The document discusses various layout strategies in operations management, including office, retail, warehouse, fixed-position, process-oriented, work cell, and product-oriented layouts, each tailored to specific production needs and enhancing efficiency. It highlights examples such as McDonald's and Toyota's production system, illustrating their impact on cost reduction and quality improvement. Additionally, it covers the importance of layout decisions in optimizing space, material handling, and overall profitability in different contexts.

1. LAYOUT STRATEGY
OPERATIONS MANAGEMENT
Aim
To develop an economic layout that will
meet the firm’s competitive requirements

2. TYPES
Office layout - Positions workers, equipment, and spaces to provide
movement of info.
Retail layout - Allocates shelf space affected by customer behavior.
Warehouse layout - Addresses trade-offs between space and material
handling.
Fixed-position layout – Addresses layout requirements of large, bulky projects
such as ships and buildings
Process-oriented layout - low-volume, high-variety production (also called job
shop or intermittent production)
Work cell layout - a special arrangement of machinery and equipment to
focus on production of a single product or group of related products
Product-oriented layout - seeks the best personnel and machine utilizations
in repetitive or continuous production

3. REASON BEHIND LAYOUT DECISIONS
Higher utilization of space, equipment, and people
Improved flow of information, materials, or people
Improved employees’ ZEST and safer working conditions
Improved customer/client interaction
Flexibility

4. A CLASSIC ex. McDonald’s
INNOVATION TIMELINE + LAYOUT DECISIONS
1950s
INDOOR SEATING
1970s
DRIVE-THROUGH WINDOW
1980s
ADDING BREAKFAST TO THE MENU
1990S
ADDING PLAY AREAS

5. FOCUSING INTO KITCHEN!
THE INNOVATION Recipe
$100 MILLION SAVINGS on
New bun toasting
FOOD Cost
machine and new bun
formulation
Elimination of some Repositioning
steps, shortening of condiment
others containers
No food prepared ahead
except patty: Tikki as we call
it
Sandwiches assembled to
order

6. HOW IT LOOKS

7. NEXT EX. SUPERMARKET RETAIL LAYOUT
Aim
Maximize profitability per square foot
of floor space
HOW?
By Customer Exposure
Affecting
Sales and Profit

8. SOME COMMON LAYOUT DECISIONS
Locate high-draw items around the periphery of the store
Use prominent locations for high-impulse and high-margin items
Distribute “power items” to both sides of an aisle to increase viewing of
other items
Use end-aisle locations
Convey mission of store through careful positioning of lead-off
department

9. BUT HOW RETAILER SLOT ITEMs
Manufacturers pay fees to retailers to get the
retailers to display (slot) their product
FEEDBACK
FACOTRS BEFORE
Limited shelf space
RETAILER
An increasing number of new
products
Better information about sales
through POS data collection
Closer control of inventory

10. TECHNIQUES UTILISED
SHELF’S PLANOGRAM
Computerized tool for shelf-
space management
Generated from store’s scanner
data on sales

11. III RD ex. Warehouse layout
Aim
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

12. From where mhc comes…
All costs associated with the transaction
Incoming transport
Storage
Finding and moving material
Outgoing transport
Equipment, people, material, supervision, insurance, depreciation

13. Some SALIENT FEATURES
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

14. Automated Storage and
Retrieval Systems
A variety of computer-controlled methods for
automatically placing and retrieving loads from
specific storage locations
Space savings
BENEFITS
Increased
productivity/Reduced labor
Increased accuracy
Reduced inventory levels

15. TRADITIONAL WAREHOUSE LAYOUT
Storage racks
Customization
Conveyor
Staging
Office
Shipping and receiving docks

16. Revolutionary
TOYOTA PRODUCTION SYSTEM
Their management philosophy and practices
Originally Called JIT Production
Founder : Sakichi Toyoda ( Toyota’s Founder) , his
son Kiichiro Toyoda, and the engineer Taiichi Ohno.

17. THE Toyota way
7 kinds of muda (wastage)
Waste of overproduction (largest waste)
Waste of time on hand (waiting)
Waste of transportation
Waste of processing itself
Waste of stock at hand
Waste of movement
Waste of making defective products

18. PRINCIPLES
Continuously solving root problems drives organizational
learning
Add value to the organization by developing your people and
partners
The right process will produce the right results
Long-term philosophy
Respect for People
Continuous Improvement

19. RESULTS
Able to greatly reduce leadtime
and cost using the TPS, while
improving quality.
Enabled it to become one of the
ten largest companies in the
world.

20. Iv th ex. A description of
Production factory layout
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.
STEPS INVOLVED
Construct “from-to matrix”
Develop an initial schematic diagram
Determine the cost of this layout
Try to improve the layout.

21. formulation
Minimize cost = ∑ ∑ Xij Cij
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

22. From-to matrix
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)

23. Schematic diagram
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
60’

24. CALCULATING COST
n n
Cost = ∑ ∑ Xij Cij
i=1 j=1
Cost = $50 + $200 + $40
(1 and 2) (1 and 3) (1 and 6)
+ $30 + $100 + $10
(2 and 3) (2 and 4) (2 and 5)
+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $620

25. PRESENt
Interdepartmental Flow Graph
100
50 30
1 2 3
10
100
4 5 6
50

26. Refined layout
Room 1 Room 2 Room 3
Assembly Machine Shop Testing
Department Department Department
(1) (3) (6)
40’
Painting Receiving Shipping
Department Department Department
(2) (4) (5)
Room 4 Room 5 Room 6
60’

27. IMPROVED GRAPH
Interdepartmental Flow Graph
20
100 100
1 3 6
50 20
50 50
2 4 5
10

28. REDUCED COST
n n
Cost = ∑ ∑ Xij Cij
i=1 j=1
Cost = $50 + $100 + $40
(1 and 2) (1 and 3) (1 and 6)
+ $60 + $50 + $20
(2 and 3) (2 and 4) (2 and 5)
+ $20 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $490

29. CONCLUSION
HERE we DISCUSSED 4 examples giving
a glimpse of how layout decisions are
carried out at various stages from
Production  Retailing.
HOPE IT WAS WORTH SPENDING
TIME!
DEEPAK SHARMA
Copyright 2012 Deepak Sharma IIT Mandi IIT MANDI