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Layout Strategies

PowerPoint presentation to accompany

Heizer and Render

Operations Management, Eleventh Edition

Principles of Operations Management, Ninth Edition

PowerPoint slides by Jeff Heyl

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Outline

Global Company Profile:
McDonald’s

The Strategic Importance of Layout Decisions
Types of Layout
Office Layout
Retail Layout
Warehousing and Storage Layouts

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Outline - Continued

Fixed-Position Layout

Process-Oriented Layout

Work Cells

Repetitive and Product-Oriented Layout

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Learning Objectives

When you complete this chapter you should be able to:

Discuss important issues in office layout
Define the objectives of retail layout
Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking
Identify when fixed-position layouts are appropriate

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When you complete this chapter you should be able to:

Learning Objectives

Explain how to achieve a good process-oriented facility layout
Define work cell and the requirements of a work cell
Define product-oriented layout
Explain how to balance production flow in a repetitive or product-oriented facility

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Innovations at McDonald’s

Indoor seating (1950s)
Drive-through window (1970s)
Adding breakfast to the menu (1980s)
Adding play areas (late 1980s)
Redesign of the kitchens (1990s)
Self-service kiosk (2004)
Now three separate dining sections

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Innovations at McDonald’s

Indoor seating (1950s)
Drive-through window (1970s)
Adding breakfast to the menu (1980s)
Adding play areas (late 1980s)
Redesign of the kitchens (1990s)
Self-service kiosk (2004)
Now three separate dining sections

Six out of the seven are layout decisions!

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McDonald’s New Layout

Seventh major innovation
Redesigning all 30,000 outlets around the world
Three separate dining areas
Linger zone with comfortable chairs and Wi-Fi connections
Grab and go zone with tall counters
Flexible zone for kids and families
Facility layout is a source of competitive advantage

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Strategic Importance of Layout Decisions

The objective of layout strategy is to develop an effective and efficient layout that will meet the firm’s competitive requirements

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Layout Design Considerations

Higher utilization of space, equipment, and people
Improved flow of information, materials, or people
Improved employee morale and safer working conditions
Improved customer/client interaction
Flexibility

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Types of Layout

Office layout
Retail layout
Warehouse layout
Fixed-position layout
Process-oriented layout
Work-cell layout
Product-oriented layout

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Types of Layout

Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information
Retail layout: Allocates shelf space and responds to customer behavior
Warehouse layout: Addresses trade-offs between space and material handling

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Types of Layout

Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings
Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)

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Types of Layout

Work cell layout: Arranges machinery and equipment to focus on production of a single product or group of related products
Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production

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Layout Strategies

TABLE 9.1	Layout Strategies
OBJECTIVES	EXAMPLES
Office	Locate workers requiring frequent contact close to one another	Allstate Insurance Microsoft Corp.
Retail	Expose customer to high-margin items	Kroger’s Supermarket Walgreen’s Bloomingdale’s
Warehouse (storage)	Balance low-cost storage with low-cost material handling	Federal-Mogul’s warehouse The Gap’s distribution center
Project (fixed position)	Move material to the limited storage areas around the site	Ingall Ship Building Corp. Trump Plaza Pittsburgh Airport

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Layout Strategies

TABLE 9.1	Layout Strategies
OBJECTIVES	EXAMPLES
Job Shop (process oriented)	Manage varied material flow for each product	Arnold Palmer Hospital Hard Rock Cafe Olive Garden
Work Cell (product families)	Identify a product family, build teams, cross train team members	Hallmark Cards Wheeled Coach Ambulances
Repetitive/ Continuous (product oriented)	Equalize the task time at each workstation	Sony’s TV assembly line Toyota Scion

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Good Layouts Consider

Material handling equipment
Capacity and space requirements
Environment and aesthetics
Flows of information
Cost of moving between various work areas

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Office Layout

Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information
Movement of information is main distinction
Typically in state of flux due to frequent technological changes

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Relationship Chart

Figure 9.1

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Office Layout

Three physical and social aspects

Proximity

Privacy

Permission

Two major trends

Information technology

Dynamic needs for space and services

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Supermarket Retail Layout

Objective is to maximize profitability per square foot of floor space
Sales and profitability vary directly with customer exposure

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Five Helpful Ideas for Supermarket Layout

Locate high-draw items around the periphery of the store

Use prominent locations for high-impulse and high-margin items

Distribute power items to both sides of an aisle and disperse them to increase viewing of other items

