9 Layout Strategies Summary This is a long chapter with lots of tools. The Hints and Tips will help you with these tools. Proper layout of equipment and workstations contribute greatly to organizational strategy, capacity, process efficiency, flexibility, and cost. In addition, layout improves the operating conditions for both employees and customers. The competitive environment requires dynamic design of layouts. A variety of techniques helps to achieve such flexibility. The textbook identifies seven types of layouts. Each contributes to the success of a particular industry. One needs to consider material handling equipment, capacity and space requirements, the environment and aesthetics of space, flows of information, and the cost of moving among work areas. The office layout emphasizes the flow of information among workers to complete the tasks to which they are assigned. The relationship chart indicates the appropriate location of people and things. Still, many different questions involving people and organizational goals or culture need answers. The retail layout focuses on the ability to expose customers to products. The better the exposure, the more likely the organization can produce greater sales and profitability. An important objective of retail layout decisions is to maximize profitability per square foot of floor space or linear foot of shelf space. Many mathematical techniques and analytical tools can help identify the best layouts. Managers also must concern themselves with the servicescape so to not adversely affect customers and employees. Ambient conditions, spatial layout, and other characteristics have social significance. Warehouse layouts find the optimum trade-off between handling cost and the costs associated with providing the space. Material handling costs include those related to the transaction. Finding and moving an item is expensive. Management tries to minimize the cost through better storage logic and picking routines. Fixed-Position layouts apply to projects such as building a ship, highway, bridge, or house. People and material travel to the site and perform the work. To ease congestion and move materials, appropriate manufacturing or assembly layouts construct components offsite and deliver them as needed. Project management helps to schedule these steps. Process-oriented layouts include flexible equipment and staff that can produce a variety of products and services. As a result, the organization can more easily cater to customer needs than a dedicated or specialized process can. Each product or service may follow a different route through the layout. The challenge is to design the layout to minimize movement (a non-value activity), scheduling changes, setups, and unique material handling. All of these add costs to the end-product or service. When planning, the cost to move something from one location to another is often assumed as equal and incorporates a variety of reasons why resources are consumed. The textbook demonstrates a simple trial and error
140
141 Chapter 9 technique. The Hints and Tips section, below, explains the procedure further. Planning for layouts that are more elaborate usually requires the assistance of computer programs. Work cells reorganize people and machines into a common location that can focus on tasks efficiently. Think of a team or a theater group. Before the final product is finished (the game or the play), specialized groups (offense or defense, chorus or orchestra) work together. Grouping or locating similar products or components together minimizes travel and enhances information flow. As needed, the organization will change the work cell. Work cells require the identification of product families, high level of training, selfcontained assignment of equipment and resources, and a quality/specification test at each station. Staffing and balancing the work cell requires knowing the capacity of the cell and the total time necessary to build one unit. Focused work centers and focused factories use the work cell concept to produce families of similar products (components) that have a large and stable demand. The final layout to consider applies to product-oriented production that builds or supply high-volume, low-variety products. Volume satisfies utilization requirements. Demand is stable. The product or service is standardized, and supplies are adequate. Product-oriented layouts follow repetitive procedures and include fabrication or assembly. Fabrication lines build components. Assembly lines put the fabricated parts together. In both cases, organization must “balance” the workstations. Why? One of two problems can occur. Workers or machines may stand idle waiting for a part to arrive, or a queue develops because a particular workstation is too slow to keep up with demand. Line balancing techniques help to solve either problem. Using the a list of the production tasks organized by sequence, time required to complete a task, and the total throughput demanded of the system, operations managers will determine the number of workstations required and how many tasks are completed at each station. As an example, one person may build five wheelbarrows per day, but divide the work between two assemblers and they can build ten. This assumes, however, that we can divide task time equally. Picture one worker having responsibility for two-thirds of time required to complete the wheelbarrow, while the other worker only has one-third. The second worker must wait until the other person hands off the component before starting. The imbalance produces idle time. When a line is balanced, there is little idle time, and the required capacity exists. The Hints and Tips section gives an annotated example. Knowing the desired throughput (number of units per time period) for an assembly line determines the cycle time (the amount of time between completion of each unit). Thus building five wheelbarrows per eight-hour day determines a cycle time of 96 minutes per wheelbarrow. To build ten wheelbarrows per day means a unit is completed every 48 minutes. The minimum number of workstations needed to build at the required rates is determined by dividing the total time necessary to build a unit divided by the cycle time. To build 10 wheelbarrows would require 2 workstations at a minimum.
