Plant layout

Location can be defined as “a place to put something”. Facility location

means a place to put the facility. Facility location decisions are strategic,
long term, and non-repetitive in nature. Without sound location planning in
the beginning, the new facility may pose continuous operating
disadvantages for the future operations. Location decisions are affected by
many factors, both internal and external, to the organization's operations.
Internal factors include the technology used, the capacity, the financial
position, and the work force required. External factors include the
economic, political, and social conditions in the various localities. Thus, for
long term benefits of the facility, a sound and careful location planning is
required.

Location planning deals with determining the optimal location for one or
more new facilities to serve a set of customers. This type of problem arises
in many areas, such as location of manufacturing facility, storage facility,
etc. Location planning may involve finding the best site for the plant, which
is termed as plant location. Location planning may also involve deciding the
location of each specific piece of machinery and equipment in a particular
area of a facility ( Tompkins, J. A., et al., Facility Planning, Second
Edition , John Wiley & Sons, NY, 1996 ).

When does a facility location (plant location) decision arise?

 It may arise when a new facility is to be located

 In some cases, a poor site restricts the facility or plant operations and
subsequent expansions, thereby necessitating setting up the facility
at a new site.
 The growing volume of a business makes it advisable to establish
additional facilities in new territories.
 New economic, social, legal or political factors could suggest a
change of the location of the existing plant.

Factors affecting the facility location study

Location studies are normally made in two phases,

(1) The general territory selection phase and

(2) The exact site selection phase

The important factors to be considered for the selection of territory and
subsequent selection of a particular site are:

•  Market: It is a very important factor with respect to both phases of

location studies. If product is fragile and susceptible to spoilage, proximity
of the facility to the market is critical. If the product is relatively cheap and
transportation cost is high, a location close to the markets is desirable.

•  Raw material and supplies: The facility in general should be near to the
vendors / suppliers. This will further reduce the transportation cost of
incoming materials and the lead-time of the inventory replenishment.

•  Transportation facilities: Transportation facilities must be available.

•  Climate: Climate is another important factor to be considered for the

facility location especially in industries where special constraints are
needed, for example the textile industry requires a high humidity zone.

•  Site size: The plot of land must be large enough to hold the facilities
required by the proposed facility. Sometimes a good site may not have the
required area.

•  Community attitude: Community attitude is difficult to evaluate. Normally

communities provide the overwhelming support to new industries, because
this generates significant employment opportunities to the local people.
Moreover, infrastructure development of the city or town progresses very
rapidly. In some cases, when there is a fear of generation of pollution,
community attitude goes in the reverse.

Other factors that may also affect the facility location decisions are
manpower availability, land cost, waste disposal, and pollution.

Requirements governing the choice of a plant in a city location

The requirements that govern the choice of a plant or a facility to be located

in a city location include availability of adequate supply of labor force, high
proportion of skilled employees, small plant site or multi-floor operations,
good communication facilities, good banking and health care delivery
system, and rapid contact with customers and suppliers.
Requirements governing the choice of a plant in a country location

The requirements that govern the choice of a plant or a facility to be located

in a country location include large plant site, lesser effort required for anti-
pollution measures, lower taxes, unskilled labor force requirement, and low
wages.

Techniques of conducting a facility location study

The following techniques may be used for deciding the best location of a
facility.

 Factor rating method

 Transportation method

Factor rating method

The factor rating method is explained below by an example of deciding the

best site out of the three proposed sites.

 To evaluate these alternative sites we identify five factors such as

raw material, market, land cost, community attitude, and
transportation facility.
 Provide the weights to each factor. Suppose we allocate 10 points to
market and raw material, 8 points to land cost, 7 points to community
attitude, and 6 points to transportation facilities.
 Rate each alternative for each factor on a scale of 10. Suppose, for
factor raw material the A alternative gets 9 points, B alternative gets
10 points and C alternative gets 8 points.
 Tabulate all the above information as given in Table 1.
 Repeat the same procedure (step 3 and 4) for other factors.
 Multiply the weights of each factor with the rating of each alternative
and record on the lower half of the rectangle under each alternative.
 Add the score of each alternative and record in front of Total.
 The best alternative is that alternative which has the maximum score.
If two or more alternatives have the maximum score, then those
alternatives should be selected and a separate evaluation should be
made for those alternatives only.
 Table 1: Factor Rating Chart

Factors Weight Location  Location  Location 

s A B C
Raw material 10 9 10 8

90 100 80
Market 10 8 8 9

80 80 90
Land cost 8 7 8 8

56 64 64
Community 7 10 9 10
attitude
70 63 70
Transportation 6 8 7 10
facilities
48 42 60
Total 347 349 364*

* Best Alternative is Location C  

Transportation method:

The transportation problem is concerned with the distribution of goods or

services from various sources to various destinations. The transportation
problem can be formulated as a linear programming problem. The total
transportation cost at various locations can be calculated and the location
with the least total transportation cost can be chosen (Turner, W.C, et al.,
Introduction to Industrial and System Engineering, Second Edition, Prentice
–Hall, Inc. New Jersey 1987).

