Facility layout

The strategic importance of layout decisions

Layout - the way in which the parts of something are arranged or laid out.
Layout is one of the key decisions that determine the long-run efficiency of
operations. The objective of layout strategy is to develop an effective and efficient
layout that will meet the firm’s competitive requirements

Instagram is testing three

layouts so don’t be
surprised if your friend
sees a different one
Source: Hindustan Times
August 20, 2022.
• In today’s business environment, it’s important to have a layout that
reduces costs while maximizes productivity.

• This means considering small, movable and flexible equipment.

• Store displays needs to be movable, office desks and partitions modular,

and warehouse racks prefabricated.

• To obtain flexibility on layout, mangers cross-train (the practice of training

an employee to be able to do the work that another employee does, in addition to
their primary job role) their workers, maintain equipment, keep investments
low, place workstations close together, and use small, movable equipment.
Example

• Benetton supports a differentiation strategy by heavy investment

in warehouse layouts that contribute to fast, accurate sorting
and shipping to its 5,000 outlets.
• Walmart store layouts support a strategy of low cost, as do its
warehouse layouts.
• Hallmark’s office layouts, where many professional operate
with open communication in work cells, support rapid
development of greeting cards.
The objective of layout strategy is to develop an effective and efficient
layout that will meet the firm’s competitive requirements.
Types of layout

1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process layout
6. Work cell layout
7. Product layout
Office layout

• Office layouts require the grouping of workers, their equipment, and

spaces to provide for comfort, safety, and movement of information.
• The main distinction of office layouts is the importance of flow of
information.
• Even though the movement of information is increasingly electronic,
analysis of office layouts still require a task-based approach.
• A useful tool for such an analysis is the relationship chart also called
Muther Grid. Proposed by Richard Muther.

On the other hand, some layout considerations are universal.

 Draw closeness of
departments from each
other using closeness
ratings

A E I O U X
1-3 3-6 1-5 1-2 1-4
2-3 4-6 2-4 3-4 1-7
Prepared for a software
4-5 2-5 2-7 5-7
firm
4-6 3-5 5-6
1-6 6-7
2-6
3-6
The insights from the relationship chart for a software firm are: it
is absolutely necessary for operations department (3) to be close
to accounting (1) and marketing (2), but it is ordinary Ok or you
can say does not need to be to close to graphic arts (4).
Homework: Make a closeness
rating matrix and interpret the
results.
The five versions of office layout

Managers and architects have pondered how to design an

office to encourage productivity for more than 100 years.
In the early 20th century, large offices resembled factories,
where critical workers sat in long rows, often performing
repetitive tasks.

Starting in the 1960’s, layouts changed to foster

teamwork where managers and support staff sat
together, and groupings were geared towards
specific tasks.

With computers, more individual work was possible, and

the “Cube Farm” era became ubiquitous through the 80’s
and 90’s. An office full of high-walled cubicles both an
open environment and personal office space.
By the turn of the century, looking for
innovation and creativity to recruit and inspire
college grads, technology firms created the
“fun” office. Bright, casual, open office spaces,
with amenities such as beanbag chairs,
foosball tables, and coffee bars became the fad.

The buzzwords today are serendipity and

collaboration, as companies design office space
to engineer encounters between employees.
Steve Jobs designed his Pixar headquarters
with the cafeteria and bathrooms in a central
atrium away from work areas to encourage
intermingling and collaboration. Skype
achieves similar goals with lounges.
Google Office Layout of Dublin – (Source: https://www.pinterest.com/pin/hotel-inspiration--129408189272791589/
Readings

1. When Deloitte & Touche found that 30% to 40% of desks were
empty at any given time, the firm developed its “hoteling
programs.” Consultants lost their permanent offices; anyone
who plans to be in building (rather than out with clients) books
an office through a “caretaker”, who hangs that consultant’s
name on the door for the day and stocks the space with required
supplies.
2. Cisco Systems cut rent and workplace service costs by 37% and
saw productivity benefits of $2.4bn per year by reducing square
footage, reconfiguring space, creating movable, everything-on-
wheels offices, and designing “get away from it all” innovation
areas.
 Retail layout
Retail outlets are based on the idea that sales and profitability vary
directly with customer exposure to products.
Thus, few strategies, which are helpful for determining the overall arrangement of
many stores:
1. Locate the high-drawn items around the periphery of the store – Thus, we
tend to find dairy products on one side of a supermarket and bread and
bakery products on another.
2. Use prominent locations for high-impulse and high-margin items – Best
Buy puts fast-growing, high-margin digital goods such as camera and
printers in the front and center of the stores.
3. ??
4. ??

