3 Location Layout

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MS1506 Managing operations and processes

Layout and locationSee Greasley chapters 4–5

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Layout

Layout is the physical arrangement of transforming resources at a particular location

Deciding where to place machine, equipment and staff

ObjectivesMinimise materials handling and movement of peopleReduce hazards of handlingGive logical flow to materialsUse space efficientlyReduce time for operations

Four basic layout typesFixed position, functional (or process), cell, product

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Layout decisions

Fixed positionFunctional

ProjectJobbingBatchMassContinuous

ProfessionalserviceService shopMass service

Physical positioning of transforming resources

Volume andvariety Process type

Basic layout type

Decision 1

Decision 2

Detailed designof layout

Decision 3

Strategicobjectives

Flow of transformed resources

CellProduct

4

Fixed position layout

Product or project stationaryWorkers, materials and equipment moved as needed

ExamplesLarge construction projects: houses, roads, ships, aircraftOpen heart surgeryRestaurants (service element)Home help services

Design issuesEach site need areas allocated for materials and equipmentDifficult to minimise movement of transforming resources

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Fixed position example

Layout design is largely limited to allocating space for staff and equipment

How do we arrange transforming resources here?

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Functional (or process) layout

Emphasis on convenient location of transforming resourcesOften these are large and difficult to moveTransformed resources moved to transforming resources

ExamplesHospital: XRay, mri, … are in fixed location; patients movedSupermarket: frozen products located togetherComponents manufacture: parts moved through separate job shops

Design issuesIdeally keep total movement between different areas small

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Functional layout

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Functional layout

Lathes Milling Drilling

Grinding

PolishingAssembly

Shipping and receiving

A

A

A

A

B

B

B

BB

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Product layout

Emphasis on arranging transforming resources for convenience of transformed resourcesSometimes called line layout – tends to create assembly linesTransformed resources moved through transforming resources

ExamplesCar assembly linesSelfservice restaurants

Design issuesManage timing so that flow is not slowed substantially by specific processes

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Product layout

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Cell layout

Compromise between functional and product layoutTransforming resources grouped into cells (group technology)Cells arranged in functional layoutWithin cells, product (or sometimes functional) layout

ExamplesMaternity unit in hospital: ‘cells’ for prenatal, birth and postnatal ‘services’Some component manufacture: cells for assembly and packaging of components

Design issuesChoice of cells, product and functional layout issues

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Cell layout: vision express

Reception Desk Waiting Area

Preliminarychecks

Eye Tests

Consultation on

frames

Laboratories

Entrance

Spectacles collection

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Mixed layout

Commonly operations use mixed layout types incorporating features of other layouts

For example a hospital may use features of fixed position layout in surgery, functional layout for XRay, mri, and cell layout for maternity facilities

A house builder may use fixed position layout for the main construction activities, but may also have functional layout building prefabricated units, which are then brought to site

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Comparison of layoutsadvantages disadvantages

Fixed position

functional

cell

product

Very high mix and product flexib-ility. High variety of tasks. Product/customer not disturbed.

Very high unit costs. Can be dif-ficult to schedule space and activ-ities.

High product and mix flexibility. Less prone to disruptions. Easy to supervise.

Low utilisation. Can have high work-in-progress. Complex flow.

Often good compromise between cost and flexibility. Fast throughput. Group work can be motivating.

May be costly to introduce (re-arrange existing layout). May need more equipment.

Low unit costs for high volume. Opportunities for specialisation.

Often low mix flexibility. Disrup-tion of one process affects whole operation. Repetitive work.

