Heizer Om12 Ch09 Final Week 7c M

Layout Strategies
Copyright © 2017 Pearson Education, Ltd. 9-1

Outline
► Global Company Profile:
McDonald's
► The Strategic Importance of Layout
Decisions
► Types of Layout
► Office Layout
► Retail Layout
► Warehousing and Storage Layouts

Outline - Continued
► Fixed-Position Layout
► Process-Oriented Layout
► Work Cells
► Repetitive and Product-
Oriented Layout

Innovations at McDonald's
► Indoor seating (1950s)

► Drive-through window (1970s)
► Adding breakfast to the menu (1980s)
► Adding play areas (late 1980s)
► Redesign of the kitchens (1990s)
► Self-service kiosk (2004)
► Now three separate dining sections
Innovations at McDonald's
► Indoor seating (1950s)

► Drive-through windowSix(1970s)
out of the
► Adding breakfast to the seven are
menu (1980s)
► layout
Adding play areas (late 1980s)
decisions!
► Redesign of the kitchens (1990s)
► Self-service kiosk (2004)
► Now three separate dining sections
McDonald's New Layout
▶ Seventh major innovation
▶ Redesigning all 30,000 outlets around the
world
▶ Three separate dining areas
▶ Linger zone with comfortable chairs and Wi-Fi
connections
▶ Grab and go zone with tall counters
▶ Flexible zone for kids and families
▶ Facility layout is a source of competitive
advantage
Learning Objectives
When you complete this chapter you
should be able to:
9.1 Discuss important issues in office layout
9.2 Define the objectives of retail layout
9.3 Discuss modern warehouse management
and terms such as ASRS, cross-docking,
and random stocking
9.4 Identify when fixed-position layouts are
appropriate

Learning Objectives
When you complete this chapter you
should be able to:
9.5 Explain how to achieve a good process-
oriented facility layout
9.6 Define work cell and the requirements of a
work cell
9.7 Define product-oriented layout
9.8 Explain how to balance production flow in
a repetitive or product-oriented facility

Strategic Importance of
Layout Decisions
The objective of layout strategy

is to develop an effective and
efficient 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
Copyright © 2017 Pearson Education, Ltd. 9 - 10

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 display 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: Arranges 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

Layout Strategies
TABLE 9.1 Layout Strategies
OBJECTIVES EXAMPLES
Office Locate workers requiring Allstate Insurance
frequent contact close to one Microsoft Corp.
another
Retail Expose customer to high- Kroger’s Supermarket
margin items Walgreen’s
Bloomingdale’s
Warehouse Balance low-cost storage with Federal-Mogul’s warehouse
(storage) low-cost material handling The Gap’s distribution center
Project (fixed Move material to the limited Ingall Ship Building Corp.
position) storage areas around the site Trump Plaza
Pittsburgh Airport

Layout Strategies
TABLE 9.1 Layout Strategies
OBJECTIVES EXAMPLES
Job Shop Manage varied material flow for Arnold Palmer Hospital
(process each product Hard Rock Cafe
oriented) Olive Garden
Work Cell Identify a product family, build Hallmark Cards

(product teams, cross-train team Wheeled Coach Ambulances
families) members
Repetitive/ Equalize the task time at each Sony’s TV assembly line

Continuous workstation Toyota Scion
(product
oriented)

Good Layouts Consider
► Material handling equipment
► Capacity and space requirements
► Environment and aesthetics
► Flows of information
► Cost of moving between various work
areas

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
Figure 9.1
Office Layout
► Three physical and social aspects
► Proximity
► Privacy
► Permission
► Two major trends
► Information technology
► Dynamic needs for space and services

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
Slotting
▶ Manufacturers pay slotting 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

Servicescapes
1. Ambient conditions - background
characteristics such as lighting, sound,
smell, and temperature
2. Spatial layout and functionality - which
involve customer
circulation path planning,
aisle characteristics, and
product grouping
3. Signs, symbols, and
artifacts - characteristics
of building design that
carry social significance
Warehouse and Storage Layouts
▶ Objective is to find the optimum 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
(ASRSs) 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,
bar code or RFID
identification used for
advanced shipment
notification as
materials are unloaded