The main objective of retail layout is to maximize profit per square per foot of store
Store Layout
Warehouse layout
In Layman’s term: we want to maximize use of the whole building. The objective of warehouse layout is to
maximize the utilization of the total “cube” of the warehouse – that is utilize, its full volume while maintain
low material handling cost.
Material handling involves moving, loading, unloading, pushing, pulling, storing, lifting, picking,
placing, and retrieving products or goods in a factory or warehouse. It has been a critical part of
supply chains and manufacturing processes worldwide.
• Material handling costs consist of incoming transport, storage,
and outgoing transport of materials. Like, warehouse cost,
vehicles, conveyors, transportation equipment, transportation
costs, packaging materials, packaging equipment, and other
material costs to move the goods.
An important component of warehouse layout is the relationship
between the receiving/unloading area and the shipping/loading area.
• In some companies, the receiving and shipping facilities, or
docks, as they are called, are even in the same area.
An important strategy ‘cross-docking’ to reduce material handling
cost. Therefore, cross docking is most commonly used as part of a
company's warehouse and distribution efforts.
• Cross-docking means to avoid placing materials or supplies in
storage (or minimum storage time) by processing them as
they are received. This is desirable because the longer
products sit in a warehouse or other storage location, the less
overall value they provide.
Example,
• In a manufacturing facility, product is received directly
by the assembly line.
• In a distribution centre, labelled and pre-sorted loads
arrive at the shipping dock for immediate rerouting,
thereby avoiding formal receiving, stocking/storing.
• As these activities add no value to the product, their
elimination is cost savings.
Walmart, an early advocate of cross-docking, uses this
technique as a major component of its low-cost strategy.
With cross-docking, Walmart reduces distribution costs
and speeds restocking of stores, thereby improving
customer service.
Fixed-position layout

• In a fixed-position layout, the project remains in one place, and

workers and equipment come to that one work area.
• Example, ship, a highway, a bridge, a house, an airplane.

Challenges:
1. There is a limited space at virtually all sites.
2. Second, at different stages of a project, different materials are
needed; therefore, different items become critical as the
project develops.
3. The volume of material needed is dynamic.
Process layout
• A process or a functional layout is an arrangement of resources on the basis
of the process characteristics (functions) of the resources.
• More specifically, a process layout is a type of facility layout in which the
floor plan is arranged with similar processes/operations, or all
machines/services performing similar types of operations are located
together. It is recommended for batch production.
For example, a machine shop with mills located together, drills located together,
saws located together, and so on, is arranged with a process layout.

Example 1:
manufacturing
operations of different
products
 • In Example 1, components belonging to Product A first visit a lathe, then a
drilling machine, a milling machine, and finally a grinding machine.

Example 2:
an emergency room
process layout showing the
routing of two patients
Write a disadvantage.
• The advantage of this layout is that if some machines/operations stop
for some reason, products that do not require that machine/operation
for final production can still be produced. Other benefits is of
flexibility. By using a process layout, organizations can enjoy a high
level of flexibility by completing various processes simultaneously.
• Disadvantage is that there will be enormous criss-crossing in the
shop, as components needs to machines in multiple combinations.
This increases material handling.

When designing a process layout, the most common tactic is to arrange

departments or work centers so as to minimize the costs of material handling.
Product layout
• Useful for high-volume and low-variety products, that is, Mass
Production.
• In manufacturing, the machines are arranged according to the sequence of
operations, that is, as required to produce the final product. In service, it is
more customer based. Therefore, the manpower and resources are
organized on the basis of the customer segments that needs to be catered
on.

