Operations

Management
Layout Strategies
 Learning Objectives
1. Discuss important issues in office
layout
2. Define the objectives of retail layout
3. Discuss modern warehouse
management and terms such as
ASRS, cross-docking, and random
stocking
4. Identify when fixed-position layouts
are appropriate
 Learning Objectives
5. Explain how to achieve a good
process-oriented facility layout

6. Define work cell and the requirements

of a work cell

7. Define product-oriented layout

8. Explain how to balance production

flow in a repetitive or product-oriented
facility
Strategic Importance
of Layout Decisions

ONE of the key decisions that

determines 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
Layout Design Consideration
Higher utilization of space, equipment and people

Improve flow of information, materials, or people

Improve employee morale and safer working conditions

Improve customer/client interaction

Flexibility – movable equipment / displays, modular

office, racks, workers
 7 Types of Layout

Office
layout
Retail Warehouse
layout layout
Fixed- Process-
position oriented
layout layout
Focused Product-
Facilities oriented
(Work cell) layout
 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 Bloomingdale’s
Warehouse Balance low-cost storage with Federal-Mogul’s
(storage) low-cost material handling warehouse
Gap’s distribution center
Project Move material to the limited Ingall Ship Building Corp.
(fixed storage areas around the site Pittsburgh Airport
position)
 Layout Strategies
OBJECTIVES EXAMPLES
Job Shop Manage varied material Arnold Palmer Hospital
(process flow for each product Hard Rock Cafe
oriented) Olive Garden
Work Cell Identify a product family, Hallmark Cards
(product build teams, cross-train Wheeled Coach
families) team members Ambulances
Repetitive/ Equalize the task time at Sony’s TV assembly line
Continuous each 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 Analysis still requires
a task-based approach

Electronic & conventional

▪ Grouping of workers, their communication patterns
equipment and spaces to
provide comfort and safety
Separation needs
▪ Movement of information is the
main distinction
Conditions affecting
▪ Typically in state of flux due to employee effectiveness
frequent technology changes
Office Relationship Chart
(Muther Grid)
layout
Office
Layout
Office Three physical and social
layout aspects
• Proximity – bring people together
• Privacy – control access to
conversations
• Permission – signal non-work
interactions

Two major trends

• Information technology
• Dynamic needs for space and services
 Retail
layout
Sales and profitability
vary directly with
▪ Allocates display space and customer exposure
responds to customer behaviour
Store arrangement
▪ Objective is to maximize
profitability per square foot of floor
space Allocation of space
to various products
▪ The greater the rate of exposure,
the greater the sales and the higher
the ROI
 5 Helpful Ideas for Supermarket Layout
Retail
layout

Distribute “power items”, Convey mission throughout

Locate high-draw and disperse them to the store through careful
items around the increase viewing of positioning of the lead-off
periphery of the store other items department

Use prominent locations Use end-aisle location →

for high-impulse and very high exposure rate
high-margin items
Retail
layout Store Layout
Retail
layout Retail Layout Objective

Maximize profitability per square foot of floor space

▪ Category Management – analysis of profitability of

merchandising plans for hundreds of categories

▪ Slotting – manufacturers pay slotting fees to retailers to get the

retailers to display (slot) their product
Retail
layout Category Management

▪ Products need to be arranged for sale

▪ Big ticket, or expensive, items may yield greater dollar

sales, but the profit per square foot may be lower

▪ Computer programs can assist in evaluating the

profitability of various merchandising plans for
hundreds of categories → categories management
Retail
layout Slotting

▪ Contributing factors
▪ Limited shelf space
▪ An increasing number of new products
▪ Better information about sales through POS data collection
▪ Closer control of inventory
Retail
layout
Servicescapes

Physical surroundings in which the service is delivered

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
Retail Layout
 Warehouse
layout Maximise the total
“cube” of the warehouse

▪ Addresses trade-offs between Utilize its full volume

space and material handling

▪ Objective is to find the optimum Maintain low

trade-offs between handling material handling
costs and costs associated with costs
warehouse space
Warehouse Incoming transport
layout

Storage
Material
Handling Finding and moving material

Costs
Outgoing transport

All costs associated

with the transaction Equipment, people, material,
supervision, insurance, depreciation
Warehouse
layout

▪ 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
Warehouse
layout 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

▪ Requires bar code or RFID

identification used for advanced
shipment notification as materials are
unloaded
Warehouse
layout Random Stocking
Maintain list of “open” locations
▪ Typically requires
automatic identification
systems (AISs) and Maintain accurate records
effective information
systems → quantity and Sequence items to minimize travel,
location of every unit “pick” time
▪ Allows more efficient use Combine picking orders to reduce
of space picking time
▪ Key tasks ➔ Assign classes of items to particular
areas
Warehouse
layout Customizing
Assembly of
▪ Value-added activities components
performed at the
warehouse
Loading software
▪ Useful way to generate
competitive competitive
advantage Repairs

