BBA-2nd Sem (BBA_AIS & GEN) 2017-20

LOCATION DECISIONS
&
FACILITY LAYOUT

Dr. B P Panda
SoB, UPES, Dehradun

1
 TOPICS UNDER DISCUSSION

 Concept
 Need for Suitable Location
 Factors affecting Plant/Facility Location
 Location Theories
 Location Models
 Locational Economics

 Plant Lay Out

 Classification of layout
 Design of Product Layout
 Design of Process Layout
 Service Layout
 Organization of Physical Facilities
2
 CONCEPT
Plant/Facility Location - Where a plant or facility is to be located ?

Facility Layout - What provisions are required at the selected location and in which order ?

These are important strategic-level decisions

Selecting a location or layout is a key-decision

◦ Involves large investment

◦ Difficult to change, once selected

Prerequisite
◦ Long range forecasting

◦ Company’s expansion plan and policy

◦ Diversification plan for product

3
 NEED FOR SUITABLE LOCATION

I. When an organization starts (comes into existence,1 st time)

◦ Has the direct bearing on – financial, employment, distribution patterns etc.

◦ By closing its old/cost-inefficient operations unit

II. When an existing organization expands/diversifies/

decentralizes/ shuts-down …..
◦ Relocation involves stoppage of production, cost of shifting etc.

III. When an existing organization goes for global operations

◦ Additional capacity also brings additional burden, inconvenience, unforeseen... 4
 LOCATION CHOICE
for 1st time operation or new organizations

Consider the long-term business/organizational objectives

 Identification of region for locating the operations facility
◦ Along with the considerations – marketing, technology, org strengths & weaknesses,
regional resources, business environment, legal-gov environment, society, geography

 Choice of a site within the region

◦ Along with the org strategies for their tangible and intangible costs

 Dimensional (quantitative) analysis to select a location with least cost

◦ By quantifying all the tangible and intangible factors in terms of costs

◦ Intangible costs are expressed in absolute terms, rather than relative terms, with
appropriate weightage to the ratios

Contd.5
 LOCATION CHOICE
for expansion/diversification/…..

Consider the multi-plant operation strategy – additional plants

in the same premises or elsewhere
 Manufacturing distinct products
◦ When the resources/ inputs are specialized for different competitive product-lines

 Manufacturing for a specific market area

◦ When proximity factor dominates other factors

 Division of plant on the basis of stage-wise processes

◦ When parts are manufactured in different plants, for diff. tgt cos., for an assembly unit

 Emphasis on flexibility
◦ When plants plan to manage all changes to fulfill the long-term corporate strategy
6
 LOCATION CHOICE
for global operations

Consider the reasons and reaches

 Virtual Proximity
◦ With the advance telecommunication technologies

 Virtual Factory
◦ Build and operate the virtual factory of foreign and remote locations
due to advances in telecom and information technologies.

Contd.
7
Reasons for New Location
 Tangible reasons
◦ To reach the customer

◦ To avail tax benefits

◦ To avail low-cost/abundant labor, raw material, energy, water etc.

◦ To avail tariff benefits of mfg. there, instead of exporting

 Intangible reasons
◦ For customer – service accessibility, personalized services, better and clear
understanding of the needs

◦ For organizational learning – advances in technologies, customers’ insight,

competitor’s practice, suppliers’ insight

◦ For strategic benefit – psychological, balancing locational and political risk,

alternative source of supply, using best human capital across the globe 8
 (Tangible/Intangible/Strategic) FACTORS INFLUENCING

PLANT / FACILITY LOCATION

General factors Specific factors
 Uncontrollable factors
 Controllable factors  For Mfg. Organizations
 Government policy
 Proximity to markets  Dominant competitive factors
 Climatic conditions
 Supply of materials  Secondary factors
 Supporting industries
 Transportation facilities  For Service Organization
 Community attitudes
 Infrastructure availability  Dominant competitive factors
 Community
 Secondary factors
 Labor and wages
infrastructure
 Capital
 External economics

