Operations

Management
Layout Strategy
Chapter 9
9-1

Outline
Strategic Importance of Layout Decisions.
Fixed-Position Layout.
Office Layout.
Process-Oriented Layout (Flow graphs).
Retail Layout.
Warehouse Layout.
Product-Oriented Layout (Assembly line balancing).
9-2

What is Facility Layout

Location or arrangement of everything
within & around buildings.
Objectives are to maximize:

Utilization of space, equipment, & people.

Efficient flow of information, material, & people.

Employee morale & safety.

Trend is towards flexible and dynamic layouts.

9-3

Facility Layout
Helps achieve competitive advantage:
Better, faster, cheaper.

Determines productivity, cost, quality,

flexibility, image, etc.
May involve a blend of strategies.

9-4

Six Layout Strategies

1. Fixed-position layout.

For large unique projects such as ships and buildings.

2. Office layout.

Positions workers, equipment, and spaces/offices to

provide for movement of information and material.

3. Process-oriented layout.

For low-volume, high-variety production.

9-5

Six Layout Strategies - continued

4. Retail/service layout.

Arranges facility and allocates shelf space in light of

customer behavior.

5. Warehouse layout.

Addresses trade-offs between space utilization and material

handling.

6. Product-oriented layout.

For repetitive or continuous production.

9-6

Layout Strategies
Project

Job Shop

(fixed-position)

Examples

Problem

(Process-oriented)

Office

Ingal Ship
Building

Shouldice
Hospital

Allstate
Insurance

Pittsburgh Airport

Olive Garden

Microsoft

Move material
to limited
storage areas
at the site.

Manage varied
material flow for
each product.

Locate workers
requiring contact
close to each
other.

9-7

Layout Strategies
Warehouse
Retail

Examples

Problem

(storage)

Repetitive
/Continuous
(Product-oriented)

Federal-Moguls
Warehouse

Sonys TV
Assembly Line

Famous-Barr

The Gaps
distribution center

Dodge
Caravans

Expose
customer to
high-margin
items.

Balance cost for

storage and
material
handling.

Krogers
Supermarket

9-8

Equalize the
task time at
each
workstation.

Requirements for a Good Layout

Understand capacity and space requirements.
Understand information flows.
Understand cost of people and product flows.
Select appropriate material handling equipment.
Consider environment and aesthetics.
Consider safety and regulations.

9-9

Constraints on Layout Objectives

Product/service design.
Volume of business.
Process equipment & capacity.
Quality of work life.
Building and site.

9-10

1. Fixed-Position Layout
Project is stationary.

Special purpose: Construction, shipbuilding, etc.

Workers and equipment come to site.

Complicating factors.

Limited space at site.

Changing material needs.

Unique projects.

9-11

2. Office Layout
Positions people, equipment, & offices.

Usually for maximum information flow.

Also can consider material flow.

Arranged by process or product.

Example: Payroll dept. is by process.

Different cultures have different

expectations for space.
Relationship (or proximity) chart used.
9-12

Relationship (Proximity) Chart

Uses 6 levels to express desired proximity.

A = Absolutely necessary
E = Especially important
I = Important
O= Ordinary importance
U = Unimportant
X = Not desirable
9-13

Relationship (Proximity) Chart

1 President

2 Costing

3 Engineering

4 Presidents Secretary

5 Photocopiers

9-14

U
I
E

A
U

Relationship (Proximity) Chart

1 President
2 Costing
3 Engineering
4 Presidents Secretary
5 Photocopiers

Can determine layout

using proximity diagram
O
E
U
A

U
I
E

A
U

X
E

9-15

Office Layout
1 President
2 Costing
3 Engineering
4 Presidents Secretary
5 Photocopiers

O
E
U
A

1
U
I
E

A
U

Offices 2-5 are to be same size.

Office 1 (Presidents) is twice as
large.

9-16

X
E

Locate 5 offices in a rectangular

space.

Office Layout
Photocopiers
(5)

Presidents
Secretary
(4)

Corridor
Engineering
(3)

Costing
(2)

9-17

President
(1)

3. Process-Oriented Layout
Place departments with large flows of
material or people close together.
Similar processes and equipment are
located in close proximity.