▪ Enable low cost and rapid Customized labeling

response strategies and packaging
 Fixed-
position
layout
Complicating factors:

Limited space at site

▪ Addresses the layout
requirements of stationary
projects Different materials
required at different
▪ Product remains in one place stages

▪ Workers and equipment come Volume of materials is

to site dynamic
 Fixed-
position
layout
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
Complicating factors:
layout
Orders take a longer
time to move through
▪ Deals with low-volume, high- the system
variety production (also called job
shop or intermittent production) General purpose
equipment requires
▪ Like machines and equipment are high labour skills
grouped together
Higher work-in-process
▪ Flexible and capable of handling a inventories
wide variety of products or services
Process-
oriented
layout
Process-
oriented
layout

Advantages Disadvantages
Flexibility in equipment and labor General-purpose use of equipment → high
assignments labor skills → increases the required level
of training and experience
Good for handling the Orders take more time to move through the
manufacture of parts in small system – difficult scheduling, changing
batches, or job lots setups, unique material handling
Good for production of a wide High work-in-process inventories because
variety of parts in different sizes of imbalances in process → increases
and forms capital investment
Process-
oriented
layout

▪ Arrange work centers so as to

minimize the costs of material
handling

▪ Basic cost elements:

▪ Number of loads (or people)
moving between centers
▪ Distance loads (or people)
move between centers
Process-
oriented
layout
n n
Minimize cost = åå X ijCij
i=1 j=1

where n = total number of work centers or

departments
i, j = individual departments
Xij = number of loads moved from department i
to department j
Cij = cost to move a load between department i
and department j
Process-

Example: Designing a Process Layout

oriented
layout

Arrange six departments in a factory to minimize the

interdepartmental material handling costs. Each department is
20 x 20 feet and the building is 60 feet long and 40 feet wide.

6 STEPS PROCEDURES
1. Construct a "from-to matrix"
2. Determine the space requirements
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. Try to improve the layout
6. Prepare a detailed plan
Process-
oriented
layout Example: Designing a Process Layout
STEP 1: Construct a “from-to matrix”
Process-
oriented
layout
Example: Designing a Process Layout
STEP 2: Determine space requirement
Process-
oriented
layout Example: Designing a Process Layout
STEP 3: Develop an initial schematic diagram

Interdepartmental Flow Graph

Process-
oriented
layout Example: Designing a Process Layout
STEP 4: Determine cost of this layout
n n
Cost = åå X ijCij
i=1 j=1

Cost = $50 + $200 + $40

(1 and 2) (1 and 3) (1 and 6)
+ $30 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)
+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $570
Process-
oriented
layout Example: Designing a Process Layout
STEP 5: Try to improve the layout

Revised Interdepartmental Flow Graph

Process-
oriented
layout Example: Designing a Process Layout
n n
Cost = åå X ijCij
i=1 j=1

Cost = $50 + $100 + $20

(1 and 2) (1 and 3) (1 and 6)
+ $60 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)
+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $480
Process-
oriented
layout Example: Designing a Process Layout
STEP 6: Prepare a detailed plan
Process-
oriented Computer Software
layout

▪ Graphical approach only works for small problems

▪ Computer programs are available to solve bigger

problems
▪ CRAFT ▪ Factory Flow
▪ ALDEP ▪ Proplanner
▪ CORELAP
 Computer Software
Process-
oriented
layout

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
Process-
oriented
layout

Three dimensional
visualization software
allows managers to view
possible layouts and
assess process, material
handling, efficiency, and
safety issues
Focused
Facilities Focused Facilities

▪ A family of similar products with reasonably stable

demand

▪ Match facilities to customer requirements and demand

▪ Reduces waste and capacity requirements

▪ Three types: Focused work center, focused factory, and

work cell
Focused Focused Work Center and
Facilities Focused Factory
Focused Work Center (A plant within a plant)
• 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 that remains part of the present facility

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
 Work
Cell Requirements of work
Layout cells:
Identification of families of
▪ Arranges machinery and products
equipment to focus on High level of training,
production of a single product flexibility and empowerment
or group of related products of employees

▪ Volume must justify cells Self-contained – own

equipment and resources
▪ Cells can be reconfigured as Testing (poka-yoke) at
designs or volume changes each station
Focused
Facilities 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
Focused
Facilities Improving Layouts Using Work Cells
Focused
Facilities Improving Layouts Using Work Cells

U-shaped line may reduce employee movement and space

requirements while enhancing communication, reducing the
number of workers, and facilitating inspection
Work-
cell
Staffing and Balancing
layout Work Cells

Determine the takt time (Pace of production

units to meet customer demands)
Total work time available
Takt time =
Units required to
satisfy customer demand
Work-
cell Example Compute Takt Time
layout

