Facility Location
Facility Location
Facility Location
FACILITY LOCATION
By:- Shimelis Tamirat
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Contents
5.1 The Need for Location Decisions
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5.1 The Need for Location Decisions
Facility location decisions are:
❖ Strategic,
❖ Long-term and
❖ Non-repetitive in nature.
Without sound and careful location planning in the beginning itself, the new facility may
pose continuous operating disadvantages, for the future operations.
The facilities location problem is concerned primarily with the best (or optimal!) location
depending on appropriate criteria of effectiveness.
Most of the fixed and some of the variable costs are determined by the location decision.
The efficiency, effectiveness, productivity and profitability of the facility are also affected
by the location decision.
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Contd.,
Once a facility is set up at a location, it is very difficult to shift later to a better
location because of numerous economic, political and sociological reasons.
Economic - total costs, profits, availability of raw materials, labor, power. transportation
facilities, markets etc.
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5.2 The Nature of Location Decisions
=>Traditionally, location theorists have dealt with industrial
• plant/factory location.
=>However, the concept of plant location has now been generalized
into that of facility location, since the facility could include a:-
• production operation or service system.
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When does a location decision arise?
The impetus to embark upon a facility location study can usually be attributed to various
reasons:
1) It may arise when a new facility is to be established.
2) In expansion where original site is restricted by a poor site, thereby necessitating the setting up of the
facility at a new site.
3) The growing volume of business makes it advisable to establish additional facilities in new territories.
4) Decentralization and dispersal of industries reflected in the Industrial Policy resolution to achieve an
overall development of a developing country would necessitate a location decision at a macro level.
5) It could happen that the original advantages of the plant have been outweighed due to new developments.
6) New economic, social, legal or political factors could suggest a change of location of the existing plant.
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Steps in the Facility Location Study
Location studies are usually made in two phases namely,
1) the general territory selection phase, and
2) the exact site/community selection phase amongst available in territory.
Territory selection important factors that influence the selection:-
✓ Markets
✓ Raw Materials and Supplies
✓ Manpower Supply
✓ Infrastructure
✓ Legislation and Taxation
✓ Climate
✓ Community Facilities
✓ Community Attitudes
✓ Ecology and Pollution
✓ Site Size
✓ Topography, soil structure and drainage 7
✓ Land Costs
Location Models
✓ Various models are available which help to identify the ideal
location. Some of the popular models are:
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1. Factor Rating Method
The process of selecting a new facility location involves a series of
following steps:
1) Identify the important location factors.
2) Rate each factor according to its relative importance, i.e., higher the ratings is
indicative of prominent factor.
3) Assign each location according to the merits of the location for each factor.
4) Calculate the rating for each location by multiplying factor assigned to each
location with basic factors considered.
5) Find the sum of product calculated for each factor and select best location
having highest total score.
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ILLUSTRATION 1
Let us assume that a new medical facility, Health-care, is to be in Sodo. The
location factors, factor rating and scores for two potential sites are shown in the
following table. Which is the best location based on factor rating method?
No. Rating
Location factor Factor rating Location1 Location2
1 Facility utilization 8 3 5
2 Total patient per month 5 4 3
3 Average time per emergency trip 6 4 5
4 Land and construction costs 3 1 2
5 Employee preferences 5 5 3
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Solution:
No Location factor Factor Location 1 Location 2
Rating (1) Rating (2) Total=(1).(2) Rating (3) Total= (1).(3)
1 Facility utilization 8 3 24 5 40
2 Total patient per month 5 4 20 3 15
3 Average time per emergency trip 6 4 24 5 30
4 Land and construction costs 3 1 3 2 6
5 Employee preferences 5 5 25 3 15
Total 96 Total 106
❖ NB: The total score for location 2 is higher than that of location1. Hence location 2, is the best
choice.
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ILLUSTRATION 2:
ABC shoe factory intends to open a new branch store. The exhibit below contains
information on two potential locations, A and B. Which location is promising?
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Contd.,
Scores
No Location factor Weight Location1 Location2
1 Facility utilization 25 3 5
2 Total patient km per month 25 4 3
3 Average time per emergency trip 25 3 3
4 Land and construction costs 15 1 2
5 Employee preferences 10 5 3
SOLUTION: The weighted score for this particular site is calculated by
multiplying each factor’s weight by its score and adding the results:
Weighted score of location 1=25×3+25×4+25×3+15×1+10×5
=75+100+75+15+50 = 315
Weighted score of location 2 =25×5+25×3+25×3+15×2+10×3
=125+75+75+30+30= 335
❖ Location 2 is the best site based on total weighted scores.
