Module 2

Facility Location and Layout

MISSION VISION CORE VALUES

CHRIST is a nurturing ground for an individual’s Excellence and Service Faith in God | Moral Uprightness
holistic development to make effective contribution to Love of Fellow Beings
the society in a dynamic environment Social Responsibility | Pursuit of Excellence
 CHRIST
Deemed to be University

Contents

Introduction and meaning, Need for selecting a suitable loca

tion, Factors influencing plant location, Weber’s theory of location.
General locational factors, and Specific locational factors for
manufacturing organization and for Service organization.

Objectives, principles and Types of plant layout. Process lay

out, Product
Layout, Combination layout, Fixed
position layout, Group layout. Physical Facilities.

Excellence and Service

 CHRIST
Deemed to be University

PLANT LOCATION
• A Plant is a place where men, machine, materials, money, equipment
etc., are brought together for manufacturing products.
• Plant location means deciding a suitable location, area, place etc.,
where the plant or factory will start functioning.
• Plant location involves two major activities:
First, to select a proper geographic region and Second, selecting a specific
site within the region.
• Plant location plays a major role in the design of a production system
as it determines the cost of :
1. Getting suitable raw material
2. Processing raw materials to finished goods
3. Finished products distribution to customers.
Excellence and Service
 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

● Favourable Labour Climate

Specific Locational ● Proximity to markets
Factors for ● Quality of life
● Proximity to Suppliers and
Manufacturing
Resources
Organization ● Utilities, Taxes and Real Estate
costs

Specific Locational
Factors for Service
Organization

Excellence and Service

 CHRIST
Deemed to be University

Three tier model for assessing the competitiveness of a

location globally

Excellence and Service

 CHRIST
Deemed to be University

Location Planning Method

Excellence and Service

 CHRIST
Deemed to be University

1. Factor Locating Method

● A general approach to evaluate locations that includes quantitative and

qualitative inputs
● Most widely used location technique
● Useful for service and industrial locations
● Rates locations using both –
● Tangible (quantitative) factors such as cost, expenses, travel, etc
● Intangible (qualitative) factors such as education quality, labour skills,
etc
Steps for Factor Locating Method –
Step 1 – Identify and list all the relevant factors for the location decision
Step 2 – Establish relative importance of each factor in the final decision
Step 3 – Rate the performance of each facility location using rating mechanism
Step 4 – compute a total score for each location, based on its performance against
each factor and rank them in the decreasing order of the score

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

2. Centre of Gravity Method

● A method for locating a distribution centre that minimizes distribution

costs
● Finds location of a single distribution centre serving several
destinations
● Used primarily for services
● Treats distribution costs as a linear function of the distance and the
quantity shipped
● The quantity to be shipped to each destination is assumed to be fixed
● The method necessitates to identify coordinates and weights shipped for
each location and includes the use of a map that shows the location of
destinations
● Centre of gravity method merely indicates the ideal location in the grid
map that would ensure that the weighted distance travelled on the whole
is minimum Excellence and Service
 CHRIST
Deemed to be University

Steps for Centre of Gravity

1. Locate each of the existing location on an X and Y coordinate grid map

2. Find out the X and Y coordinates of the new facility or plant by taking
weighted average of the X and Y coordinates of all the existing facilities
with the given formula

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

Example
The Mumbai banking company currently has four retail location within the
metropolitan area of a major city. Currently each retail outlet makes all of its
own breads and pastries from scratch. In order to reduce costs and ensure
consistency of the firm's products across all locations, the management has
decided to build a central commissary where the products will be prepared
and subsequently distributed to the four retail stores. The question now is
where to locate the commissary.
Store location X-Coordinate Y-Coordinate Quantity of product
sold
A 125 100 1250
B 250 75 3000
C 450 300 2750
D 200 350 1500

Excellence and Service

 CHRIST
Deemed to be University

Solution

Excellence and Service

 CHRIST
Deemed to be University

Load Distance Method

● A mathematical model used to evaluate locations based on proximity

factors
● A load may be shipments from suppliers, shipments between plants or
to customers or it may be customers or employees travelling to or
from the facility.
● The firm seeks to minimise its load-distance (LD) score, generally by
choosing a location, so that large loads go short distances.
● To calculate LD score for any potential location, we use the actual
distance between any two points using GIS system, and simply
multiply the loads flowing to and from the facility by the distance
travelled.

