Operations Management ORMB11-1

Session 15 Location + Layout

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Making Location Decisions
Decide on the criteria

Identify the important factors

Develop location alternatives

Evaluate the alternatives

Make selection
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Factors Affecting Location
Regional
Raw material/ Market/ Labor/ Climate/ Tax
Community
Site
Land/ Transportation

Multiple plant location strategies
Product plant strategy
Market area plant strategy
Process plant strategy
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Issues with Global Locations
Facilitating factors
Trade agreements/ Technology

Benefits
Markets/ Cost savings/ Legal and regulatory/ Financial

Disadvantages
Transportation costs/ security costs/ unskilled labor/
Import restrictions/ Criticisms

Risks
Political/ Economic/ Legal/ Cultural

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Comparison of Service and
Manufacturing Considerations

Manufacturing/Distribution Service/Retail
Cost Focus Revenue focus
Transportation modes/costs Demographics age/income
Energy availability, costs Population/drawing area
Labor cost/availability/skills Competition
Building/leasing costs Traffic volume/patterns
Customer access/parking
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Evaluating Locations
Weighted Factor Rating Method

Center of Gravity Method

Simple Median Method

Cost-volume-profit Analysis

Transportation Model
Will be covered in Operations Research course
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Problem Homework
For a particular product demand destinations, demand
quantities associated with each destination and the
coordinates of each destination are given below.






If you are planning to build a warehouse, what will be the
coordinates of that warehouse?

Destination X Coordinate Y Coordinate Demand in units
1 5 2 800
2 3 6 900
3 2 7 200
4 8 4 100
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Steps for a Populated Layout
Identify Space Planning Identifiers (SPIs)
Chart the Affinities/ Relationships
Determine space requirements
Develop layout primitive
Generate macro layouts
Evaluate layouts
Populate layout
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Affinity Chart Example

Value Closeness
A
Absolutely
necessary
E
Especially
important
I Important
O Ordinary OK
U Unimportant
X Not desirable
XX
Must be
separated
Director
Chief Technology Officer
Engineers area
Secretary
Office entrance
Central files
Equipment cabinet
Photocopy equipment
Storage room
O
U
A
X
O
U
A
I
O
A
I
O
U
A
I
I
A
U
O
A U O
U
X
O I
U
O I
I
I
E
E
E
E
E
1
2
3
4
5
6
7
8
9
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Basic Layout Types
Product layouts
Process layouts
Fixed-Position layout
Combination layouts
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Layout Types
Fixed Machine Position Layout
3
4
1
2
Process Layout
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Layout Types Continued
3
4
1
2
Process Layout
1
2
3
4
Flow through Process Departments
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Layout Types Continued
1
2
3
4
Flow through Process Departments
Flow through Process Groupings
1
2
3
4
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Layout Types Continued

Product Layout With Conveyor
Product Layout Without Conveyor
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Layout Types Continued
Product Layout Four Lines
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Layout Types Continued
Similar to
Production Line
1
2
3
4
1
2
3
4
Production Line
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U-Shaped Production Line

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Designing Product Layouts Assembly
Line Balancing
The process of assigning tasks to workstations in such a
way that
The workstations have approximately equal time
requirements

Takt time
The maximum time allowed at each workstation
To complete its set of tasks on a unit
Can be termed as required cycle time


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Line Balancing Steps
1. Set up a precedence table
2. Compute required cycle time
C = (production time) / (required output in units)
3. Compute minimum number of stations
SMIN = (sum of all times) / C
4. Select rule by which tasks are assigned to work stations
5. Assign tasks to the first work station until
Sum of the task times are equal to the cycle time or
No other tasks are feasible
6. Repeat for stations 2, 3, until tasks are assigned
7. Find Efficiency
Efficiency = (Sum of all times)/
Actual No. of stations Cycle time
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Various Rules for Assembly Line
1. Longest task time First choose the available task with
the longest task time
2. Most following tasks First choose the available task with
the largest number of following tasks
3. Ranked positional
weight
First choose the available task for
which the sum of following task
times is the longest
4. Shortest task time First choose the available task with
the shortest task time
5. Least number of
following tasks
First choose the available task with
the least number of following tasks
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Assembly Line Balancing Example






Balance this production line to achieve an output of 367
units per day. Available production time is 8 hrs. less a 40
min. lunch break. Use the largest number of following
tasks rule to select tasks for work stations. Break ties with
the longest operation time.
What happens if Job G takes 2.1 min?

A
B
C
D
E
F
G
H
I J
1.1
0.4
0.3 1.1
0.5
1.2 0.4 0.8
0.7 0.3
All values in minutes
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Assembly Line Balancing Example
Answer
Takt time = 440/367 1.2 min

Total production time = 6.8 min

Number of workstation = 6.8/1.2 6

Allocation rule = A > D > C > B > F > E > G > H > I > J

Idle time in a day = 144.4 min

If G = 2.1 min > Takt time
Split the job in two workstations
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Next slides (about CRAFT) are not part of ORMB11-1 syllabus
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Designing Process Layouts Example
How CRAFT Technique works
Distance matrix Flow/Load matrix
1 2 3 4 5 6 7 8
1 10 20 30 15 18 25 34
2 10 20 18 15 18 25
3 10 25 18 15 18
4 34 25 18 15
5 10 20 30
6 10 20
7 10
8
A B C D E F G H
A 2 0 0 5 0 0 0
B 0 0 0 3 0 2
C 0 0 0 0 3
D 4 0 0 0
E 1 0 0
F 1 0
G 4
H
Computerized Relative Allocation of Facilities Technique (CRAFT)
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Process layout Example Continued
Load Distance matrix










Total = 440

A B C D E F G H
A 20 0 0 75 0 0 0
B 0 0 0 45 0 50
C 0 0 0 0 54
D 136 0 0 0
E 10 0 0
F 10 0
G 40
H
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Process layout Example Continued
Prepare full Load matrix
A B C D E F G H
A - 2 0 0 5 0 0 0
B 2 - 0 0 0 3 0 2
C 0 0 - 0 0 0 0 3
D 0 0 0 - 4 0 0 0
E 5 0 0 4 - 1 0 0
F 0 3 0 0 1 - 1 0
G 0 0 0 0 0 1 - 4
H 0 2 3 0 0 0 4 -
A B C D E F G H
A 2 0 0 5 0 0 0
B 0 0 0 3 0 2
C 0 0 0 0 3
D 4 0 0 0
E 1 0 0
F 1 0
G 4
H
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Process layout Example Continued
Interchange B and E
A E C D B F G H
A - 5 0 0 2 0 0 0
E 5 - 0 4 0 1 0 0
C 0 0 - 0 0 0 0 3
D 0 4 0 - 0 0 0 0
B 2 0 0 0 - 3 0 2
F 0 1 0 0 3 - 1 0
G 0 0 0 0 0 1 - 4
H 0 0 3 0 2 0 4 -
A B C D E F G H
A - 2 0 0 5 0 0 0
B 2 - 0 0 0 3 0 2
C 0 0 - 0 0 0 0 3
D 0 0 0 - 4 0 0 0
E 5 0 0 4 - 1 0 0
F 0 3 0 0 1 - 1 0
G 0 0 0 0 0 1 - 4
H 0 2 3 0 0 0 4 -
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Process layout Example Continued
New Load Distance matrix










Total = 369
A E C D B F G H
A 50 0 0 30 0 0 0
B 0 80 0 15 0 0
C 0 0 0 0 54
D 0 0 0 0
E 30 0 60
F 10 0
G 40
H