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3. Center of gravity method
For locating single facility that considers the existing facilities,
the distance between them, and
the volumes of goods that need to be shipped are considered
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Example 1
A refining company needs to locate an intermediate holding facility between its
refining plant and its major distributors. The coordinate map is the following.
500
T(25,450)
400 G(350, 400) Plant
L(450 , 350)
Distributor
300
* C(308 , 217)
200
A(400 , 150)
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Solution
Shipping Volumes and the coordinates of the destinations shown in map is summarized
as follows:
Location X Y Gallons of Gasoline/month (000') Vi = 1500
Plant 325 75 1500 Cx= (325x1500) + (400x250) + (450x450) + (350x350) + (25x450)
A 400 150 250 1500 + 250 + 450 + 350 + 450
L 450 350 450 Cx= 925,750 = 307.9
G 350 400 350 3000
T 25 450 450 Cy= (75x1500) + (150 +250) + (350x450) + (400x350) + (450x450)
dix = 325 3000
diy = 75 = 216.7
Note: X and Y coordinate are approximately 308 and 217, respectively. Therefore, the
location of the intermediate holding facility should be at (x, y) = (308, 217). On the
map it is represented by point C.
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Example 2
2. A clothing manufacturing produces children's cloth at four locations in northern Ethiopia. Relative
locations have been determined, as shown in the table below. The location of a central shipping
point for bolts of cloth must now be determined. Weekly quantities to be shipped to each location are
shown below. Determine the coordinates of the location that will minimize distribution costs.
Solution
Location (X, Y) Weekly Quantity Coordinate point is given by the formula:
(x , y ) = ,
A 5, 9 15 xi di yi di
di di
B 6, 9 20 xi di = 5 15 + 6 20 + 3 25 + 9 30
X =
di 15 + 20 + 25 + 30
C 3, 9 25
=
540
=6
= (6 7.33)
90
D 9, 4 30
Y =
Yi di = 9 15 + 9 20 + 9 25 + 4 30
di 15 + 20 + 25 + 30
X and Y coordinate are approximately 6 and 7.33 respectively. Therefore, the location of
the intermediate holding facility should be at (x, y) = (6, 7.33).
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5.3 Factors that Affect Location Decisions
Location decisions are affected by many factors, both internal and external to the
organization's operations.
Internal factors include the technology used, the capacity, the financial position, and the work force
required.
External factors include the economic, political and social conditions in the various localities.
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Contd.,
In general, the location for
Large-scale industries should be in rural areas, which helps in regional development also. It
is seen that once a large industry is set up (or even if a decision to this effect has been taken),
a lot of infrastructure develops around it as a .result of the location decision.
Medium scale industries, these could be preferably in the suburban/semi-urban areas where
the advantages of urban and rural areas are available.
Small-scale industries, the location could be urban areas where the infrastructural facilities
are already available.
However, in real life, the situation is somewhat paradoxical as people, with money and
means, are usually in the cities and would like to locate the units in the city itself.
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THANK YOU
Shimelis Tamirat
+251 911387229/12685945
[email protected]
[email protected]
[email protected]
22
CHAPTER 6
FACILITY LAYOUT
Contents
6.1 Layout Types
A poor layout will result in continuous losses in terms of higher efforts for material handling, more scrap and rework,
poor space utilization etc. Hence, need to analyze and design a sound plant layout can hardly be over emphasized.
It is a crucial function that has to be performed both at the time of initial design of any facility, and during its growth,
development and diversification.
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What is Layout Planning?
❑ Layout planning is deciding on the best physical arrangement of all resources
that consume space within a facility.
❑ These resources might include:
✓ a desk,
✓ a work center,
✓ a cabinet,
✓ a person,
✓ an entire office, or
✓ even a department
❑ Decisions about the arrangement of resources in a business are not made only
when a new facility is being designed; they are made any time there is a change in
the arrangement of resources, such as
✓ a new worker being added,
✓ a machine being moved, or
✓ a change in procedure being implemented .
