© 2006 Prentice Hall, Inc.9 – 1 Layout Strategy Chapter9.

© 2006 Prentice Hall, Inc. 9 – 1

Layout StrategyLayout Strategy

Chapter9Chapter9


Innovations at McDonald’sInnovations at McDonald’s

Indoor seating (1950s)Indoor seating (1950s) Drive-through window (1970s)Drive-through window (1970s) Adding breakfast to the menu Adding breakfast to the menu

(1980s)(1980s) Adding play areas (1990s)Adding play areas (1990s)

Three out of the four are Three out of the four are layout decisions!layout decisions!


McDonald’s New Kitchen McDonald’s New Kitchen LayoutLayout

Fifth major innovation Fifth major innovation Sandwiches assembled in order Sandwiches assembled in order Elimination of some steps, shortening of Elimination of some steps, shortening of

others others No food prepared ahead except pattyNo food prepared ahead except patty New bun toasting machine and new bun New bun toasting machine and new bun

formulationformulation Repositioning condiment containersRepositioning condiment containers Savings of $100,000,000 per year in food Savings of $100,000,000 per year in food

costscosts


Strategic Importance of Strategic Importance of Layout DecisionsLayout Decisions

The objective of layout strategy The objective of layout strategy is to develop an economic layout is to develop an economic layout

that will meet the firm’s that will meet the firm’s competitive requirementscompetitive requirements


Types of LayoutTypes of Layout

1.1. Office layout Office layout

2.2. Retail layout Retail layout

3.3. Warehouse layoutWarehouse layout

4.4. Fixed-position layoutFixed-position layout

5.5. Process-oriented layoutProcess-oriented layout

6.6. Work cell layout Work cell layout

7.7. Product-oriented layoutProduct-oriented layout



1.1. Office layout - positions workers, Office layout - positions workers, their equipment, and spaces/offices their equipment, and spaces/offices to provide for movement of to provide for movement of informationinformation

2.2. Retail layout - allocates shelf space Retail layout - allocates shelf space and responds to customer behavior and responds to customer behavior

3.3. Warehouse layout - addresses Warehouse layout - addresses trade-offs between space and trade-offs between space and material handlingmaterial handling



4.4. Fixed-position layout - addresses Fixed-position layout - addresses the layout requirements of large, the layout requirements of large, bulky projects such as ships and bulky projects such as ships and buildingsbuildings

5.5. Process-oriented layout - deals with Process-oriented layout - deals with low-volume, high-variety production low-volume, high-variety production (also called job shop or intermittent (also called job shop or intermittent production)production)



6.6. Work cell layout - a special Work cell layout - a special arrangement of machinery and arrangement of machinery and equipment to focus on production of equipment to focus on production of a single product or group of related a single product or group of related productsproducts

7.7. Product-oriented layout - seeks the Product-oriented layout - seeks the best personnel and machine best personnel and machine utilizations in repetitive or utilizations in repetitive or continuous productioncontinuous production



1.1. Office layoutOffice layout








Office LayoutOffice Layout

Grouping of workers, their Grouping of workers, their equipment, and spaces to provide equipment, and spaces to provide comfort, safety, and movement of comfort, safety, and movement of informationinformation

Movement of information is main Movement of information is main distinctiondistinction

Typically in state of flux due to Typically in state of flux due to frequent technological changesfrequent technological changes


Relationship ChartRelationship ChartValue Closeness

A Absolutely necessary

E Especially important

I Important

O Ordinary OK

U Unimportant

X Not desirable

President

Chief Technology Officer

Engineer’s area

Secretary

Office entrance

Central files

Equipment cabinet

Photocopy equipment

Storage room

O

UA

X

O

U

A

I

OA

I

O

U

AI

I

A

UO

AU O

UX

O I

U

OII

I

E

EE

E E

1122

3344

5566

77

8899

Figure 9.1Figure 9.1




2.2. Retail layoutRetail layout







Supermarket Retail LayoutSupermarket Retail Layout

ObjectiveObjective is to maximize is to maximize profitability per square foot of profitability per square foot of floor spacefloor space

Sales and profitability vary Sales and profitability vary directly with directly with customer exposurecustomer exposure


Five Helpful Ideas for Five Helpful Ideas for Supermarket LayoutSupermarket Layout

