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) (Process-oriented) Office

Ingal Ship Building Shouldice Hospital Allstate Insurance

Examples Pittsburgh Airport Olive Garden Microsoft

Move material to Manage varied Locate workers

Problem
limited storage material flow for requiring contact
areas at the site. each product. close to each
other.

9-7
 Layout Strategies
Repetitive
Warehouse /Continuous
Retail (storage) (Product-oriented)

Federal-Mogul’s Sony’s TV
Kroger’s Warehouse Assembly Line
Examples Supermarket
The Gap’s Dodge Caravans
Famous-Barr distribution center

Expose Balance cost for Equalize the task

Problem customer to storage and time at each
high-margin material handling. workstation.
items.

9-8
 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
O
2 Costing U
E A
3 Engineering I X
U U
4 President’s Secretary E
A
5 Photocopiers

9-14
 Relationship (Proximity) Chart
Can determine layout using
1 President proximity diagram
O
2 Costing U
E A
3 Engineering I X
U U
4 President’s Secretary E
A
5 Photocopiers 2
1 E
I
3
A
X
E
4 5
A

9-15
 Office Layout
2
1 President 1 E
O I
2 Costing U
E A 3
3 Engineering I A
X X
U U E
4 President’s Secretary E
A
5 Photocopiers 4 5
A

Locate 5 offices in a rectangular

space.
Offices 2-5 are to be same size.
Office 1 (President’s) is twice as
large.
9-16
 Office Layout

President’s
Photocopiers Secretary
(5)
(4)
President
Corridor (1)
Engineering Costing
(3) (2)

9-17
 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
E.R.Triage Patient A -
broken leg
room
E.R. Admissions
ry

Patient B - erratic
rge

pacemaker
Su

Hallway

Ra
dio
log
y
E.R. beds Pharmacy Billing/exit

9-19
 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 n

Minimize cost    X C
ij ij
i  1 j  1

where n  total number of work centers or departments

i,j  individual departments

X  number of loads moved from department i to department j

ij
C  cost to move a load between department i and department j
ij
9-23
 Flows of Parts (loads/week)
to
1 2 3 4 5 6
1 40 100 0 0 0
2 10 10 40 10 0
3 0 20 0 0 80
from

4 0 10 20 50 0
5 0 0 0 0 0
6 20 0 20 0 0
9-24
Interdepartmental Flow of Parts
Number of loads/week between departments

1 2 3 4 5 6
1 50 100 0 0 20
2 30 50 10 0
3 20 0 100
4 50 0
5 0
6
9-25
 Initial Layout
Room 1 Room 2 Room 3
Assembly Printing Machine shop
Department Department Department
(1) (2) (3)

Receiving Shipping Testing

Department Department Department
(4) (5) (6)

Room 4 Room 5 Room 6

9-26
Initial Layout Flow Graph Showing
Loads/Week
100

1 2 3
50 30

20

100
50 20
10

4 5 6
50

9-27
 Cost of Initial Layout
Cost per load for adjacent locations = $1
Cost per load for non-adjacent locations = $2
1-2 50 = 50*1
100
1-3 200 = 100*2
1-6 40 = 20*2 1 2 3
50 30
2-3 30 = 30*1
20
2-4 50 = 50*1
2-5 10 = 10*1 100
50 20
3-4 40 = 20*2 10
3-6 100 = 100*1 4 5 6
50
4-5 50 = 50*1
Total = $570
9-28
 Large Flows in Initial Layout
100

1 2 3
50 30

20
100
50 20
10

4 5 6
50

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 1 3
50 100

20 20 100
50
10

4 5 6
50

9-30
 Improved Layout
Room 1 Room 2 Room 3
Printing Assembly Machine shop
Department Department Department
(2) (1) (3)

Receiving Shipping Testing

Department Department Department
(4) (5) (6)

Room 4 Room 5 Room 6

9-31
 Cost of Improved Layout
Cost per load for adjacent locations = $1
Cost per load for non-adjacent locations = $2
1-2 50 = 50*1
30
1-3 100 = 100*1
1-6 20 = 20*1 2 1 3
50 100
2-3 60 = 30*2
2-4 50 = 50*1
2-5 10 = 10*1 100
50 20 20
3-4 40 = 20*2 10
3-6 100 = 100*1
4 5 6
4-5 50 = 50*1 50
Total = $480
9-32
 Alternative Improved Layout
20

