Facility Layout

1
 Learning Objectives

• Define layout planning and explain its

importance
• Identify and describe different types of layouts
• Compare process layouts & product layouts
• Describe the steps involved in designing a
process layout

2
 Learning Objectives – con’t

• Describe the steps involved in designing a

product layout
• Explain the advantages of hybrid layouts
• Define the meaning of group technology (cell)
layouts

3
 Types of Processes/ Operations
• Two broad categories of operations:
– Intermittent processing systems – low volume of many different
products
– Continuous processing systems – high volume of a few standardized
products

4
Product/ Process Matrix

5
 Objectives of Facility Layout

• A facility layout problem may have many objectives. In

the context of manufacturing plants, minimizing material
handling costs is the most common one.
• Other objectives include efficient utilization of
– space
– labor
• Eliminate
– bottlenecks
– waste or redundant movement
 Objectives of Facility Layout

• Facilitate
– organization structure
– communication and interaction between workers
– manufacturing process
– visual control
• Minimize
– manufacturing cycle time or customer flow time
– investment
• Provide
– convenience, safety and comfort of the employees
– flexibility to adapt to changing conditions
 Basic Types of Layouts
• Process Layout
– Used in a job shop for a low volume, customized
products
Product Layout
Used in a flow shop for a high volume, standard
products

9
 Product vs. Process Layouts
• A process layout is a functional grouping of machines.
For example, a group of lathe machines are arranged
in one area, drill machines in another area, grinding
machines in another area and so on. Different job
jumps from one area to another differently. Hence, the
flow of jobs is difficult to perceive. This type of layout is
suitable for a make-to-order or an assemble-to-order
production environment, as in a job shop where
customization is high, demand fluctuates, and volume
of production low. Since a wide variety of products are
produced, general purpose equipments and workers
with varied skills are needed.
 Product vs. Process Layouts

• A product layout arrangement of machines. Every job

visits the machines in the same order. This type of
layout is suitable for a make-to-stock or an assemble-
to-stock production environment, as in a flow shop
where products are standard, demand stable, and
volume of production high. Since variety is low, special
purpose equipments and workers with a limited skill are
needed.
• Advantage
• A process layout provides flexibility
• A product layout provides efficiency.
 Product vs. Process Layouts
• Inventory
• A product layout has a low work-in-process
inventory and high finished goods inventory because
production is initiated by demand forecast.
• On the other hand, a process layout has a high
work-in-process inventory and low finished goods
inventory.
• Material handling
• A product layout can use automatic guided vehicles
which travels in a fixed path. But, variable path
forklifts are suitable for a process layout.
 Product vs. Process Layouts

• Scheduling/line balancing
• In case of a process layout, jobs arrive throughout
the planning period. A process layout requires
dynamic scheduling where a new scheduling
decisions is made whenever a new job arrives.
• In case of a product layout, sequencing and timing
of product flow are standard and set when the line is
designed. With a change in demand, a product
layout may need a new line balancing decision.
 Process vs. Product Layouts
Here are the characteristic differences between a
process and product layout.

14
 Extension of Basic Layouts

• Fixed Position Layout

– Used in projects for large products e.g., airplanes,
ships and rockets
• Cellular layouts
– A cell contains a group of machines dedicated for a
group of similar parts
– Suitable for producing a wide variety parts in
moderate volume
16
 Cellular Layouts

• Every cell contains a group of machines which are

dedicated to the production of a family of parts.
• One of the problems is to identify a family parts that
require the same group of machines.
• These layouts are also called as group technology
layouts.
 Cellular Layouts

Machines
Enter

Worker 2
Worker
3
Worker 1

Exit

Key: Product route

Worker route
Group Technology (CELL) Layouts

• One of the most popular hybrid layouts uses Group Technology (GT)
and a cellular layout
• GT has the advantage of bringing the efficiencies of a product layout
to a process layout environment

19
Process Flows before the Use of GT Cells

20
Process Flows after the Use of GT Cells

21
 Cellular Layouts Example

• The previous slide shows a facility in which three parts

A, B, C flow through the machines.
• The next slide provides the information in a matrix form
which includes some other parts D, E, F, G, H.
• The rows correspond to the parts and columns to the
machines.
• Just by interchanging rows and columns, eventually a
matrix is obtained where the “X” marks are all
concentrated near the diagonal. This matrix provides the
cells. For example, parts A, D and F require Machines 1,
2, 4, 8 and 10 which forms a cell.
 Cellular Layouts Example

Machines
Parts 1 2 3 4 5 6 7 8 9 10 11 12
A x x x x x
B x x x x
C x x x
D x x x x x
E x x x
F x x x
G x x x x
H x x x
 Cellular Layouts Example

Machines
Parts 1 2 4 3 5 6 7 8 9 10 11 12
A x x x x x
B x x x x
C x x x
D x x x x x
E x x x
F x x x
G x x x x
H x x x
 Cellular Layouts Example