Excellence and Service

 CHRIST
Deemed to be University

Locating on Grid

Excellence and Service

 CHRIST
Deemed to be University

Steps for Load Distance Method

1. Find the relative grid position of all the existing and perspective
locations
2. Find the load at each location. This can be the number of people
served or the amount of goods to be transported
3. Measure the distance of the perspective locations from each of the
existing locations
4. Find the product of load and the distance from each facility centres
5. Find the sum of the product for each perspective locations
6. Select the smallest value of the sum as the most suitable location.

Excellence and Service

 CHRIST
Deemed to be University

Steps and Formula to find

distance

Excellence and Service

 CHRIST
Deemed to be University

Load Distance Method - Example:

A manufacturer is considering where to locate a new plant. The plant will
ship 100 units of its production to a customer at coordinates (10, 10) and
200 units to a second customer at (26, 20). Three plant locations are under
considerations:
A (5, 3)
B (18, 13)
C (30, 20)
Which location will minimise total load distance?

Excellence and Service

 CHRIST
Deemed to be University

Case Study

Excellence and Service

 CHRIST
Deemed to be University

Given Information

Excellence and Service

 CHRIST
Deemed to be University

Q 1 Central Location for CWH

Excellence and Service

 CHRIST
Deemed to be University

Consolidated data

Excellence and Service

 CHRIST
Deemed to be University

2. Calculating Load distance factor

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

Load distance for all CWH

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

Final Factor Rating method

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 Module 3
Facility Location and Layout

MISSION VISION CORE VALUES

CHRIST is a nurturing ground for an individual’s Excellence and Service Faith in God | Moral Uprightness
holistic development to make effective contribution to Love of Fellow Beings
the society in a dynamic environment Social Responsibility | Pursuit of Excellence
 CHRIST
Deemed to be University

Capacity and Capacity Planning

● The capacity of a facility is defined as the maximum load that can be

handled by it during a given period. The load can be expressed in terms
of the amount of inputs or outputs.
● When a company produces many products or services, the measure of
capacity in terms of output may not be suitable.
● Need for capacity planning includes –
○ To find the optimal capacity of the facility so that the sum of the costs of
under-capacity and over-capacity is the minimum
○ To keep the initial investment in the facility as low as possible to achieve break
even volume
○ Investment in facility capacity are long- term and can not be reversed easily
○ To satisfy the future demand of products without any shortages

Excellence and Service

 CHRIST
Deemed to be University

Types of Capacity

● Design Capacity – this is the capacity designed for the facility. It

depends upon the number and capacity of machines and equipment
coupled with labour. It represents the maximum rate of output that can
be achieved under ideal conditions
● Effective Capacity - It is the maximum rate of output which can be
output which can be achieved under different constraints like machine
adjustments like oiling, cleaning, or batches of different products, etc.
it is always lower than Designed capacity
● Actual Capacity – this the maximum output rate which is achieved
under the constraints of machine breakdown, labour inefficiencies and
absenteeism's, defective products, late deliveries of raw material from
suppliers, etc.

Excellence and Service

 CHRIST
Deemed to be University

Capacity Planning

● In the formula for utilization, design capacity is constant. Therefore,

utilization can be increased only by increasing the actual output.
● Actual output cannot be increased beyond the effective capacity as it is
the maximum limit of actual capacity.
● Thus, for increasing the utilization, effective capacity has to be
increased.
Excellence and Service
 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

CONCEPT OF PLANT
LAYOUT

Plant layout refers to the physical arrangement of production facilities. It is

the configuration of departments, work centers and equipment in the
conversion process. It is a floor plan of the physical facilities, which are
used in production.

Layout planning refers to the generation of several possible plans for the
spatial arrangement of physical facilities and select the one which
minimizes the distance between the departments.
Excellence and Service
 CHRIST
Deemed to be University

Continued ….