For example, all x-ray machines in same area.

Used with process-focused processes.

Low volume, high variety.

9-18

Emergency Room Layout

ry

E.R.Triage
room

Patient A broken leg

E.R. Admissions

Su
rge

Patient B - erratic
pacemaker

Hallway
Ra
dio
log
y

E.R. beds
9-19

Pharmacy

Billing/exit

Process-Oriented Layout Advantages

Flexibility.

Allows wide variety of products.

Low fixed costs for general

purpose equipment.
Breakdown of one machine or
worker does not stop
processing.

9-20

Process-Oriented Layout
Disadvantages
Scheduling is difficult.
High variable cost.
High work-in-process
inventory and waiting.
High labor skills required.

9-21

Developing a Process-Oriented
Layout by Hand
Goal: Minimize cost of moving between departments.
1 Construct a from-to matrix.
2 Determine space requirements for each department.
3 Develop an initial layout and try to place departments with
large flows close together.
4 Determine the cost of this initial layout.
5 Improve the initial layout (by hand or more sophisticated
means).
6 Consider factors in addition to transportation cost.

9-22

Cost of Process-Oriented Layout

n

Minimize cost

X C
ij ij

i 1 j 1

where n total number of work centers or departments

i,j

individual departments

number of loads moved from department i to department j

ij
ij

cost to move a load between department i and department j

9-23

Flows of Parts (loads/week)

to
1

from

40

100

10

40

10

80

50

10

20

10

20
0

20

20
9-24

0
0

0
0

Interdepartmental Flow of Parts

Number of loads/week between departments
1
1
2

50

100

20

30

50

10

20

100

50

3
4
5

6
9-25

Initial Layout
Room 1

Room 2

Room 3

Assembly
Department
(1)

Printing
Department
(2)

Machine shop
Department
(3)

Receiving
Department
(4)

Shipping
Department
(5)

Testing
Department
(6)

Room 4

Room 5

Room 6

9-26

Initial Layout Flow Graph

Showing Loads/Week
100
1

50

30
20

50

10
50

9-27

20

100

Cost of Initial Layout

1-2 50 = 50*1
1-3 200 = 100*2
1-6 40 = 20*2
2-3 30 = 30*1
2-4 50 = 50*1
2-5 10 = 10*1
3-4 40 = 20*2
3-6 100 = 100*1
4-5 50 = 50*1
Total = $570

Cost per load for adjacent locations = $1

Cost per load for non-adjacent locations = $2

100
1

50

30
20

50

10
50

9-28

20

100

Large Flows in Initial Layout

100
1

50

30
20

50

10
5

50

20

100

Largest Flows: 100 for 1-3 & 3-6, so put 3 close to 1 and 6.
50 for 1-2, 2-4 & 4-5 ,
9-29

Improved Layout Flow Graph

30
2

50

20

50

100

100

20

10

50

9-30

Improved Layout
Room 1

Room 2

Room 3

Printing
Department
(2)

Assembly
Department
(1)

Machine shop
Department
(3)

Receiving
Department
(4)

Shipping
Department
(5)

Testing
Department
(6)

Room 4

Room 5

Room 6

9-31

Cost of Improved Layout

1-2 50 = 50*1
1-3 100 = 100*1
1-6 20 = 20*1
2-3 60 = 30*2
2-4 50 = 50*1
2-5 10 = 10*1
3-4 40 = 20*2
3-6 100 = 100*1
4-5 50 = 50*1
Total = $480

Cost per load for adjacent locations = $1

Cost per load for non-adjacent locations = $2

30
2

50

20

50

100

20

100

10

50

9-32

Alternative Improved Layout

20
1

100

50

50

20

30

100

50

4
10

9-33

Cost of Alternative Improved Layout

Is this best?