Learning Objectives 1. Discuss important issues in office layout 2. Define the objectives of retail layout 3. Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking 4. Identify when fixed-position layouts are appropriate 5. Explain how to achieve a good process-oriented facility layout 6. Define work cell and the requirements of a work cell
Layout Strategies 142 7. Define product-oriented layout 8. Explain how to balance production flow in a repetitive or product-oriented facility
Skills to Develop •
See the efficiency associated with better layout
•
Specify layout criteria
•
Identify how a customer reacts to layout design
•
Compute costs associated with layout design
•
Design work cells
•
Assess unbalanced lines
•
Identify methods to improve cycle time
Annotated Chapter Outline I.
The Strategic Importance of Layout Decisions A. Affects 1. Capacity 2. Process 3. Flexibility 4. Cost 5. Differentiation 6. Response time B. Layout should achieve 1. Higher utilization of space, equipment, and people 2. Improved flow of information, materials, or people 3. Improved employee morale and safer working conditions 4. Improved customer/client interaction 5. Flexibility (whatever the layout is now, it will need to change) II. Types of Layout A. Key attributes 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 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) 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 utilization in repetitive or continuous production B. Must determine the following 1. Material handling equipment 2. Capacity and space requirements
143 Chapter 9
III. A. B. C.
D.
IV. A.
B.
C.
V. A. B. C.
3. Environment and aesthetics 4. Flows of information 5. Cost of moving between various work areas Office Layout Provide for comfort, safety, and movement of information Also must consider tasks Analysis 1. Electronic and conventional communication 2. Separation needs 3. Use the relationship chart Universal considerations 1. Working conditions 2. Teamwork 3. Authority 4. Status a. Private or open cubicles b. High or low file cabinets c. Use of entrance and other rooms in the facility Retail Layout Exposure of products to the customer increase sales and profits 1. Locate high draw items around the periphery of the store. 2. Use prominent location for high-impulse and high-margin items 3. Distribute power items – those that dominate the customer’s visit – to both sides of an aisle and disburse to increase viewing of other items 4. Use end-aisle locations because of their exposure rate 5. Convey the mission of the store by selecting the position of the lead-off department. Evaluate 1. Maximize profitability per square foot or lineal foot of shelf space 2. Can slotting fees help with profitability a. Slotting fees are charged for the best space in a retail store b. Used by stores with strong buying power Servicescapes 1. Physical surrounding in which service is delivered a. Ambient conditions such as lighting, sound, smell, and temperature b. Spatial layout and functionality which involve customer circulation and aisle characteristics c. Signs, symbols, and artifacts which are characteristics of design that carry social significance Warehousing and Storage Layouts Find optimum trade-off between handling cost and the costs associate with warehouse space Maximize the utilization of the warehouse volume – known as the “cube” Material handling costs produced by the transaction 1. Incoming transport, storage, outgoing transport 2. Equipment, people, supervision, insurance, and depreciation 3. Minimize damage and spoilage
Layout Strategies 144 D. Automated storage and retrieval systems (ASRS) 1. Computer assisted placement and picking E. Cross-Docking 1. Avoids placing materials or supplies by processing as received 2. Manufacturing facilities move material right from delivery dock to the assembly line 3. Distribution centers will receive labeled and presorted loads then reroute immediately 4. Avoids formal receiving, stocking/sorting, and order-selection activity a. All of these add no value to the customer F. Random Stocking 1. Automatic identification systems using bar codes allow accurate and rapid item identification 2. With good systems, items are stored anywhere in the warehouse a. Can be retrieved easily b. Makes efficient use of open bays or slots c. Do not need to reserve space 3. Includes a. Maintaining a list of open locations b. Maintaining accurate records of existing inventory and its locations c. Sequencing items to minimize the travel time required to pick orders d. Combining orders to reduce picking time e. Assigning certain items or classes of items, such as high-usage items to particular areas i. Minimizes distance travelled G. Customizing 1. Warehouses can house assembly facilities for last minute customizing 2. Allows for multiple configurations of product 3. Customized labeling and packaging 4. Performed adjacent to major airports VI. Fixed-Position Layout A. Project remains in one place B. Problems 1. Limited space 2. Scheduling 3. Volume of materials changes rapidly 4. Use of offsite production locations that are more product-oriented a. Modular construction 5. Project management is important VII. Process-Oriented Layout A. Flexible equipment and staff B. Build a variety of products or deliver a variety of services C. Focus on different needs demanded by customers 1. Low-volume, high-variety a. Different sequence of steps for production D. Objective is to minimize costs without sacrificing quality or customer satisfaction 1. Evaluate using the cost of moving materials from one department to another 2. Minimize distance and the number load movements