● According to Moore “Plant layout is a plan of an optimum

arrangement of facilities including personnel, operating equipment,
storage space, material handling equipment and all other supporting
services along with the design of best structure to contain all these
facilities”

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

TYPES OF PLANT LAYOUT

• PRODUCT LAYOUT OR LINE LAYOUT

• PROCESS LAYOUT OR FUNCTIONAL LAYOUT
• COMBINATION OR HYBRID LAYOUT
• FIXED TYPE OR PROJECT TYPE LAYOUT
• CELLULAR OR GROUP TECHNOLOGY LAYOUT

Excellence and Service

 CHRIST
Deemed to be University

1. PRODUCT LAYOUT OR LINE LAYOUT

● An arrangement based on the sequence of operations that are performed
during the manufacturing of a good or delivery of service
● Layout is dictated by the product – suited to manufacturing process with
single output
● High production items (volume) and stable demand with similar products
● Continuous flow, mass productions and flow shop processes are usually
physically organised by a product layout
● Other examples – credit card processing, Sub-way sandwich shops,
automobile assembly, etc

Excellence and Service

 CHRIST
Deemed to be University

WHEN TO USE

PRODUCT LAYOUT IS USED WHEN :

1. Production is “Make to stock” or mass production system
2. Limited variety and standardized product
3. Steady demand for the product
4.Balanced operations and continuity of material flow
For example : Standard Size Fasteners (Like: Nuts & Bolts)

Excellence and Service

 CHRIST
Deemed to be University

2. PROCESS LAYOUT OR FUNCTIONAL LAYOUT

● A format in which similar equipment or functions are grouped together.
A part being worked on then travels, according to the established
sequence of operations, from area to area, where proper machines are
located for each operations.
● It is also define as grouping together of like machines based upon
operational characteristics. The design is based on the production
process. It is suitable for a factory producing several products that
undergo a similar process.
● Ex – Typical in hospitals where areas are dedicated to particular types of
medical care, such as maternity wards and ICU.
● Machines performing drilling operations are grouped in drilling
department etc.

Excellence and Service

 CHRIST
Deemed to be University

Process Layout

Excellence and Service

 CHRIST
Deemed to be University

WHEN TO USE
PROCESS LAYOUT IS USED WHEN :
1. Machinery is highly expensive and easily moved
2. Variety of products is high and also in the case of “Make to order”
production
3. There is small or intermittent demand for the products.
4. There is a wide variation in cycle time of operations of products.

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

COMBINATION OR HYBRID LAYOUT

● A combination of process and product layout combines the advantages

of both types of layout. A combination layout is possible where an item
is being made in different types and sizes.
● Here, it maintains some of the efficiencies of product layout and some
of the flexibility of process layouts.
● Here, machinery is arranged in a process layout but the process
grouping is then arranged in a sequence to manufacture various types
and sizes of products. It is also noted that the sequence of operations
remain same with the variety of products and sizes.
● Ex – Group technology and manufacturing cells – Used Just-in-time
manufacturing, Grocery stores, etc

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

FIXED POSTION LAYOUT

Layout in which product or project remains stationary and workers, material
and machines are moved as needed.
FIXED POSTION LAYOUT IS USED WHEN :
1. The operation requires only hand tools or single machine
2. Making only one or few pieces of product
3. The cost of moving material is very high

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

PRINCIPLES OF PLANT LAYOUT

1. Principle Of Integration
2. Principle Of Minimum Distance
3. Principle Of Cubic Space Utilization
4. Principle Of Flow
5. Principle Of Maximum Flexibility
6. Principle Of Safety, Security And Satisfaction
7. Principle Of Minimum Handling

Excellence and Service

 CHRIST
Deemed to be University

Steps involved in
Designing a
plant layout

Excellence and Service

 CHRIST
Deemed to be University

Understand Operation Process Chart

This is also known as outline process

chart and it provides a compact over all
view of the whole system of operations
involved in the production of a product.
In this chart only the main activities (i.e.
operations and inspections) carried out
to complete a job are recorded in the
sequence of their occurrence but
irrespective of where they are performed
and who performs them.