- Processing requirements in terms of amount of flow between departments and work centers
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Why Layout?
The central focus of most
manufacturing layouts is to minimize
the
- cost of processing,
- transporting, and
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6.1 Layout Types
There are five basic layout types:
❖ Process (interdepartmental flow, job-shop or functional) layout
❖ Hybrid layout
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Process Layouts
Process layouts are layouts that group resources based on similar processes or functions. A hospital
is an example of process layout. This type of layout is seen in companies with intermittent processing
systems where:-
✓ a large variety of items are produced in a low volume.
✓ each with unique processing requirements,
✓ it is not possible to dedicate an entire facility to each item.
✓ It is more efficient to group resources based on their function.
The products are then moved from one resource to another, based on their unique needs. If the
process layout has not been designed properly, many products will have to be moved long distances,
often daily. This type of movement adds nothing to the value of the product and contributes to waste.
The challenge in process layouts is to arrange resources to maximize efficiency and minimize waste
of movement.
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Unique Characteristics of Process Layouts:
1.-Resources used are general purpose.
2.-Facilities are less capital intensive/less automation.
3.-Facilities are more labor intensive/rely on higher-skilled workers.
4.-Resources have greater flexibility
5.-Processing rates are slower.
6.-Material handling costs are higher.
7.-Scheduling resources is more challenging.
8.-Space requirements are higher.
❑- Improper design of process layouts can result in costly inefficiencies, such as high
material handling costs. A good design can help bring order to an environment that
might otherwise be very chaotic.
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Product Layouts
• Layouts that arrange resources in sequence to allow for an efficient build up of the product.
In product layouts the material moves continuously and uniformly through a series of
workstations until the product is completed.
• Product layouts are layouts that arrange resources in a straight-line fashion to promote
efficient production. They are called product layouts because all resources are arranged to
meet the production needs of the product. This type of layout is used by companies that have
repetitive processing systems and produce one or a few standardized products in large
volume.
• The challenge in designing product layouts is to arrange workstations in sequence and designate the
jobs by considering:-
✓ The logical order to produce the product,
✓ How fast production occurs and
✓ How many units can be processed in the most efficient way possible in each station. 11
Characteristics:
1.Resources are specialized.
Product layouts use specialized resources designed to produce large quantities of a product.
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Fixed-position Layout
• A fixed-position layout is used when the product is large and cannot be
moved due to its size.
• All the resources for producing the product—including equipment, labor,
tools, and all other resources—must be brought to the site where the
product is located.
➢ Examples of fixed-position layouts include building construction, dam or
bridge construction, shipbuilding, or large aircraft manufacture.
• Hybrid layouts are very common. Often, some elements of the operation call to
produce standardized parts, which can be produced more efficiently in a product
layout, whereas other parts need to be made individually in a process layout.
• Hybrid layouts are often created to bring the efficiencies of a product layout to a
process layout environment. To develop a hybrid layout, we can try to identify
parts of the process layout operation that can be standardized and produce them
in a product layout format.
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Group technology (cellular) layout,
• Group technology (GT) or cell layouts are hybrid layouts that create groups of
products based on similar processing requirements.
• First, families of products that is similar in their processing characteristics and resource
requirements are identified. Grouping parts into families that follow a common sequence of
steps of operation.
• Identifying dominant flow patterns of parts families as a basis for location or relocation of
processes. Managers can then create cells, or small product layouts, that are dedicated to the
production of these families of products. Physically grouping machines and processes into cells.
• This approach brings greater efficiency to the process layout environment by handling a
moderate variety of products in moderate volumes.
• For example, retail stores and grocery stores use hybrid layouts. In these environments,
goods such as dairy items, meat, or produce are stored based on their function.
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Characteristics of Cellular Layouts
-Equipment can be less general-purpose
-Material handling costs are reduced
-Training periods for operators are shortened
-In-process inventory is lower
-Parts can be made faster and shipped more quickly
-Equipment can be less special-purpose
-Changeovers are simplified
-Production is easier to automate
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Benefits of Group Technology
1. Better human relations
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New Trends in Manufacturing Layouts
- Designed for quality
- Designed for flexibility–to adjust to different product models/ production rates
- Cellular layout within larger process layouts
- Automated material handling
- U-shaped production lines
- More open work areas with fewer walls, partitions, or other obstacles
- Smaller and more compact factory layouts
- Less space provided for storage of inventories throughout the layout
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6.2 Service Layouts
The objectives of service facility layouts differ from those of
manufacturing facility layouts.