20
1

100
30

50

50

100

50

4
10

9-34

20

1-2 50 = 50*1
1-3 100 = 100*1
1-6 40 = 20*2
2-3 30 = 30*1
2-4 50 = 50*1
2-5 20 = 10*2
3-4 20 = 20*1
3-6 100 = 100*1
4-5 50 = 50*1
Total = $460

Cost per load for adjacent locations = $1

Cost per load for non-adjacent locations = $2

Alternative Improved Layout

Room 1

Room 2

Room 3

Assembly
Department
(1)

Machine shop
Department
(3)

Testing
Department
(6)

Printing
Department
(2)

Receiving
Department
(4)

Shipping
Department
(5)

Room 4

Room 5

Room 6

9-35

Layout Example 2
Given the following tables of interdepartmental flows and distances
between locations A-E, locate the five departments to minimize the
total distancexflow.
Interdepartmental flows
1
2
3
4

1
-

2
13
-

3
18
15
-

4
3
0
0
-

5
0
6
4
4

A
B
C
D
E

9-36

Distances between locations

A
B
C
D
E
9
8
12
14
9
9
6
7
8
9
4
9
12
6
4
14
14

14

Layout Example 2
Largest flow 1-3 (flow=18) should be in closest locations: C&D
Could have: Solution 1: C=1 and D=3 or
Solution 2: C=3 and D=1
Interdepartmental flows
1
2
3
4

1
-

2
13
-

3
18
15
-

4
3
0
0
-

5
0
6
4
4

A
B
C
D
E

9-37

Distances between locations

A
B
C
D
E
9
8
12
14
9
9
6
7
8
9
4
9
12
6
4
14
14

14

Layout Example 2
Next largest flow is 2-3, so 2 should be placed in location closest to 3.
Solution 1: D=3 and closest open location to D is B, so B=2, C=1, D=3.
Solution 2: C=3 and closest open location to C is A, so A=2, C=3, D=1.
Interdepartmental flows
1
2
3
4

1
-

2
13
-

3
18
15
-

4
3
0
0
-

5
0
6
4
4

A
B
C
D
E

9-38

Distances between locations

A
B
C
D
E
9
8
12
14
9
9
6
7
8
9
4
9
12
6
4
14
14

14

Layout Example 2
Next largest flow is 1-2, but 1 and 2 are already located.
So consider next largest flow 2-5.
Solution 1: B=2 and closest open location to B is E, so A=4,B=2,C=1, D=3,E=5.
Solution 2: A=2 and closest open location to A is B, so A=2,B=5,C=3, D=1,E=4.
Interdepartmental flows
1
2
3
4

1
-

2
13
-

3
18
15
-

4
3
0
0
-

5
0
6
4
4

A
B
C
D
E

9-39

Distances between locations

A
B
C
D
E
9
8
12
14
9
9
6
7
8
9
4
9
12
6
4
14
14

14

Layout Example 2
Solution 1: A=4,B=2,C=1, D=3,E=5.
Distance = 13x9 + 18x4 + 3x8 + 15x6 + 6x7 + 4x14 + 4x14 = 457

Solution 1
is best!

Solution 2: A=2,B=5,C=3, D=1,E=4.

Distance = 13x12 + 18x4 + 3x14 + 15x8 + 6x9 + 4x9 + 4x7 = 508
Interdepartmental flows
1
2
3
4

1
-

2
13
-

3
18
15
-

4
3
0
0
-

5
0
6
4
4

A
B
C
D
E

9-40

Distances between locations

A
B
C
D
E
9
8
12
14
9
9
6
7
8
9
4
9
12
6
4
14
14

14

Computer Programs for Layout

Many different programs:

CRAFT
SPACECRAFT
CRAFT 3-D
CORELAP
ALDEP

All are heuristic - not necessarily optimal!!

9-41

Work Cells in Process Layouts

Special case of product-oriented layout - in a
process-oriented facility.

Different machines brought together to make a product.

Use when high volume warrants special arrangement.

For 1 product or a small group of products.

Temporary arrangement.

Example: Assembly line set up to produce 3000

identical parts in a job shop.

9-42

Work Cell Floor Plan

Saws

Tool Room

Drills

Work Cell

9-43

Office

Work Cell Advantages

Lower:
Inventory.
Floor space.
Direct labor costs.