145 Chapter 9 E. Computer Software for Process-Oriented Layouts
Layout Strategies 146 VIII. Work Cells A. Work cells reorganize people and machines so that they focus on a single product or group of related products 1. Volume should warrant this type of arrangement 2. Often reconfigured 3. Benefits a. Reduced work-in-process inventory b. Less floor space required c. Reduced raw material and finished goods inventories d. Reduced direct labor cost e. Heightened sense of employee participation f. Increased equipment and machinery utilization g. Reduced investment in machinery and equipment B. Requirements of Work Cells 1. Include a. Identification of families of products b. Use of group technology codes c. A high level of training, flexibility, and empowerment of employees d. Being self-contained, with its own equipment and resources i. Rare call to other locations for assistance e. Test products at each cell station 2. Advantage over assembly lines a. Inspection immediate b. Few workers c. Workers have better reach throughout the work area d. Work area can be balanced e. Communications enhanced f. U-shape manages space efficiently C. Staffing and Balancing Work Cells 1. Determine “takt time” which is the frequency between units necessary to meet orders a. Total work time available/units required i. Time per day/units required b. Determine the number of operators required i. Total operation time required for one unit/takt time c. Imbalance occurs if one employee is performing longer tasks than others i. Material or people may have to wait 2. Cell flexibility overcomes modest imbalance problems a. Cross training D. The Focused Work Center and the Focused Factory 1. Extensions of work cell management systems
147 Chapter 9 IX.
Repetitive and Product-Oriented Layout A. Organized around products or families of product with similar high-volume, low-variety characteristics 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 life cycle phase that justifies investment in specialized equipment 4. Supplies of raw materials and components are adequate and of uniform quality 5. Fabrication lines make product components 6. Assembly lines put components together 7. Management’s goal a. Create a smooth, continuing flow with minimal idle time b. Minimize imbalance 8. Advantages a. Low variable cost per unit b. Low material handling costs c. Reduced work-in-process inventories d. Easier training and supervision e. Rapid throughput 9. Disadvantages a. High volume required to match the investment made b. Work stoppage at any point ties up the whole operation c. Lack of flexibility B. Assembly-Line Balancing 1. Information needed a. Know the tools, equipment, and work methods b. Time requirements for each step in the process c. How much is to be made during a time period? d. Precedence relationship among the activities 2. Steps a. Divide demand or production rate per day into the time available per day i. Equals cycle time ii. Inverse of throughput b. Sum the time of all tasks necessary to produce a product (equals the minimum time necessary to build a product c. Divide the time to produce the product by the cycle time i. Equals the minimum number of workstations d. Take the steps to produce the product and assign them to the workstations i. Keep sequence logic ii. Avoid idle time iii. If a task is longer than the desired cycle time aa. Break into two workstations performing the same task
Layout Strategies 148 iv.
Heuristics for assigning tasks to a workstation Longest task time Most following tasks Greatest following time Shortest task (allows grouping with other tasks) Least number of following tasks
aa. aa. aa. aa. aa. 3. Efficiency a. Divide the total task time by the (actual number of stations times the largest assigned cycle time) i. The more a line is imbalanced, the larger the denominator ii. Ideally, the workstations should finish a unit in exactly the amount of the total task time 4. Computers handle large scale line balancing requirements
Hints and Tips 1.
Layouts require not only cost analysis, but also design creativity, especially when dealing directly with the customer.
2. Wish to minimize travel or movement time. 3. Assembly line balancing requires visualizing workstations that finish before the next workstation does (or before the prior station). Idle time occurs. To obtain a certain production volume, the cycle time must produce so many goods per time period. A cycle time of 30 seconds will produce 2 items per minute, or 120 items per hour. A cycle time of 90 minutes will produce 2 units every 3 hours. If workstations are not working according to the desired cycle time, then the system is not balanced. Successful line balancing means combining work or adding additional workstations.
Example: Process Layout Walters Company management wants to arrange the six departments of its factory in a way that will minimize interdepartmental material handling costs. They make an initial assumption, to simplify the problem, that each department is 20 x 20 and that the building is 60 feet long by 40 feet wide. Based on initial schematic and routing information, given below, what are the total material handling costs for this layout? How could you improve this initial layout?