Problem 1:

Suppose a manufacturing unit has two plants at location X and Y . These

plants ship the parts to five distribution centers namely A, B, C, D, and E .
These distribution centers, in turn, supply to retail outlets. The cost of
transportation of a single part varies from manufacturing unit to distribution
center. Table 2 provides the information of per unit cost from various
sources to various destinations. For example, from plant X to distribution
center A , the unit cost of transportation is Rs.30 per unit. Moreover, Table
2 also provides the information regarding the capacity of manufacturing
units and demand of various distribution centers.

Table 2: Per-unit Cost Between Various Sources and Destinations

A B C D E Capacity
Plant X Rs.30 Rs.25 Rs.35 Rs.34 Rs.41 1000
Plant Y Rs.32 Rs.28 Rs.32 Rs.42 Rs.40 1000
Deman 500 700 300 400 600 200
d 0
250
0

Since, the demand is more than the supply, the company is planning to
install another unit with a capacity of 500 units at different location to
reduce the transportation cost as well as to meet the demand. Two new
locations Z and T are possible. The per unit transportation cost from
plants Z and T is given in Table 3. Which location the company should opt
for, so that the transportation cost is minimum?

Table 3: Per-unit Transportation Cost Between Sources And

Destinations

A B C D E Capacity
Plant Z Rs.25 Rs.21 Rs.32 Rs.28 Rs.37 500
Plant T Rs.30 Rs.25 Rs.28 Rs.40 Rs.39 500

Solution:

The two transportation problems can be formulated, one with site Z and

another with site T . Table 4 and Table 5 respectively give the formulation
for site Z and site T .
 Table 4

A B C D E Capacity
Plant X Rs.30 Rs.25 Rs.35 Rs.34 Rs.41 1000
Plant Y Rs.32 Rs.28 Rs.32 Rs.42 Rs.40 1000
Plant Z Rs.25 Rs.21 Rs.32 Rs.28 Rs.37 500
Deman 500 700 300 400 600 250
d 0
250
0
 

Table 5

A B C D E Capacity
Plant X Rs.30 Rs.25 Rs.35 Rs.34 Rs.41 1000
Plant Y Rs.32 Rs.28 Rs.32 Rs.42 Rs.40 1000
Plant T Rs.30 Rs.25 Rs.28 Rs.40 Rs.39 500
Deman 500 700 300 400 600 250
d 0
250
0
 

Both the transportation problems need to be solved independently. Though

there are many methods to solve the transportation problems, but the least
cost assignment method is selected to solve the problems given in Table
4 and Table 5. The solution methodology is not provided. The learners' are
advised to go through the reference related to solution methodology of
transportation problems. The solution of the problem with site Z is given
in Table 6 and with site T is given in Table 7.

Table 6

A B C D E Capacity
Plant X Rs.30 Rs.25 Rs.35 Rs.34 Rs.41 1000

500 200 300

 Plant Y Rs.32 Rs.28 Rs.32 Rs.42 Rs.40 1000

300 100 600

Plant Z Rs.25 Rs.21 Rs.32 Rs.28 Rs.37 500

500
Deman 500 700 300 400 600 250
d 0
250
0

The total cost of transportation if the plant is located at Z is:

Total cost = 500 x 30 + 200 x 25 + 300 x 34 + 300 x 32 + 100 x 42 + 600 x

40 + 500 x 21

= Rs.78500

Table 7

A B C D E Capacity
Plant X Rs.30 Rs.25 Rs.35 Rs.34 Rs.41 1000

300 700
Plant Y Rs.32 Rs.28 Rs.32 Rs.42 Rs.40 1000

400 600
Plant T Rs.30 Rs.25 Rs.28 Rs.40 Rs.39 500

200 300
Deman 500 700 300 400 600 250
d 0
250
0

The total cost of transportation if the plant is located at T is:

Total cost = 300 x 30 + 700 x 25 + 400 x 42 + 600 x 40 + 200 x 30 + 300 x
28= Rs. 81700

The total transportation cost is less in the case when new plant is located at
site Z.

Facilities Layout Design and Facilities Location

Facilities layout design refers to the arrangement of all equipment,

machinery, and furnishings within a building envelope after considering the
various objectives of the facility. The layout consists of production areas,
support areas, and the personnel areas in the building (( Tompkins, J. A., et
al., Facility Planning, Second Edition , John Wiley & Sons, NY,1996 ).

Need of Facilities Layout Design

The need for facilities layout design arises both in the process of designing
a new layout and in redesigning an existing layout. The need in the former
case is obvious but in the latter case it is because of many developments
as well as many problems with in the facility such as change in the product
design, obsolescence of existing facilities, change in demand, frequent
accidents, more scrap and rework, market shift, introduction of a new
product etc.