1 3 6
100 100

30

20
50

2 50
4 5
50

10
9-33
 Cost of Alternative Improved Layout
Cost per load for adjacent locations = $1
Cost per load for non-adjacent locations = $2
1-2 50 = 50*1
1-3 100 = 100*1 20
1-6 40 = 20*2
1 3 6
2-3 30 = 30*1 100 100
2-4 50 = 50*1
30
2-5 20 = 10*2

20
50
3-4 20 = 20*1
3-6 100 = 100*1
2 50
4-5 50 = 50*1 4 5
50
Total = $460
10
Is this best? 9-34
Alternative Improved Layout
Room 1 Room 2 Room 3
Assembly Machine shop Testing
Department Department Department
(1) (3) (6)

Printing Receiving Shipping

Department Department Department
(2) (4) (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 Distances between locations

1 2 3 4 5 A B C D E
1 - 13 18 3 0 A - 9 8 12 14
2 - 15 0 6 B 9 - 9 6 7
3 - 0 4 C 8 9 - 4 9
4 - 4 D 12 6 4 - 14
E 14 7 9 14 -

9-36
 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 Distances between locations

1 2 3 4 5 A B C D E
1 - 13 18 3 0 A - 9 8 12 14
2 - 15 0 6 B 9 - 9 6 7
3 - 0 4 C 8 9 - 4 9
4 - 4 D 12 6 4 - 14
E 14 7 9 14 -

9-37
 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 Distances between locations

1 2 3 4 5 A B C D E
1 - 13 18 3 0 A - 9 8 12 14
2 - 15 0 6 B 9 - 9 6 7
3 - 0 4 C 8 9 - 4 9
4 - 4 D 12 6 4 - 14
E 14 7 9 14 -

9-38
 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 Distances between locations

1 2 3 4 5 A B C D E
1 - 13 18 3 0 A - 9 8 12 14
2 - 15 0 6 B 9 - 9 6 7
3 - 0 4 C 8 9 - 4 9
4 - 4 D 12 6 4 - 14
E 14 7 9 14 -

9-39
 Layout Example 2
Solution 1: A=4,B=2,C=1, D=3,E=5. Solution 1
Distance = 13x9 + 18x4 + 3x8 + 15x6 + 6x7 + 4x14 + 4x14 = 457 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 Distances between locations

1 2 3 4 5 A B C D E
1 - 13 18 3 0 A - 9 8 12 14
2 - 15 0 6 B 9 - 9 6 7
3 - 0 4 C 8 9 - 4 9
4 - 4 D 12 6 4 - 14
E 14 7 9 14 -

9-40
 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 Drills Office

Work Cell
Tool Room

9-43
 Work Cell Advantages

Lower: Higher:
Inventory. Equipment utilization.
Floor space. Employee participation.
Direct labor costs. 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 A permanent assembly-line-oriented

arrangement of machines and personnel in
Center 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
5 facings
 Consider prominence of shelf
location and number of

PERT
PERT
PERT

PERT
PERT
facings.
 Can use computerized tools
to manage shelf-space.
 Track sales and product
location (scanner data).

9-49
 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. In-
coming
 Avoids placing goods into storage. Outgoing

 Requires suppliers provide

effective addressing (bar codes)
and packaging for rapid
transshipment.

9-54
 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 T1 T3
T4 Work Station
3
T5
Work Station 2 T2

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
Production time available
Cycle time =
Production rate

Minimum  Task times

number of = N = Rounded up
work stations Cycle time

 Task times
Efficiency =
(Actual number of
* (Cycle time)
work stations)

9-65
 Assembly Line Balancing Example
Immediate
Task Time Predecessor
A 0.1 min. - Suppose we want to
B 0.7 min. A produce 300 units/day
C 1.0 min. B and 8 hours are available
D 0.5 min. C each day.
E 0.2 min. D
2.5 min.

A B C D E
0.1 0.7 1.0 0.5 0.2

9-66
 Assembly Line Balancing Example
Immediate
Task Time Predecessor Suppose we want to
A 0.1 min. - produce 300 units/day
B 0.7 min. A
C 1.0 min. B and 8 hours are
D 0.5 min. C available each day.
E 0.2 min. D
2.5 min.
480 minutes / day
cycle time   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
Immediate
Task Time Predecessor Suppose we want to
A 0.1 min. - produce 300 units/day
B 0.7 min. A
C 1.0 min. B and 8 hours are available
D 0.5 min. C each day.
E 0.2 min. D
2.5 min.