149 Chapter 9 Move From Department Assembly Assembly Assembly Painting Painting Painting Machine Shop Machine Shop Receiving
To Location 1 1 1 2 2 2 3 3 4
Department Painting Machine Shop Testing Machine Shop Receiving Shipping Receiving Testing Shipping
Ranking # of of Loads Volume Location of loads 2 2 50 1 3 100 4 6 20 3 3 30 2 4 50 5 5 10 4 4 20 1 6 100 2 5 50
Initial Material Handling Cost From
To Load
Department Assembly Assembly Assembly Painting Painting Painting Machine Shop Machine Shop Receiving
*
Location 1 1 1 2 2 2 3 3 4
Department Painting Machine Shop Testing Machine Shop Receiving Shipping Receiving Testing Shipping
Cost Per Trip*
Location 2 50 $ 1 3 100 $ 2 6 20 $ 2 3 30 $ 1 4 50 $ 1 5 10 $ 1 4 20 $ 2 6 100 $ 1 5 50 $ 1 Total Material Handling Cost
Handling Cost (Load x Cost) $ 50 $ 200 $ 40 $ 30 $ 50 $ 10 $ 40 $ 100 $ 50 570
Cost per trip includes a variety of items that would consume resources. These might include labor, energy, time, or depreciation. Note that the greater the distance traveled, the greater the cost per load.
Layout Strategies 150 Seeking to reduce the total material handling costs, we would seek to move departments with the highest loads closest to one another. Note that these are the machine shop, assembly department, and testing department. While the machine shop and testing are already as close as possible, we can reduce the cost of handling by moving the machine shop closer to assembly so long as we do not increase the distance from the machine shop to testing. Switching the position of assembly and paint, we now have the following layout:
Which incurs the following material handling costs: From Department Assembly Assembly Assembly Painting Painting Painting Machine Shop Machine Shop Receiving
To Location Department 1 Painting 1 Machine Shop 1 Testing 2 Machine Shop 2 Receiving 2 Shipping 3 Receiving 3 Testing 4 Shipping
Load
Cost Per Handling Trip* Cost
Location 2 50 $ 1 3 100 $ 1 6 20 $ 1 3 30 $ 2 4 50 $ 1 5 10 $ 1 4 20 $ 2 6 100 $ 1 5 50 $ 1 Total Material Handling Cost
$ 50 $ 100 $ 20 $ 60 $ 50 $ 10 $ 40 $ 100 $ 50 480
*
Note that now receiving and painting shops have the furthest to travel from the machine shop. There are fewer loads, thus less cost. Continue with this process until finding the lowest cost layout. This is not necessarily easy, in that there are 720 distinct layouts (6! = 6x5x4x3x2x1 = 720) possible layouts. This is why examining the locations with the greatest volume of loads is a good place to start.
151 Chapter 9 Example: Line Balancing Boeing wants to develop a precedence diagram for an electrostatic wing component that requires a total assembly time of 66 minutes (Note: this is an important fact; all tasks together take 66 minutes to produce one wing component). Staff gathered tasks, assembly times, and sequence requirements for the component as provided below. Draw the precedence diagram, and based on demand of 40 units per day and 480 productive minutes available per day, balance the production line. Finally, determine the efficiency of this production line. Task
Performance Time (min)
A B C D E F G H I All tasks
10 11 5 4 12 3 7 11 3 66 minutes
Task Must Follow -A B B A C, D F E G, H
Precedence Diagram (note: minutes per task, adding to 66)
Determine the Cycle Time
Cycle Time =
Production Time Available Per Day Units Required Per Day
Note: Assumption is 8 hours and 60 minutes of work per hour
Cycle Time =
480 minutes = 12 minutes per unit 40 units
Note: Time in between the completion of units
Layout Strategies 152 Determine the Minimum Number of Workstations
∑ Minimum Number of Workstations=
n i =1
Time for Task i
Cycle Time 66 minutes Minimum Number of Workstations = = 5.5 or 6 stations 12 minutes Picture that we must have a unit completed every 12 minutes, but it takes 66 minutes to make one. The only way to do so is to separate duties. Once the assembly line is active, each workstation does its work and hands off to the next workstation. Work is being accomplished simultaneously. However, also note that 6 x 12 stations means that the total time an assembly is in the system is 72 minutes, slightly more than the ideal time. Group the Stations
Note: the grouping combines tasks. There are now 6 stations. However, look at station #1. The task takes ten minutes, or two minutes less than needed. This means that the person and/or machine, must wait two minutes before station #3 is finished and one minute before station #2 is finished. Station #2 has to wait one minute before station #4 is finished. The waiting time contributes to inefficiency in the system. A similar problem exists for stations #5 and #6. They have to wait to receive components from #4 and #3. There seems to be no other way to organize the system. Calculate Efficiency
Efficiency =
Efficiency =
∑ Task Times
( Actual Number of Workstations ) × ( Largest Assigned Cycle Time ) 66 = 91.7% ( 6 ) × ( 12 )
153 Chapter 9
Sample Problem A firm must produce 40 units/day during an 8-hour workday. Tasks, times, and predecessor activities are given below. Task
Time (Minutes) A 2 B 2 C 8 D 6 E 3 F 10 G 4 H 3 Total 38 minutes
Predecessor(s) A C B D, E F G
Determine the cycle time and the appropriate number of workstations to produce the 40 units per day.