Higher:
Equipment utilization.
Employee
participation.
Quality.

9-44

Work Cells, Focused Work

Centers and the Focused Factory
Work Cell

A temporary assembly-line-oriented
arrangement of machines and personnel in
what is ordinarily a process-oriented facility.

Focused Work
Center

A permanent assembly-line-oriented
arrangement of machines and personnel in
what is ordinarily a process-oriented facility.

Focused Factory A permanent facility to produce a product or

component in a product-oriented facility.
9-45

4. Retail/Service Layout
Maximize product exposure to customers.

Maximize profitability per square foot of floor space or

per linear foot of shelf space.

Video

Decision variables:

Arrangement of store.

Store flow pattern.

Allocation of (shelf) space to products.

9-46

Retail Layouts - Rules of Thumb

Locate high-draw items around the periphery.
Use prominent locations (end aisle locations; first or
last aisle) for high-impulse and high margin items.
Remove crossover aisles to prevent customers from
moving between aisles.
Distribute power items (that dominate a shopping trip)
around store to increase the viewing of other items.

Locate far apart.

Locate on both sides of an aisle.

9-47

Grocery Store Layout

9-48

Retail Store Shelf Space

Can use computerized tools

to manage shelf-space.
Track sales and product
location (scanner data).

9-49

PERT

PERT

PERT

PERT

PERT

Consider prominence of
shelf location and number
of facings.

5 facings

Servicescape Considerations
Ambient conditions.

Background characteristics such as lighting, sound,

smell, and temperature.

Spatial layout and functionality.

Customer circulation, aisle width, shelf spacing, etc.

Signs, Symbols, and Artifacts.

Various other characteristics of design (carpeting,

greeters, etc.).

9-50

5. Warehouse Layout
Balance space utilization & handling cost.
Similar to process layout.
Items moved between loading docks

& various storage areas.

Optimum layout depends on:

Variety of items stored.

Number of items picked.

9-51

Space Utilization vs. Handling

Costs
High space utilization (for storage).

Small, narrow aisles.

Product stacked high and deep (not easily accessible).

Ease of material handling.

Wide, short aisles.

Product easily accessible.

Design facility to optimize space utilization and

handling costs tradeoff.
9-52

Assigned vs. Random Stock

Locations
Assigned locations for products:

May be inefficient use of space.

Easier order picking and re-stocking.

Random locations:

More efficient use of space.

Added costs to track location of inventory and open space.

More difficult order picking and re-stocking.

Stock products to optimize cost and efficiencies

tradeoffs.
9-53

Cross Docking (Wal-Mart)

Transferring goods:

From incoming trucks at receiving

docks.
To outgoing trucks at shipping docks.

Avoids placing goods into

storage.
Requires suppliers provide
effective addressing (bar codes)
and packaging for rapid
transshipment.
9-54

Incoming

Outgoing

Order Picking
Collecting items on a customer order from various
locations in the warehouse.
Sequence items to minimize travel time in
warehouse to pick order.

Also, should locate items to be efficient to pick.

Combine several orders to reduce picking time.

Zoning: Assign separate pickers to different
zones in the warehouse.

Split order among several pickers.

9-55

6. Product-Oriented Layout
Used with product-focussed processes.

Facility organized around product.

High volume, low variety.

Types:

Fabrication line - Builds components.

Assembly line - Assembles components into

products.

9-56

Product-Oriented Layout
Divide work into small tasks. To be done by
workers or machines.
Assign tasks to workstations.
Balance output of each workstation.

To smooth operations of the line.

To make workload equal.

To minimize idle time.

To achieve desired output.

9-57

Product-Oriented Requirements
Standardized product.
High production volume.
Stable production quantities.
Uniform quality of raw materials &
components.

9-58

Product-Oriented Layout Advantages

Lower variable cost per unit.
Lower material handling costs.
Lower work-in-process
inventories.
Rapid throughput.
Easier training & supervision.

9-59

Product-Oriented Layout
Disadvantages
Higher capital investment for
special equipment.
Any work stoppage stops
whole process.
Lack of flexibility in volume
and product.