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Selecting a layout: volume, variety, flow

low volume high

Regular flow more important

regu

lar f

low

eas

ier t

o ac

hiev

ehighvariety

low

fixedposition

product

cell

functional

continuousflow

intermittentflow

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Selecting a layout: process types

professionalservices

fixed position layout

product layout

cell layout

functional layout

continuous

jobbing

project

batch

mass

mass services

service shops

manufacturingprocess types

layout types serviceprocess types

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Detailed design: functional layout

Steps in Developing a functional layout

0. Construct a “fromto matrix”1. Determine space requirements for each department2. Develop an initial schematic diagram3. Determine the cost of this layout4. By trialanderror (or more sophisticated means), try

to improve the initial layout5. Prepare a detailed plan that evaluates factors in addi

tion to transportation cost

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Cost of ProcessOriented Layout

Minimize cost =∑i=1

n

∑j=1

n

x ij c ij

where n= total number of work centers or departmentsi , j are individual departmentsx ij=number of loads moved from department i to department jc ij= cost to move a load between department i and department j

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Example

The following movements take place between the different departments of a workshop

Suggest an efficient layout

goods in machining painting assembly shipping goods in 45 3 6 6 0

machining 10 38 46 24 2painting 4 30 15 12 0

assembly 5 40 20 50 4qc 3 4 11 8 43

shipping 1 2 2 3 21

qc

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Diagram for functional layout

goods in

shipping

QC

assembly

painting

machining

A absolutely essentialE extremely importantI importantO ordinaryU unimportantX undesirable

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Example

goods in

shipping

QC

assembly

painting

machining

0

7

68

4

9

2

28

11

7

23

86

64

58

33

55

A absolutely essentialE extremely importantI importantO ordinaryU unimportantX undesirable

Total movements

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Example

goods in

shipping

QC

assembly

painting

machining

U

O

A

U

O

U

I

O

O

I

A

A

A

E

A

A absolutely essential > 50E extremely important 30–49I important 15–29O ordinary 5–15U unimportant 0–5X undesirable

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Suggested layout

goods in

shippingQCassembly

paintingmachining

The following layout ensures most important movements are between departments that are close to each other

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Detailed design: product layout

Line balancing technique

ExampleIt takes 3 minutes to build a productThis 3 minutes’ work can be broken down into 3 steps each of 1 minute

It still takes total of 3 minutes’ activity per item

1 minute 1 minute1 minute

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Example: cycle time for one person

It takes 3 minutes to build a productOne person can process 20 products in an hour, with a cycle time of 3 minutes

Throughput time is also 3 minutesWe cannot change throughput time, but can we produce 60 items per hour (cycle time of 1 minute)?



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Example: cycle time for three people

We could give the same tasks to three people

Alternatively, we could give each person a separate taskuses less equipmentEither way cycle time reduced to 1 minuteThroughput time 3 minutes



1 minute 1 minute1 minute 1 minute 1 minute1 minute1 minute 1 minute1 minute

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Another example

Throughput time is four minutesWith three operators, cycle time is 2 minutes

The actual cycle time of the line is determined by the slowest process in the sequence

Can we reduce the cycle time to 1 minute?


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Another example

If we add one more operator to last workstation

cycle time for last workstation is average time between units of output = 2 minutes / 2 = 1 minute

So cycle time for process is now one minute

1 minute

2 minute

1 minute

2 minute

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Precedence diagrams

Standard products—where volume and price are important—are assembled in line production

The product or service is simplified by breaking it down into a series of simpler tasks

The relationship of one task to another is called the precedence diagram

The individual tasks are collected together in work stations, then carried out in a sequence—a line—which allows the product to be assembled efficiently

Line balancing ensures as far as possible that the work contents of the stations are equal

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Precedence diagrams

Activity Predecessor Time (mins)

a — 7

b — 2

c a 6

d a 4

e b 3

f c,d,e 8

g f 1

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Precedence diagram

a

b

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Precedence diagrams


a — 7

b — 2

c a 6

d a 4

e b 3

f c,d,e 8

g f 1

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Precedence diagram

a

b

d

c

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Precedence diagrams


a — 7

b — 2

c a 6

d a 4

e b 3

f c,d,e 8

g f 1

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Precedence diagram

a

b

d

c

e

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Precedence diagrams


a — 7

b — 2

c a 6

d a 4

e b 3

f c,d,e 8

g f 1

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Precedence diagram

a

b

d

c

e

f

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Precedence diagrams


a — 7

b — 2

c a 6

d a 4

e b 3

f c,d,e 8

g f 1

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Precedence diagram

a

b

d

c

e

f g

7 min

1 min8 min

3 min

4 min

6 min

2 min

Total time required: 31 minutes

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Line balancing

Cycle time: the time between units of output

Once a production target has been set, the line must produce at a rate that ensures demand is met: the required cycle time

To achieve the right output, the processing time for each work station must not exceed the required cycle time.