Answer Cycle time =
Production time available 8 hrs *60 minutes/hr 480 = = = 12 minutes/cycle Units required 40 units 40
∑t
Work time required Cycle time Cycle time 38 minutes = = 3.17 station 12 minutes/cycle
Minimum number of workstations =
i
=
3.17 workstations must be rounded up to 4 as 3 workstations would not be able to produce the required output. One layout – not necessarily optimal
Layout Strategies 154
Key Terms Assembly line: an approach that puts fabricated parts together at a series of workstations; used in repetitive processes Assembly-line balancing: obtaining output at each workstation on a production line so that delay is minimized CRAFT: a computer program that systematically examines alternative departmental rearrangements to reduce total material handling costs Cross-docking: avoiding the placement of materials or supplies in storage by processing them as they are received for shipment; requires an information system that provides inbound product identification, its destination, and routing of the product to the designated outbound vehicle Customizing: using warehousing to add value to a product through component modification, repair, labeling, and packaging Cycle time: the maximum time that a product is allowed at each workstation Fabrication line: a machine-paced, product-oriented facility for building components Fixed-position layout: addresses the layout requirements of large, bulky, stationary projects such as ships and buildings Focused factory: a facility designed to produce similar products or components Focused work center: a permanent or semi-permanent product-oriented arrangement of machines and personnel Heuristic: problem solving using procedures and rules rather than mathematical optimization Job lots: groups or batches of parts processed together Office layout: grouping workers, their equipment, and spaces/offices to provide for comfort, safety, and movement of information Process-oriented layout: groups like machines and equipment together for production of low volume, high variety goods (also known as “job shop” or intermittent production) Random stocking: used in warehousing to locate stock wherever there is an open location Retail layout: an approach that addresses flow, allocates shelf space, and responds to customer behavior Servicescape: the physical surroundings in which a service takes place, and how they affect customers and employees Slotting fees: fees manufacturers pay to get shelf space for their products Takt time: pace of production to meet customer demand Warehouse layout: a design that attempts to minimize total cost by addressing trade-offs between space and material handling
155 Chapter 9 Work cell: an arrangement of machinery and personnel to focus on production of a single product or family of related products
Formulas Cost Minimization in a Process Layout n
n
Minimize Cost = ∑∑ X ij Cij i =1 j =1
Where:
n = total number of work centers or departments i, j = individual departments X ij = number of loads moved from department i to department j Cij = cost to mode a load from department i to department j
Takt Time
Takt Time =
Total Work Time Available Units Required
Workers Required =
Total Operation Time Required Takt Time
Assembly-Line Balancing
Cycle Time =
Production Time Available Per Day Units Required Per Day
∑ Minimum Number of Workstations= Efficiency =
n i =1
Time for Task i
Cycle Time
∑ Task Times
( Actual Number of Workstations ) × ( Largest Assigned Cycle Time )
Layout Strategies 156
Supplementary Materials On Our Companion Web site www.pearsonglobaleditions.com/ heizer POM for Windows Excel OM Excel OM data files Ch09Ex1.xls Ch09Ex4.xls
Active Models 9.1- Process Layout
Self-Study Quizzes Virtual Company Tours
On the DVD
Video 9.1- Arnold Palmer Hospital Video 9.2- Facility Layout at Wheeled Coach Ambulances Video Case- Laying out Arnold Palmer Hospital's New Facility Video Case- Facility Layout at Wheeled Coach
On
POM for Windows Excel OM Excel OM data files Ch09Ex1.xls Ch09Ex4.xls
Videos Virtual Office Hours Solved Problem 9.1 Solved Problem 9.2
Additional Case Studies Additional Homework Problems Active Models
Assistance with the end of chapter problems, virtual office hours help is available on
.