Use end-aisle locations

Convey mission of store through careful positioning of lead-off department

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Store Layout

Figure 9.2

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Retail Slotting

Manufacturers pay fees to retailers to get the retailers to display (slot) their product
Contributing factors
Limited shelf space
An increasing number of new products
Better information about sales through POS data collection
Closer control of inventory

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Servicescapes

Ambient conditions - background characteristics such as lighting, sound, smell, and temperature
Spatial layout and functionality - which involve customer
circulation path planning,
aisle characteristics, and
product grouping
Signs, symbols, and
artifacts - characteristics
of building design that
carry social significance

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Warehousing and Storage Layouts

Objective is to optimize trade-offs between handling costs and costs associated with warehouse space
Maximize the total “cube” of the warehouse – utilize its full volume while maintaining low material handling costs

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Warehousing and Storage Layouts

All costs associated with the transaction
Incoming transport
Storage
Finding and moving material
Outgoing transport
Equipment, people, material, supervision, insurance, depreciation
Minimize damage and spoilage

Material Handling Costs

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Warehousing and Storage Layouts

Warehouse density tends to vary inversely with the number of different items stored
Automated Storage and Retrieval Systems (ASRSs) can significantly improve
warehouse
productivity by
an estimated 500%
Dock location is a
key design element

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Cross-Docking

Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse
Requires tight
scheduling and
accurate shipments,
bar code or RFID
identification used for
advanced shipment
notification as
materials are unloaded

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Random Stocking

Typically requires automatic identification systems (AISs) and effective information systems

Allows more efficient use of space

Key tasks

Maintain list of open locations

Maintain accurate records

Sequence items to minimize travel, pick time

Combine picking orders

Assign classes of items to particular areas

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Customizing

Value-added activities performed at the warehouse
Enable low cost and rapid response strategies
Assembly of components
Loading software
Repairs
Customized labeling and packaging

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Fixed-Position Layout

Product remains in one place
Workers and equipment come to site
Complicating factors
Limited space at site
Different materials
required at different
stages of the project
Volume of materials
needed is dynamic

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Alternative Strategy

As much of the project as possible is completed off-site in a product-oriented facility
This can
significantly
improve
efficiency but
is only possible
when multiple
similar units need to be created

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Process-Oriented Layout

Like machines and equipment are grouped together
Flexible and capable of handling a wide variety of products or services
Scheduling can be difficult and setup, material handling, and labor costs can be high

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Process-Oriented Layout

Figure 9.3

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Process-Oriented Layout

Arrange work centers so as to minimize the costs of material handling
Basic cost elements are
Number of loads (or people) moving between centers
Distance loads (or people) move between centers

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Process-Oriented Layout

where n = total number of work centers or departments

i, j = individual departments

Xij = number of loads moved from
department i to department j

Cij = cost to move a load between
department i and department j

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Process Layout Example

Construct a “from-to matrix”
Determine the space requirements
Develop an initial schematic diagram
Determine the cost of this layout
Try to improve the layout
Prepare a detailed plan

Arrange six departments in a factory to minimize the material handling costs. Each department is 20 x 20 feet and the building is 60 feet long and 40 feet wide.

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50 100 0 0 20

30 50 10 0

20 0 100

50 0

Process Layout Example

Figure 9.4

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Process Layout Example

Receiving Shipping Testing

Department Department Department

(4) (5) (6)

Figure 9.5

Assembly Painting Machine Shop

Department Department Department

(1) (2) (3)

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Process Layout Example

Interdepartmental Flow Graph

Figure 9.6

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Process Layout Example

Cost = $50 + $200 + $40
(1 and 2) (1 and 3) (1 and 6)

+ $30 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)

+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)

= $570

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Process Layout Example

Revised Interdepartmental Flow Graph

Figure 9.7

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Process Layout Example

Cost = $50 + $100 + $20
(1 and 2) (1 and 3) (1 and 6)

+ $60 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)

+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)

= $480

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Process Layout Example

Receiving Shipping Testing

Department Department Department

(4) (5) (6)

Figure 9.8

Painting Assembly Machine Shop

Department Department Department

(2) (1) (3)

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Computer Software

Graphical approach only works for small problems
Computer programs are available to solve bigger problems

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Computer Software

Proplanner analysis
Distance traveled reduced by 38%

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Computer Software

Three dimensional visualization software allows managers to view possible layouts and assess process, material
handling, efficiency, and safety issues

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Work Cells

Reorganizes people and machines into groups to focus on single products or product groups
Group technology identifies products that have similar characteristics for particular cells
Volume must justify cells
Cells can be reconfigured as designs or volume changes

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Advantages of Work Cells

Reduced work-in-process inventory

Less floor space required

Reduced raw material and finished goods inventories

Reduced direct labor cost

Heightened sense of employee participation

Increased equipment and machinery utilization

Reduced investment in machinery and equipment

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Requirements of Work Cells

Identification of families of products
A high level of training, flexibility and empowerment of employees
Being self-contained, with its own equipment and resources
Test (poka-yoke) at each station in the cell

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Improving Layouts Using Work Cells

Current layout - workers in small closed areas.

