT 405
Fig. 6 Final results of the AHP KBS for the industrial data from the machine tool company
B07598 © IMechE 1999 Proc Instn Mech Engrs Vol 213 Part B
406 Y T ABDUL-HAMID, A K KOCHHAR AND M K KHAN
Proc Instn Mech Engrs Vol 213 Part B B07598 © IMechE 1999