Process Selection & Layout


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  • Process Selection & Layout

    1. 1. Process Selection & Capacity Planning ผศ . ดร . จักรกฤษณ์ ดวงพัสตรา
    2. 2. Process Selection <ul><li>Process selection includes: </li></ul><ul><ul><li>Technical issues–basic technology used to produce a service or good </li></ul></ul><ul><ul><li>Volume or scale decision–using the proper amount of mechanization to leverage the organization’s work force </li></ul></ul>
    3. 3. Product Design, Process Selection, & Capacity Decisions
    4. 4. Understanding the Scale Factor <ul><li>Economies of Scale: </li></ul><ul><ul><li>Efficiencies of prorating costs over greater volumes of a single product/service. </li></ul></ul><ul><li>Economies of scope: </li></ul><ul><ul><li>Efficiencies of prorating processing costs over a greater number of different process/services, which are processed (individually) in smaller item volumes but (collectively) at greater total volume. </li></ul></ul>
    5. 5. Outline <ul><li>Four Process Strategies </li></ul><ul><ul><li>Process Focus </li></ul></ul><ul><ul><li>Repetitive Focus </li></ul></ul><ul><ul><li>Product Focus </li></ul></ul><ul><ul><li>Mass Customization Focus </li></ul></ul><ul><ul><li>Comparison of Process Choices </li></ul></ul><ul><li>Process Analysis and Design </li></ul><ul><ul><li>Flow Diagrams </li></ul></ul><ul><ul><li>Time-Function Mapping </li></ul></ul><ul><ul><li>Process Charts </li></ul></ul><ul><ul><li>Work Flow Analysis </li></ul></ul><ul><ul><li>Service Blueprinting </li></ul></ul>
    6. 6. Outline <ul><li>Service Process Design </li></ul><ul><ul><li>Customer Interaction and Process Design </li></ul></ul><ul><ul><li>More Opportunities to Improve Service Processes </li></ul></ul><ul><li>Process Reengineering </li></ul><ul><li>Environmentally Friendly Processes </li></ul><ul><li>Selection of Equipment and Technology </li></ul><ul><li>Capacity </li></ul><ul><ul><li>Defining Capacity </li></ul></ul><ul><ul><li>Forecasting Capacity Requirements </li></ul></ul><ul><ul><li>Applying Decision Trees to Capacity Decisions </li></ul></ul><ul><ul><li>Managing Demand </li></ul></ul>
    7. 7. Outline <ul><li>Break-Even Analysis </li></ul><ul><ul><li>Single-Product Case </li></ul></ul><ul><ul><li>Multiproduct Case </li></ul></ul><ul><li>Strategy-Driven Investments </li></ul><ul><ul><li>Investment, Variable Cost, and Cash Flow </li></ul></ul><ul><ul><li>Net Present Value </li></ul></ul>
    8. 8. Learning Objectives <ul><li>Identify or Define : </li></ul><ul><ul><li>Process focus </li></ul></ul><ul><ul><li>Repetitive focus </li></ul></ul><ul><ul><li>Product focus </li></ul></ul><ul><ul><li>Process reengineering </li></ul></ul><ul><ul><li>Service process issues </li></ul></ul><ul><ul><li>Environmental issues </li></ul></ul><ul><ul><li>Process analysis </li></ul></ul><ul><ul><li>Lean production </li></ul></ul><ul><ul><li>Green manufacturing </li></ul></ul><ul><ul><li>The capacity issue </li></ul></ul><ul><ul><li>Breakeven analysis </li></ul></ul><ul><ul><li>Financial considerations </li></ul></ul><ul><ul><li>Strategy-driven investments </li></ul></ul>
    9. 9. Fit of Process, Volume, and Variety Process focus projects, job shops,(machine, print, carpentry) Standard Register Repetitive (autos, motorcycles) Harley Davidson Product focus (commercial baked goods, steel, glass) Nucor Steel High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Poor strategy (Variable costs are high) Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous)
    10. 10. Production Process Flow Diagram Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow
    11. 11. Process Strategies <ul><li>Involve determining how to produce a product or provide a service </li></ul><ul><li>Objective </li></ul><ul><ul><li>Meet or exceed customer requirements </li></ul></ul><ul><ul><li>Meet cost & managerial goals </li></ul></ul><ul><li>Has long-run effects </li></ul><ul><ul><li>Product & volume flexibility </li></ul></ul><ul><ul><li>Costs & quality </li></ul></ul>
    12. 12. Types of Process Strategies <ul><li>Process strategies that follow a continuum </li></ul><ul><li>Within a given facility, several strategies may be used </li></ul><ul><li>These strategies are often classified as: </li></ul>Repetitive-Focused Product-Focused Process-Focused Continuum
    13. 13. Process-Focused Strategy <ul><li>Facilities are organized by process </li></ul><ul><li>Similar processes are together </li></ul><ul><ul><li>Example: All drill presses are together </li></ul></ul><ul><li>Low volume, high variety products </li></ul><ul><li>‘ Jumbled’ flow </li></ul><ul><li>Other names </li></ul><ul><ul><li>Intermittent process </li></ul></ul><ul><ul><li>Job shop </li></ul></ul>Operation Product A Product B 1 2 3
    14. 14. Figure 7A
    15. 15. Process Flows Before Applying Group Technology
    16. 16. Process Flows After Applying Group Technology
    17. 17. Process-Focused Strategy Examples Bank © 1995 Corel Corp. Machine Shop © 1995 Corel Corp. Hospital © 1995 Corel Corp.