To achieve the right output, the number of work stations (n) must be at least the total processing time for each product (T) divided by the required cycle time (C)

number of workstations n≥T /C

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Defining the workstations

a

b

d

c

e

f g

7 min

1 min8 min

3 min

4 min

6 min

2 min

6 min

7 min

9 min

9 min

Required cycle time: 9 minutes

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Balancing loss

total work time = required cycle time × number of workstationsidle time = total work time − total processing time for 1 unit

balancing loss = idle timetotal work time

balancing loss represents proportion of time lost becausewe need to use some idle time to divide work betweenworkstations

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Balancing loss example

total work time = required cycle time × number of workstations =9 minutes ×4=36 minutesidle time = total work time − total processing time for 1 unit =36 minutes −31 minutes =5 minutes

balancing loss = idle timetotal work time

=5 minutes

36 minutes≈13.9 %

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Detailed design of cells

Cells designed by grouping similar products/services

ExampleElectronic products packed by combination of machines in sequenceFive products use the following

Product 1 2 3 4 5antistatic bag x x

foam filler x xbag x xbox x x x

label x xxrfid tag

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Detailed design of cells

Example

We can rearrange the matrix to get two natural cells

General technique is called production flow analysis (see chapter 4 of textbook)

Product 1 3 4 2 5bag x x

label x xantistatic bag x x

foam filler x xbox x x x

xrfid tag

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Location: some definitions

Capacity: quantity of products/services that operation can produce per unit timeIt may produce less than this (underutilisation)

Location: where the capacity isThis affects the conditions for supply and demand

Supply: quantity of products/services that other producers are willing and able to sell during a given period and under a given set of conditions

Demand: quantity of products/services that customers are willing and able to buy during a given period and under a given set of conditions

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Factors affecting location decision

Objectives for locationCostOnly the costs that depend on location are important

Revenue potentialHow much revenue the location may produce

Service provisionWhat service the operation can provide customers (e.g. dependability, speed, quality) at a location

Ideally we want to minimise cost and maximise revenue and maximise service provision at the same timeIn practice, this is usually impossible and so a compromise is sought

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Supply and demand factors

We consider how cost, service provision and revenue are affected by many factors

To select factors of importance, consider supply and demand, and environment

OperationSupply Demand

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Supplyside factors

Labour costsThese vary from location to location, depending on availability and cost of labourUsually measured in cost per unit of production

Land costsThese vary from country to country and are usually greater in cities than outside

Energy costsImportant for heavy industries that use a lot of energy

Transportation costsUnit cost of transporting raw materials from source to operation

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Demandside factors

Convenience for customerImportant for service provision and revenue potential to be near customers

Suitability of siteE.g. hotels usually situated in attractive regions rather than industrial areas

Image of locationFor example, some high streets create a reputation for highquality goods and services

Labour skillsFor example, farm shops located outside towns attract customers looking for higher grade produce

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Environmental factors

Tax rates (especially between countries) and tariffsGovernment assistancePolitical/economic stabilityLocal attitudes to investmentLanguageCultureLabour relationsEnvironmental regulations (e.g. pollution)Availability of support servicesLocal amenities

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Location for goods and services

Operations producing goodsTypically transportation and energy costs are more importantLow customer contact diminishes importance of many demandside factors

Operations producing servicesOperations with direct customer contacte.g. department store, restaurant, hotelusually supplyside factors dominate

Operations with indirect customer contacte.g. call centres, ecommercereduced importance of supplyside factors

Operations with no customer contacte.g. creditcard processingLabour/land costs more important

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Location decision

Country decisionPolitical/economic environmentexchange ratesaccess to markets

Region decisionLand costsRegional incentivesAvailability of labour

Site decisionSite size and costtransportAvailability of services

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Summary

Process mapping: what adds value?Process layoutsFixed positionProductFunctionalCellDetailed functional layout designDetailed product layout design: line balancingDetailed cell layout design: production flow analysis

Location

ObjectivesSupplyside and demandside factors

3 Location Layout

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