ch 05 - location and layout strategiesportal.unimap.edu.my/portal/page/portal30/lecture...
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ENT 457/3 SEM 01 2014/15 1
8 - 1© 2014 Pearson Education
Location and layout
Strategies
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Global Edition, Eleventh Edition
Principles of Operations Management, Global Edition, Ninth Edition
PowerPoint slides by Jeff Heyl
55
© 2014 Pearson Education 8 - 2© 2014 Pearson Education
Learning Objectives
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
1. Identify objective of location strategy, international location issues, clustering, fixed-position, process-oriented and product-oriented layout, work cells, focused work center, office layout, retail layout, warehouse layout and assembly line.
2. Analyze location problem by factor-rating method, locational break-even analysis and center-of-gravity method.
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Learning Objectives
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
3. Design to achieve good layout for process facility and balance production flow in a repetitive or product-oriented facility
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Fast TrackTM
▶ Location strategies
▶ Factor-Rating Method
▶ Locational Break-Even Analysis
▶Center-of-Gravity Method
▶ Transportation Model
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Fast TrackTM
▶ Layout Strategies
▶ Types of layout
▶Relationship Chart – Office Layout
▶Process-Oriented Layout (Job Shop)
▶Balancing Work Cells
▶Balancing Assembly Line
8 - 6© 2014 Pearson Education
Location Strategies
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Global Edition, Eleventh Edition
Principles of Operations Management, Global Edition, Ninth Edition
PowerPoint slides by Jeff Heyl
55aa
© 2014 Pearson Education
8/20/2014
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8 - 7© 2014 Pearson Education© 2014 Pearson Education0:10:29
8 - 8© 2014 Pearson Education
Location Provides Competitive
Advantage for FedEx
▶ Central hub concept
▶ Enables service to more locations with fewer aircraft
▶ Enables matching of aircraft flights with package loads
▶ Reduces mishandling and delay in transit because there is total control of packages from pickup to delivery
© 2014 Pearson Education
8 - 9© 2014 Pearson Education
The Strategic Importance of
Location
► One of the most important decisions a firm makes
► Increasingly global in nature
► Significant impact on fixed and variable costs
► Decisions made relatively infrequently
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The Strategic Importance of
Location
► Long-term decisions
► Once committed to a location, many resource and cost issues are difficult to change
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The Strategic Importance of
Location
The objective of location strategy is to maximize the benefit of location
to the firm
Options include
1. Expanding existing facilities
2. Maintain existing and add sites
3. Closing existing and relocating
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Location and Costs
► Location decisions based on low cost require careful consideration
► Once in place, location-related costs are fixed in place and difficult to reduce
► Determining optimal facility location is a good investment
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Factors That Affect Location
Decisions
▶ Globalization adds to complexity
▶Market economics
▶Communication
▶Rapid, reliable transportation
▶Ease of capital flow
▶Differing labor costs
▶ Identify key success factors (KSFs)
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Location Decisions
Country Decision Key Success Factors
1. Political risks, government rules, attitudes, incentives
2. Cultural and economic issues
3. Location of markets
4. Labor talent, attitudes, productivity, costs
5. Availability of supplies, communications, energy
6. Exchange rates and currency risksFigure 8.1
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Location DecisionsRegion/
Community Decision
Key Success Factors
1. Corporate desires
2. Attractiveness of region
3. Labor availability and costs
4. Costs and availability of utilities