    18. 18. Process Focused Strategy <ul><li>Advantages </li></ul><ul><ul><li>Greater product flexibility </li></ul></ul><ul><ul><li>More general purpose equipment </li></ul></ul><ul><ul><li>Lower initial capital investment </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>More highly trained personnel </li></ul></ul><ul><ul><li>More difficult production planning & control </li></ul></ul><ul><ul><li>Low equipment utilization (5% to 25%) </li></ul></ul>
    19. 19. Repetitive Focused Strategy <ul><li>Facilities often organized by assembly lines </li></ul><ul><li>Characterized by modules </li></ul><ul><ul><li>Parts & assemblies made previously </li></ul></ul><ul><li>Modules combined for many output options </li></ul><ul><li>Other names </li></ul><ul><ul><li>Assembly line </li></ul></ul><ul><ul><li>Production line </li></ul></ul>
    20. 20. Figure 7B
    21. 21. Repetitive Focused Strategy - Considerations <ul><li>More structured than process-focused, less structured than product focused </li></ul><ul><li>Enables quasi-customization </li></ul><ul><li>Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model </li></ul>
    22. 22. Repetitive-Focused Strategy - Examples Truck © 1995 Corel Corp. Clothes Dryer © 1995 Corel Corp. Fast Food McDonald’s over 95 billion served © 1984-1994 T/Maker Co.
    23. 24. Product-Focused Strategy <ul><li>Facilities are organized by product </li></ul><ul><li>High volume, low variety products </li></ul><ul><li>Where found </li></ul><ul><ul><li>Discrete unit manufacturing </li></ul></ul><ul><ul><li>Continuous process manufacturing </li></ul></ul><ul><li>Other names </li></ul><ul><ul><li>Line flow production </li></ul></ul><ul><ul><li>Continuous production </li></ul></ul>Operation Products A & B 1 2 3
    24. 26. Product-Focused Strategy <ul><li>Advantages </li></ul><ul><ul><li>Lower variable cost per unit </li></ul></ul><ul><ul><li>Lower but more specialized labor skills </li></ul></ul><ul><ul><li>Easier production planning and control </li></ul></ul><ul><ul><li>Higher equipment utilization (70% to 90%) </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>Lower product flexibility </li></ul></ul><ul><ul><li>More specialized equipment </li></ul></ul><ul><ul><li>Usually higher capital investment </li></ul></ul>
    25. 27. Product-Focused Examples Light Bulbs (Discrete) Paper (Continuous) Soft Drinks (Continuous, then Discrete) Mass Flu Shots (Discrete)
    26. 29. Process Focus Repetitive Focus Product Focus 1. Product: Small quantity, large variety 1. Product: Long runs, usually standardized 1. Product: Large quantities, small variety 2. Equipment: General purpose 2. Equipment: Special; assembly line 2. Equipment: Special-purpose 3. Operators broadly skilled 3. Employees modestly trained 3. Operators less broadly skilled 4. Many job instructions 4. Repetitive operations 4. Few work orders and job instructions; standardization
    27. 30. Process Focus Repetitive Focus Product Focus 5. Raw material inventory value high relative to product value 5. Just-in-time procurement 5. Raw material inventory value low compared to product value 6. Work-in-process inventory high relative to output 6. Just-in-time inventory 6. Work-in-process inventory low compared to output 7. Units move slowly through plant 7. Movement measured in hours and days 7. Swift movement of units through facility 8. Make to order 8. Make to forecast 8. Make to forecast; inventory
    28. 31. Process Focus Repetitive Focus Product Focus 9. Scheduling complex; trade-off between inventory availability, capacity, and customer service 9. Scheduling based on models 9. Scheduling simple; establishing a rate of output sufficient to meet sales forecasts 10. High fixed costs, low variable costs 10. Fixed costs dependent upon flexibility of facility 10. High fixed costs, low variable costs 11. Cost, estimated prior to job;known only after completion 11. Costs usually known because of experience 11. Costs highly dependent upon utilization of capacity
    29. 32. Process Continuum Process Focused (intermittent process) Repetitive Focus (assembly line) Product Focused (continuous process) Continuum High variety, low volume Low utilization (5% - 25%) General-purpose equipment Low variety, high volume High utilization (70% - 90%) Specialized equipment Modular Flexible equipment
    30. 33. Volume and Variety of Products Poor Strategy (Fixed costs and cost changing to other products are high). Volume and Variety of Products Low Volume High Variety Process (Intermittent) Repetitive Process (Modular) High Volume Low Variety Process (Continuous) One or very few units per lot Projects Very small runs, high variety Job Shops Modest runs, modest variety Disconnected Repetitive Long runs, modest variations Connected Repetitive Very long runs, changes in attributes Continuous Equipment utilization 5%-25% 20%-75% 70%-80% Poor Strategy (High variable costs)
    31. 34. Mass Customization <ul><li>Using technology and imagination to rapidly mass-produce products that cater to sundry unique customer desires. </li></ul><ul><li>Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant. </li></ul>