Machines
Parts 1 2 4 3 5 6 7 8 9 10 11 12
A x x x x x
D x x x x x
B x x x x
C x x x
E x x x
F x x x
G x x x x
H x x x
 Cellular Layouts Example

Machines
Parts 1 2 4 8 3 5 6 7 9 10 11 12
A x x x x x
D x x x x x
B x x x x
C x x x
E x x x
F x x x
G x x x x
H x x x
 Cellular Layouts Example

Machines
Parts 1 2 4 8 3 5 6 7 9 10 11 12
A x x x x x
D x x x x x
F x x x
B x x x x
C x x x
E x x x
G x x x x
H x x x
 Cellular Layouts Example

Machines
Parts 1 2 4 8 10 3 5 6 7 9 11 12
A x x x x x
D x x x x x
F x x x
B x x x x
C x x x
E x x x
G x x x x
H x x x
 Cellular Layouts Example

Machines
Parts 1 2 4 8 10 3 6 9 5 7 11 12
A x x x x x
D x x x x x
F x x x
C x x x
G x x x x
B x x x x
E x x x
H x x x
 Activity Relationship Chart

• An activity relationship chart is a graphical tool

used to represent importance of locating pairs
of operations near each other.
• Importance is described using letter codes
defined below:
A- absolutely necessary
E- especially important
I - important
O - ordinarily important
U- unimportant
X- undesirable
 Activity Relationship Chart
Example: It’s ordinarily important
to locate office rooms near
loading/unloading area

Production area
O
Office rooms A
U I
Storage O E
A X A
Dock area U U
U O
Locker room O
U
Tool room
Facility Layout Across the Organization

Layout planning is organizationally important for

an efficient operations
– Marketing is affected by layout especially when
clients come to the site
– Human resources is affected as layout impacts
people
– Finance is involved as layout changes can be costly
endeavors

32
Facilities Location
 Facilities Location
Growing importance
• Factors promoting globalisation of operations
– Regulatory & economic reforms
– Factor Cost Advantages
– Expanding markets in developing countries
• Location issues have become more prominent
in recent years due to globalisation
• Location decision pertains to the choice of
appropriate geographical site for locating
manufacturing & service facilities of an
organisation
 Location Decision
Relevant Factors

Market related issues Cost related issues

Market for products and services Wage rates
Raw Material availability Transportation costs
Number and proximity of suppliers Taxes and other tariff issues
Availability of skilled labour
Quality of Infrastructure
Regulatory & Policy issues Other issues
Government & Economic stability Culture
Quality of legal and other institutions Climate
Trading blocks and trading agreements Quality of Life
 Location Planning Methods
• One facility – Multiple Candidates
– Location factor rating
– Centre of Gravity Method
– Load- Distance Method

• Multiple Facility – Multiple Candidates

– Transportation Model
 Location factor rating
Steps
• Identify and list down all the relevant factors for
the location decision
• Establish the relative importance of each factor in
the final decision
• Rate the performance of each candidate location
using a rating mechanism
• Compute a total score for each location based on
its performance against each factor and rank them
in the decreasing order of the score
 Example 1
A manufacturer of garments is actively considering five alternative locations for
setting up its factory. The locations vary in terms of the advantages that it
provides to the firm. Hence the firm requires a method of identifying the most
appropriate location. Based on a survey of its senior executives the firm has
arrived at six factors to be considered for final site selection. The ratings of each
factor on a scale of 1 to 100 provide this information. Further, based some
detailed analysis of both the qualitative and quantitative data available for each
of the location, the rating for the locations against each factor has also been
arrived at (on a scale of 1 to 100). Using this information obtain a ranking of the
alternative locations.
Factor Ratings Rating of each locations against the factors

Factors Rating
Availability of infrastructure 90 Factors Location 1 Location 2 Location 3 Location 4 Location 5
Availability of infrastructure 20 40 60 35 55
Size of the market 60
Size of the market 30 30 40 60 80
Industrial relations climate 50
Industrial relations climate 80 30 50 60 50
Tax benefits and concessions 30 Tax benefits and concessions 80 20 10 20 20
Availability of cheap labour 30 Availability of cheap labour 70 70 45 50 50
Nearness to port 65 Nearness to port 20 40 90 50 60
 Solution to Example 1
Relative
Factors Rating weights
Availability of infrastructure 90 0.28
Overall rating for location 3 = 60*0.28 +
Size of the market 60 0.18
Industrial relations climate 50 0.15
40*0.18 + 50*0.15 + 10*0.09 +
Tax benefits and concessions 30 0.09 45*0.09 + 90*0.20 = 54.77
Availability of cheap labour 30 0.09
Nearness to port 65 0.20

Sum of all factor ratings 325 1.00

Relative
Factors weights Location 1 Location 2 Location 3 Location 4 Location 5
Availability of infrastructure 0.28 20 40 60 35 55
Size of the market 0.18 30 30 40 60 80
Industrial relations climate 0.15 80 30 50 60 50
Tax benefits and concessions 0.09 80 20 10 20 20
Availability of cheap labour 0.09 70 70 45 50 50
Nearness to port 0.20 20 40 90 50 60