5. Environmental regulations
6. Government incentives and fiscal policies
7. Proximity to raw materials and customers
8. Land/construction costsFigure 8.1
MN
WI
MI
IL INOH
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Location Decisions
Site Decision Key Success Factors
1. Site size and cost
2. Air, rail, highway, and waterway systems
3. Zoning restrictions
4. Proximity of services/ supplies needed
5. Environmental impact issues
Figure 8.1
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Global
Competitiveness
Index of
Countries
TABLE 8.1
Competitiveness of 142 Selected
Countries
COUNTRY
2011-2012
RANKING
Switzerland 1
Singapore 2
Sweden 3
Finland 4
USA 5
Japan 9
UK 10
Canada 12
Israel 22
China 26
Mexico 58
Vietnam 65
Russia 66
Haiti 141
Chad 142
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Factors That Affect
Location Decisions
► Labor productivity
► Wage rates are not the only cost
► Lower productivity may increase total cost
Labor cost per day
Productivity (units per day)= Cost per unit
South Carolina
= $1.17 per unit$70
60 units
Mexico
= $1.25 per unit$25
20 units
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Factors That Affect
Location Decisions
► Exchange rates and currency risks
► Can have a significant impact on costs
► Rates change over time
► Costs
► Tangible - easily measured costs such as utilities, labor, materials, taxes
► Intangible - less easy to quantify and include education, public transportation, community, quality-of-life
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Factors That Affect
Location Decisions
► Exchange rates and currency risks
► Can have a significant impact on costs
► Rates change over time
► Costs
► Tangible - easily measured costs such as utilities, labor, materials, taxes
► Intangible - less easy to quantify and include education, public transportation, community, quality-of-life
Location decisions based on costs
alone can create difficult ethical
situations
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Factors That Affect
Location Decisions
► Political risk, values, and culture
► National, state, local governments attitudes toward private and intellectual property, zoning, pollution, employment stability may be in flux
► Worker attitudes towards turnover, unions, absenteeism
► Globally cultures have different attitudes towards punctuality, legal, and ethical issues
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Ranking CorruptionRank Country 2012 CPI Score (out of 100)
1 Demark, Finland, New Zealand 90
4 Sweden 88
5 Singapore 87
6 Switzerland 86
7 Australia, Norway 85
9 Canada, Netherlands 84
13 Germany 79
14 Hong Kong 77
17 Japan, UK 74
19 USA 73
37 Taiwan 61
39 Israel 60
45 South Korea 56
80 China 39
123 Vietnam 31
133 Russia 28
Least Corrupt
Most Corrupt
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Factors That Affect
Location Decisions
► Proximity to markets
► Very important to services
► JIT systems or high transportation costs may make it important to manufacturers
► Proximity to suppliers
► Perishable goods, high transportation costs, bulky products
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Factors That Affect
Location Decisions
► Proximity to competitors (clustering)
► Often driven by resources such as natural, information, capital, talent
► Found in both manufacturing and service industries
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Clustering of Companies
TABLE 8.3 Clustering of Companies
INDUSTRY LOCATIONS
REASON FOR
CLUSTERING
Wine making Napa Valley (US) Bordeaux region (France)
Natural resources of land and climate
Software firms Silicon Valley, Boston, Bangalore (India)
Talent resources of bright graduates in scientific/technical areas, venture capitalists nearby
Clean energy Colorado Critical mass of talent and information, with 1,000 companies
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Clustering of Companies
TABLE 8.3 Clustering of Companies
INDUSTRY LOCATIONS
REASON FOR
CLUSTERING
Theme parks (Disney World, Universal Studios, and Sea World)
Orlando, Florida A hot spot for entertainment, warm weather, tourists, and inexpensive labor
Electronics firms Northern Mexico NAFTA, duty free export to U.S.