    32. 35. Mass Customization - More Choices Than even
    33. 36. Repetitive Focus Assembly line Modular Design Flexible equipment Mass Customization Process focus Intermittent process High variety, low volume Low utilization (5%-25%) general purpose equipment Product focus Continuous Process Low variety, high volume High utilization (70%-90%) Specialized equipment Modular techniques Scheduling techniques Rapid throughput
    34. 37. Questions for Process Analysis and Design <ul><li>Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost? </li></ul><ul><li>Does the process eliminate steps that do not add value? </li></ul><ul><li>Does the process maximize customer value as perceived by the customer? </li></ul><ul><li>Will the process win orders? </li></ul>
    35. 38. Tools for Process Design <ul><li>Flow Diagrams </li></ul><ul><li>Process Charts </li></ul><ul><li>Time-Function/Process Mapping </li></ul><ul><li>Work Flow Analysis </li></ul>
    36. 39. Production Process Flow Diagram Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow
    37. 40. Time Function Map Customer Sales Production control Plant A Warehouse Plant B Transport Order Product Process Order Print Extrude Receive product Wait Move Wait Wait Wait Move Order Order WIP WIP WIP WIP Product Product Product 12 days 1 day 1 day 1 day 1 day 13 days 4 days 10 days 9 days
    38. 41. Process Chart Example SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description  D  Write order    On desk 75    D  To buyer  D  Examine  = Operation;  = Transport;  = Inspect; D = Delay;  = Storage
    39. 43. Work Flow Analysis - Four Phases <ul><li>Request from a customer or an offer to provide services by a performer </li></ul><ul><li>Negotiation , allowing the customer and the performer to agree on how the work should be done and what will constitute customer satisfaction </li></ul><ul><li>Performance of the assignment and completion </li></ul><ul><li>Acceptance , closing the transaction provided the customer expresses satisfaction and agrees that the conditions were met. </li></ul>
    40. 44. Process Reengineering <ul><li>The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance </li></ul><ul><li>Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions </li></ul><ul><li>Requires reexamination of the basic process and its objectives </li></ul><ul><li>Focuses on activities that cross boundaries </li></ul>
    41. 45. Attaining Lean Production <ul><li>Focus on inventory reduction </li></ul><ul><li>Build systems that help employees </li></ul><ul><li>Reduce space requirements </li></ul><ul><li>Develop close relationships with suppliers </li></ul><ul><li>Educate suppliers </li></ul><ul><li>Eliminate all but value-added activities </li></ul><ul><li>Develop the workforce </li></ul><ul><li>Make jobs more challenging </li></ul><ul><li>Set sights on perfection! </li></ul>
    42. 46. Customer Interaction and Process Strategy Mass Service Professional Service Service Factory Service Shop Commercial Banking General purpose law firms Fine dining restaurants Hospitals Airlines Full-service stockbroker Retailing Personal banking Boutiques Law clinics Fast food restaurants Warehouse and catalog stores No frills airlines Limited service stockbroker For-profit hospitals Degree of Interaction and Customization Degree of Labor Intensity Low High High Low
    43. 47. Techniques for Improving Service Productivity <ul><li>Separation </li></ul><ul><li>Self-service </li></ul><ul><li>Postponement </li></ul><ul><li>Focus </li></ul><ul><li>Structure service so customers must go where service is offered </li></ul><ul><li>Self-service so customers examine, compare and evaluate at their own pace </li></ul><ul><li>Customizing at delivery </li></ul><ul><li>Restricting the offerings </li></ul>Strategy Technique
    44. 48. Techniques for Improving Service Productivity <ul><li>Modules </li></ul><ul><li>Automation </li></ul><ul><li>Scheduling </li></ul><ul><li>Training </li></ul><ul><li>Modular selection of service. Modular production </li></ul><ul><li>Separating services that lend themselves to automation </li></ul><ul><li>Precise personnel scheduling </li></ul><ul><li>Clarifying the service options </li></ul><ul><li>Explaining problems </li></ul><ul><li>Improving employee flexibility </li></ul>
    45. 49. More Opportunities to Improve Service Processes <ul><li>Layout </li></ul><ul><li>Human Resources </li></ul><ul><li>Technology </li></ul>
    46. 50. Showing Sensitivity to the Environment <ul><li>Make products recyclable </li></ul><ul><li>Use recycled materials </li></ul><ul><li>Use less harmful ingredients </li></ul><ul><li>Use light components </li></ul><ul><li>Use less energy </li></ul><ul><li>Use less materials </li></ul>
    47. 51. Factors Affecting Process Alternatives <ul><li>Production flexibility </li></ul><ul><ul><li>Product volume </li></ul></ul><ul><ul><li>Product variety </li></ul></ul><ul><li>Technology </li></ul><ul><li>Cost </li></ul><ul><li>Human resources </li></ul><ul><li>Quality </li></ul><ul><li>Reliability </li></ul>These factors reduce the number of alternatives! © 1984-1994 T/Maker Co.