9-60

Repetitive Layout
Work Station 1

Work Station 2

T3

T1

T2

T4 Work
Station 3
T5

Belt Conveyor
Office

Note: 5 tasks or operations (T1-T5);

3 work stations (orange rectangles)
9-61

Assembly Line Balancing Steps

1.

Determine tasks (operations) & task times.

2.

Determine sequence of tasks.

3.

Draw precedence diagram.

4.

Calculate cycle time .

5.

Calculate minimum number of work stations, N.

6.

Assign tasks.

7.

Calculate efficiency.
9-62

Assembly Line Balancing Data

Usually we are given:
Production rate.

Units of product to be produced per unit time.

Production time available per day.

Tasks (operations) & task times.
Sequence of tasks.

9-63

Assembly Line Balancing

General Procedure
1. Determine cycle time - The time between production
of successive units. (May be measured in seconds,
minutes, etc.)
2. Calculate the theoretical minimum number of
workstations, denoted N. (May not be achievable.)
3. Assign tasks to workstations to balance the line.
Compute the efficiency.
9-64

Assembly Line Balancing Equations

Cycle time

Production time available

Production rate

Minimum
number of
= N =
work stations

Efficiency

Task times
Cycle time

Rounded up

Task times
(Actual number
* (Cycle time)
of work stations)

9-65

Assembly Line Balancing Example

Task
A
B
C
D
E

Time
0.1 min.
0.7 min.
1.0 min.
0.5 min.
0.2 min.
2.5 min.

Immediate
Predecessor
A
B
C
D

Suppose we want to
produce 300 units/day
and 8 hours are available
each day.

0.1

0.7

1.0

0.5

0.2

9-66

Assembly Line Balancing Example

Task
A
B
C
D
E

Time
0.1 min.
0.7 min.
1.0 min.
0.5 min.
0.2 min.
2.5 min.

cycle time

Immediate
Predecessor
A
B
C
D

480 minutes / day

Suppose we want to
produce 300 units/day
and 8 hours are
available each day.
1.6 minutes / unit

300 units / day

2.5 minutes
N
1.5625 or 2 workstations
1.6 minutes

So assign tasks A-E to 2 workstations, where neither workstation

should exceed 1.6 minutes.
9-67

Assembly Line Balancing Example

Task
A
B
C
D
E

Time
0.1 min.
0.7 min.
1.0 min.
0.5 min.
0.2 min.
2.5 min.

Immediate
Predecessor
A
B
C
D

Suppose we want to
produce 300 units/day
and 8 hours are available
each day.

0.1

0.7

1.0

0.5

0.2

Can not use only 2 workstations!

Efficiency=2.5/(3*1.6) = 52.1%
9-68

Must use 3.

Assembly Line Balancing Example

A

0.1

0.7

1.0

0.5

0.2

Both of these can

produce 300/day in
8 hours.

Efficiency=2.5/(3*1.6) = 52.1%

0.1

0.7

1.0

0.5

0.2

Better balance!

Efficiency=2.5/(3*1.6) = 52.1%
Note: this line could produce 300 units in 5 hours (1 per minute)
Efficiency=2.5/(3*1.0) = 83.3%
9-69

Assembly Line Balancing Example

If 2 workstations were required, then it will take more than 8 hours
to produce 300 units.
A

0.1

0.7

1.0

0.5

0.2

Cycle time = 1.7 minutes

Efficiency=2.5/(2*1.7) = 73.5%
Time to produce 300 units
1.7 min/unit*300 units = 510 minutes = 8.5 hours
9-70

Assembly Line Balancing Heuristics

Longest (or shortest) task time.

Choose task with longest (or shortest) operation time.

Most following tasks.

Choose task with largest number of following tasks.

Ranked positional weight.

Choose task where the sum of the times for each following
task is longest.

Least number of following tasks.

Choose task with fewest subsequent tasks.