Computer hardware manufacturers
Singapore, Taiwan High technological penetration rate and per capita GDP, skilled/educated workforce with large pool of engineers
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Clustering of Companies
TABLE 8.3 Clustering of Companies
INDUSTRY LOCATIONS
REASON FOR
CLUSTERING
Fast food chains (Wendy’s, McDonald’s, Burger King, and Pizza Hut)
Sites within 1 mile of each other
Stimulate food sales, high traffic flows
General aviation aircraft (Cessna, Learjet, Boeing, Raytheon)
Wichita, Kansas Mass of aviation skills
Athletic footwear, outdoor wear
Portland, Oregon 300 companies, many owned by Nike, deep talent pool and outdoor culture
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Factor-Rating Method► Popular because a wide variety of factors
can be included in the analysis
► Six steps in the method
1. Develop a list of relevant factors called key success factors
2. Assign a weight to each factor
3. Develop a scale for each factor
4. Score each location for each factor
5. Multiply score by weights for each factor for each location
6. Make a recommendation based on the highest point score
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Factor-Rating ExampleTABLE 8.4 Weights, Scores, and Solution
SCORES
(OUT OF 100) WEIGHTED SCORES
KSF WEIGHT FRANCE DENMARK FRANCE DENMARK
Labor availability and attitude
.25 70 60 (.25)(70) = 17.5 (.25)(60) = 15.0
People-to-car ratio .05 50 60 (.05)(50) = 2.5 (.05)(60) = 3.0
Per capita income .10 85 80 (.10)(85) = 8.5 (.10)(80) = 8.0
Tax structure .39 75 70 (.39)(75) = 29.3 (.39)(70) = 27.3
Education and health
.21 60 70 (.21)(60) = 12.6 (.21)(70) = 14.7
Totals 1.00 70.4 68.0
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Locational
Cost-Volume Analysis
► An economic comparison of location alternatives
► Three steps in the method
1. Determine fixed and variable costs for each location
2. Plot the cost for each location
3. Select location with lowest total cost for expected production volume
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Locational Cost-Volume Analysis Example
Three locations:
Athens $30,000 $75 $180,000
Brussels $60,000 $45 $150,000
Lisbon $110,000 $25 $160,000
Fixed Variable TotalCity Cost Cost Cost
Total Cost = Fixed Cost + (Variable Cost x Volume)
Selling price = $120Expected volume = 2,000 units
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Locational Cost-Volume Analysis Example
Crossover point – Athens/Brussels
30,000 + 75(x) = 60,000 + 45(x)30(x) = 30,000
(x) = 1,000
60,000 + 45(x) = 110,000 + 25(x)20(x) = 50,000
(x) = 2,500
Crossover point – Brussels/Lisbon
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Locational Cost-Volume Analysis Example
–$180,000 –
–$160,000 –$150,000 –
–$130,000 –
–$110,000 –
––
$80,000 ––
$60,000 –––
$30,000 ––
$10,000 ––
Annual cost
| | | | | | |
0 500 1,000 1,500 2,000 2,500 3,000
Volume
Athens lowest cost
Brusselslowest cost
Lisbon lowest cost
Figure 8.2
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Center-of-Gravity Method
► Finds location of distribution center that minimizes distribution costs
► Considers
► Location of markets
► Volume of goods shipped to those markets
► Shipping cost (or distance)
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Center-of-Gravity Method
► Place existing locations on a coordinate grid
► Grid origin and scale is arbitrary
► Maintain relative distances
► Calculate x and y coordinates for ‘center of gravity’
► Assumes cost is directly proportional to distance and volume shipped
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Center-of-Gravity Method
where dix = x-coordinate of location i
diy = y-coordinate of location i
Qi = Quantity of goods moved to or from location i
=
dixQi
i
∑
Qi
i
∑x-coordinate of the
center of gravity
=
diyQi
i
∑
Qi
i
∑y-coordinate of the
center of gravity
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Center-of-Gravity Method
TABLE 8.5 Demand for Quain’s Discount Department Stores
STORE LOCATION
NUMBER OF CONTAINERS
SHIPPED PER MONTH
Chicago 2,000
Pittsburgh 1,000
New York 1,000
Atlanta 2,000
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Center-of-Gravity Method
North-South
East-West
120 –
90 –
60 –
30 –
–| | | | | |
30 60 90 120 150Arbitrary origin
Chicago (30, 120)New York (130, 130)
Pittsburgh (90, 110)
Atlanta (60, 40)
Figure 8.3
d1x = 30d1y = 120Q1 = 2,000
