Strategic Importance of

Layout Decisions

The objective of layout strategy is to

develop an economic layout that will
meet the firm’s competitive
requirements
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
 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
 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
 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)
 Types of Layout
6. Work cell layout - a special
arrangement of 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
 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
 Layout Strategies
Warehouse
Office Retail (storage)
Examples
Allstate Insurance Kroger’s Federal-Mogul’s
Supermarket warehouse
Microsoft Corp.
Walgreens The Gap’s
distribution center
Bloomingdale’s
Problems/Issues
Locate workers Expose customer Balance low-cost
requiring frequent to high-margin storage with low-
contact close to items cost material
one another handling

Table 9.1
 Layout Strategies
Project Job Shop
(fixed position) (process oriented)
Examples
Ingall Ship Building Arnold Palmer Hospital
Corp.
Hard Rock Cafes
Trump Plaza
Pittsburgh Airport
Problems/Issues
Move material to the Manage varied material
limited storage area flow for each product
around the site

Table 9.1
 Layout Strategies
Work Cells Repetitive/ Continuous
(product families) (product oriented)
Examples
Hallmark Cards Sony’s TV assembly
line
Wheeled Coach
Dodge minivans
Standard Aero
Problems/Issues
Identify product family, Equalize the task time
build teams, cross train at each workstation
team members

Table 9.1
 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
 Relationship Chart
Value Closeness
Absolutely
1 A
necessary
President 2
Especially
O 3 E
important
Chief Technology Officer U 4
A A 5 I Important
Engineer’s area I I 6 O Ordinary OK
O I I 7
Secretary I I U 8 U Unimportant
A I O O 9 X Not desirable
Office entrance A E U O
X E E U
Central files U A O
O U I
Equipment cabinet O X
U A
Photocopy equipment E
E
Storage room Figure 9.1
Supermarket Retail Layout

 Objective is to maximize
profitability per square foot of floor
space
 Sales and profitability vary directly
with customer exposure
 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
 Store Layout

Figure 9.2
 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
 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
 Retail Store Shelf Space
Planogram
5 facings
 Computerized tool
for shelf-space

Shampoo

Shampoo

Shampoo

Shampoo

Shampoo
management
 Generated from
store’s scanner
data on sales

Conditioner
Shampoo

Shampoo

Shampoo

Shampoo
Conditioner

Conditioner
 Often supplied by
manufacturer

2 ft.
 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
 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

 Warehousing and Storage
Layouts
 Warehouse density tends to vary
inversely with the number of different
items stored
 Automated Storage and Retrieval
Systems (ASRS) can significantly
improve warehouse productivity
 Dock location is a key design element
 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, typically with
bar code identification
 Random Stocking
 Typically requires automatic identification
systems (AISs) and effective information
systems
 Random assignment of stocking locations
allows more efficient use of space
1. Maintain list of open locations
2. Maintain accurate records
3. Sequence items to minimize travel time
4. Combine picking orders
5. Assign classes of items to particular areas
 Customization
 Value-added activities performed at the
warehouse
 Enable low cost and rapid response
strategies
 Assembly of components
 Loading software
 Repairs
 Customized labeling and packaging
 Warehouse Layout
Traditional Layout

Storage racks
Customization

Conveyor

Staging
Office
Shipping and receiving docks
 Warehouse Layout
Cross-Docking Layout

Shipping and receiving docks

Office
Shipping and receiving docks
 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
 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
 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
 Process-Oriented Layout
Patient A - broken leg
ER
triage Emergency room admissions
room
Patient B - erratic heart
Surgery pacemaker

Laboratories

Radiology ER Beds Pharmacy Billing/exit

Figure 9.3
 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
Layout at Arnold Palmer
Hospital
 Process-Oriented Layout
n n

Minimize cost = ∑ ∑ Xij Cij

i=1 j=1

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
 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
 Process Layout Example
Number of loads per week
Department Assembly Painting Machine Receiving Shipping Testing
(1) (2) Shop (3) (4) (5) (6)

Assembly (1) 50 100 0 0 20

Painting (2) 30 50 10 0

Machine Shop (3) 20 0 100

Receiving (4) 50 0

Shipping (5) 0

Testing (6)

Figure 9.4
 Process Layout Example
Room 1 Room 2 Room 3

Assembly Painting Machine Shop

Department Department Department
(1) (2) (3)

40’

Receiving Shipping Testing

Department Department Department
(4) (5) (6)

Room 4 Room 5 Room 6

Figure 9.5
60’
Process Layout Example
n n

Cost = ∑ ∑ 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
 Process Layout Example
Interdepartmental Flow Graph
100

50 30
1 2 3

10
100

4 5 6
50
Figure 9.6
Process Layout Example
n n

Cost = ∑ ∑ 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
 Process Layout Example
Interdepartmental Flow Graph
30

50 100
2 1 3

50 100

50
4 5 6

Figure 9.7
 Process Layout Example
Room 1 Room 2 Room 3

Painting Assembly Machine Shop

Department Department Department
(2) (1) (3)

40’

Receiving Shipping Testing

Department Department Department
(4) (5) (6)

Room 4 Room 5 Room 6

Figure 9.8
60’
 Computer Software
 Graphical approach only works for
small problems
 Computer programs are available to
solve bigger problems
 CRAFT
 ALDEP
 CORELAP
 Factory Flow
 CRAFT Example
PATTERN PATTERN
1 2 3 4 5 6 1 2 3 4 5 6

1 A A A A B B 1 D D D D B B

2 A A A A B B 2 D D D D B B

3 D D D D D D 3 D D D E E E

4 C C D D D D 4 C C D E E F

5 F F F F F D 5 A A A A A F

6 E E E E E D 6 A A A F F F

TOTAL COST 20,100 TOTAL COST 14,390

EST. COST REDUCTION .00 EST. COST REDUCTION 70.
ITERATION 0 ITERATION 3

(a) (b) Figure 9.9

 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
 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
 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)

 Improving Layouts Using
Work Cells

Current layout - straight lines

make it hard to balance tasks Improved layout - in U shape,
because work may not be workers have better access.
divided evenly Four cross-trained workers
were reduced.