Objectives of Facilities Layout Design

Primary objectives of a typical facility layout include

(1) Overall integration and effective use of man, machine, material, and
supporting services,

(2) Minimization of material handling cost by suitably placing the facilities in

the best possible way,

(3) Better supervision and control,

(4) Employee's convenience, safety, improved morale and better working

environment,

(5) Higher flexibility and adaptability to changing conditions and

(6) Waste minimization and higher productivity.

Types of Layout

The basic types of layouts are:

 Product layout
 Process layout
 Fixed position layout
 Cellular layout

Product layout

This type of layout is generally used in systems where a product has to be

manufactured or assembled in large quantities. In product layout the
machinery and auxiliary services are located according to the processing
sequence of the product without any buffer storage within the line itself. A
pictorial representation of a product type of layout is given in Figure 1. The
advantages and disadvantages are given in Table 1.

Figure 1: A Pictorial Representation of Product Type of Layout

 Table 1: Advantages And Disadvantages of Product Type of Layout

ADVANTAGES
 Low material handling
cost per unit
 Less work in process
 Total production time
per unit is short
 Low unit cost due to
high volume
 Less skill is required for
personnel
 Smooth, simple, logical,
and direct flow
 Inspection can be
reduced
 Delays are reduced
 Effective supervision
and control
DISADVANTAGES
 Machine stoppage
stops the line
 Product design change
or process change
causes the layout to
become obsolete
 Slowest station paces
the line
 Higher equipment
investment usually
results
 Less machine utilization
   Less flexible

Process layout

In a process layout, (also referred to as a job shop layout) similar machines

and services are located together. Therefore, in a process type of layout all
drills are located in one area of the layout and all milling machines are
located in another area. A manufacturing example of a process layout is a
machine shop. Process layouts are also quite common in non-
manufacturing environments. Examples include hospitals, colleges, banks,
auto repair shops, and public libraries ( Muther, R, Systematic Layout
Planning, Second Edition , CBI Publishing Company, Inc. Boston, 1973 ).
A pictorial representation of a process type of layout is given in Figure 2.
The advantages and disadvantages are given in Table 2.

Figure 2: A Pictorial Representation of Process Type of Layout

  Table 2: Advantages And Disadvantages of Process Type of Layout

ADVANTAGES DISADVANTAGES
 Better machine  Increased material
utilization handling
 Highly flexible in  Increased work in
allocating personnel process
and equipment  Longer production lines
because general  Critical delays can
purpose machines are occur if the part
used. obtained from previous
 Diversity of tasks for operation is faulty
personnel  Routing and scheduling
 Greater incentives to pose continual
individual worker challenges
 Change in Product
design and process
design can be
incorporated easily
 More continuity of
production in
unforeseen conditions
like breakdown,
 shortages, absenteeism

Fixed location layout

In this type of layout, the product is kept at a fixed position and all other
material; components, tools, machines, workers, etc. are brought and
arranged around it. Then assembly or fabrication is carried out. The layout
of the fixed material location department involves the sequencing and
placement of workstations around the material or product. It is used in
aircraft assembly, shipbuilding, and most construction projects. A pictorial
representation of a fixed location type of layout is given in Figure 3. The
advantages and disadvantages are detailed in Table 3.

Figure 3: A Pictorial Representation of Fixed Location Type of Layout

  Table 3: Advantages And Disadvantages of Fixed Location Type of

Layout

ADVANTAGES DISADVANTAGES
 Material movement is  May result in increase
reduced space and greater work
 Promotes pride and in process
quality because an  Requires greater skill
individual can complete for personnel
the whole job  Personnel and
  Highly flexible; can equipment movement
accommodate changes is increased
 in product design,  Requires close control
product mix, and and coordination in
production volume production and
personnel scheduling

Cellular type layout

This type of layout is based on the grouping of parts to form product / part
families. Similar parts may be grouped into families based on common
processing sequences, shapes, tooling requirements, and so on. The
processing equipment required for a particular product family are grouped
together and placed in a manufacturing cell. The cells become, in effect,
miniature versions of product layouts. The cells may have movements of
parts between machines via conveyors or have a flow line connected by a
conveyor. This type of layout is used when various products have to be
produced in medium to large quantities. A pictorial representation of a
cellular type of layout is given in Figure 4. The advantages and
disadvantages are given in Table 4.

Figure 4: A Pictorial Representation Of Cellular Type Of Layout

Table 4: Advantages And Disadvantages Of Cellular Type Of Layout

Advantages Disadvantages
 Higher machine  Greater labor skills
utilization required
 Smoother flow lines  Flow balance required
and shorter travel in each cell
distances are expected  Has some of the
than for process layout disadvantages of
 Offers some benefits of product and process
both product and type of layout; it is a
process type of layout compromise between
because it is a the two
compromise between
the two
 Encourages
consideration of
general purpose
equipment