9-71

Ranked Positional Weight Heuristic

Positional weight = Sum of times for a task and all
tasks that must follow it.
1. Calculate positional weight for each task.
2. Assign task with largest positional weight to the
earliest workstation where it fits.
- Obey precedence relations.
- Do not exceed cycle time.
3. Repeat step 2 until all tasks are assigned.
9-72

Line Balancing Example 2

Task
A
B
C
D
E
F
G

Time
0.2 min.
0.6 min.
0.5 min.
0.3 min.
1.0 min.
0.2 min.
0.9 min.
3.7 min.

Immediate
Predecessor
A,C
B,D
D
E,F

9-73

Suppose we want to
produce 450 units/day
and 8 hours are
available each day.

Line Balancing Example 2

Task
A
B
C
D
E
F
G

Time
0.2 min.
0.6 min.
0.5 min.
0.3 min.
1.0 min.
0.2 min.
0.9 min.
3.7 min.

cycle time

Immediate
Predecessor
A,C
B,D
D
E,F

Suppose we want to
produce 450 units/day
and 8 hours are
available each day.

480 minutes / day

1.0667 minutes / unit

450 units / day

3.7 minutes
N
3.47... or 4 workstations
1.0667 minutes

9-74

Precedence Diagram - Example 2

0.2

0.5

0.6

C
0.3

1.0

G
0.2

F
9-75

0.9

Example 2 - Positional Weight

Task
A
B
C
D
E
F
G

Time
0.2 min.
0.6 min.
0.5 min.
0.3 min.
1.0 min.
0.2 min.
0.9 min.
3.7 min.

Immediate Positional
Predecessor weight
2.7
A,C
2.5
3.0
2.4
B,D
1.9
D
1.1
E,F
0.9

9-76

Example 2 - Assign Tasks

Task
A
B
C
D
E
F
G

Immediate
Time
Predecessor
0.2 min.
0.6 min.
A,C
0.5 min.
0.3 min.
1.0 min.
B,D
0.2 min.
D
0.9 min.
E,F
3.7 min.

Positional
weight
2.7
2.5
3.0
2.4
1.9
1.1
0.9

WS1 WS2
C(0.5)

A(0.2)
9-77

WS3

Cycle time = 1.07 min.

N = 4 workstations

WS4

Example 2 - Assign Tasks (cont.)

Task
A
B
C
D
E
F
G

Immediate
Time
Predecessor
0.2 min.
0.6 min.
A,C
0.5 min.
0.3 min.
1.0 min.
B,D
0.2 min.
D
0.9 min.
E,F
3.7 min.

Positional
weight
2.7
2.5
3.0
2.4
1.9
1.1
0.9

WS1 WS2 WS3

C(0.5) B(0.6)

A(0.2)
D(0.3)

9-78

Cycle time = 1.07 min.

N = 4 workstations

WS4

Example 2 - Assign Tasks (cont.)

Task
A
B
C
D
E
F
G

Immediate
Time
Predecessor
0.2 min.
0.6 min.
A,C
0.5 min.
0.3 min.
1.0 min.
B,D
0.2 min.
D
0.9 min.
E,F
3.7 min.

Efficiency = 3.7/
(4*1.07) = 86.4%

Positional
weight
2.7
2.5
3.0
2.4
1.9
1.1
0.9

Cycle time = 1.07 min.

N = 4 workstations

WS1 WS2 WS3 WS4

C(0.5) B(0.6) E(1.0) G(0.9)
A(0.2) F(0.2)
D(0.3)

9-79

Precedence Diagram - Example 2

0.2

0.5

0.6

WS3

C
0.3

G
0.2

D
WS1

1.0

WS2
9-80

0.9

WS4

Example 2 - Final Comment

Task
A
B
C
D
E
F
G

Immediate
Time
Predecessor
0.2 min.
0.6 min.
A,C
0.5 min.
0.3 min.
1.0 min.
B,D
0.2 min.
D
0.9 min.
E,F
3.7 min.

Could use a cycle time of

1 minute & produce 450
units in 7.5 hours
Efficiency = 3.7/
(4*1.0) = 92.5%

WS1 WS2 WS3 WS4

C(0.5) B(0.6) E(1.0) G(0.9)
A(0.2) F(0.2)
D(0.3)

9-81