This is because a manufacturing facility aims to make on-time delivery
of products to customers, whereas customers come to a service facility
to receive services.
Therefore, customers usually prefer a service facility that is close to
them, especially when the service delivery process requires considerable
customer contact. For example, if you are hungry, you would prefer to
go to a restaurant near you.
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Planning Service Facility Layouts
For many service operations, layouts are like process layouts
in manufacturing.
In a perfectly balanced line, all workers would complete their assigned tasks at the
same time (assuming they start their work simultaneously).
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Line Balancing Problem
Unfortunately there are a number of conditions that prevent the
achievement of a perfectly balanced line
- The estimated times for tasks - elemental task lengths cannot always be
overcome by grouping tasks as well.
* For instance, if the cycle time is two minutes, units will come off the end of the line at the
rate of one every two minutes. Hence, the line’s capacity is a function of its cycle time.
Example:-
✓ Suppose that the work required to fabricate a certain product can be divided up into
five elemental tasks, with the task times and precedence relationships as shown in the
following diagram:
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Workstations…
The task times govern the range of possible cycle times. The minimum cycle time is equal
to the longest task time (1.0 minute if there were five workstations), and the maximum
cycle time is equal to the sum of the task times (0.1 + 0.7 + 1.0 + 0.5 + 0.2 = 2.5 minutes if
all tasks were performed at a single workstation).
The minimum and maximum cycle times are important because they establish the
potential range of output for the line.
As a general rule, the cycle time is determined by the desired output; that is, a desired
output rate is selected, and the cycle time is computed. If the cycle time does not fall
between the maximum and minimum bounds, the desired output rate must be revised. We
can compute the cycle time using this equation:
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Workstations …
- Assume that the line will operate for eight hours per day (480 minutes).
- Suppose that the desired output rate is 480 units.
- Using the above formula the necessary cycle time is :-
• The number of workstations that will be
needed is a function of both the desired
output rate and our ability to combine
elemental tasks into workstations. We can
determine the theoretical minimum
number of stations necessary to provide a
specified rate of output as follows:
• NB: Because 2.5 stations is not feasible, it is necessary to round up (because 2.5 is the
minimum) to three stations. Thus, the actual number of stations used will equal or exceed
three, depending on how successfully the tasks can be grouped into workstations. 29
Assigning tasks to workstations
A very useful tool in line balancing is a precedence diagram. Precedence diagram is a
diagram that shows elemental tasks and their precedence requirements.
Here in the precedence diagram in order to begin task d, tasks b and c must both be
finished.
Assign tasks in order of most following tasks. Add tasks to a workstation in order of task
precedence one at a time until utilization is 100% or is observed to fall. If two or more tasks tie
for order of precedence, the one with the longest task time is added.
Assign tasks in order of greatest positional weight. Positional weight is the sum of each task’s
time and the times of all following tasks.
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NB : The initial “time remaining” for each workstation is equal to the cycle time. For a task to be eligible,
tasks preceding it must have been assigned, and the task’s time must not exceed the station’s remaining time.
Measures of Effectiveness in Line Balancing
The percentage of idle time of the line The efficiency of the line
This is sometimes referred to as the balance delay.
It can be computed as follows:
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Exercise 1
- Armstrong produces bicycle tire pumps on a production line. The time to perform the 6 tasks
in producing a pump and their immediate predecessor tasks are shown on the table below. Ten
pumps per hour must be produced and 45 minutes per hour are productive. -Use the incremental
utilization heuristic to combine the tasks into workstations in order to minimize idle time.
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Exercise 2
Task Imm. predecessor Task time (sec)
A None 55
B A 30
C A 22
D B 35
E B, C 50
F C 15
G F 5
H G 10
TOTAL 222
◼ Draw precedence diagram
◼ Determine cycle time—demand = 50 units/hr.
◼ Theoretical minimum no. of work stations
◼ Assign tasks to workstations using cycle time
◼ Efficiency and balance delay of line?
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◼ Bottleneck?
◼ Maximum output?
THANK YOU
Shimelis Tamirat
+251 911387229/12685945
[email protected]
[email protected]
[email protected]
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