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Center-of-Gravity Method
x-coordinate =(30)(2000) + (90)(1000) + (130)(1000) + (60)(2000)
2000 + 1000 + 1000 + 2000
= 66.7
y-coordinate =(120)(2000) + (110)(1000) + (130)(1000) + (40)(2000)
2000 + 1000 + 1000 + 2000
= 93.3
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Center-of-Gravity Method
North-South
East-West
120 –
90 –
60 –
30 –
–| | | | | |
30 60 90 120 150Arbitrary origin
Chicago (30, 120)New York (130, 130)
Pittsburgh (90, 110)
Atlanta (60, 40)
Center of gravity (66.7, 93.3)+
Figure 8.3
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Transportation Model
► Finds amount to be shipped from several points of supply to several points of demand
► Solution will minimize total production and shipping costs
► A special class of linear programming problems
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Worldwide Distribution of
Volkswagens and PartsFigure 8.4
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Service Location Strategy
1. Purchasing power of customer-drawing area
2. Service and image compatibility with demographics of the customer-drawing area
3. Competition in the area
4. Quality of the competition
5. Uniqueness of the firm’s and competitors’ locations
6. Physical qualities of facilities and neighboring businesses
7. Operating policies of the firm
8. Quality of management
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Location StrategiesTABLE 8.6 Location Strategies – Service vs. Goods-Producing Organizations
SERVICE/RETAIL/PROFESSIONAL GOODS-PRODUCING
REVENUE FOCUS COST FOCUS
Volume/revenue
Drawing area; purchasing power Competition; advertising/pricing
Physical quality
Parking/access; security/lighting; appearance/ image
Cost determinants
RentManagement caliberOperation policies (hours, wage rates)
Tangible costs
Transportation cost of raw material Shipment cost of finished goodsEnergy and utility cost; labor; raw material; taxes, and so on
Intangible and future costs
Attitude toward unionQuality of lifeEducation expenditures by state Quality of state and local government
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Location StrategiesTABLE 8.6 Location Strategies – Service vs. Goods-Producing Organizations
SERVICE/RETAIL/PROFESSIONAL GOODS-PRODUCING
TECHNIQUES TECHNIQUES
Regression models to determine importance of various factors
Factor-rating methodTraffic countsDemographic analysis of drawing areaPurchasing power analysis of areaCenter-of-gravity methodGeographic information systems
Transportation method Factor-rating method Locational cost–volume analysisCrossover charts
ASSUMPTIONS ASSUMPTIONS
Location is a major determinant ofrevenue
High customer-contact issues are criticalCosts are relatively constant for a given
area; therefore, the revenue function is critical
Location is a major determinant of costMost major costs can be identified
explicitly for each siteLow customer contact allows focus on
the identifiable costsIntangible costs can be evaluated
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How Hotel Chains Select Sites
► Location is a strategically important decision in the hospitality industry
► La Quinta started with 35 independent variables and worked to refine a regression model to predict profitability
► The final model had only four variables
► Price of the inn
► Median income levels
► State population per inn
► Location of nearby colleges
r2 = .51
51% of the profitability is predicted by
just thesefour variables!
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Geographic Information
Systems (GIS)
► Important tool to help in location analysis
► Enables more complex demographic analysis
► Available data bases include
► Detailed census data
► Detailed maps
► Utilities
► Geographic features
► Locations of major services
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Geographic Information
Systems (GIS)
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Layout Strategies
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Global Edition, Eleventh Edition
Principles of Operations Management, Global Edition, Ninth Edition
PowerPoint slides by Jeff Heyl
55bb
© 2014 Pearson Education 8 - 50© 2014 Pearson Education© 2014 Pearson Education 0:16:29
8 - 51© 2014 Pearson Education
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© 2014 Pearson Education 8 - 52© 2014 Pearson Education
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!