Improved layout - cross-trained workers can assist each other. May be able to add a third worker as additional output is needed.

Figure 9.9 (a)

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Improving Layouts Using Work Cells

Current layout - straight lines make it hard to balance tasks because work may not be divided evenly

Improved layout - in U shape, workers have better access. Four cross-trained workers were reduced.

Figure 9.9 (b)

U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection

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Staffing and Balancing Work Cells

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Staffing Work Cells Example

600 Mirrors per day required

Mirror production scheduled for 8 hours per day

From a work balance
chart total operation
time = 140 seconds

Figure 9.10

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Staffing Work Cells Example

600 Mirrors per day required

Mirror production scheduled for 8 hours per day

From a work balance
chart total operation
time = 140 seconds

Takt time = (8 hrs x 60 mins) / 600 units

= .8 min = 48 seconds

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Work Balance Charts

Used for evaluating operation times in work cells
Can help identify bottleneck operations
Flexible, cross-trained employees can help address labor bottlenecks
Machine bottlenecks may require other approaches

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Focused Work Center and Focused Factory

Focused Work Center
Identify a large family of similar products that have a large and stable demand
Moves production from a general-purpose, process-oriented facility to a large work cell
Focused Factory
A focused work cell in a separate facility
May be focused by product line, layout, quality, new product introduction, flexibility, or other requirements

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Repetitive and Product-Oriented Layout

Volume is adequate for high equipment utilization
Product demand is stable enough to justify high investment in specialized equipment
Product is standardized or approaching a phase of life cycle that justifies investment
Supplies of raw materials and components are adequate and of uniform quality

Organized around products or families of similar high-volume, low-variety products

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Product-Oriented Layouts

Fabrication line
Builds components on a series of machines
Machine-paced
Require mechanical or engineering changes to balance
Assembly line
Puts fabricated parts together at a series of workstations
Paced by work tasks
Balanced by moving tasks

Both types of lines must be balanced so that the time to perform the work at each station is the same

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Product-Oriented Layouts

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McDonald’s Assembly Line

Figure 9.11

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Assembly-Line Balancing

Objective is to minimize the imbalance between machines or personnel while meeting required output
Starts with the precedence relationships
Determine cycle time
Calculate theoretical
minimum number of
workstations
Balance the line by
assigning specific
tasks to workstations

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Wing Component Example

TABLE 9.2	Precedence Data for Wing Component
TASK	ASSEMBLY TIME (MINUTES)	TASK MUST FOLLOW TASK LISTED BELOW
A	10	–
B	11	A
C	5	B
D	4	B
E	11	A
F	3	C, D
G	7	F
H	11	E
I	3	G, H
Total time	65

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Wing Component Example

Figure 9.12

480 available mins per day

40 units required

TABLE 9.2	Precedence Data for Wing Component
TASK	ASSEMBLY TIME (MINUTES)	TASK MUST FOLLOW TASK LISTED BELOW
A	10	–
B	11	A
C	5	B
D	4	B
E	11	A
F	3	C, D
G	7	F
H	11	E
I	3	G, H
Total time	65

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Wing Component Example

TABLE 9.3	Layout Heuristics That May Be Used to Assign Tasks to Workstations in Assembly-Line Balancing
1. Longest task time	From the available tasks, choose the task with the largest (longest) task time
2. Most following tasks	From the available tasks, choose the task with the largest number of following tasks
3. Ranked positional weight	From the available tasks, choose the task for which the sum of following task times is the longest
4. Shortest task time	From the available tasks, choose the task with the shortest task time
5. Least number of following tasks	From the available tasks, choose the task with the least number of subsequent tasks

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Wing Component Example

Figure 9.13

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Wing Component Example

TABLE 9.2	Precedence Data for Wing Component
TASK	ASSEMBLY TIME (MINUTES)	TASK MUST FOLLOW TASK LISTED BELOW
A	10	–
B	11	A
C	5	B
D	4	B
E	11	A
F	3	C, D
G	7	F
H	11	E
I	3	G, H
Total time	65

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Printed in the United States of America.

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