9
 FACTORS …… Contd.
General factors
 Controllable factors
 Proximity to markets – for concentrated buyers, for delicate/susceptible/low-self-life
products, for products demanding after-sales-service, in-time/low-cost supply of goods
and service to the customers, if raw materials are ubiquitous
 Supply of materials – raw material in right quality/quantity/time/price/place,
transportation at a lower cost, proximity to source for processing weight-loosing materials
 Transportation facilities – timely supply of raw materials (to company) and finished
goods (to customers), import/export duties
 Infrastructure availability – power, water, waste-disposal/treatment, (air)port/railway

 Labor and wages – adequate number/skill, prospective community, productive,

conveyance, prevailing wage pattern, cost of living, industrial relations, bargaining power
 Capital – fixed capital of land/building/equipment, existing/rental infrastructure, scope
for raising financial capital, regular demand of capital for fast-growing/technology-
intensive firms 10
 FACTORS …… Contd.
General factors
 Uncontrollable factors
 Government Policy – labor laws/building-code/safety-rules, incentives to entrepreneurs –
exemption from sales-tax/excise-duty, soft loans, subsidy on electricity/water etc.
 Climatic conditions – geological/geographical factor on human efficiency and behavior,
climatic conditions requirement for processes (ex- humidity for textile mills, dryness for
cement plants) etc.
 Supporting industries and services – subsidiaries/ancillaries/sub-contracts/outsourced
vendors, services like – communications, banking, consultancy, civil amenities etc.
 Community and labor attitude – union/association, strikes/lockouts etc.
 Community infrastructure and amenity – economic overhead capital like
roads/railways/port/power lines/utilities and social overhead capital like
schools/universities/hospitals/parks etc.
 External economies – degree of urbanization, settlement with other companies of the
industry, access to labor pool, business services in demand etc. 11
 FACTORS …… Contd.
Specific factors for Mfg. Org.
 Dominant factors
 Favorable labor climate – for labor-intensive firms (ex – textile, furniture, consumer
electronics), wage rates, training requirements, attitude towards work, worker productivity,
union strength etc.
 Proximity to markets – for greater demand of goods/services, for bulky/heavy finished
goods
 Quality of life – schools, recreational facilities/events
 Proximity to suppliers and resources – for those plants who rely on supplying to (receive
supplies from) other facilities, to offer/receive staff support, for frequent
coordination/communication
 Utilities, taxes, and estate costs – telephone/energy/water, local/state taxes, financial
incentives offered by local/state govt, relocation, land cost etc.

 Secondary factors – space for expansion, construction, transportation of goods/people,

competition influence on workforce/community, local skill/education/facility 12
 FACTORS …… Contd.

Specific factors for Serv. Org.

 Dominant factors
 Proximity to customers – after sales service, customer contact
 Transportation costs & proximity to markets – for warehousing/distribution,
inventory, delivery time, sales promotion
 Location of competitors – competitor’s location, their reaction to co’s new location,
advantage of cluster

 Secondary factors – level of retail activity, residential density, traffic flow, site
visibility, shopper’s impulse, strategies for target market segment

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 LOCATION THEORIES
for finding an optimal (min. cost) location

Alfred Weber’s Theory of Location of Industries (1909):

 Distance travelled by raw/intermediate/finished product materials
 Labor movement for transportation and work
 Agglomeration (or concentration) of labor; investment in schools and hospitals;
supporting companies for construction, plant and machine erection, financial services etc.
 Degglommeration (loosening of over concentration) of inappropriate industries, labor,
capital, land; diversification; flat processes.
 Some models to identify an ideal location –
◦ Factor rating method
◦ Weighted factor rating method
◦ Load-distance method
◦ Centre of gravity method
◦ Break-even analysis
14
Location models:

FACTOR RATING METHOD

The process of selecting a new facility location

 Identify the important location factors

 Rate the factors according to their relative importance (higher the rating,
more the prominence)
 Assign each location
 Calculate the rating by multiplying the assigned factor to the basic factor
 Find the sum of product for each factor
 Select the best location having highest total score

15
Example –1
Let’s assume that a new medical facility, health care, is to be located in
Delhi. The location factors, factor rating and scores for two potential sites are
shown in the following table. Which is the best location according to the
factor rating method?