    48. 52. <ul><li>How much long-range capacity is needed </li></ul><ul><li>When more capacity is needed </li></ul><ul><li>Where facilities should be located (location) </li></ul><ul><li>How facilities should be arranged (layout) </li></ul>Facility Planning Facility planning answers :
    49. 53. Definition and Measures of Capacity Capacity: Designed Capacity: Effective capacity: Rated Capacity: RC = (Capacity)(Utilization)(Efficiency) The maximum output of a system in a given period The maximum capacity that can be achieved under ideal conditions The percent of design capacity actually expected Maximum usable capacity of a particular facility
    50. 54. <ul><li>Measure of planned or actual capacity usage of a facility, work center, or machine </li></ul>Utilization Utilization Expected capacity Capacity Planned hours to be used Total hours available = =
    51. 55. <ul><li>Measure of how well a facility or machine is performing when used </li></ul>Efficiency Efficiency Actual output Effective capacity Actual output in units Standard output in units Average actual time Standard time = = =
    52. 56. Capacity Planning Process Forecast Demand Compute Needed Capacity Compute Rated Capacity Evaluate Capacity Plans Implement Best Plan Qualitative Factors (e.g., Skills) Select Best Capacity Plan Develop Alternative Plans Quantitative Factors (e.g., Cost)
    53. 57. <ul><li>Vary staffing </li></ul><ul><li>Change equipment & processes </li></ul><ul><li>Change methods </li></ul><ul><li>Redesign the product for faster processing </li></ul>Managing Existing Capacity Capacity Management <ul><li>Vary prices </li></ul><ul><li>Vary promotion </li></ul><ul><li>Change lead times (e.g., backorders) </li></ul><ul><li>Offer complementary products </li></ul>Demand Management
    54. 58. Complementary Products Time (Months) Sales (Units) Jet Skis Snow-mobiles Total 0 1,000 2,000 3,000 4,000 5,000 J M M J S N J M M J S N J
    55. 59. Approaches to Capacity Expansion Expected Demand Expected Demand Expected Demand Expected Demand Time in Years Time in Years Time in Years Time in Years Demand Demand Demand Demand New Capacity New Capacity New Capacity New Capacity Capacity leads demand with an incremental expansion Capacity leads demand with a one-step expansion Capacity lags demand with an incremental expansion Attempts to have an average capacity, with an incremental expansion
    56. 60. Approaches to Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity leads demand with an incremental expansion
    57. 61. Approaches to Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity leads demand with a one-step expansion
    58. 62. Approaches to Capacity Expansion Expected Demand Time in Years Demand New Capacity Capacity lags demand with an incremental expansion
    59. 63. Approaches to Capacity Expansion Expected Demand Time in Years Demand New Capacity Attempts to have an average capacity, with an incremental expansion
    60. 64. Breakeven Analysis <ul><li>Technique for evaluating process & equipment alternatives </li></ul><ul><li>Objective: Find the point ($ or units) at which total cost equals total revenue </li></ul><ul><li>Assumptions </li></ul><ul><ul><li>Revenue & costs are related linearly to volume </li></ul></ul><ul><ul><li>All information is known with certainty </li></ul></ul><ul><ul><li>No time value of money </li></ul></ul>
    61. 65. Break-Even Analysis <ul><li>Fixed costs: costs that continue even if no units are produced: depreciation, taxes, debt, mortgage payments </li></ul><ul><li>Variable costs: costs that vary with the volume of units produced: labor, materials, portion of utilities </li></ul>
    62. 66. Breakeven Chart Fixed cost Variable cost Total cost line Total revenue line Profit Breakeven point Total cost = Total revenue Volume (units/period) Cost in Dollars (Thousands) Loss
    63. 67. Break-Even Analysis <ul><li>Total cost = fixed costs + variable costs (quantity): </li></ul><ul><li>Revenue = selling price (quantity) </li></ul><ul><li>Break-even point is where total costs = revenue: </li></ul>
    64. 68. Example <ul><li>A firm estimates that the fixed cost of producing a line of footwear is $52,000 with a $9 variable cost for each pair produced. They want to know: </li></ul><ul><ul><li>If each pair sells for $25, how many pairs must they sell to break-even? </li></ul></ul><ul><ul><li>If they sell 4000 pairs at $25 each, how much money will they make? </li></ul></ul>
    65. 69. Example Solved <ul><li>Break-even point: </li></ul><ul><li>Profit = total revenue – total costs </li></ul>
    66. 70. Crossover Chart Fixed cost - Process A Fixed cost - Process B Fixed cost - Process C Total cost - Process C Total cost - Process B Total cost - Process A Process A: low volume, high variety Process B: Repetitive Process C: High volume, low variety Process C Process B Process A Lowest cost process
    67. 71. Cost of Wrong Process Found Via Breakeven Analysis Fixed cost $ Variable cost Fixed cost $ Variable cost Fixed cost $ Variable cost Low volume, high variety process Repetitive process High volume, low variety process A B Volume B1 B2 B3 Total cost for low volume high variety Total cost for repetitive process Total cost for high volume, low variety process
    68. 72. Strategy Driven Investment <ul><li>Select investments as part of a coordinated strategic plan </li></ul><ul><li>Choose investments yielding competitive advantage </li></ul><ul><li>Consider product life cycles </li></ul><ul><li>Include a variety of operating factors in the financial return analysis </li></ul><ul><li>Test investments in light of several revenue projections </li></ul>
    69. 73. Limitations of Net Present Value <ul><li>Investments with the same present value may have significantly different project lives and different salvage values </li></ul><ul><li>Investments with the same net present values may have different cash flows </li></ul><ul><li>We assume that we know future interest rates - which we do not </li></ul><ul><li>We assume that payments are always made at the end of the period - which is not always the case </li></ul>