Random Stocking
► Typically requires automatic identification
systems (AISs) and effective information
systems
► Allows more efficient use of space
► Key tasks
1. Maintain list of “open” locations
2. Maintain accurate records
3. Sequence items to minimize travel, “pick” time
4. Combine picking orders
5. Assign classes of items to particular areas
Customizing
▶ Value-added activities performed at the
warehouse
▶ Enable low cost and rapid response
strategies
▶ Assembly of components
▶ Loading software
▶ Repairs
▶ Customized labeling and packaging

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

Surgery ER triage room Emergency room admissions
Patient A - broken leg
Patient B - erratic heart

pacemaker
Laboratories
Radiology ER Beds Pharmacy Billing/exit
Figure 9.3

▶ 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

Computer Software
▶ Graphical approach only works for small
problems
▶ Computer programs are available to solve
bigger problems
► CRAFT ► Factory Flow
► ALDEP ► Proplanner
► CORELAP

Computer Software
▶ Proplanner flow path calculator
▶ Generate material flow diagrams
▶ Calculate material handling distances,
times, costs
▶ Color-coded flow lines
▶ Helps identify excessive material handling

Computer Software
▶ Proplanner flow path calculator
▶ Generate material flow diagrams
▶ Calculate material handling distances,
times, costs
▶ Color-coded flow lines
▶ Helps identify excessive material
handling

Computer Software
▶ Three dimensional visualization software
allows managers to view possible layouts
and assess process, material
handling,
efficiency,
and safety
issues

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
inventories
4. Reduced direct labor cost
5. Heightened sense of employee
participation
6. Increased equipment and machinery
utilization
7. Reduced investment in machinery and
equipment
Requirements of Work Cells
▶ Identification of families of products
▶ A high level of training, flexibility and
empowerment of employees
▶ Being self-contained, with its own
equipment and resources
▶ Test (poka-yoke) at each station in
the cell

Improving Layouts Using
Figure 9.9 (a)
Work Cells
Material
Current layout - workers in

small closed areas.
Improved layout - cross-trained

workers can assist each other. May
be able to add a third worker as
additional output is needed.

Improving Layouts Using
Figure 9.9 (b) 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 to three.
U-shaped line may reduce employee movement

and space requirements while enhancing
communication, reducing the number of workers,
and facilitating inspection

Staffing and Balancing Work
Cells
Determine the takt time
Total work time available

Takt time =
Units required to
satisfy customer demand
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 60
chart total operation
50
time = 140 seconds
Standard time required

40
30
20
10
Figure 9.10
0 Assemble Paint Test Label Pack for
shipment
Copyright © 2017 Pearson Education, Ltd. Operations 9 - 47
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 min = 48 seconds
Total operation time required
Workers required =
Takt time
= 140 / 48 = 2.92
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
Repetitive and Product-
Oriented Layout
Organized around products or families of
similar high-volume, low-variety products
1. Volume is adequate for high equipment utilization
2. Product demand is stable enough to justify high
investment in specialized equipment
3. Product is standardized or approaching a phase of
life cycle that justifies investment
4. 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

► Fabrication line
► Builds components on a series of machines
► Machine-paced
► Require mechanical or engineering changes to
balance
► Assembly line
Both types of lines
► Puts fabricated parts together at a series
must of
be balanced
workstations so that the time to
► Paced by work tasks perform the work at
each station is the
► Balanced by moving tasks same

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

McDonald's Assembly Line
Figure 9.11

Assembly-Line Balancing
▶ Objective is to minimize the imbalance
between machines or personnel while
meeting required output
▶ Starts with the precedence relationships
▶ Determine cycle time
▶ Calculate theoretical
minimum number of
workstations
▶ Balance the line by
assigning specific
tasks to workstations
Wing Component Example
TABLE 9.2 Precedence Data for Wing Component
ASSEMBLY TIME TASK MUST FOLLOW
TASK (MINUTES) TASK LISTED BELOW
A 10 –
This means that
B 11 A tasks B and E
C 5 B
cannot be done
until task A has
D 4 B been completed
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65