With 7.5 working hours available per day, and a daily

demand of 600 units,
Takt time = (7.5 hours x 60 minutes)/600 units
= 450 minutes/600 units
= 0.75 minutes or 45 seconds

Takt time becomes the drumbeat of the focused

facility to which all facets of the organization march
Product
oriented Assumptions:
layout
Volume is adequate for
high equipment utilization

▪ Seeks best personnel and Stable product demand to

machine utilizations in justify high investment in
repetitive or continuous specialised equipment
production
Product is standardized
that it justifies investment
▪ Organized around products
or families of similar high- Supplies of raw materials
volume, low variety products and components are
adequate and of quality
Product-
oriented
layout

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
Product-
oriented
layout

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
Product-
oriented
layout

Advantages Disadvantages

▪ Low variable cost per unit ▪ High volume is required

▪ Low material handling costs ▪ Work stoppage at any point
▪ Reduced work-in-process ties up the whole operation
inventories ▪ Lack of flexibility in product
▪ Easier training and or production rates
supervision
▪ Rapid throughput
 McDonald's Assembly Line
Product-
oriented
layout
Product-
oriented
layout Assembly-Line Balancing

Objective: Minimize imbalance between machines/

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
Product-
oriented
layout
Example: Assembly of Wing Component
ASSEMBLY TIME TASK MUST FOLLOW
TASK (MINUTES) TASK LISTED BELOW
A 10 –
B 11 A This
means that
C 5 B tasks B
D 4 B and E
cannot be
E 11 A done until
F 3 C, D task A has
been
G 7 F
completed
H 11 E
I 3 G, H
Total time 65
Product-
oriented
layout
Example: Assembly of Wing Component

TASK MUST
ASSEMBLY TIME FOLLOW TASK 480 available mins
TASK (MINUTES) LISTED BELOW per day
A 10 – 40 units required
B 11 A
C 5 B
5
D 4 B
C
E 11 A 10 11 3 7

F 3 C, D A B F G
4
G 7 F 3
D
H 11 E 11 11 I
I 3 G, H E H
Total time 65
Product-
oriented
layout
Example: Assembly of Wing Component

TASK MUST
ASSEMBLY TIME FOLLOW TASK 480 available mins
TASK (MINUTES) LISTED BELOW per day
A 10 – Production
40 timeunits required
B 11 A available per day
Cycle time =
Units required per day
C 5 B
= 480 / 40 5
D 4 B
= 12 minutes per unit C
E 11 A n 10 11 3 7

F 3 C, D
Minimum number i=1
å Time forBtask i
A F G
G 7 F
of workstations = 4
3
Cycle time
D
H 11 E = 65 / 12 11 11 I
I 3 G, H E
= 5.42, or 6 stations H
Total time 65
Product-
oriented Example: Assembly of Wing Component
layout

Layout Heuristics That May Be Used to Assign Tasks 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 weight From the available tasks, choose the 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 following From the available tasks, choose the task with the
tasks least number of subsequent tasks
Product-
oriented Example: Assembly of Wing Component
layout

Layout Heuristics That May Be Used to Assign Tasks 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 weight From the available tasks, choose the task for which the
Test heuristics sum
to see whichtask
of following generates the
times is the longest
“best solution” – the smallest number of
4. Shortest task time workstations
From thehighest
and available efficiency
tasks, choose the task with the
shortest task time
5. Least number➔ DO NOT
of following guarantee an optimal
From the available tasks, solution!
choose the task with the
tasks least number of subsequent tasks
Product-
oriented Example: Assembly of Wing Component
layout

480 available mins per day

40 units required
Cycle time = 12 mins
Minimum workstations = 5.42 or 6
Product-
oriented Example: Assembly of Wing Component
layout

480 available mins per day

40 units required
Cycle time = 12 mins
Minimum workstations = 5.42 or 6

5
∑ Task times C
Efficiency = 10 11 3 7
(Actual number of workstations) x (Largest cycle time)
A B F G
= 65 minutes / ((6 stations) x (12 minutes))4 3
= 90.3% D I
11 11
E H
Idle Time = ((6 stations) × (12 minutes)) – 65 minutes = 7 minutes
 Competitive Advantage
through Layout
1950s 1970s 1980s Late 1980s
Introducing indoor Drive through Breakfast menu Play areas
seating windows
(Product) (Layout)
(Layout) (Layout)

1990s 2004 2020s

New redesign of Self service kiosk 3 zones – Linger; Grab
the kitchens & Go; and Flexible
(Layout)
(Layout) (Layout)
 7 Types of Layout

Office
layout
Retail Warehouse
layout layout
Fixed- Process-
position oriented
layout layout
Focused Product-
Facilities oriented
(Work-cell) layout