    70. 74. Facility Layout Planning ผศ . ดร . จักรกฤษณ์ ดวงพัสตรา
    71. 75. Learning Objectives <ul><li>Identify or Define : </li></ul><ul><ul><li>Fixed-position layout </li></ul></ul><ul><ul><li>Process-oriented layout </li></ul></ul><ul><ul><li>Work cells </li></ul></ul><ul><ul><li>Focused work center </li></ul></ul><ul><ul><li>Office layout </li></ul></ul><ul><ul><li>Retail layout </li></ul></ul><ul><ul><li>Warehouse layout </li></ul></ul><ul><ul><li>Product-oriented layout </li></ul></ul><ul><ul><li>Assembly-line factory </li></ul></ul><ul><li>Describe or explain: </li></ul><ul><ul><li>How to achieve a good layout for the process facility </li></ul></ul><ul><ul><li>How to balance production flow in a repetitive or product-oriented facility </li></ul></ul>
    72. 76. What Is Facility Layout Planning <ul><li>Location or arrangement of everything within & around buildings </li></ul><ul><li>Objectives are to maximize </li></ul><ul><ul><li>Customer satisfaction </li></ul></ul><ul><ul><li>Utilization of space, equipment, & people </li></ul></ul><ul><ul><li>Efficient flow of information, material, & people </li></ul></ul><ul><ul><li>Employee morale & safety </li></ul></ul>
    73. 77. Strategic Importance of Layout <ul><li>Proper layout enables : </li></ul><ul><li>Higher utilization of space, equipment,and people </li></ul><ul><li>Improved flow of information, materials, or people </li></ul><ul><li>Improved employee morale and safer working conditions </li></ul><ul><li>Improved customer/client interaction </li></ul><ul><li>Flexibility </li></ul>
    74. 78. Types of Layout <ul><li>Fixed-position layout </li></ul><ul><ul><li>large bulky projects such as ships and buildings </li></ul></ul><ul><li>Process-oriented layout </li></ul><ul><ul><li>deals with low-volume, high-variety production (“job shop”, intermittent production) </li></ul></ul><ul><li>Office layout </li></ul><ul><ul><li>positions workers, their equipment, and spaces/offices to provide for movement of information </li></ul></ul><ul><li>Retail/service layout </li></ul><ul><ul><li>allocates shelf space and responds to customer behavior </li></ul></ul><ul><li>Warehouse layout </li></ul><ul><ul><li>addresses trade-offs between space and material handling </li></ul></ul><ul><li>Product-oriented layout </li></ul><ul><ul><li>seeks the best personnel and machine use in repetitive or continuous production </li></ul></ul>
    75. 79. Layout Example
    76. 80. Areas of Concern in Layout Strategy Layout Strategy Material Flow Communication Work Cell Safety Material Attributes Warehousing Service Areas
    77. 81. Fixed Position Layout <ul><li>Design is for stationary project </li></ul><ul><li>Workers and equipment come to site </li></ul><ul><li>Usually used because product movement is difficult (ship building) or for convenience (on-site repair). </li></ul><ul><li>This is often managed through Project Management. </li></ul><ul><li>Complicating factors </li></ul><ul><ul><li>Limited space at site </li></ul></ul><ul><ul><li>Changing material needs in different stages in construction process </li></ul></ul>
    78. 82. Process Oriented Layout <ul><li>Similar processes/functions are grouped together (job shop) </li></ul><ul><li>Department areas having similar processes located in close proximity </li></ul><ul><li>Primary advantages </li></ul><ul><ul><li>flexibility, utilization of machinery/equipment. </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>greater handling of materials/customers, more complex scheduling, WIP/waiting lines, departmental boundaries </li></ul></ul>
    79. 83. Traditional Process Layout
    80. 84. Emergency Room Layout (Process Oriented) Surgery Radiology E.R. beds Pharmacy Billing/exit E.R.Triage room E.R. Admissions Patient B - erratic pacemaker Patient A - broken leg Hallway
    81. 85. Process Layouts <ul><li>General purpose & flexible resources </li></ul><ul><li>Lower capital intensity & automation </li></ul><ul><li>Higher labor intensity </li></ul><ul><li>Resources have greater flexibility </li></ul><ul><li>Processing rates are slower </li></ul><ul><li>Material handling costs are higher </li></ul><ul><li>Scheduling resources & work flow is more complex </li></ul><ul><li>Space requirements are higher </li></ul>
    82. 86. Designing Process Layouts <ul><li>Step 1: Gather information: </li></ul><ul><ul><li>Space needed, space available, importance of proximity between various units </li></ul></ul><ul><li>Step 2: Develop alternative block plans: </li></ul><ul><ul><li>Using trial-and-error or decision support tools </li></ul></ul><ul><li>Step 3: Develop a detailed layout </li></ul><ul><ul><li>Consider exact sizes and shapes of departments and work centers including aisles and stairways </li></ul></ul><ul><ul><li>Tools like drawings, 3-D models, and CAD software are available to facilitate this process </li></ul></ul>
    83. 87. Comparing Alternatives <ul><li>Load-distance measures </li></ul><ul><ul><li>Load: # of trips, weight moved, $-value moved </li></ul></ul><ul><ul><li>Distance: rectilinear distance (using north-south & east-west movements) </li></ul></ul><ul><li>REL charts: </li></ul><ul><ul><li>Management opinion on strength of relationships </li></ul></ul><ul><li>Software tools: </li></ul><ul><ul><li>CRAFT: computerized relative allocation of facilities technique </li></ul></ul><ul><ul><li>ALDEP: automated layout design program </li></ul></ul>
    84. 88. Process Layout Example
    85. 89. Process Layout Steps <ul><li>Step 1: Gather information like space needed, from-to matrix, and REL Chart for Recovery First Sports Medicine Clinic (total space 3750 sq. ft.) </li></ul>F Physical Therapy 1050 sq. ft. E Surgery & Recovery 900 sq. ft. D Examining Rooms 800 sq. ft. C Lobby & Waiting 300 sq. ft. B Laboratory 300 sq. ft. A Radiology 400 sq. ft.