Sl. Location Factor Basic Location -I Location -II

No. Factor Relative Total Relative Total
Rating Factor Factor
Rating Rating
1 Facility utilization 8 3 24 5 40
2 Total patient per month 5 4 20 3 15
3 Average time per 6 4 24 5 30
emergency trip
4 Land and construction 3 1 3 2 6
costs
5 Employee preferences 5 5 25 3 15
Total: 96 106
Solution: Location-II is the best choice for its total score is higher than location-I.

16
 Example –2
The Arkansas Cement Co. plans to locate a new production facility at either
Little Rock, Fort Smith, or Jonesboro. Six location factors, factor weights
and location scores are tabulated below. Which location is the best location
according to the factor rating method?

Sl. Location Factor Factor Little Rock Fort Smith Jonesboro

No. Rating Location score Location score Location score

1 Cost per ton 0.55 55.4 62.3 59.1

2 Labor availability 0.15 0.7 0.9 0.5

3 Local transportation 0.08 0.7 0.7 0.6

4 Union activities 0.15 0.8 0.4 0.9

5 Proximity to similar 0.05 0.8 0.8 0.4

industry
6 Proximity to raw 0.02 0.7 0.8 0.5
materials

17
 Solution
Sl. Location Factor Basic Little Rock Fort Smith Jonesboro
No. Factor Locatio Factor Locatio Factor Location Factor
Rating n score Rated n score Rated score Rated
Score Score Score
1 Cost per ton 0.55 55.4 30.470 62.3 34.265 59.1 32.505
2 Labor availability 0.15 0.7 0.105 0.9 0.135 0.5 0.075
3 Local 0.08 0.7 0.056 0.7 0.056 0.6 0.048
transportation
4 Union activities 0.15 0.8 0.120 0.4 0.060 0.9 0.135
5 Proximity to 0.05 0.8 0.040 0.8 0.040 0.4 0.020
similar industry
6 Proximity to raw 0.02 0.7 0.014 0.8 0.016 0.5 0.010
materials
Overall Rating 30.805 34.572 32.793

As per factor-rating method, Fort Smith is the best location. 18

 Location models:
WEIGHTED FACTOR RATING METHOD
Both qualitative and quantitative factors are assigned weights to select the best choice

Example –
Let’s assume that a new medical facility, health care, is to be located in Delhi. The
location factors, weights and scores (1= poor, …, 5 = excellent) for two potential sites
are shown in the following table. What is the weighted score for these sites? Which
is the best location?
Sl. Location Factor Weight Location -I Location -II
No. (total = 100)
Rating Total Rating Total

1 Facility utilization 25 3 75 5 125

2 Total patient per month 25 4 100 3 75
3 Average time per emergency trip 25 3 75 3 75

4 Land and construction costs 15 1 15 2 30

5 Employee preferences 10 5 50 3 30
Total Weighted Rating: 315 335
Solution: Location-II is the best choice based on its total weighted scores.
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 Location models: LOAD-DISTANCE METHOD
 A mathematical model (calculated in terms of distance/time/cost of movement)
 Based on proximity factors (min. movement of weighted loads into or out of the facility)

Example – The new health-care facility is targeted to serve seven census tracts in Delhi. The
table given below shows the coordinates for the centre of each census tract, along with the
projected populations, measured in thousands. Customers will travel from the seven census tract
centers to the new facility when they need health-care. Two locations being considered for the
new facility are at (5.5, 4.5) and (7, 2) which are the centers of census tracts C and F. Details of
seven census tract centers, coordinate distances along with the population for each centre are
given below. If we use the population as the loads and use rectilinear distance, which location is
better in terms of its total load-distance score?
Sl. Census (X, Y) Population Location - C(5.5, 4.5) Location - F(7, 2)
No. Tract
Distance (dx+dy) Load Distance Distance (dx+dy) Load Distance