U-shaped line may reduce employee movement

and space requirements while enhancing
communication, reducing the number of workers,
Figure 9.10 (b) and facilitating inspection
 Requirements of Work Cells
1. Identification of families of products
2. A high level of training and flexibility on
the part of employees
3. Either staff support or flexible,
imaginative employees to establish
work cells initially
4. Test (poka-yoke) at each station in the
cell
 Staffing and Balancing Work
Cells
Determine the takt time
total work time available
Takt time = units required

Determine the number

of operators required
total operation time required
Workers required = takt time
 Staffing Work Cells Example
600 Mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance chart
total operation time = 140 seconds

60

50

Standard time required 40

30

20

10

0
Assemble Paint Test Label Pack for
shipment
Operations
 Staffing Work Cells Example
600 Mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance chart
total operation time = 140 seconds

Takt time = (8 hrs x 60 mins) / 600 units

= .8 mins = 48 seconds

total operation time required

Workers required = takt time

= 140 / 48 = 2.91
 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
 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
 Focused Work Center and
Focused Factory
Work Cell Focused Work Center Focused Factory

A work cell is a A focused work center is A focused factory is a

temporary product- a permanent product- permanent facility to
oriented arrangement oriented arrangement produce a product or
of machines and of machines and component in a
personnel in what is personnel in what is product-oriented
ordinarily a process- ordinarily a process- facility. Many focused
oriented facility. oriented facility. factories currently
being built were
originally part of a
process-oriented
facility.

Example: A job shop Example: Pipe bracket Example: A plant to

with machinery and manufacturing at a produce window
personnel; rearranged shipyard. mechanism for
to produce 300 unique automobiles.
control panels.

Table 9.2
 Repetitive and Product-
Oriented Layout
Organized around products or families of similar
high-volume, low-variety products
 Volume is adequate for high equipment utilization
 Product demand is stable enough to justify high investment in
specialized equipment
 Product is standardized or approaching a phase of life cycle
that justifies investment
 Supplies of raw materials and components are adequate and
of uniform quality
 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
 Product-Oriented Layouts
Advantages
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

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
 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
 Copier Example
Performance Task Must Follow
Time Task Listed
Task (minutes) Below
A 10 —
B 11 A This means that
C 5 B tasks B and E
cannot be done
D 4 B until task A has
E 12 A been completed
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 66
 Copier Example
Performance Task Must Follow
Time Task Listed
Task (minutes) Below
A 10 —
B 11 A
C 5 B
D 4 B
E 12 A
F 3 C, D 5

G 7 F 10 11
C
3 7
H 11 E
A B F G
I 3 G, H 4
3
Total time 66 12
D
11 I
E H

Figure 9.13
 Copier Example
Performance Task Must Follow 480 available mins
Time Task Listed per day
Task (minutes) Below 40 units required
A 10 —
B 11 A Production time available
C 5 B per day
D 4 Cycle
B time = Units required per day
E 12 A = 480 / 40
F 3 C, D 5
= 12 minutes per unit
G 7 F 10 11
C
3 7
n
H 11 E ∑ BTime for task iF
Minimum A G
I 3 G, H i=1 4
number of = 3
Cycle time
Total time 66 workstations 12
D
11 I
= 66 / 12
E H
= 5.5 or 6 stations
Figure 9.13
 Copier Example
Line-Balancing Heuristics

1. Longest task time Choose the available480 task

available mins
Performance Task Must Follow
with the longest task time
Time Task Listed per day
Task2. Most
(minutes)
following tasks Below
Choose the available40 task
units required
A 10 —with the largestCycle
number
timeof= 12 mins
B 11 Afollowing tasksMinimum
C 3. Ranked5 positional BChoose the available
workstations = 5.5 or 6
task for
D weight4 Bwhich the sum of following
E 12 Atask times is the longest
F 3 C, D 5

G 4. Shortest 7 task time FChoose the available

C task
with the
10 shortest
11 task time
3 7
H 11 E
A B F G
I 5. Least number
3 of G, H
Choose the available 4 task 3
Totalfollowing
time 66 tasks with the least number
12
D of
11 I
following tasks
E H
Table 9.4
Figure 9.13
 Copier Example
Performance Task Must Follow 480 available mins
Time Task Listed per day
Task (minutes) Below 40 units required
A 10 — Cycle time = 12 mins
B 11 A Minimum
Station
workstations = 5.5 or 6
C 52 5 B
D 4 C B
E 10 11
12 A 3 7
F A B
3 C, D F G
4 3
G 7 F
D E Station 4
H 11 I
I 3 12 G, H 11
Station 6
Total time 66
Station
1 E H
Station Station
3 5 Figure 9.14
 Copier Example
Performance Task Must Follow 480 available mins
Time Task Listed per day
Task (minutes) Below 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
G 7 F ∑ Task times
Efficiency =
H 11 (actual number of
E workstations) x (largest cycle time)
I 3 G, H
= 66 minutes / (6 stations) x (12 minutes)
Total time 66
= 91.7%