    86. 90. Step 1: Gather Information (continued)
    87. 91. Step 2: Develop a Block Layout <ul><li>Use trial and error with from-to and REL Charts as a guide </li></ul><ul><li>Use computer software like ALDEP or CRAFT </li></ul>
    88. 92. Other Example of Process Oriented Layout
    89. 93. Cost of Process-Oriented Layout
    90. 94. Interdepartmental Flow of Parts 1 2 3 4 5 6 1 2 3 4 5 6 50 100 0 0 20 30 50 10 0 20 0 100 50 0 0
    91. 95. Interdepartmental Flow Graph Showing Number of Weekly Loads 100 50 30 10 20 50 20 100 50 1 2 3 4 5 6
    92. 96. Possible Layout 1 Room 1 Room 2 Room 2 Room 4 Room 5 Room 6 60’ 40’
    93. 97. Interdepartmental Flow Graph Showing Number of Weekly Loads 100 50 30 10 20 50 20 100 50 1 2 3 4 5 6
    94. 98. Possible Layout 2 Room 1 Room 2 Room 2 Room 4 Room 5 Room 6 60’ 40’
    95. 99. Office Layout <ul><li>Design positions people, equipment, & offices for maximum information flow </li></ul><ul><li>Arranged by process or product </li></ul><ul><ul><li>Example: Payroll dept. is by process </li></ul></ul><ul><li>Relationship chart used </li></ul><ul><li>Examples </li></ul><ul><ul><li>Insurance company </li></ul></ul><ul><ul><li>Software company </li></ul></ul>
    96. 100. Office Layout Floor Plan Accounting Manager Brand X Finance Fin. Acct.
    97. 101. Relationship Chart 1 President O 2 Costing U A A 3 Engineering I O 4 President’s Secretary 1 2 3 Ordinary closeness: President (1) & Costing (2) Absolutely necessary: President (1) & Secretary (4) 4 I = Important U = Unimportant
    98. 102. Retail/Service Layout <ul><li>Design maximizes product exposure to customers </li></ul><ul><li>Decision variables </li></ul><ul><ul><li>Store flow pattern </li></ul></ul><ul><ul><li>Allocation of (shelf) space to products </li></ul></ul><ul><li>Types </li></ul><ul><ul><li>Grid design </li></ul></ul><ul><ul><li>Free-flow design </li></ul></ul>Video
    99. 103. Retail Layouts - Some Rules of Thumb <ul><li>Locate high-draw items around the periphery of the store </li></ul><ul><li>Use prominent locations such as the first or last aisle for high-impulse and high margin items </li></ul><ul><li>Remove crossover aisles that allow customers the opportunity to move between aisles </li></ul><ul><li>Distribute what are known in the trade as “power items” (items that may dominate a shopping trip) to both sides of an aisle, and disperse them to increase the viewing of other items </li></ul><ul><li>Use end aisle locations because they have a very high exposure rate </li></ul>
    100. 104. Retail /Service Layout - Grid Design Office Carts Check- out Grocery Store Meat Bread Milk Produce Frozen Foods
    101. 105. Store Layout - with Dairy, Bread, High Drawer Items in Corners
    102. 106. Retail/Service Layout - Free-Flow Design Feature Display Table Trans. Counter Apparel Store
    103. 107. Retail Store Shelf Space Planogram <ul><li>Computerized tool for shelf-space management </li></ul><ul><li>Generated from store’s scanner data on sales </li></ul><ul><li>Often supplied by manufacturer </li></ul><ul><ul><li>Example: P&G </li></ul></ul>2 ft . 5 facings VO-5 VO-5 VO-5 SUAVE SUAVE VO-5 PERT PERT PERT PERT PERT VO-5
    104. 108. A Good Service Layout (Servicescape) Considers <ul><li>Ambient conditions - background characteristics such as lighting, sound, smell, and temperature. </li></ul><ul><li>Spatial layout and functionality - which involve customer circulation path planning </li></ul><ul><li>Signs, Symbols, and Artifacts - characteristics of building design that carry social significance </li></ul>
    105. 109. Warehouse Layout <ul><li>Design balances space (cube) utilization & handling cost </li></ul><ul><li>Similar to process layout </li></ul><ul><ul><li>Items moved between dock & various storage areas </li></ul></ul><ul><li>Optimum layout depends on </li></ul><ul><ul><ul><li>Variety of items stored </li></ul></ul></ul><ul><ul><ul><li>Number of items picked </li></ul></ul></ul>
    106. 110. Warehouse Layout Floor Plan Zones Conveyor Truck Order Picker
    107. 111. Cross Docking <ul><li>Transferring goods </li></ul><ul><ul><li>from incoming trucks at receiving docks </li></ul></ul><ul><ul><li>to outgoing trucks at shipping docks </li></ul></ul><ul><li>Avoids placing goods into storage </li></ul><ul><li>Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transhipment </li></ul>In-coming Outgoing © 1984-1994 T/Maker Co. © 1995 Corel Corp.