1 A (2.5, 4.5) 2 3+0=3 6 4.5+2.5=7 14

2 B (2.5, 2.5) 5 3+2=5 25 4.5+0.5=5 25
3 C (5.5, 4.5) 10 0 0 1.5+2.5=4 40
4 D (5,2) 7 0.5+2.5 =3 21 2+0=2 14
5 E (8,5) 10 2.5+0.5=3 30 1+3=4 40
6 F (7,2) 20 1.5+2.5=4 80 0+0=0 0
7 G (9, 2.5) 14 3.5+2=5.5 77 2+0.5=2.5 35
Total: 239 168
Location census, F(7,2) is a better choice for its minimum total load-distance score.
20
 Total
7 load-distance = 239

Total
6 load-distance = 168

Rejected E(8,5)
Location
5
A(2.5, 4.5) C(5.5, 4.5) *
* *
4

3
B(2.5, 2.5) Selected G(9, 2.5)
Location
* D(5,2) F(7,2) *
2
* *

(0,0) 1 2 3 4 5 6 7 8 9
21
 Exercise: Do it yourself

Sl. Census (X, Y) Population Location (5.5, 4.5) Location (7, 2)

No. Tract
Distance (dx+dy) Load Distance Distance (dx+dy) Load Distance

1 A (2.5, 4.5) 2
2 B (2.5, 2.5) 5
3 C (5.5, 4.5) 10
4 D (5,2) 7
5 E (8,5) 10
6 F (7,2) 20
7 G (9, 2.5) 14
Total:

Location census, ________ is a better choice for its minimum total load-distance score.

22
 Location models:

CENTRE OF GRAVITY METHOD

 Balancing cost and service objectives
◦ Takes care of market, volume of transportation, warehousing etc.
 Minimizes the weighted distance between the warehouse and its
supply/distribution/sales points.
Sl. Census (X, Y) Population X component of CG Y Component of CG
Tract
1 A (2.5, 4.5) 2 2.5x2=5 4.5x2=9
2 B (2.5, 2.5) 5 2.5x5=12.5 2.5x5=12.5
3 C (5.5, 4.5) 10 5.5x10=55 4.5x10=45
4 D (5,2) 7 5x7=35 2x7=14
5 E (8,5) 10 8x10=80 5x10=50
6 F (7,2) 20 7x20=140 2x20=40
7 G (9, 2.5) 14 9x14=126 2.5x14=35
Total: 68 Total: 453.50 Total: 205.50
Overall x-component: 6.67 Overall y-component: 3.02
Solution: Initially assume to operate from the origin (0,0). Finally, take CG(6.67, 3.02) as the new origin.
Therefore, project managers can search an optimal location closer to the CG.

23
 Exercise: Do it yourself

Sl. Census (X, Y) Population X component of CG Y Component of CG

Tract
1 A (2.5, 4.5) 2
2 B (2.5, 2.5) 5
3 C (5.5, 4.5) 10
4 D (5,2) 7
5 E (8,5) 10
6 F (7,2) 20
7 G (9, 2.5) 14
Total: Total: Total:
Overall x-component: Overall y-component:

Solution: Now taking CG ( ________, ________ ) as starting point, project managers can search an optimal
location in the vicinity.

24
7

E(8,5)
5
A(2.5, 4.5) C(5.5, 4.5) *
* *
4

Selected Location
(6.67, 3.02)
3
B(2.5, 2.5) * G(9, 2.5)
* D(5,2) F(7,2) *
2
* *

(0,0) 1 2 3 4 5 6 7 8 9
25
Location models:

BREAK-EVEN ANALYSIS
 Locates a site where total revenue equals total cost
 At break-even point, there is no loss, no profit
 BEA for each location can make economic
comparison, identifying for a range of production
volume.

