Operations
Management
Chapter 9 –
Layout Strategies
Delivered by:
Eng.Mosab I. Tabash
© 2008 Prentice Hall, Inc.
9–1
Strategic Importance of
Layout Decisions
The objective of layout strategy
is to develop a cost-effective
layout that will meet a firm’s
competitive needs
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9–2
Importance 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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9–3
Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Product-oriented layout
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9–4
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 tradeoffs between space and material
handling
© 2008 Prentice Hall, Inc.
9–5
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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9–6
Types of Layout
þ Product-oriented layout: Seeks the
best personnel and machine
utilizations in repetitive or
continuous production
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9–7
Good Layouts Consider
1. Material handling equipment
2. Capacity and space requirements
3. Environment and aesthetics
4. Flows of information
5. Cost of moving between various
work areas
© 2008 Prentice Hall, Inc.
9–8
Layout Strategies
Office
Retail
Warehouse
(storage)
Examples
Allstate Insurance
Microsoft Corp.
Locate workers
requiring frequent
contact close to
one another
Kroger’s
Supermarket
Federal-Mogul’s
warehouse
Walgreen’s
The Gap’s
distribution center
Bloomingdale’s
Problems/Issues
Expose customer
to high-margin
items
Balance low-cost
storage with lowcost material
handling
Table 9.1
© 2008 Prentice Hall, Inc.
9–9
Layout Strategies
Project
(fixed position)
Job Shop
(process oriented)
Examples
Ingall Ship Building
Corp.
Trump Plaza
Arnold Palmer Hospital
Hard Rock Café
Olive Garden
Pittsburgh Airport
Problems/Issues
Move material to the
Manage varied material
limited storage areas
flow for each product
around the site
Table 9.1
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9 – 10
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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9 – 11
Relationship Chart
Figure 9.1
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9 – 12
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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9 – 13
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
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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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9 – 15
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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9 – 16
Warehousing and Storage
Layouts
Material Handling Costs
 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
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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
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Random Stocking
 Typically requires automatic identification
systems (AISs) and effective information
systems
 Random assignment of stocking locations
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 areas
© 2008 Prentice Hall, Inc.
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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
© 2008 Prentice Hall, Inc.
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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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9 – 22
Alternative Strategy
 As much of the project as possible
is completed off-site in a productoriented facility
 This can
significantly
improve efficiency
but is only
possible when
multiple similar
units need to be created
© 2008 Prentice Hall, Inc.
9 – 23
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
© 2008 Prentice Hall, Inc.
9 – 24
Process-Oriented Layout
Patient A - broken leg
ER
triage
room
Emergency room admissions
Patient B - erratic heart
pacemaker
Surgery
Laboratories
Radiology
ER Beds
Pharmacy
Billing/exit
Figure 9.3
© 2008 Prentice Hall, Inc.
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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
© 2008 Prentice Hall, Inc.
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Process-Oriented Layout
n
Minimize cost = ∑
n
∑ Xij Cij
i=1 j=1
where
© 2008 Prentice Hall, Inc.
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
9 – 27
Process Layout Example
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.
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
© 2008 Prentice Hall, Inc.
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Process Layout Example
Number of loads per week
Department Assembly Painting
(1)
(2)
Assembly (1)
Painting (2)
Machine Shop (3)
Receiving (4)
Shipping (5)
50
Machine Receiving
Shop (3)
(4)
Shipping
(5)
Testing
(6)
100
0
0
20
30
50
10
0
20
0
100
50
0
0
Testing (6)
Figure 9.4
© 2008 Prentice Hall, Inc.
9 – 29
Process Layout Example
Area 1
Area 2
Area 3
Assembly
Department
(1)
Painting
Department
(2)
Machine Shop
Department
(3)
40’
Figure 9.5
© 2008 Prentice Hall, Inc.
Receiving
Department
(4)
Shipping
Department
(5)
Testing
Department
(6)
Area 4
Area 5
Area 6
60’
9 – 30
Process Layout Example
Interdepartmental Flow Graph
100
1
50
2
30
3
10
100
4
50
5
6
Figure 9.6
© 2008 Prentice Hall, Inc.
9 – 31
Process Layout Example
n
Cost = ∑
n
∑ Xij Cij
i=1 j=1
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
© 2008 Prentice Hall, Inc.
9 – 32
Process Layout Example
Revised Interdepartmental Flow Graph
30
50
2
1
100
3
50
4
100
50
5
6
Figure 9.7
© 2008 Prentice Hall, Inc.
9 – 33
Process Layout Example
n
Cost = ∑
n
∑ Xij Cij
i=1 j=1
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
© 2008 Prentice Hall, Inc.