    108. 112. Random Stocking Systems Often: <ul><li>Maintain a list of “open” locations </li></ul><ul><li>Maintain accurate records of existing inventory and its locations </li></ul><ul><li>Sequence items on orders to minimize travel time required to pick orders </li></ul><ul><li>Combine orders to reduce picking time </li></ul><ul><li>Assign certain items or classes of items, such as high usage items, to particular warehouse areas so that distance traveled is minimized </li></ul>
    109. 113. Product Layout <ul><li>Processes/work stations arranged in sequence of activities required to produce the product/service (Assembly Line). </li></ul><ul><ul><li>Use for high volume, standardized products and services </li></ul></ul><ul><ul><li>WIP and handling of materials/customers is minimized </li></ul></ul><ul><ul><li>Equipment is specialized, capital intensive </li></ul></ul><ul><ul><li>Output is dependent on the slowest work station </li></ul></ul><ul><ul><li>The “line” must be balanced for effectiveness. </li></ul></ul>
    110. 114. Product Layouts <ul><li>Specialized equipment </li></ul><ul><li>High capital intensity & wide use of automation </li></ul><ul><li>Processing rates are faster </li></ul><ul><li>Material handling costs are lower </li></ul><ul><li>Less space required for inventories </li></ul><ul><li>Less volume or design flexibility </li></ul>
    111. 115. Product Layout Product A Product B Product C Step 1 Step 1 Step 1 Step 2 Step 2 Step 2 Step 3 Step 3 Step 3 Step 4 Step 4 Step 4 7-14
    112. 116. Repetitive Layout 1 3 2 4 5 Work Office Belt Conveyor Work Station Note: 5 tasks or operations; 3 work stations Work Station Station
    113. 117. Assembly Line Balancing <ul><li>Analysis of production lines </li></ul><ul><li>Nearly equally divides work between workstations while meeting required output </li></ul><ul><li>Objectives </li></ul><ul><ul><li>Maximize efficiency </li></ul></ul><ul><ul><li>Minimize number of work stations </li></ul></ul>
    114. 118. Assembly Line Balancing <ul><li>Precedence diagram: circles=tasks, arrows show the required sequence. </li></ul><ul><li>Determine cycle time: </li></ul><ul><li>Determine required workstations (theoretical minimum Work) </li></ul><ul><li>Set rules for assigning tasks (number of following tasks, longest task time) </li></ul>
    115. 119. Assembly Line Balancing <ul><li>Assign tasks to first workstation, using rules and staying within cycle time. Repeat for following workstations until all tasks are assigned. </li></ul><ul><li>Evaluate line efficiency: </li></ul><ul><li>Rebalance if efficiency is not satisfactory. </li></ul>
    116. 120. Designing Product Layouts <ul><li>Step 1: Identify tasks & immediate predecessors </li></ul><ul><li>Step 2: Determine the desired output rate </li></ul><ul><li>Step 3: Calculate the cycle time </li></ul><ul><li>Step 4: Compute the theoretical minimum number </li></ul><ul><li>of workstations </li></ul><ul><li>Step 5: Assign tasks to workstations (balance the line) </li></ul><ul><li>Step 6: Compute efficiency, idle time & balance delay </li></ul>
    117. 121. Step 1: Identify Tasks & Immediate Predecessors
    118. 122. Layout Calculations <ul><li>Step 2: Determine output rate </li></ul><ul><ul><li>Vicki needs to produce 60 pizzas per hour </li></ul></ul><ul><li>Step 3: Determine cycle time </li></ul><ul><ul><li>The amount of time each workstation is allowed to complete its tasks </li></ul></ul><ul><ul><li>Limited by the bottleneck task (the longest task in a process): </li></ul></ul>
    119. 123. Layout Calculations (continued) <ul><li>Step 4: Compute the theoretical minimum number of stations </li></ul><ul><ul><li>TM = number of stations needed to achieve 100% efficiency (every second is used) </li></ul></ul><ul><ul><li>Always round up (no partial workstations) </li></ul></ul><ul><ul><li>Serves as a lower bound for our analysis </li></ul></ul>
    120. 124. Layout Calculations (continued) <ul><li>Step 5: Assign tasks to workstations </li></ul><ul><ul><li>Start at the first station & choose the longest eligible task following precedence relationships </li></ul></ul><ul><ul><li>Continue adding the longest eligible task that fits without going over the desired cycle time </li></ul></ul><ul><ul><li>When no additional tasks can be added within the desired cycle time, begin assigning tasks to the next workstation until finished </li></ul></ul>
    121. 125. Last Layout Calculation <ul><li>Step 6: Compute efficiency and balance delay </li></ul><ul><ul><li>Efficiency (%) is the ratio of total productive time divided by total time </li></ul></ul><ul><ul><li>Balance delay (%) is the amount by which the line falls short of 100% </li></ul></ul>