Excellence and Service

 CHRIST
Deemed to be University

Flow Process Chart

A flow process chart is a chart

showing the sequence of the
flow of a product by way of
recording all activities/events
under review with appropriate
symbols. It utilizes symbols of
operation, transportation,
inspection, delay and
permanent storage. The
operation times and distances
moved are also recorded along
the symbols side

Excellence and Service

 CHRIST
Deemed to be University

Design of Layout – Two major Requirements

When cost of travel is

important:
Collecting information
such as:
● Number of loads per
day
● Cost per distance
travelled

When the process

relationship is
important
● Relationship chart
Excellence and Service
 CHRIST
Deemed to be University

Qualitative approach to Layout Design

The qualitative measure links some criteria to the closeness required

between a pair of departments.
There are computer packages available for qualitative design of process
layouts – Automated Layout Design Program (ALDEP) and Computerized
Relationship Layout Planning (CORELAP).
RELATIONSHIP CHART

Excellence and Service

 CHRIST
Deemed to be University

RELATIONSHIP CHART OF A REAL LAYOUT

Excellence and Service

 CHRIST
Deemed to be University

Example:

Municipal Hospital has made the

matrix as shown below – to show the
closeness ratings of the various
departments for its proposed building.
The matrix shows, for example, the
closeness rating between department
D1 and D2 as 2, department D1 and
D3 as 4, D1 and D8 as 5. Make a
layout for the hospital building keeping
in view the various closeness ratings in
a 3 by 3 grid.
(1- Absolutely necessary, 6 –
Undesirable)
Excellence and Service
 CHRIST
Deemed to be University

Steps:

Steps -
● Make the list of department pair with rating 1 and 6 –
● Make a network of departments having the rating 1 with the department
occurring most frequently at the centre. similarly make a note of
departments with rating 6 not to be kept together or aside.
● Keeping in view the above networks, subjectively place the departments
in the given number of cells.

Excellence and Service

 CHRIST
Deemed to be University

Solution:

List of the departments pairs with rating 1 and 6 –

Rating 1 Rating 6
D1-D4 D2-D3
D3-D4 D5-D6
D1-D9 D2-D8
D4-D8 D4-D9
D8-D9

With trial and error method,

departments can be placed keeping in
mind the given closeness rating

Excellence and Service

 CHRIST
Deemed to be University

D8 D4 D3

D9 D1 D6

D2 D5 D7

Excellence and Service

 CHRIST
Deemed to be University

Quantitative Approach to Layout design

● In process layouts, two or more layouts can be compared to find out the
layout which minimises the total load-distance value of the various
products manufactured. Here, Load means the total number of units of
different products any department processes. Distance means the
distance between any two departments.
● To calculate load-distance, formula applied will be
Load * Distance travelled

Excellence and Service

 CHRIST
Deemed to be University

Excellence and Service

 CHRIST
Deemed to be University

Distance travelled in layouts A and B

Produc Department Quantity per Distance travelled Distance travelled

t Processing month in case of Layout in case of Layout
Sequence A B
V 5-7-2-9 4000 40+30+30= 100 30+10+10=50
W 4-6-3-7-8-9 1000 10+20+10+10+1 20+10+20+10+30
0 = 60 = 90
X 1-2-7-8 2000 50 50
Y 5-2-1-7-9 3000 60 90
Z 3-4-7-8-9 1000 50 80

Excellence and Service

 CHRIST
Deemed to be University

Load – Distance Value for both the Layouts

Prod Quantit Distance Distance Layout A = Layout B =

uct y per travelled in travelled in Quantity * Quantity *
month case of Layout case of Distance Distance
A Layout B
V 4000 100 50 400000 200000
W 1000 60 90 60000 90000
X 2000 50 50 100000 100000
Y 3000 60 90 180000 270000
Z 1000 50 80 50000 80000
Total 790000 740000

Excellence and Service

 CHRIST
Deemed to be University

● https://www.youtube.com/watch?v=lFkJCpD0_V0

Excellence and Service

 CHRIST
Deemed to be University
SIMPLE DESIGN OF SERVICE LAYOUT -
HOSPITAL

Excellence and Service

 CHRIST
Deemed to be University

RESTAURANT LAYOUT

Excellence and Service