1.1. Locate high-draw items around the Locate high-draw items around the periphery of the storeperiphery of the store

2.2. Use prominent locations for high-impulse Use prominent locations for high-impulse and high-margin itemsand high-margin items

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

4.4. Use end-aisle locationsUse end-aisle locations

5.5. Convey mission of store through careful Convey mission of store through careful positioning of lead-off departmentpositioning of lead-off department


Retail SlottingRetail Slotting Manufacturers pay fees to retailers Manufacturers pay fees to retailers

to get the retailers to display (slot) to get the retailers to display (slot) their producttheir product

Contributing factorsContributing factors Limited shelf spaceLimited shelf space

An increasing number of new An increasing number of new productsproducts

Better information about sales Better information about sales through POS data collectionthrough POS data collection

Closer control of inventoryCloser control of inventory


Retail Store Shelf Space Retail Store Shelf Space PlanogramPlanogram

Computerized Computerized tool for shelf-tool for shelf-space space managementmanagement

Generated from Generated from store’s scanner store’s scanner data on salesdata on sales

Often supplied Often supplied by manufacturerby manufacturer

5 facings5 facings

Sh

amp

oo

Sh

amp

oo

Sh

amp

oo

Sh

amp

oo

Sh

amp

oo

Co

nd

ition

er

Co

nd

ition

er

Sh

amp

oo

Sh

amp

oo

Sh

amp

oo

Sh

amp

oo

Co

nd

ition

er

2 ft.2 ft.











Warehousing and Storage Warehousing and Storage LayoutsLayouts

ObjectiveObjective is to optimize trade-offs is to optimize trade-offs between handling costs and costs between handling costs and costs associated with warehouse spaceassociated with warehouse space

Maximize the total “cube” of the Maximize the total “cube” of the warehouse – utilize its full volume warehouse – utilize its full volume while maintaining low material while maintaining low material handling costshandling costs


Warehousing and Storage Warehousing and Storage LayoutsLayouts

Warehouse density tends to vary Warehouse density tends to vary inversely with the number of inversely with the number of different items storeddifferent items stored

Automated Storage and Retrieval Automated Storage and Retrieval Systems (ASRS) can significantly Systems (ASRS) can significantly improve warehouse productivityimprove warehouse productivity

Dock location is a key design Dock location is a key design elementelement


Cross-DockingCross-Docking

Materials are moved directly from Materials are moved directly from receiving to shipping and are not receiving to shipping and are not placed in storage in the placed in storage in the warehousewarehouse

Requires tight scheduling and Requires tight scheduling and accurate shipments, typically accurate shipments, typically with bar code identificationwith bar code identification


Shipping and receiving docks

Office

Cu

sto

miz

atio

n

Conveyor

Storage racks

Staging

Warehouse LayoutWarehouse LayoutTraditional LayoutTraditional Layout


Warehouse LayoutWarehouse LayoutCross-Docking LayoutCross-Docking Layout


Off

ice












Fixed-Position LayoutFixed-Position Layout

Product remains in one place Product remains in one place

Workers and equipment come to Workers and equipment come to sitesite

Complicating factorsComplicating factors Limited space at siteLimited space at site

Different materials required at Different materials required at different stages of the projectdifferent stages of the project

Volume of materials needed is Volume of materials needed is dynamicdynamic











Process-Oriented LayoutProcess-Oriented Layout

Like machines and equipment are Like machines and equipment are grouped togethergrouped together

Flexible and capable of handling a Flexible and capable of handling a wide variety of products or wide variety of products or servicesservices

Scheduling can be difficult and Scheduling can be difficult and setup, material handling, and labor setup, material handling, and labor costs can be highcosts can be high


Surgery

Radiology

ER triage room

ER Beds Pharmacy

Emergency room admissions

Billing/exit

Laboratories


Patient A - broken leg

Patient B - erratic heart pacemaker




Arrange work centers so as to Arrange work centers so as to minimizeminimize the costs of material the costs of material handlinghandling

Basic Basic cost elementscost elements are are Number of loads (or people) moving Number of loads (or people) moving

between centersbetween centers

Distance loads (or people) move Distance loads (or people) move between centersbetween centers



Minimize cost = Minimize cost = ∑ ∑∑ ∑ X Xijij C Cijij

nn

i i = 1= 1

nn

j j = 1= 1

wherewhere nn == total number of total number of work centers or departmentswork centers or departments

i, ji, j == individual individual departmentsdepartments

XXijij == number of loads number of loads moved from department i to moved from department i to department jdepartment j