At BEP, Rs. e
e nu
BEQ = fixed cost / contribution per unit R ev
s
a le Profit
= fixed cost / (selling price – variable cost per unit) S

= F / (S - V) units BEP l e cost

iab
Var
Margin of
Safety
BEP = Fixed Cost / PV Ratio
Loss
= Fixed Cost / [(Sales – Variable cost) / Sales] Fixed cost

= F/Ø Rs.
No. 26
 Example –1
Company ABC has a demand of 1,30,000 units of a new product. Three potential
locations X, Y and Z have the cost structures shown below. Identify the locations for
selected volume of production.
Y
Location X Location Y Location Z
Z
Fixed Costs (Rs.) 1,50,000 3,50,000 9,50,000
Variable Costs 10 8 6 X
(Rs.)
20,00,000
Solution
Solve for the cross-over between X and Y locations
15,00,000
10x + 1,50,000 = 8x + 3,50,000
Or 2x = 2,00,000 Cost
Or x = 1,00,000 units 10,00,000

Similarly for the cross-over between Y and Z locations

8x + 3,50,000 = 6x + 9,50,000 5,00,000

Or 2x = 6,00,000
Or x = 3,00,000 units

1,00,000 2,00,000 3,00,000

From the above cross-over solutions it is clear that
Volume
 Location X is suitable up to 1,00,00 units of production;
 Location Y is suitable in the range of 1,00,000 to 3,00,000 units of production; and
 Location Z is suitable for more than 3,00,000 units of production.

In the current example, therefore, for a production of 1,30,000 units, Location Y is suitable. 27
Example –2
William Green, VP Mfg., Computer Products Corp. and his staff are studying
three Midwestern alternative locations for a new production facility for
producing bar code scanners. His staff analysts predict that the scanners will
be growing market overt the next ten years, and the analysis group shares
marketing’s enthusiasm for planning facilities for producing this new product
line.
The analysts have developed these estimates for the three locations:
Cleveland, Ohio South Bend, Indiana Grand Rapids,
Michigan
Annual Fixed Costs ($) 3,900,000 3,600,000 3,100,000
Variable Costs per 3,400 3,700 4,000
Scanner ($)

The marketing department at CPC estimates sales for the bar code scanners
will be 1,000 scanners in the first year, 2,000 in the second year, and 4,000
in the third year.
a) In what range of production capacity would each of the locations be
preferred?
b) Use break-even analysis to determine which location would be preferred
in Years 1, 2, and 3. Which single location should be chosen and in what
year will CPC break even? 28
 Solution GR
20,00,000 S
Solve for the cross-over between C and SB:
B
C
3,900,000 + 3,400x = 3,600,000 + 3,700x
15,00,000
Or 300x = 3,00,000
Cost
Or x = 1,00,000 units
10,00,000
Similarly for the cross-over between SB and GR:
3,600,000 + 3,700x = 3,100,000 + 4,000x
 x = 1,667 units 5,00,000
For the cross-over between C and GR:
3,900,000 + 3,400x = 3,100,000 + 4,000x
 x = 1,333 units 1,00,000 2,00,000 3,00,000 4,00,000
a) From the above cross-over solutions and graph it is clear – Volume
 Location GR is suitable up to 1,333 units of production; and
 Location C is suitable for more than 1,333 units of production.

b) 1st yr – GR; 2nd yr and 3rd yr - C

Cleveland, Ohio South Bend, Indiana Grand Rapids, Michigan
Annual Fixed Costs 3,900,000 3,600,000 3,100,000
($)
Variable Costs per 3,400 3,700 4,000
Scanner ($)
Yr-1 Yr-2 Yr-3 Yr-1 Yr-2 Yr-3 Yr-1 Yr-2 Yr-3
Total Cost 3,900,000 10,700, 17,500, 3,600,000 11,000, 18,400, 3,100,000 11,100, 19,100,
+ 3,400 000 000 + 3,700 000 000 + 4,000 000 000
(1000) = (1000)= (1000) =
7,300,000 7,300,000 7,100, 000
29
LOCATIONAL ECONOMICS
A location is ideal/economic at a least cost of:
◦ Production
Factors X Y Z
◦ Distribution 1. Total initial investment
◦ Land 2. Total expected sales
3. Distribution expenses
◦ Building 4. Raw material expenses
◦ Equipment 5. Power and water supply expenses
6. Wages and salaries
◦ Labor 7. Other expenses
◦ Material 8. Community attitude
9. Employee housing facility
with better Total expenses at -- -- --
◦ Community attitude Location with Min. expenses Or
Location with Max. ROI is best
◦ Community facility
◦ Housing facility
◦ Etc. ….
30
Design of systems