A B C D E
0.1 0.7 1.0 0.5 0.2

Can not use only 2 workstations! Must use 3.

Efficiency=2.5/(3*1.6) = 52.1%
9-68
 Assembly Line Balancing Example
Both of these can
A B C D E produce 300/day in
8 hours.
0.1 0.7 1.0 0.5 0.2

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

A B C D E
Better balance!
0.1 0.7 1.0 0.5 0.2

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 B C D E
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
Immediate
Task Time Predecessor
A 0.2 min. - Suppose we want to
B 0.6 min. A,C produce 450 units/day
C 0.5 min. - and 8 hours are available
D 0.3 min. - each day.
E 1.0 min. B,D
F 0.2 min. D
G 0.9 min. E,F
3.7 min.

9-73
 Line Balancing Example 2
Immediate
Task Time Predecessor
A 0.2 min. -
B 0.6 min. A,C Suppose we want to
C 0.5 min. -
D 0.3 min. -
produce 450 units/day
E 1.0 min. B,D and 8 hours are available
F 0.2 min. D
G 0.9 min. E,F
each day.
3.7 min.

480 minutes / day

cycle time   1.0667 minutes / unit
450 units / day
3.7 minutes
N  3.47... or 4 workstatio ns
1.0667 minutes

9-74
 Precedence Diagram - Example 2
0.2
A 0.6

0.5 B 1.0

C E 0.9
G
0.3
0.2
D
F

9-75
 Example 2 - Positional Weight
Immediate Positional
Task Time Predecessor weight
A 0.2 min. - 2.7
B 0.6 min. A,C 2.5
C 0.5 min. - 3.0
D 0.3 min. - 2.4
E 1.0 min. B,D 1.9
F 0.2 min. D 1.1
G 0.9 min. E,F 0.9
3.7 min.

9-76
 Example 2 - Assign Tasks
Immediate Positional
Task Time Predecessor weight
A 0.2 min. - 2.7
B 0.6 min. A,C 2.5
C 0.5 min. - 3.0 Cycle time = 1.07 min.
D 0.3 min. - 2.4 N = 4 workstations
E 1.0 min. B,D 1.9
F 0.2 min. D 1.1
G 0.9 min. E,F 0.9
3.7 min.
WS1 WS2 WS3 WS4
C(0.5)
A(0.2)

9-77
 Example 2 - Assign Tasks (cont.)
Immediate Positional
Task Time Predecessor weight
A 0.2 min. - 2.7
B 0.6 min. A,C 2.5
C 0.5 min. - 3.0 Cycle time = 1.07 min.
D 0.3 min. - 2.4 N = 4 workstations
E 1.0 min. B,D 1.9
F 0.2 min. D 1.1
G 0.9 min. E,F 0.9
3.7 min.
WS1 WS2 WS3 WS4
C(0.5) B(0.6)
A(0.2)
D(0.3)
9-78
 Example 2 - Assign Tasks (cont.)
Immediate Positional
Task Time Predecessor weight
A 0.2 min. - 2.7
B 0.6 min. A,C 2.5
C 0.5 min. - 3.0 Cycle time = 1.07 min.
D 0.3 min. - 2.4
N = 4 workstations
E 1.0 min. B,D 1.9
F 0.2 min. D 1.1
G 0.9 min. E,F 0.9
3.7 min.
WS1 WS2 WS3 WS4
Efficiency = C(0.5) B(0.6) E(1.0) G(0.9)
3.7/(4*1.07) = 86.4% A(0.2) F(0.2)
D(0.3)
9-79
 Precedence Diagram - Example 2
0.2
A 0.6
WS3
0.5 B 1.0

C E 0.9
G
0.3
0.2 WS4
D
WS1 WS2
F

9-80
 Example 2 - Final Comment
Immediate
Task Time Predecessor
A 0.2 min. - Could use a cycle time of
B 0.6 min. A,C
C 0.5 min. -
1 minute & produce 450
D 0.3 min. - units in 7.5 hours
E 1.0 min. B,D
F 0.2 min. D Efficiency =
G 0.9 min. E,F 3.7/(4*1.0) = 92.5%
3.7 min.
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