CCijij == cost to move a load cost to move a load between department i and between department i and department jdepartment j


Process Layout ExampleProcess Layout Example

1.1. Construct a “from-to matrix”Construct a “from-to matrix”

2.2. Determine the space requirementsDetermine the space requirements

3.3. Develop an initial schematic diagramDevelop an initial schematic diagram

4.4. Determine the cost of this layout Determine the cost of this layout

5.5. Try to improve the layoutTry to improve the layout

6.6. Prepare a detailed plan Prepare a detailed plan

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


DepartmentDepartment AssemblyAssembly PaintingPainting MachineMachine ReceivingReceiving ShippingShipping TestingTesting(1)(1) (2)(2) Shop (3)Shop (3) (4)(4) (5)(5) (6)(6)

Assembly (1)Assembly (1)

Painting (2)Painting (2)

Machine Shop (3)Machine Shop (3)

Receiving (4)Receiving (4)

Shipping (5)Shipping (5)

Testing (6)Testing (6)

Number of loads per weekNumber of loads per week

50 100 0 0 20

30 50 10 0

20 0 100

50 0

0




Room 1Room 1 Room 2Room 2 Room 3Room 3

Room 4Room 4 Room 5Room 5 Room 6Room 660’60’

40’40’


Receiving Shipping TestingDepartment Department Department

(4) (5) (6)


Assembly Painting Machine ShopDepartment Department Department

(1) (2) (3)



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

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


= $570= $570

Cost = Cost = ∑ ∑∑ ∑ X Xijij C Cijij

nn

i i = 1= 1

nn

j j = 1= 1


100100

5050

2020

5050

5050

20201010

100100

3030


Interdepartmental Flow GraphInterdepartmental Flow Graph

1 2 3

4 5 6




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



= $480= $480

Cost = Cost = ∑ ∑∑ ∑ X Xijij C Cijij

nn

i i = 1= 1

nn

j j = 1= 1



3030

5050

1010

5050

50502020

5050 100100

100100

Interdepartmental Flow GraphInterdepartmental Flow Graph

2 1 3

4 5 6



Room 1Room 1 Room 2Room 2 Room 3Room 3

Room 4Room 4 Room 5Room 5 Room 6Room 660’60’

40’40’


Receiving Shipping TestingDepartment Department Department

(4) (5) (6)


Painting Assembly Machine ShopDepartment Department Department

(2) (1) (3)








6.6. Work cell layoutWork cell layout



Work CellsWork Cells

Reorganizes people and machines Reorganizes people and machines into groups to focus on single into groups to focus on single products or product groupsproducts or product groups

Group technology identifies Group technology identifies products that have similar products that have similar characteristics for particular cellscharacteristics for particular cells

Volume must justify cellsVolume must justify cells

Cells can be reconfigured as Cells can be reconfigured as designs or volume changesdesigns or volume changes


Advantages of Work CellsAdvantages of Work Cells

1.1. Reduced work-in-process inventoryReduced work-in-process inventory

2.2. Less floor space requiredLess floor space required

3.3. Reduced raw material and finished Reduced raw material and finished goods inventorygoods inventory

4.4. Reduced direct laborReduced direct labor

5.5. Heightened sense of employee Heightened sense of employee participationparticipation

6.6. Increased use of equipment and Increased use of equipment and machinerymachinery

7.7. Reduced investment in machinery Reduced investment in machinery and equipmentand equipment


Improving Layouts Using Improving Layouts Using Work CellsWork Cells

Current layout - workers in Current layout - workers in small closed areas. small closed areas. Cannot increase output Cannot increase output without a third worker and without a third worker and third set of equipment.third set of equipment. Improved layout - cross-trained Improved layout - cross-trained

workers can assist each other. workers can assist each other. May be able to add a third worker May be able to add a third worker as additional output is needed.as additional output is needed.

