CH 8 Location

Manajemen Layanan dan Operasi
Dr Maya Ariyanti
Fakultas Ekonomi dan Bisnis
School Economics and Business
Chapter 8
Service Location & Layout
2 Creating the great business leaders

• Strategic Location Considerations

• Quantitative methods for location
selection
Learning • Site selection
Objectives • Objectives of facility layout
• Layout strategy
• Office Layout
• Warehousing Layout
1-3
Concept for Location Facilities

• An organization may look for a new facility location for the following
reasons:
• Commencement of a new business
• Obsolescence of the existing technology
• Expansion of the existing business
• Expiry of the lease agreement
• Reduction in overall costs
4
Factor Affecting a Facility Location

• Market proximity
• Proximity to raw materials
• Availability of capital
• Availability of labour
• Transportation system
• Government policies
• Natural factors
• Availability of power
5
• Nature and Objectives of Service Organization

• Land Availability and Space Requirements
Facility Design • Flexibility
Considerations • Security
• Aesthetic Factors
• The Community and Environment

9-6
Quantitative methods for location selection

• Transportation Model - Decision based on movement costs of raw
materials or finished goods
• Factor Rating - Decision based on quantitative and qualitative inputs
• Center of Gravity Method - Decision based on minimum distribution
costs

Three Type of sites

• Isolated Store
• Large-store formats :
• Wal-Mart
• Costco
• Convenience stores
• 7-Eleven
• Planned Shopping Center
• Site Selection like Starbucks
• Unplanned Business District
• Central Business District
• Secondary Business District
• Neighbourhood Business District
• String
8
Location and Site Evaluation

• One-Hundred Percent Location
• The optimum site for a particular store
• Some example Checklist :

• Number of People/vehicles
• Type of people/vehicles
• Parking area
• Distance to store
• Visibility
• etc
9
Facility Layout
• The layout facility is the physical location of the various
departments/units of the facility within the premises of the facility
• The departments may be located based on the considerations such
as:
• Less walking distance
• Logical sequence of the processing requirements of the product
• Emergency services, etc
10
Factors affecting Layout

• Material
• Product
• Machinery
• Labour
• Location
• Managerial Policies
• Type of Industry
11
Scope of Facility ayout
• Related to material
• Less material handling and minimum transportation cost
• Less waiting time for in-process inventory
• Related to work place
• Safe working conditions from the point of ventilation, lighting, etc.
• Minimum movement of workers
• Least chances of accidents, fire, etc.
• Proper space for machines, worker, tools, etc.
• Performance related objectives
• Simpler plant maintenance
• Increased productivity, better product quality, and reduced cost
• Least set-up cost and minimal change-over
• Objective related to flexibility
• Scope for future expansion
12
Types of Layouts
1. Process Layout
• suitable when product having standard features is to be produced in large volumes.
• the specialized machines and equipments are arranged one after another in the
order of sequence required in the production process
• Advantages of Process Layout:
• Greater Flexibility
• Better and more efficient supervision possible through specialization
• Capacity of different product line can be expanded easily. •Better utilization of men and
machine.
• Disadvantages:
• More floor space
• More work in progress
• More distance travelled by the product
13
Types of Layouts
2. Product Layout
• It is appropriate for producing one standardized product, usually in large volume. It is also
called as flow-shop layout or straight line layouts. The machines are arranged according to
the progressive steps by which the product is made.
• Example: chemical, paper, rubber, refineries, cement industry.
• Advantages:
• Mechanization of materials is possible and material handling cost can be reduced.
• It requires less floor area.
• It facilitates better production control.
• Production bottlenecks are avoided.
• Disadvantages:
• Expansion of product line is difficult.
• There is difficulty is supervising.
• Breakdown of equipment disrupts the production.
14
Types of Layouts
3. Grouping Technology Layout
• Grouping technology layout of cellular manufacturing layout is made for a
single part family i.e parts with common characteristics. In this layout
dissimilar machines are grouped into cells and each cell functions like product
layout.
• Advantage and Disadvantages:
• It reduces material handling cost and simplifies machine changeovers.
• It reduces in-process inventory and automate the production but reduces the flexibility.
15
Types of Layouts
4. Fixed Position Layout
• When due to size, shape and other characteristics constraints, the products
cannot be moved, the machine and operators move around the product.
• Example: construction of a building, assemble of an aircraft or ship.
• Advantage:
• Less investment is required in this layout and less transport cost as
• bulky machines are not moved
16
Office Layout Working Environment

1. Cellular Office
• A collection of rooms in which employees work on their own or in small groups. It has: Partitions, Doors, and Windows
• Advantages of Cellular Office :
• Rooms can be locked
• Less distractions for employees
• Offices can be used for meetings
• Each room designed for employee
• Noisy office equipment can be housed elsewhere
• Infections and illnesses less easily spread
• Employees can personalise their environment
• Disadvantages of Cellular Office
• Harder for manager to supervise staff
• Communication may be more difficult
• Time lost moving from room to room
• Employees may feel isolated
• Overheads are higher due to individual rooms
• Harder to change work area layout
• Less friendly or relaxed atmosphere
17
Office Layout Working Environment

2. Open Plan Office also known as landscaped
• A large area where many employees work together
• Activities are grouped so to reduce time being wasted
• Advantages of Open Plan Office :
• Easier for managers to supervise staff
• Easier to organise meetings of groups of workers
• Less time wasted passing information/work
• Overheads cost less
• Work area size can be changed
• Equipment can be shared more easily
• Disadvantages of Open Plan Office :
• Employees may find it hard to concentrate
• Employees may be distracted
• Difficult to restrict access
• Fewer areas for confidential meetings
• Infections and illnesses can be more easily spread
• Less wall space for departmental information
• Lighting, heating and ventilation may not suit everyone
18
Deciding Office Layout Depends on:

• Size of organisation - number of employees
• Organisation expanding or contracting?
• Type of work involved
• Space available
• Financial resources available
19
Office Layout
• Be adaptable to meet volume changes
• Provide enough work and storage space
• Take account of flow of work
• Allow easy access for employees
• Economical to maintain
• Easy access to services
• Easy access to equipment
• Provide security for equipment and information
20
Warehouse Layout
• The goal of layout is to maximize your warehouse functions to achieve
the greatest efficiency and space utilization
• A warehouse is typically divided into the following areas to support its
everyday processes:
• Receiving
• Reserve Storage
• Forward Pick
• Sorting and/or assembly
• Quality
• Shipping
21
• The warehouse layout must satisfy these four primary functions:

• Product storage
• Inbound operations
• Outbound operations
• Value-added processes
22
Thank You

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Manajemen Layanan dan Operasi

2 Creating the great business leaders

• Strategic Location Considerations

Learning • Site selection

Objectives • Objectives of facility layout

Concept for Location Facilities

Factor Affecting a Facility Location

• Nature and Objectives of Service Organization

6 Creating the great business leaders

Quantitative methods for location selection

7 Creating the great business leaders

Three Type of sites

Location and Site Evaluation

• Some example Checklist :

Factors affecting Layout

Scope of Facility ayout

Office Layout Working Environment

Office Layout Working Environment

Deciding Office Layout Depends on:

• The warehouse layout must satisfy these four primary functions:

23 Creating the great business leaders

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