Lathe Milling Drilling Assembly

Package
Inspection
dispatch
There are two types: assemble line and fabricated line. We will discuss assembly
line in this course.
An assembly line puts fabricated parts together at a series of workstations; used
in repetitive processes.

Benefits
1. Reduced material handling
2. Mass production
3. Unskilled workers can learn and manage
4. Simplified production, planning and control

Limitations
5. Lack of flexibility
6. Large capital investment
7. Breakdown may affect entire operations
McDonald's Assembly Line
 Product and process
layouts: an example
from banking

In Bank A, customer arrives at the

waiting area and a member of the
customer relationship staff attends to
all the requirements of customer. In
contrast, in Bank B, the staff is
organized on the basis of functions.
Depending on the nature of work
involved, customers will visit different
sections in the bank and get their
service done.

Homework: Identify which bank is product based and which is

process based with clear explanation.
An assembly line
Work cell layout

A work cell reorganizes people and machines that would ordinarily be dispersed in
various departments into a group so that they can focus on making a single product
or a group of related products. It is also called Group Technology Layout.
Or “the main objective is to divide components/customers to part families.
Corresponding to each part family, machine/operations groups are
identified, and the layout is formed accordingly.”
Step 1 – determine part families.
Step 2 – applying group technology, that is, arrange plants equipment used
to process a particular family of components.
Example of work cell

D M D M
G
S L G

Cell 1 Cell 2

L M

Cell 3
G S
Benefits
1. Reduced material handling as components seldom travel outside their
respective cell.
2. Reduced direct labor cost because of improved communication, better
material flow, improved scheduling.
3. Increased equipment and machinery utilization because of better
scheduling and faster material flow.
4. Better employee participation as they will relate better to their
workplace and make concerted improvements in their process.
5. Implementations of various techniques and group improvement
activities such as Just-in-Time, Kaizen is easier.
Limitations
6. The additional cost of implementation of this system.
7. Difficulties with out-of-cell operations.
Readings

Why did Canon’s copier factories in Japan switch from assembly

line to work cells?
First, the move freed up 12 miles of conveyor-belt space, at 54
plants, saving $280 million in real estate costs. Second, the cells
enabled Canon to change its product mix more quickly. And
third, morale increased because workers can now assemble a
whole copier, not just one part. Some of Canon’s fastest workers
are so admired that they have become TV celebrities!
Improving layouts –
U shaped layouts (a)

Material

Improved layout - cross-trained

Current layout - workers in workers can assist each other.
small closed areas. May be able to add a third
worker as additional output is
needed.

(b)

Current layout - straight lines

make it hard to balance tasks Improved layout - in U shape,
U-shaped line may reduce employee movement
because work may not be divided workers have better access. Four and space requirements while enhancing
evenly cross-trained workers were communication, reducing the number of workers,
reduced to three. and facilitating inspection
Assembly line balancing

Important terminologies
1. Workstation – Physical location where a particular set of tasks is
performed. It is of 2 types: manned workstation containing one worker
who operates machine and/or tools, and an unmanned workstations
containing unattended machines like robots.
2. Tasks – Elements of work. Grasp pencil, position pencil on paper to write,
clamp work, use jig and fixture.
3. Task precedence – The sequence or order in which tasks must be
performed.
4. Work center – A physical location where two or more identical
workstations are located. If more than one station is required to provide
enough production capacity, they are combined to form a work center.
5. Number of workstations working (Ideal situation) – The
amount of work to be done at a work center expressed in number
of workstations. Twenty-eight hours of work at a work center
during an 8-hour shift would be equivalent to 28/8 = 3.5
workstations working.
6. Actual number of workstations – The total number of
workstations required on the entire production line, calculated as
the next higher integer value of the number of workstations
working.
• Line balancing is usually undertaken to minimize imbalance
between machines or personnel while meeting a required
output from the line.
• To do so, the main objective of line balancing is to assign tasks
to workstations in such a way that the workstations have equal
time requirements. This minimizes the idle time along the line
and results in a high utilization of labor and equipment.
• A balance design is one in which the workstations time do not
vary widely. In such situation, the resources will be uniformly
utilized, and the flow of material will be even.
Normally, one worker is assigned to each workstation.
 7 min
Suppose 4 tasks (as shown in figure), are performed 10 min B 6 min
in a single workstation Wa to make a final product Time to complete
the task A D
X. One worker is assigned to a workstation. Then,
3 min
according to precedence rule, tasks B and C cannot
be done, until task A is completed. Likewise, task D C
Precedence diagram
cannot do so, if A, B, and C are completed.
a prerequisite for
balancing a line