Figure 9.10 (a)Figure 9.10 (a)


Improving Layouts Using Improving Layouts Using Work CellsWork Cells

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

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

Figure 9.10 (b)Figure 9.10 (b)

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


Requirements of Work CellsRequirements of Work Cells

1.1. Identification of families of productsIdentification of families of products

2.2. A high level of training and A high level of training and flexibility on the part of employeesflexibility on the part of employees

3.3. Either staff support or flexible, Either staff support or flexible, imaginative employees to establish imaginative employees to establish work cells initiallywork cells initially

4.4. Test (poka-yoke) at each station in Test (poka-yoke) at each station in the cellthe cell











Repetitive and Product-Repetitive and Product-Oriented LayoutOriented Layout

Volume is adequate for high equipment Volume is adequate for high equipment utilizationutilization

Product demand is stable enough to justify high Product demand is stable enough to justify high investment in specialized equipmentinvestment in specialized equipment

Product is standardized or approaching a phase Product is standardized or approaching a phase of life cycle that justifies investment of life cycle that justifies investment

Supplies of raw materials and components are Supplies of raw materials and components are adequate and of uniform qualityadequate and of uniform quality

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


Product-Oriented LayoutsProduct-Oriented Layouts Fabrication lineFabrication line

Builds components on a series of machinesBuilds components on a series of machines Machine-pacedMachine-paced Require mechanical or engineering changes Require mechanical or engineering changes

to balanceto balance Assembly lineAssembly line

Puts fabricated parts together at a series of Puts fabricated parts together at a series of workstationsworkstations

Paced by work tasksPaced by work tasks Balanced by moving tasksBalanced by moving tasks

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


Product-Oriented LayoutsProduct-Oriented Layouts

1.1. Low variable cost per unitLow variable cost per unit

2.2. Low material handling costsLow material handling costs

3.3. Reduced work-in-process inventoriesReduced work-in-process inventories

4.4. Easier training and supervisionEasier training and supervision

5.5. Rapid throughputRapid throughput

AdvantagesAdvantages

1.1. High volume is requiredHigh volume is required

2.2. Work stoppage at any point ties up the Work stoppage at any point ties up the whole operationwhole operation

3.3. Lack of flexibility in product or production Lack of flexibility in product or production ratesrates

DisadvantagesDisadvantages


Assembly-Line BalancingAssembly-Line Balancing

Objective is to Objective is to minimize the imbalanceminimize the imbalance between machines or personnel while between machines or personnel while meeting required outputmeeting required output

Starts with the precedence Starts with the precedence relationshipsrelationships

1.1. Determine cycle timeDetermine cycle time

2.2. Calculate theoretical minimum number Calculate theoretical minimum number of workstationsof workstations

3.3. Balance the line by assigning specific Balance the line by assigning specific tasks to workstationstasks to workstations


Copier ExampleCopier Example

This means that This means that tasks B and E tasks B and E cannot be done cannot be done until task A has until task A has been completedbeen completed

PerformancePerformance Task Must FollowTask Must FollowTimeTime Task ListedTask Listed

TaskTask (minutes)(minutes) BelowBelow

AA 1010 ——BB 1111 AACC 55 BBDD 44 BBEE 1212 AAFF 33 C, DC, DGG 77 FFHH 1111 EEII 33 G, HG, H

Total time Total time 6666






Total time Total time 6666 I

GF

C

D

H

B

E

A

10

1112

5

4 3

711 3

Figure 9.13


I

GF

C

D

H

B

E

A

10

1112

5

4 3

711 3

Figure 9.13





Copier ExampleCopier Example480 available

mins per day40 units required

Cycle time =

Production time available per day

Units required per day

= 480 / 40= 12 minutes per unit

Minimum number of

workstations=

∑ Time for task i

Cycle time

n

i = 1

= 66 / 12= 5.5 or 6 stations


I

GF

C

D

H

B

E

A

10

1112

5

4 3

711 3

Figure 9.13







Cycle time = 12 mins

Minimum workstations = 5.5 or 6

Line-Balancing Heuristics

1. Longest task time Choose the available task with the longest task time

2. Most following tasks Choose the available task with the largest number of following tasks

3. Ranked positional weight

Choose the available task for which the sum of following task times is the longest

4. Shortest task time Choose the available task with the shortest task time

5. Least number of following tasks

Choose the available task with the least number of following tasks

Table 9.4


480 available mins per day

40 units required








I

GF

H

C

D

B

E

A

10 11

12

5

4

3 7

11

3

Station 1

Station 2

Station 3

Station 5

Station 4

Station 6

Figure 9.14










Efficiency =∑ Task times

(actual number of workstations) x (largest cycle time)

= 66 minutes / (6 stations) x (12 minutes)

= 91.7%

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