 Defining the system elements

 Defining the interrelationship between the elements

 Selection of elements

31
Production (process) System Design
 Process planning
 place, people, m/c tools, time and cost estimation

 Process selection
 continuous, batch, job

 Process sequence
 product, process, job

 Process technology
 manual, automatic, semi-automatic

 Process flow design

 product, material, people, information, utilities, etc.

 Work center (place) design

 light, air, temp., noise, speed, vibration, safety - positional/ occupational fatigue, place
(posture) of sitting, movement of body (parts) etc.
 Process personnel
 required physique, skill, education, discipline etc. 32
DESIGN OF LAYOUTS

“Plant layout is a plan of an optimum arrangement of

facilities including personnel, operating equipment,
storage space, material handling equipment and all
other supporting services along with the design of best
structure to contain all these facilities”.
- Moore

33
Objectives of Plant Layout
The primary goal of a layout is to maximize the profit by arrangement of all
the plant facilities to the best advantage of total manufacturing of the product.
The objectives of plant layout are:
1. Streamline the flow of materials through the plant.
2. Facilitate the manufacturing process.
3. Maintain high turnover of in-process inventory.
4. Minimise materials handling and cost.
5. Effective utilisation of men, equipment and space.
6. Make effective utilisation of cubic space.
7. Flexibility of manufacturing operations and arrangements.
8. Provide for employee convenience, safety and comfort.
9. Minimize investment in equipment.
10. Minimize overall production time.
11. Maintain flexibility of arrangement and operation.
12. Facilitate the organizational structure. 34
 Principles of Plant Layout

1. Principle of integration: A layout integrates men, materials, machines

2. Principle of minimum distance travel:

3. Principle of cubic space utilization: Use of both horizontal & vertical space

4. Principle of flow: Keeping the materials move forward

5. Principle of maximum flexibility: A layout that can be easily altered

6. Principle of safety, security and satisfaction:

7. Principle of minimum handling: A layout handling the materials minimum

35
TYPES OF LAYOUTS

Flow patterns - line/continuous, intermittent/batch, project/job

Types of Layouts
 Product layouts

 Process layouts
 Position layouts
 Combined layouts

Shapes of layout
 O, U, C, S, I, L - types, Vertical, Multi-storied etc.

36
 PRODUCTION FLOW PATTERNS
line/continuous

intermittent/batch

project/job

37
 PRODUCT LAYOUT
(Assembly) line/continuous

M/c-1 M/c-2 M/c-3 M/c-4 M/c-5

 High volume production

 A dedicated set of facilities

 Fixed sequence of operations

 Suitable for only one type of product or its minor modifications

38
 PROCESS LAYOUT
Intermittent/ Batch

M/c Type 1 M/c Type 2 M/c Type 3 M/c Type 4

M/c Type 5

 A small range of variety

 Products/ services are repetitive
 Large volume on demand, but periodically
 Identical Facilities are put together
They function/ process
◦ Similar within the department/section
◦ Differ to other departments/sections 39
 JOB-SHOP LAYOUT

Job shop

 Limited capacity, but of general purpose

machines/equipments/facilities.