    122. 126. Comparison of Product vs. Product Layouts <ul><li> Process Layouts Product Layouts </li></ul><ul><li>Products: large #, different small # efficiently </li></ul><ul><li>Resources: general purpose specialized </li></ul><ul><li>Facilities: more labor intensive more capital intensive </li></ul><ul><li>Flexibility: greater relative to market lower relative to market </li></ul><ul><li>Processing slower faster </li></ul><ul><li>Rates: </li></ul><ul><li>Handling costs: high low </li></ul><ul><li>Space requirements: higher lower </li></ul>
    123. 127. Hybrid Layouts <ul><li>Combine elements of both product & process layouts </li></ul><ul><ul><li>Maintain some of the efficiencies of product layouts </li></ul></ul><ul><ul><li>Maintain some of the flexibility of process layouts </li></ul></ul><ul><li>Examples: </li></ul><ul><ul><li>Group technology & manufacturing cells </li></ul></ul><ul><ul><li>Grocery stores </li></ul></ul>
    124. 128. Hybrid Layouts <ul><li>Cellular Layout </li></ul><ul><ul><li>Cross between product/process layout </li></ul></ul><ul><ul><li>group a number of machines into a cell to produce a family of parts requiring similar processing (group technology). </li></ul></ul><ul><ul><li>Often arranged into U- or C-shaped line flows </li></ul></ul><ul><li>Modular Layout </li></ul><ul><ul><li>achieves layout flexibility so that layouts can be changed, expanded, or reduced without much difficulty. </li></ul></ul>
    125. 129. Designing Hybrid Layouts <ul><li>One of the most popular hybrid layouts uses Group Technology (GT) and a cellular layout </li></ul><ul><li>GT has the advantage of bringing the efficiencies of a product layout to a process layout environment </li></ul>
    126. 130. Process Flows before the Use of GT Cells
    127. 131. Process Flows after the Use of GT Cells
    128. 132. Other Product Layout Considerations <ul><li>Shape of the line (S, U, O, L): </li></ul><ul><ul><li>Share resources, enhance communication & visibility, impact location of loading & unloading </li></ul></ul><ul><li>Paced versus un-paced lines </li></ul><ul><ul><li>Paced lines use an automatically enforced cycle time </li></ul></ul><ul><li>Single or mixed-model lines </li></ul>
    129. 133. A Bottleneck in the Product Flow
    130. 134. Sequential Approach to Bottleneck Analysis
    131. 135. Simple Steel Production Flow
    132. 136. Steel Production Flow: A Product Layout
    133. 137. Determining System Capacity
    134. 138. Rounding Out Capacity
    135. 139. 7,000 6,000 2 8,000 1 10,000 2,000 1 4,000 3,000 Chemical Corporation: A Product Layout (Slide 1 of 3) The numbers listed below the departments represent capacity in gallons per hour. The number of the arrows represent the number of parts (ratio) that must be combined to meet the needs of the next department. A B C D E F G H 1,800 1 3 2
    136. 140. Chemical Corporation: A Product Layout (Slide 2 of 3) G F D A B E H C 3,600 3,600 6,000 9,000 7,000 6,000 8,000 10,000 1,200 2,400 3,000 2,000 4,000 3,000 1,200 1,800 The numbers above the departments represent the production rate required to produce a system capacity of 9,000 gallons per hour. The bottleneck department is H. 1 1 3 2 2 1
    137. 141. Chemical Corporation: A Product Layout (Slide 3 of 3) G F D A B E H C 7,000 6,000 8,000 10,000 1,334 2,667 3,333 2,000 4,000 ????? 1,334 1,800 4,000 4,000 6,667 10,000 3 2 2 1 1 1 The System capacity can be increased by 1,000 gallons per hour if the capacity of department H is increased by 333 gallons per hour. If it happens, The bottleneck becomes department G.
    138. 142. Summary <ul><li>Layout planning is deciding on the best physical arrangement of resources. </li></ul><ul><li>There are four basic types of layouts: process, product, hybrid, and fixed position. </li></ul><ul><li>Process layouts provide flexibility to make a variety of different products. Product layouts provide greater efficiency for one product. </li></ul><ul><li>The steps for designing process layouts are: gather space and closeness information, develop a block plan, and develop a detailed layout. </li></ul>
    139. 143. Summary <ul><li>The steps for designing an product layout are: identify tasks and predecessors, determine output rate, determine cycle time, computing the theoretical minimum number of work stations, assigning tasks to workstations, and computing efficiency and balance delay. </li></ul><ul><li>Hybrids layouts combine elements from both types of layouts to increase efficiency. </li></ul><ul><li>Hybrid layouts combine GT analysis with cellular layout concepts . </li></ul>