9 – 34
Process Layout Example
Area 1
Area 2
Area 3
Painting
Department
(2)
Assembly
Department
(1)
Machine Shop
Department
(3)
40’
Figure 9.8
Receiving
Department
(4)
Shipping
Department
(5)
Testing
Department
(6)
Area 4
Area 5
Area 6
60’
© 2008 Prentice Hall, Inc.
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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
© 2008 Prentice Hall, Inc.
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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
© 2008 Prentice Hall, Inc.
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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 inventory
4. Reduced direct labor
5. Heightened sense of employee
participation
6. Increased use of equipment and
machinery
7. Reduced investment in machinery
and equipment
© 2008 Prentice Hall, Inc.
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Improving Layouts Using
Work Cells
Current layout - workers
in small closed areas.
Cannot increase output
without a third worker and
third set of equipment.
Improved layout - cross-trained
workers can assist each other.
May be able to add a third worker
as additional output is needed.
Figure 9.10 (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
Figure 9.10 (b)
© 2008 Prentice Hall, Inc.
Improved layout - in U
shape, workers have better
access. Four cross-trained
workers were reduced.
U-shaped line may reduce employee movement
and space requirements while enhancing
communication, reducing the number of
workers, and facilitating inspection
9 – 40
Requirements of Work Cells
1. Identification of families of products
2. A high level of training, flexibility
and empowerment of employees
3. Being self-contained, with its own
equipment and resources
4. Test (poka-yoke) at each station in
the cell
© 2008 Prentice Hall, Inc.
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Repetitive and ProductOriented Layout
Organized around products or families of
similar high-volume, low-variety products
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
© 2008 Prentice Hall, Inc.
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Product-Oriented Layouts
Advantages
1.
2.
3.
4.
5.
Low variable cost per unit
Low material handling costs
Reduced work-in-process inventories
Easier training and supervision
Rapid throughput
Disadvantages
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
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McDonald’s Assembly Line
Figure 9.12
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9 – 44
Assembly-Line Balancing
 Objective is to minimize the imbalance
between machines or personnel while
meeting required output
 Starts with the precedence
relationships
1. Determine cycle time
2. Calculate theoretical
minimum number of
workstations
3. Balance the line by
assigning specific
tasks to workstations
© 2008 Prentice Hall, Inc.
9 – 45
Electronic copier Component Example
Performance
Time
Task
(minutes)
A
10
B
11
C
5
D
4
E
12
F
3
G
7
H
11
I
3
Total time 66
© 2008 Prentice Hall, Inc.
Task Must Follow
Task Listed
Below
—
A
B
B
A
C, D
F
E
G, H
This means that
tasks B and E
cannot be done
until task A has
been completed
9 – 46
Electronic copier Component Example
Performance
Time
Task
(minutes)
A
10
B
11
C
5
D
4
E
12
F
3
G
7
H
11
I
3
Total time 66
Task Must Follow
Task Listed
Below
—
A
B
B
A
C, D
F
E
G, H
5
10
11
A
B
C
3
7
F
G
4
12
E
D
3
11
I
H
Figure 9.13
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Electronic copier Component Example
Performance
Time
Task
(minutes)
A
10
B
11
C
5
D
4
E
12
F
3
G
7
H
11
I
3
Total time 66
480 available
mins per day
40 units required
Task Must Follow
Task Listed
Below
—
A
Production time
B
available per day
Cycle
B time = Units required per day
A
= 480 / 40
5
C, D
= 12 minutes per unit
C
F
10
11
3
7
n
E
for taskFi
A ∑ Time
B
G
Minimum
G, H
i=1
4
number of =
workstations
Cycle Dtime
12
11
3
I
= 66 / 12
E
H
= 5.5 or 6 stations
Figure 9.13
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Electronic copier Component Example
Performance
Time
Task
(minutes)
A
10
B
11
Station
C
52
D
4
11
E 10
12
F A
B
3
G
7
H
11
I
3
12
Stationtime 66
Total
E
1
Station
4
© 2008 Prentice Hall, Inc.
480 available
mins per day
40 units required
Task Must Follow
Task Listed
Below
—
A
5 B
C B
A
C, D
4
F
D E
G, H
Cycle time = 12 mins
Minimum
workstations = 5.5 or 6
3
7
F
G
Station 3
3
I
11
Station 6
H
Station
5
Figure 9.14
9 – 49
Electronic copier Component Example
Performance
Time
Task
(minutes)
Task Must Follow
Task Listed
Below
480 available
mins per day
40 units required
A
10
—
Cycle time = 12 mins
B
11
A
Minimum
C
5
B
workstations = 5.5 or 6
D
4
B
E
12
A
F
3
C, D
∑ Task times
G
7
F
Efficiency =
(Actual number ofEworkstations) x (Largest cycle time)
H
11
I
3
G, H
= 66 minutes / (6 stations) x (12 minutes)
Total time 66
= 91.7%
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