 Limited people, but highly skilled

 Wide variety of unique (non-repetitive) products

 Higher degree of customization 40

 • Job at one place (a project)
POSITION LAYOUT • Resources arrive
• Costly/ Scarce Resources

41
COMBINED LAYOUTS
 Line layout with sub-assemblies

 Combination of line and function layout

 Advantage of both types

Cellular layouts
 Every cell represented by a Group
functioning for a particular product
 Suitable for flexible batch production
 High degree of standardization
42
 O-type

I-type

SHAPE
OF U or C-type
LAYOUT

L-type

S S-type

43
Z
VERTICAL LAYOUT

Single-storied Vertical Layout

 Use of vertical space

 Use of gravity

Z Ease of material handling


2nd Floor

Z
1st Floor

Gr. Floor

Multi-storied Vertical Layout

44
 LINE BALANCING
Assembly-line balancing often has implications for layout. This would
occur when, for balance purposes, workstation size or the number used
would have to be physically modified.

The steps in balancing an assembly line (product layout) are:

1. Specify the sequential relationships among tasks using a precedence diagram.

2. Determine the required workstation cycle time C, using the formula

C = Production time per day / Required output per day (in units)

3. Determine the theoretical minimum number of workstations (Nt) required to satisfy the workstation cycle time constraint using
the formula
Nt = Sum of task times (T) / Cycle time (C)

4. Select a primary rule by which tasks are to be assigned to workstations, and a secondary rule to break ties.

5. Assign tasks, one at a time, to the first workstation until the sum of the task times is equal to the workstation cycle time, or no
other tasks are feasible because of time or sequence restrictions. Repeat the process for workstation 2, workstation 3, and so on
until all tasks are assigned.

6. Evaluate the efficiency of the balance derived using the formula

Efficiency = Sum of task times (T) / [Actual number of workstations (N ) × Workstations cycle
time (C)}]

7. If efficiency is unsatisfactory, rebalance using a different decision rule.

45
Designing Process Layouts

 Minimize material handling costs

 Block Diagramming
 Minimize nonadjacent loads
 Use when quantitative data
is available
 Relationship Diagramming
 Based on location preference between areas
 Use when quantitative data is not available
Block Diagramming

 Create load summary chart

 Calculate composite (two way) movements
 Develop trial layouts minimizing number of
nonadjacent loads
 Process Layout: Interdepartmental Flow contd.

Flow (or Movements) between Workcenters Workcenter Activity

1 2 3 4 5 6 7 8
1 175 50 0 30 200 20 25 1 Shipping & Receiving

2 0 100 75 90 80 90 2 Plastic Molding, Stamping

3 17 88 125 99 180 3
4 20 5 0 25 4
5 0 180 187 5
6 374 103 6
7 7 7
8 8

1 3 5 7 4 6 7 3

Building dimensions Loading 40’ 2 1 5 8

and dock
Workcenters 2 4 6 8
An improved layout
80’
Process Layout: Systematic Layout Planning

 Numerical flow of items between workcenters

◦ Can be impractical to obtain
◦ Does not account for the qualitative factors that may be crucial to
the placement decision

 Systematic Layout Planning

◦ Accounts for the importance of having each department located
next to every other department
◦ Is also guided by trial and error
 Switching workcenters then checking the results of the “closeness” score
Example of Systematic Layout Planning: Reasons for Closeness

Code Reason

1 Type of customer

2 Ease of supervision

3 Common personnel

4 Contact necessary

5 Share same price

6 Psychology
Example of Systematic Layout Planning: Importance of Closeness

Line Numerical
Value Closeness
code weights
A Absolutely necessary 16

E Especially important 8

I Important 4

O Ordinary closeness OK 2

U Unimportant 0

X Undesirable -80
Example of Systematic Layout Planning:
Initial Relationship Diagram

The
Thenumber
numberof oflines
lines
1 E 3 here
hererepresent
representpaths
paths
required
requiredtotobe
betaken
takeninin
I U U transactions
transactionsbetween
between
4 the
thedepartments.
departments. The The
more
morelines,
lines,the
themore
more
2 5
A the
theinteraction
interactionbetween
between
departments.
departments.
Note
Notehere
hereagain,
again,Depts.
Depts.(1)
(1)and
and
(2)
(2)are
arelinked
linkedtogether,
together,and
and
Depts.
Depts.(2)
(2)and
and(5)
(5)are
arelinked
linked
together
togetherby
bymultiple
multiplelines
linesor
or
required
requiredtransactions.
transactions.
Example of Systematic Layout Planning:
Initial and Final Layouts