For example, task A is toasting Bun and cutting into two pieces; B is
cutting onions and tomatoes and putting in base; C is cutting cheese
and putting in top, D is preparing box connect all things and
deliver. Because there is one workstation, so, if A is not done, that
is, bun is not toasted and divided into two pieces, sliced onion and
tomatoes and cheese cubes cannot be put into a bun. So, workers
will finish A, then B and C and finally D. So, total processing time
per unit is 26 mins also called the workstation time.
• If there are 3 workstations Wa, Wb, Wc with times as 5 seconds, 3
seconds, and 7 seconds, then the interval between two successive units
to produce is given by the maximum time taken by a workstation.
• So, 7 seconds is the maximum time. Which means, every component
will come out of system in every 7 seconds. It is also called cycle time.

• Cycle time is the time to produce a single product or service.

• Cycle time can be considered as the reciprocal of production rate. If in
a period of 20000 seconds a shop produced 10000 units, then the
production rate is 0.5 units/second. Conversely, the cycle time is 2
seconds.
 Steps

1. Find the cycle time; Cycle time =

2. Calculate the theoretical number of workstations

Minimum number of workstations =

Balance the line by assigning tasks to each workstation. An efficient balance is one that will
complete the required assemble, follow, the specified sequence, and keep the idle time at each
workstation to a minimum.
Measures to calculate effectiveness of a balance assignment: Means
how to know how the designed balanced line is a good one

1. Efficiency (in percent) =()X100

Efficiency also called average utilization.

 Layout Heuristics That May Be Used to Assign Tasks
TABLE 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
Q1. A computer manufacturer needs to design stations in the factory where
the cabinet housing the hard disk, mother board and other accessories is to
be made. The factory currently works for one shift of 8 hours. The tasks,
their precedence relationships and their durations are already given.
80 sec
30 sec
B
F
70 sec 50 sec
40 sec
50 sec
A H
C
G
20 sec

40 sec

E
1. If the cycle time is 80 seconds, what will be the daily
production rate?
2. If the desired production rate is 320 cabinets per day, what is
the maximum permissible cycle time?
3. What is maximum and minimum number of workstations
required to maintain this daily production rate?
4. Design an assembly line with 5 workstations.
Sol.
1. Total available time per day = 8*60*60 = 28,800 seconds
Daily production rate = 28800/80 = 360 units

2. Since the desired production rate is only 320 units, one can obtain the maximum
permissible cycle time for the assembly stations.

Maximum cycle time =

= 28800/320 = 90 seconds

The computations show that while a cycle time of 80 seconds may yield a much
higher production rate, the workstations can be designed for a cycle time of up to
90 seconds without falling short of the desired daily production. Once the cycle
time crosses the 90 seconds, the manufacturer may not be able to produce 320
units every day.
We know that maximum number of workstations required are
equal to number of tasks in order to meet the desired output.
Hence, maximum number of workstations are 8. However, the
objective is to set minimum number of stations while meeting
the desired output.
In our problem, the sum of all tasks is 380 seconds. If we
consider only one workstation, then cycle time will be 380
seconds, which is not desired. So, we need to set different
workstations, where each worker in each workstation can
combine the tasks to meet the desired output.
Minimum number of workstations =
= 380/90 =4.22≈ 5
As long as we have 5 workstations, our cycle time may not
exceed 90 seconds and will be able to meet the production rate.
4. To balance the assembly line with 5 workstations, we need to
follow two rules: (a) the workstation times should not exceed the
maximum cycle time (in this problem 90 seconds). (b) the
precedence relationships among the task need to honoured.
 40 sec 30 sec