Overall score for the locations 41.23 37.54 54.77 46.46 56.15
Ranking of the locations 4 5 2 3 1
 Centre of Gravity Method
• All the demand points (or the supply points, if raw material is supplied from
several locations) are represented in a Cartesian coordinate system
• Each demand (or the supply point) will also have weight indicating the quantum of
shipment
• Therefore it is possible to identify the centre of gravity of the various demand (or
supply) points
• Notations:
– The number of demand (or supply) points in the grip map: n
– Co-ordinates of location i in the grid map: (xi,yi)
– Quantum of shipment between existing demand (or supply) point i and
proposed facility: Wi
– Co-ordinates of the center of gravity in the grip map: (XC,YC)
n n

 ( x ) *W
i 1
i i  ( y ) *W i i
i 1
XC  n
YC  n

W
i 1
i W i
i 1
 Problem 2
Census (x,y) Population
A (2.5, 4.5) 2
B (2.5, 2.5) 5
C (5.5, 4.5) 10
D (5,2) 7
E (8,5) 10
F (7,2) 20
G (9,2.5) 14
 Problem (ANS)
Census (x,y) Population D ix Qi D iy Qi
A (2.5,4.5) 2 5 9
B (2.5,2.5) 5 12.5 12.5
C (5.5,4.5) 10 55 45
D (5,2) 7 35 14
E (8,5) 10 80 50
F (7,2) 20 140 40
G (9,2.5) 14 126 35
Total 68 453.5 205.5
 ANS (Cont..)
• X-coordinate = (453.5/ 68) = 6.67
• Y-coordinate = (205.5/68) = 3.02
 A Load-Distance Model Example: Matrix Manufacturing is considering where
to locate its warehouse in order to service its four Ohio stores located in
Cleveland, Cincinnati, Columbus, Dayton. Two sites are being considered;
Mansfield and Springfield, Ohio. Use the load-distance model to make the
decision.

• Calculate the rectilinear distance:

d AB  30  10  40  15  45 miles

• Multiply by the number of loads between each site and the four cities
 Calculating the Load-Distance Score
for Springfield vs. Mansfield
Computing the Load-Distance Score for Springfield
•
City Load Distance ld
Cleveland 15 20.5 307.5
Columbus 10 4.5 45
Cincinnati 12 7.5 90
Dayton 4 3.5 14
Total Load-Distance Score(456.5)

Computing the Load-Distance Score for Mansfield

City Load Distance ld
Cleveland 15 8 120
Columbus 10 8 80
Cincinnati 12 20 240
Dayton 4 16 64
Total Load-Distance Score(504)

• The load-distance score for Mansfield is higher than for

Springfield. The warehouse should be located in Springfield.
 Multi-facility location problem
Transportation Model
• Locating distribution centers for nation-wide distribution of
products is one typical example belonging to this category
• Decisions variables in a multiple location – multiple candidate
problem
– Identifying k out of n candidates for locating facilities
– Which of the demand points will be served by each of
these locations and to what extent
• the problem is one of managing network flows of satisfying a
set demand points using a combination of supply points
• The transportation model is ideally suited for solving this
combinatorial optimisation problem
 Multiple facilities location problem
Transportation table

Market 1 Market 2 Market 3 Market 4 Market 5 Supply

100 70 50 30 40
Warehouse A 2900 Problem
30 95 40 125 50
Warehouse B 2300

75 20 65 40 30
Warehouse C 3700

20 40 95 85 80
Warehouse D 1100

Demand 2000 1500 1200 2800 2500 10000

Market 1 Market 2 Market 3 Market 4 Market 5 Supply

70 40 10 0 0
Warehouse A 2900
2800 100
0 65 0 95 10
Warehouse B 2300
Solution using 2000 300
Vogal’s Approximation 55 0 35 20 0
Warehouse C 3700
Method (VAM) 400 900 2400
0 20 65 65 50
Warehouse D 1100
1100
Demand 2000 1500 1200 2800 2500 10000
 Other issues in location planning
• Recent trends in the international markets point to a shift
towards fewer facilities that could serve markets worldwide
– Example HP Desk Jet Printer, Dell PC
• These developments point to two areas which could affect the
location planning problem very significantly
– availability of good transportation infrastructure
– use of Internet and IT infrastructure
• Location planning in the overall context of just-in-time
manufacturing philosophy (suppliers located in the vicinity (20 –
40 Km radius) of the manufacturer)
• Service quality depends on responsiveness of service delivery
system. Locating service outlets, close to the demand point is an
important requirement in a service system
 Facilities Location
Chapter Highlights
• Location issues have become more prominent in
recent years on account of globalisation of markets
• Multi-national Corporations have more opportunities
to identify candidate locations for their
manufacturing facilities.
• Factor cost advantages and expanding market in
developing countries have made these nations
attractive for locating new facilities
• Simple qualitative methods are useful for quickly
screening an initial set of candidates and narrowing
down the choice to one or two