© 2014 Pearson Education
8 - 53© 2014 Pearson Education
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
© 2014 Pearson Education 8 - 54© 2014 Pearson Education
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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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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Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout
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Types of Layout
1. Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information
2. Retail layout: Allocates shelf space and responds to customer behavior
3. Warehouse layout: Addresses trade-offs between space and material handling
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Types of Layout
4. Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings
5. Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)
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Types of Layout
6. Work cell layout: Arranges machinery and equipment to focus on production of a single product or group of related products
7. Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production
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Layout StrategiesTABLE 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 SupermarketWalgreen’sBloomingdale’s
Warehouse
(storage)
Balance low-cost storage with low-cost material handling
Federal-Mogul’s warehouseThe Gap’s distribution center
Project (fixed
position)
Move material to the limited storage areas around the site
Ingall Ship Building Corp.Trump PlazaPittsburgh Airport
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Layout StrategiesTABLE 9.1 Layout Strategies
OBJECTIVES EXAMPLES
Job Shop
(process
oriented)
Manage varied material flow for each product
Arnold Palmer HospitalHard Rock CafeOlive Garden
Work Cell
(product
families)
Identify a product family, build teams, cross train team members
Hallmark CardsWheeled Coach Ambulances
Repetitive/
Continuous
(product
oriented)
Equalize the task time at each workstation
Sony’s TV assembly lineToyota Scion
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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
1. Locate high-draw items around the periphery of the store
2. Use prominent locations for high-impulse and high-margin items
3. Distribute power items to both sides of an aisle and disperse them to increase viewing of other items
4. Use end-aisle locations
5. 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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Servicescapes1. Ambient conditions - background
characteristics such as lighting, sound, smell, and temperature
2. Spatial layout and functionality - which involve customer circulation path planning, aisle characteristics, and product grouping
3. 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 RFIDidentification used foradvanced shipmentnotification 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
1. Maintain list of open locations
2. Maintain accurate records
3. Sequence items to minimize travel, pick time
4. Combine picking orders
5. Assign classes of items to particular areas8 - 76© 2014 Pearson Education
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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Surgery
Radiology
ER triage room
ER Beds Pharmacy
Emergency room admissions
Billing/exit
Laboratories
Process-Oriented Layout
Patient A - broken leg
Patient B - erratic heart pacemaker
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
Minimize cost = XijCij
j=1
n
∑i=1
n
∑
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Process Layout Example
1. Construct a “from-to matrix”
2. Determine the space requirements
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. Try to improve the layout
6. 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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Department Assembly Painting Machine Receiving Shipping Testing(1) (2) Shop (3) (4) (5) (6)
Assembly (1)
Painting (2)
Machine Shop (3)
Receiving (4)
Shipping (5)
Testing (6)
Number of loads per week
50 100 0 0 20
30 50 10 0
20 0 100
50 0
0
Process Layout ExampleFigure 9.4
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Area A Area B Area C
Area D Area E Area F
60’
40’
Process Layout Example
Receiving Shipping TestingDepartment Department Department
(4) (5) (6)
Figure 9.5
Assembly Painting Machine ShopDepartment Department Department
(1) (2) (3)
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Process Layout Example
Interdepartmental Flow Graph Figure 9.6
100
50
50
10100
30 Machine Shop (3)
Testing (6)
Shipping (5)
Receiving (4)
Assembly(1)
Painting (2)
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Cost = XijCij
j=1
n
∑i=1
n
∑
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 GraphFigure 9.7
30
50
50
50 100
100 Machine Shop (3)
Testing (6)
Shipping (5)
Receiving (4)
Painting(2)
Assembly (1)
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Cost = XijCij
j=1
n
∑i=1
n
∑
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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Area A Area B Area C
Area D Area E Area F
60’
40’
Process Layout Example