E F

Station
80 sec 4
70 sec B

A Station
2
40 sec 50 sec

C G
Station
3
50 sec

D
H
20 sec
Station Station
1 5
 Workstation 1 Workstation 2 Workstation 3 Workstation 4 Workstation 5

Tasks assigned A,D B C,G E,F H

Workstation 90 80 90 70 50
time

Efficiency (in percent) = ()X100

= ()X100 = 84.4%
Practice

Q2. Boeing determines that there are 9 tasks to be completed to

produce a job. The time specified above a task is the assembly time.
The company has 480 production minutes of work available per day.
The production schedule requires that 40 units of the wing
component be completed as output from the assembly line each day.
It now wants to group the task to workstations. Balance the line.
Wing Component Example
TABLE 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 cannot
be done until task A
C 5 B has been completed
D 4 B
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65
Wing Component Example
Precedence Data for Wing
TABLE 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
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
Wing Component Example
Precedence Data for Wing
TABLE 9.2 Component 480 available mins
per day
TASK MUST
ASSEMBLY TIME FOLLOW TASK 40 units required
TASK (MINUTES) LISTED BELOW
A 10 –
Production time available
B 11 A per day
C 5 CycleBtime = 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 3 7

H 11 E A B F G
Minimum number 4
I 3 G, H 3
of workstations D
Total time 65 11 11 I
= 65E / 12 H
= 5.42, or 6 stations
Wing Component Example
480 available mins
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
 Wing Component Example
Precedence Data for Wing 480 available mins
TABLE Component
per day
TASK MUST
ASSEMBLY TIME FOLLOW TASK 40 units required
TASK (MINUTES) LISTED BELOW
Cycle time = 12 mins
A 10 –
Minimum
workstations = 5.42 or 6
B 11 A
C 5 B
D 4 B
E 11 A
5
F 3 C, D
∑ Task times C
Efficiency
G = 7 F
10 11 3 7
H (Actual
11 numberEof workstations) x (Largest cycle time)
A B F G
I 3 G, H 4
= 65 minutes / ((6 stations) x (12 minutes)) 3
Total time 65 D
= 90.3% 11 11 I
E
Idle Time = ((6 stations) × (12 minutes)) – 65 minutes = 7 minutesH
To summarize - Layout strategies
Layout type Objectives Examples
Office Locate workers requiring contact close to each Microsoft
other
Retail Expose customers to various items Walgreens, Kroger’s
supermarket, BigBaazar
Warehouse Balance low-cost storage with low cost material The Gap’s distribution center
handling

Fixed-position Easily move material to the limited storage areas Pittsburgh Airport, Ingall ship
around the site building

Work-cell Identify a product family, build teams, cross- Hallmark cards

train members

Process Manage varied material flow for each product Olive Garden, Hard Rock Cafe
Product Equalize the task time in each work station Toyota, Sony’s Tv assembly line
Software for layout

1. CORELAP – Computerized relationship layout planning

2. ALDEP – Automated layout design programme
3. PLANET – Plant layout evaluation technique
4. CRAFT – Computerized relative allocation of facilities
5. COFAD – Computerized facilities design
 Software for process layout
When 20 or more departments are involved in a layout problem, more than 600 trillion different department
configurations are possible.

Siemens Corp. software such as this allows operations

managers to quickly place factory equipment for a full 3-D
view of the layout. Such presentation provide added insight
into the issues of facility layout in terms of process, material
handling, efficiency, and safety.

Proplanner software for process layout

Working with computer-aided design software, analysts
with click of a mouse can use Proplanner’s Flow Path
Calculator to generate material flow diagrams and
calculate material handling distance, time, and cost.
Variable-width flow lines, color-coded by product, part,
or material handling method, allow users to identify how
layouts should be arranged and where to eliminate
excessive material handling.