Capacity of facility

1. Capacity and Facilities
MGS4700 Operations Management
Lecture 6
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Lecture Outline
Capacity Planning
Facility Layout
Basic Layouts
Designing Process Layouts
Designing Service Layouts
Designing Product Layouts
Hybrid Layouts
Facility Location
Location Analysis Techniques
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Capacity
Maximum capability to produce
Capacity planning
establishes overall level of productive
resources for a firm
3 basic strategies for timing of capacity
expansion in relation to steady growth in
demand (lead, lag, and average)
3
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2. Capacity Expansion Strategies
4
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Capacity (cont.)
Capacity increase depends on
volume and certainty of anticipated demand
strategic objectives
costs of expansion and operation
Best operating level
% of capacity utilization that minimizes unit costs
Capacity cushion
% of capacity held in reserve for unexpected
occurrences
5
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Economies of Scale
it costs less per unit to produce high levels of
output
fixed costs can be spread over a larger number of
units
production or operating costs do not increase
linearly with output levels
quantity discounts are available for material
purchases
operating efficiency increases as workers gain
experience
6
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3. 7
Best Operating Level for a Hotel
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Facility Layout
Facility layout refers to the arrangement of
machines, departments, workstations, storage
areas, and common areas within an existing
or proposed facility.
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Benefits of An Effective Layout
Overall, improved effectiveness and
efficiency of the operations system
Higher utilization of space, equipment, and labor
Improved flow of information, materials, and work
Lower material handling costs and/or redundant
movement
Reduced bottlenecks, cycle time, and service time
Higher product and service quality
More convenience to the customer
Improved employee morale and working conditions
Etc.
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4. 10
BASIC LAYOUTS
Process layouts
group similar activities together into departments or
work centers according to process or function they
perform
Product layouts
arrange activities in line according to sequence of
operations for a particular product or service
Fixed-position layouts
are used for projects in which product cannot be
moved
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Process Layout
in Services
Women’s
lingerie
Women’s
dresses
Women’s
sportswear
Shoes
Cosmetics
and Jewelry
Entry and
display area
Housewares
Children’s
department
Men’s
department
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Process Layout in Manufacturing
L
L
L
L
L
L
L
L
L
L
M
M
M
M
D
D
D
D
D
D
D
D
G
G
G
G
G
G
A A AReceiving and
Shipping Assembly
Painting Department
Lathe Department
Milling
Department Drilling Department
Grinding
Department
P
P
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5. 13
A Product Layout
In
Out
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Product Layout Examples
Assembly Lines
Generator assembly line Oil refinery
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Product Layout in Services
1) Review
application
60 seconds
2) Eye
Test
120
seconds
3) Check
file for
violations
60 seconds
4) Payment
30 seconds
5) Photo
30 seconds
6) Issue the
License
50 seconds
Out of State Driver License Transfer Example
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6. 16
Comparison of Product
and Process Layouts
Description
Type of process
Product
Demand
Volume
Equipment
Sequential
arrangement of
activities
Continuous, mass
production, mainly
assembly
Standardized, made
to stock
Stable
High
Special purpose
Functional grouping
of activities
Intermittent, job
shop, batch
production, mainly
fabrication
Varied, made to
order
Fluctuating
Low
General purpose
Product Process
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Comparison of Product
and Process Layouts
Workers
Inventory
Storage space
Material handling
Aisles
Scheduling
Layout decision
Goal
Advantage
Limited skills
Low in-process, high
finished goods
Small
Fixed path (conveyor)
Narrow
Part of balancing
Line balancing
Equalize work at each
station
Efficiency
Varied skills
High in-process, low
finished goods
Large
Variable path (forklift)
Wide
Dynamic
Machine location
Minimize material
handling cost
Flexibility
Product Process
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Fixed-Position Layouts
Typical of projects in which
product produced is too
fragile, bulky, or heavy to
move
Equipment, workers,
materials, other resources
brought to the site
Low equipment utilization
Highly skilled labor
Often low fixed cost
Typically high variable costs
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7. 19
Designing Process Layouts
Goal: minimize material handling costs
Block Diagramming
minimize nonadjacent loads
used when quantitative data is available
Relationship Diagramming
based on location preference between areas
used when quantitative data is not available
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Designing Product Layouts
Objective
Balance the assembly line
Line Balancing Problem
how to organize work elements (smallest
possible jobs or tasks) such that each
workstation has the same work load/time for
processing a unit
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A Balanced Line
Every operation step in the process has the same cycle time
1) Review application
60 seconds
2) Eye Test
60 seconds
3) Check file
for violations
60 seconds
4) Payment
60 seconds
5) Photo
60 seconds
6) Issue the
License
60 seconds
In summary:
If each workstation on the assembly line takes the same amount of
time to perform the work elements that have been assigned, then
products will move smoothly from workstation to workstation with
no need for a product to wait or a worker to be idle.
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8. 22
An Unbalanced Line
What’s the problem here?