5 2 4 2
3 20 ft
3 1 5 1 4
Note
Noteininthe
the
50 ft Final
FinalLayout
Layout
that
thatDepts.
Depts.
Initial Layout Final Layout
(1)
(1)and
and(5)
(5)
are
arenot
notboth
both
Ignoring space and Adjusted by square
building constraints footage and building size
placed
placed
directly
directlynext
next
to
toDept.
Dept.(2).
(2).
 Process Layout Composite Movements
Example 5.1 23 200 loads
Load Summary Chart 24 150 loads
13 110 loads
FROM/TO DEPARTMENT
12 100 loads
Department 1 2 3 4 5 45 60 loads
1 — 100 50 35 100 loads
2 — 200 50 25 50 loads
3 60 — 40 50 34 40 loads
4 100 — 60 14 0 loads
5 50 — 15 0 loads
110

100 200 100 150

1 2 13 2 3 1 2 4
150 50 50 200 50 40 60
110
60 50
4 5 4 5 3 5
40
Grid 1 Grid 2
 Block Diagrams
(a) Initial block diagram (b) Final block diagram

1 4
1 2 4 2

3 5 3 5
Example
The load summary of five departments in a mfg. firm is
given below. Develop & Draw a layout.

Load Summary Chart

FROM/TO DEPARTMENT
Department 1 2 3 4 5
1 — 60 60
2 40 — 100 100
3 50 100 — 30 50
4 50 10 — 10
5 50 40 —

56
Solution - The composite movements and the corresponding loads are
calculated. First, the initial solution is developed and then the final solution is
developed and subsequently space is allocated to get the actual shape of the
layout.
Composite Movements Load
23 200
24 150
13 110
12 100
35 100
45 50
34 40
25 0
14 0
15 0

57
Relationship Diagramming

 Used when quantitative data is not

available
 Muther’s grid displays
preferences
 Denote location preferences with
weighted lines
Relationship Diagramming Example

Production
O
Offices A
U I
Stockroom O E
A X A
Shipping and
receiving U U
U O
Locker room O
O
Tool room
A Absolutely necessary
E Especially important
I Important
O Okay
U Unimportant
X Undesirable
 Relationship Diagrams
(a) Relationship diagram of
original layout

Offices Locke Shippin

r g and
room receivin
g

Stockroom Toolroom Production

(b) Relationship diagram of

Stockroom
revised layout

Offices Shipping
and Key: A
receiving E
I
O
Toolroom Production Locker U
room X
The open Door Health Clinic is relocating to a newone-story
office building with 20,000 sft. Of floor space. The clinic’s
director is in the process of deciding the approximate location of
each of the clinic’s eight functional entities. Shown below are
the template of the rectangular office building with the muther’s
grid. For simplicity, the floor is divided into 8 equal-size areas.
Closeness Rating Meaning of Rating
       
1 Necessary

        2 Very Important

3 Important
4 Slightly Important
(A) Waiting Room
2 5 Unimportant
(B) Admissions 2
2 6 Undesirable
(C) Pharmacy 4 3
4 3 4
(D) Doctors’ Cabin Line
3 4 6 Value Closeness
1 4 6 3 code
(E) Exam Rooms 5 4 2
3 3 3 A Absolutely necessary
(F) Laboratory 3 4
1 E Especially important
(G) Surgery 2
1
(H) Emergency Room I Important

D E
H G
O Ordinary closeness OK
C A
U Unimportant
F B 61
X Undesirable
Computerized Layout Solutions

 CRAFT - block diagramming

 CORELAP - relationship diagramming
 ALDEP – Algorithm-based
 Simulation
Designing Product Layouts

 Product layouts or assembly lines

 Develop precedence diagram of tasks
 Jobs divided into work elements
 Assign work elements to workstations
 Try to balance the amount of work in each workstation