Precedence Data for Wing
TABLE 9.2 Component 480 available mins
TASK MUST per day
ASSEMBLY TIME FOLLOW TASK 40 units required
TASK (MINUTES) LISTED BELOW
A 10 –
B 11 A
C 5 B
D 4 B
Figure 9.12
E 11 A
5
F 3 C, D
G 7 F C
10 11 3 7
H 11 E
A B F G
I 3 G, H 4
3
Total time 65 D
11 11 I
E H

Precedence Data for Wing
TABLE 9.2 Component 480 available mins
per day
TASK MUST
A 10 –
Production time available
B 11 A per day
C 5 Cycle
B time =
Units required per day
D 4 B Figure 9.12
= 480 / 40
E 11 A 5
F 3 C, D = 12 minutes per unit
C
G 7 F 10 11
n 3 7
H 11 E
Minimum number
A åB Time for task
F i G
4
I 3 G, H
of workstations = i=1
3
Cycle
D time I
Total time 65 11 11
= 65E / 12 H
= 5.42, or 6 stations
Layout Heuristics That May Be Used to Assign Tasks
TABLE 9.3 to Workstations in Assembly-Line Balancing
1. Longest task time From the available tasks, choose the
task with the largest (longest) task time
2. Most following tasks From the available tasks, choose the
task with the largest number of following
tasks
3. Ranked positional From the available tasks, choose the
weight task for which the sum of following task
times is the longest
4. Shortest task time From the available tasks, choose the
task with the shortest task time
5. Least number of From the available tasks, choose the
following tasks task with the least number of subsequent
tasks

480 available mins
Figure 9.13 per day
40 units required
Cycle time = 12 mins
Minimum
Station 5 workstations = 5.42 or 6
2
C
10 11 3 7
A B F G
4 3
D Station 3
Station 4 I
11 11
Station 6
Station Station 6
1 E H
Station Station
3 5
Precedence Data for Wing 480 available mins
TABLE 9.2 Component
per day
TASK MUST
Cycle time = 12 mins
A 10 –
B 11 A Minimum
C 5 B
workstations = 5.42 or 6
D 4 B
Figure 9.12
E 11 A
5
F 3 C, D
∑ Task times C
Efficiency
G = 7 F
10 11 3 7
H (Actual
11 number of
E workstations) x (Largest cycle time)
A B F G
I 3 G, H
= 65 minutes / ((6 stations) x (12 minutes))4 3
Total time 65 D
= 90.3% 11 11 I
H E
Idle Time = ((6 stations) × (12 minutes)) – 65 minutes = 7 minutes

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Layout Strategies

Copyright © 2017 Pearson Education, Ltd. 9-1

Copyright © 2017 Pearson Education, Ltd. 9-2

Copyright © 2017 Pearson Education, Ltd. 9-3

► Indoor seating (1950s)

► Indoor seating (1950s)

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Copyright © 2017 Pearson Education, Ltd. 9-8

The objective of layout strategy

Copyright © 2017 Pearson Education, Ltd. 9-9

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4. Fixed-position layout: Addresses the

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6. Work cell layout: Arranges machinery

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Work Cell Identify a product family, build Hallmark Cards

Repetitive/ Equalize the task time at each Sony’s TV assembly line

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Copyright © 2017 Pearson Education, Ltd. 9 - 17

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▶ Objective is to find the optimum trade-

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▶ Warehouse density tends to vary inversely

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Patient B - erratic heart

Radiology ER Beds Pharmacy Billing/exit

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Current layout - workers in

Improved layout - cross-trained

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Current layout - straight lines

U-shaped line may reduce employee movement

Copyright © 2017 Pearson Education, Ltd. 9 - 45

Total work time available

Determine the number

Total operation time required

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Standard time required

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

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