Station 1 Station 2 Station 3
5 min/unit 8 min/unit 3 min/unit
1 2 3 4 5 6
Work
element
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Line Balancing
Line balancing tries to equalize the
amount of work at each workstation
Two constraints in line balancing:
Precedence requirements
Cycle time restrictions
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Precedence Requirement
Precedence requirements are physical restrictions on
the order in which operations are performed.
Work Element Precedence Time (Seconds)
A Review application --- 60
B Eye test A 120
C Check file for violations B 60
D Payment C 30
E Photo D 30
F Issue the license E 50
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9. 25
Cycle Time Restrictions
Cycle time
Maximum amount of time a product is allowed to
spend at each station
Desired cycle time
Production time available
Desired units of output
Cd =
Desired cycle time depends on demand requirement
In order to achieve the production requirement (quota),
Actual cycle time ≤ Desired cycle time
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Cycle Time Example
Cd =
production time available
desired units of output
Cd =
(8 hours x 60 minutes / hour)
(120 units)
Cd = = 4 minutes
480
120
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Cycle Time vs. Flow Time
Cycle time = max time spent at any station
Flow time = time to complete all stations
1 2 3
4 minutes 4 minutes 4 minutes
Flow time = 4 + 4 + 4 = 12 minutes
Cycle time = max (4, 4, 4) = 4 minutes
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10. 28
Line Balancing
Performance Measures
∑
j
i = 1
ti
nCa
E =
∑
j
i = 1
ti
Cd
N =
Efficiency
Minimum number
of workstations
where
ti = completion time for element i
j = number of work elements
n = actual number of workstations
Ca = actual cycle time
Cd = desired cycle time
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Line Balancing Procedure
1. Draw and label a precedence diagram
2. Calculate desired cycle time required for the line
3. Calculate theoretical minimum number of
workstations
4. Group elements into workstations, recognizing
cycle time and precedence constraints
5. Calculate efficiency of the line
6. Determine if the theoretical minimum number of
workstations or an acceptable efficiency level has
been reached. If not, go back to step 4.
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Line Balancing
Example (Problem 7-18)
The Speedy Pizza Palace is revamping its order-
processing and pizza-making procedures. The demand for
pizzas is 120 per night (5:00 p.m. to 1:00 a.m.). In order to
deliver fresh pizza fast, six elements must be completed.
Work Element Precedence Time (Minutes)
A Receive order --- 2
B Shape dough A 1
C Prepare toppings A 2
D Assemble pizza B,C 3
E Bake pizza D 3
F Deliver pizza E 3
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11. 31
Step 1: Draw and label a precedence
diagram
A
B
C
D E F
2
1
2
3 3 3
Work Element Precedence Time
A Receive order --- 2
B Shape dough A 1
C Prepare toppings A 2
D Assemble pizza B,C 3
E Bake pizza D 3
F Deliver pizza E 3
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Step 2: Calculate the desired cycle
time required for the line
Production time available
Desired units of output
Cd =
Desired cycle time
Desired units of output =
Production time available =
120 per night
8 hours X 60= 480 minutes
Cd = 480/120= 4 minutes
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Step 3: Calculate the theoretical
minimum number of workstations
d
j
i
i
C
t
N
∑=
= 1
The theoretic minimum number of workstations
ti = completion time for element i
j = number of work elements
Cd = desired cycle time
45.3
4
14
4
3332121
→==
+++++
==
∑=
d
j
i
i
C
t
N
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12. 34
Step 4: Group elements into
workstations
Recognize there are cycle time and precedence constraints.
A
B
C
D E F
2
1
2
3 3 3
Actual cycle time =
Actual number of workstations =
4 minutes
4
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Step 5: Calculate the efficiency
of the line
a
j
i
i
Cn
t
E
∑=
= 1
Efficiency of the line:
ti = completion time for element i
j = number of work elements
n = actual number of workstations
Ca = actual cycle time
%5.87
16
14
44
3332121
==
×
+++++
==
∑=
a
j
i
i
Cn
t
E
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Step 6: Check if performance
measure(s) are satisfactory or not
Actual number of workstations = 4
Efficiency of the line = 87.5%
Theoretic number of workstations = 4
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13. 37
Which Performance Measure to Use?
Number of Workstations or Efficiency?
Ideally we would like to have the minimum
number of workstations and also the highest
efficiency.
If there is inconsistency between these two
measures, generally go with the minimum
number of workstations.
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Number of Workstations or Efficiency?
Example
A
B
C
D E F
2
1
2
3 3 3
Actual cycle time =
Actual number of workstations =
3 minutes
5
%3.93
15
14
35
3332121
==
∗
+++++
==
∑=
a
j
i
i
Cn
t
EEfficiency:
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In-Class Exercise
Problem 7-17 (p. 283)
The TLB Yogurt Company must be able to make 600 party
cakes in a 40 hour week. Use the following information to draw
and label a precedence diagram, compute cycle time, compute
the theoretical minimum number of workstations, balance the
assembly line, and calculate its efficiency.