Receiving Shipping TestingDepartment Department Department
(4) (5) (6)
Figure 9.8
Painting Assembly Machine ShopDepartment 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
► CRAFT
► ALDEP
► CORELAP
► Factory Flow
► Proplanner
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Computer Software
▶ Proplanner analysis
▶Distance traveled reduced by 38%
Before
After
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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
1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished goods inventories
4. Reduced direct labor cost
5. Heightened sense of employee participation
6. Increased equipment and machinery utilization
7. 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)
Material
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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
Determine the takt time
Takt time =Total work time available
Units required
Determine the number of operators required
Workers required =Total operation time required
Takt time
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Staffing Work Cells Example
600 Mirrors per day requiredMirror production scheduled for 8 hours per dayFrom a work balance
chart total operation time = 140 seconds
Standard time required
Operations
Assemble Paint Test Label Pack forshipment
60
50
40
30
20
10
0Figure 9.10
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Staffing Work Cells Example
600 Mirrors per day requiredMirror production scheduled for 8 hours per dayFrom a work balance
chart total operationtime = 140 seconds
Takt time = (8 hrs x 60 mins) / 600 units = .8 min = 48 seconds
Workers required =Total operation time required
Takt time
= 140 / 48 = 2.92
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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
1. Volume is adequate for high equipment utilization
2. Product demand is stable enough to justify high investment in specialized equipment
3. Product is standardized or approaching a phase of life cycle that justifies investment
4. 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
1. Low variable cost per unit
2. Low material handling costs
3. Reduced work-in-process inventories
4. Easier training and supervision
5. Rapid throughput
Advantages
1. High volume is required
2. Work stoppage at any point ties up the whole operation
3. Lack of flexibility in product or production rates
Disadvantages
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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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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
Wing Component Example
This means that tasks B and E cannot be done until task A has been completed
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TABLE 9.2Precedence 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
Wing Component Example
I
GF
C
D
H
B
E
A
10
1111
5
43
711 3
Figure 9.12
480 available mins per day
40 units required
Cycle time =
Production time available per day
Units required per day
= 480 / 40
= 12 minutes per unit
=
Time for task ii=1
n
∑
Cycle time
Minimum number of workstations
= 65 / 12
=5.42, or 6 stations
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TABLE 9.3Layout 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
Wing Component Example
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Wing Component Example
Station 1
Station 2
Station 3Station 4
Station 3
Station 5
Station 6Station 6
I
GF
H
C
D
B
E
A
10 11
11
5
4
3 7
11
3
Figure 9.13
480 available mins per day
40 units required
Cycle time = 12 mins
Minimum workstations = 5.42 or 6
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TABLE 9.2Precedence 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
Wing Component Example
I
GF
C
D
H
B
E
A
10
1111
5
43
711 3
Figure 9.12
480 available mins per day
40 units required
Cycle time = 12 mins
Minimum workstations = 5.42 or 6
Efficiency =∑ Task times
(Actual number of workstations) x (Largest cycle time)
= 65 minutes / ((6 stations) x (12 minutes))
= 90.3%
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Learning Objectives
Do Do you you able able to:to:
1. Identify objective of location strategy, international location issues, clustering, fixed-position, process-oriented and product-oriented layout, work cells, focused work center, office layout, retail layout, warehouse layout and assembly line.
2. Analyze location problem by factor-rating method, locational break-even analysis and center-of-gravity method.
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Learning Objectives
Do Do you you able able to:to:
3. Design to achieve good layout for process facility and balance production flow in a repetitive or product-oriented facility
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Additional Material(s)
Kindly read the additional material(s) for Kindly read the additional material(s) for further understanding and refer to your further understanding and refer to your lecturer for further explanation.lecturer for further explanation.
1. www.youtube.com/watch?v=AUHtDJIPgTE
2. www.youtube.com/watch?v=vTUjEVCXTlA
3. www.youtube.com/watch?v=hmIrj_bOt48
4. www.youtube.com/watch?v=r-Z22ddHb_I
5. www.youtube.com/watch?v=3ekwd7Tg0pY