Task Precedence Time (mins)
A -- 1
B A 2
C B 2
D A, E 4
E -- 3
F C, D 4
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14. 40
Hybrid Layouts
Cellular layouts
group dissimilar machines into work centers
(called cells) that process families of parts with
similar shapes or processing requirements
Flexible manufacturing system
automated machining and material handling
systems which can produce an enormous variety
of items
Mixed-model assembly line
processes more than one product model in one
line
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Cellular Layout
Combines the flexibility of a process layout and
the efficiency of a product layout.
Within one cell, layout of machines resembles
a small assembly line. The layout between
cells is a process layout.
Cells are arranged in relation to each other so
as to minimize material movement.
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Cellular Layouts
1.Identify families of parts with similar flow paths
2.Group machines into cells based on part
families
3.Arrange cells so material movement is
minimized
4.Locate large shared machines at point of use
42
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15. Parts Families
A family of
similar parts
A family of related
grocery items
43
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Original Process Layout
CA B Raw materials
Assembly
1
2
3
4
5
6 7
8
9
10
11
12
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Revised Cellular Layout
3
6
9
Assembly
12
4
8 10
5
7
11
12
A B C
Raw materials
Cell 1 Cell 2 Cell 3
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16. 46
Key:
S = Saw
L = Lathe
HM = Horizontal milling machine
VM = Vertical milling machine
G = Grinder
Paths of three
workers moving
within cell
Material
movement
In Out
Worker 1
Worker 2
Worker 3
Direction of part movement within cell
S
L
HM
VM
G
VM
L
Final
inspection
Finished
part
A Manufacturing Cell
with Worker Paths
Source: J.T. Black, “Cellular Manufacturing
Systems Reduce Setup Time, Make Small Lot
Production Economical.” Industrial
Engineering (November 1983).
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Advantages and Disadvantages
of Cellular Layouts
Advantages
Reduced material
handling and transit time
Reduced setup time
Reduced work-in- process
inventory
Better use of human
resources
Easier to control
Easier to automate
Disadvantages
Inadequate part families
Poorly balanced cells
Expanded training and
scheduling of workers
Increased capital
investment
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Flexible Manufacturing
Systems (FMS)
CNC (computer numerical controlled) are machines that are
controlled by computer software.
FMS: CNC machines + automated material handling system (e.g.,
conveyors, AGV, robots)
FMS can produce an enormous variety of items
Parts
Finished
goods
Computer
control
room Terminal
CNC
CNC
Pallet
Automatic tool
changer
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17. 49
Mixed Model
Assembly Lines
Produce multiple
models in any order
on one assembly line
Issues in mixed
model lines
Line balancing
U-shaped line
Flexible workforce
Model sequencing
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Balancing U-Shaped Lines
A B C
D E
Precedence diagram:
Cycle time = 12 min
A,B C,D E
(a) Balanced for a straight line
9 min 12 min 3 min
Efficiency = = = .6666 = 66.7 %
24
36
24
3(12)
12 min 12 min
C,D
A,B
E
(b) Balanced for a U-shaped line
Efficiency = = = 100 %
24
24
24
2(12)
50
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Facility Location:
Factors affecting location
Heavy Manufacturing
Land and Construction costs
Raw material & finished goods shipment modes
Proximity to raw materials, utilities, and labor
Light Industry
Transportation costs – accessible geographic
region
Proximity to markets
Land costs
Retail & Service
Proximity to customers -- Location is everything
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18. 52
Location Analysis Techniques
Location factor rating
Center-of-gravity
Load Distance
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Locate facility at center of geographic area
It considers the existing facilities, the distance
between them, and the weights (or volumes)
of goods to be shipped
This methodology involves formulas used to
compute the coordinates of the two-
dimensional point on a grid-map
Center-of-Gravity Technique
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Grid-Map Coordinates
where,
x, y = coordinates of new facility
at center of gravity
xi, yi = coordinates of existing
facility i
Wi = annual weight shipped from
facility i
∑
n
Wi
i = 1
∑ xiWi
i = 1
n
x =
∑
n
Wi
i = 1
∑ yiWi
i = 1
n
y =
x1 x2 x3 x
y2
y
y1
y3
1 (x1, y1), W1
2 (x2, y2), W2
3 (x3, y3), W3
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19. 55
Center-of-Gravity Technique:
Example
I-77 I-85 Airport
x 14 20 30
y 30 8 14
W 17,000 12,000 9,000
y
35
25
30
20
15
10
5
0 x3525 302015105
I-85
I-77
Airport
(17k)
(12k)
(9k)
Miles
Miles
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Center-of-Gravity Technique:
Example
x = = = 19.68
n
∑ Wi
i = 1
∑ xiWi
i = 1
n
∑
n
Wi
i = 1
∑ yiWi
i = 1
n
y = = = 19.26
(30)(17000) + (8)(12000) + (14)(9000)
17000 + 12000 + 9000
(14)(17000) + (20)(12000) + (30)(9000)
17000 + 12000 + 9000
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Center-of-Gravity Technique:
Example
I-77 I-85 Airport
x 14 20 30
y 30 8 14
W 17,000 12,000 9,000
y
35
25
30
20
15
10
5
0 x3525 302015105
I-85
I-77
Airport
(17k)
(12k)
(9k)
Miles
Miles
Center of gravity (19.68, 19.26)
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