Facility Location Decisions & Layouts

• Facility Location Decisions
• Facility Layouts
Facility Location
Facility Design decisions
Parameters Influencing factors

Facility role Strategic
Technological
Facility location Macroeconomic
Political
Capacity allocation Infrastructure
Competitive
Market and supply Logistics and facility
allocation costs
Cost & Number of facilities
Inventory
Facility costs
Costs
Transportation
Number of facilities
Framework for Global Site selection
Competitive STRATEGY GLOBAL COMPETITION
PHASE I
Supply Chain
INTERNAL CONSTRAINTS Strategy TARIFFS AND TAX
Capital, growth strategy, INCENTIVES
existing network
PRODUCTION TECHNOLOGIES
REGIONAL DEMAND
Cost, Scale/Scope impact, PHASE II Size, growth, local
support required, flexibility
Regional specifications
Facility
COMPETITIVE
Configuration POLITICAL, EXCHANGE
ENVIRONMENT
RATE AND DEMAND RISK
PHASE III
Desirable Sites AVAILABLE
INFRASTRUCTURE
PRODUCTION METHODS
Skill needs, response time
PHASE IV
FACTOR COSTS LOGISTICS COSTS
Location
Labor, materials Transport, inventory
Choices
Layouts
Introduction
Facility layout means planning:
for the location of all machines, utilities,
employee workstations, customer service areas,
material storage areas, aisles, restrooms,
lunchrooms, internal walls, offices, and computer
rooms
for the flow patterns of materials and people

around, into, and within buildings
infrastructure services such as the delivery of line

communications, energy, and water and the
removal of waste water all make up basic utilities.
Locate all areas in and around the
building
Equipment Utilities
Work stations Eating areas
Material storage Aisles
Rest/break areas Offices

Characteristics of layout decisions
 Location of the various areas impacts the flow
through the system.
 The layout can affect productivity and costs

generated by the system.
 Layout alternatives are limited by

 the amount and type of space required for the various areas
 the amount and type of space available
 the operations strategy

Characteristics of layout decisions
Layout decisions tend to be:
Infrequent
Expensive to implement
Studied and evaluated extensively
Long-term commitments
Objectives of layout strategy
Develop an economical layout which will meet
the requirements of:
 Product design and volume (product strategy)
 Process equipment and capacity (process strategy)
 Quality of work life (human resource strategy)
 Building and site constraints (location strategy)

Requirements of a good layout
• An understanding of capacity & space requirements
• Selection of appropriate material handling equipment
• Decisions regarding environment and aesthetics
• Identification and understanding of the requirements

for information flow
• Identification of the cost of moving between the

various work areas
Inputs to Layout decisions
 Specification of objectives of the system in terms of output and
flexibility.
 Estimation of product or service demand on the system.
 Processing requirements in terms of number of operations and

amount of flow between departments and work centers.
 Space requirements for the elements in the layout.
 Space availability within the facility itself.

Types of Layouts
Process
Product
Cellular
Fixed position
Hybrid (mixed)
Process Layouts
 Used when the operations system must handle a wide variety of
products in relatively small volumes (i.e., flexibility is
necessary)
 Designed to facilitate processing items or providing services

that present a variety of processing requirements.
 The layouts include departments or other functional groupings

in which similar kinds of activities are performed.
 A manufacturing example of a process layout is the machine

shop, which has separate departments for milling, grinding,
drilling, and so on.
Characteristics of Process Layout
 General-purpose  Technical supervision is
equipment is used required
 Changeover is rapid  Planning, scheduling and

controlling functions are
 Material challenging
handling
equipment is flexible
 Production time is
 Operators relatively long
are highly
skilled
 In-process inventory is
relatively high
Product Layouts
 Product layouts are used to achieve a smooth and rapid flow of large
volumes of products or customers through a system.
 A job is divided into a series of standardized tasks, permitting

specialization of both labor and equipment.
 The large volumes handled by these systems usually make it

economical to invest huge amount of money in equipment and job
design.
 For instance, if a portion of a manufacturing operation required the

sequence of cutting, sanding, and painting, the appropriate pieces of
equipment would be arranged in that same sequence.
 Operations are arranged in the sequence required to make the product
 Product layouts achieve a high degree of labor and equipment

utilization.
Characteristics of Product Layout
 Special-purpose equipment  Little direct supervision is
are used required
 Changeover is expensive and  Planning, scheduling and

lengthy controlling functions are
relatively straight-forward
 Material flow is continuous
 Production time for a unit is
 Material handling equipment relatively short

is fixed
 In-process inventory is
relatively low
Cellular Manufacturing (CM) Layouts
 Cellular manufacturing is a type of layout in which
machines are grouped into what is referred to as a cell.
 Groupings are determined by the operations needed to

perform work for a set of similar items, or part families
that require similar processing.
 These relate to the grouping of equipment and include

faster processing time, less material handling, less work-
in-process inventory, and reduced setup time.
 Usedwhen the operations system must handle a

moderate variety of products in moderate volumes
Fixed position layouts
 In fixed-position layouts, the item being worked on
remains stationary, and workers, materials, and
equipment are moved as needed.
 Fixed-position layouts are used in large construction

projects (buildings, power plants, and dams),
shipbuilding, and production of large aircraft and space
mission rockets.
 Fixed-position layouts are widely used for farming,

firefighting, road building, home building, remodeling and
repair, and drilling for oil.
Hybrid (mixed) layouts
 Actually, most manufacturing facilities use a combination of
layout types.
 An example of a hybrid layout is where departments are

arranged according to the types of processes but the products
flow through on a product layout.
 For instance, supermarket layouts are fundamentally of a

process nature, and however we find most use fixed-path
material-handling devices such as roller-type conveyors both in
the stockroom and at checkouts, and belt-type conveyors at
the cash registers.
New Trends in Manufacturing Layouts
 Designed for quality and  U-shaped production lines
flexibility
 More open work areas with
 Ability to quickly shift to fewer walls, partitions, or
different product models or other obstacles
to different production
rates  Smaller and more compact
factory layouts
 Cellular layout within larger
process layouts  Less space provided for
storage of inventories
 Automated material throughout the layout
handling

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• Facility Location Decisions

Parameters Influencing factors

for the flow patterns of materials and people

infrastructure services such as the delivery of line

Work stations Eating areas

Material storage Aisles

Rest/break areas Offices

 The layout can affect productivity and costs

 Layout alternatives are limited by

 the amount and type of space available

 the operations strategy

Studied and evaluated extensively

 Process equipment and capacity (process strategy)

 Quality of work life (human resource strategy)

 Building and site constraints (location strategy)

• Selection of appropriate material handling equipment

• Decisions regarding environment and aesthetics

• Identification and understanding of the requirements

• Identification of the cost of moving between the

 Estimation of product or service demand on the system.

 Processing requirements in terms of number of operations and

 Space requirements for the elements in the layout.

 Space availability within the facility itself.

 Designed to facilitate processing items or providing services

 The layouts include departments or other functional groupings

 A manufacturing example of a process layout is the machine

 Changeover is rapid  Planning, scheduling and

 A job is divided into a series of standardized tasks, permitting

 The large volumes handled by these systems usually make it

 For instance, if a portion of a manufacturing operation required the

 Operations are arranged in the sequence required to make the product

 Product layouts achieve a high degree of labor and equipment

 Changeover is expensive and  Planning, scheduling and

 Material handling equipment relatively short

 Groupings are determined by the operations needed to

 These relate to the grouping of equipment and include

 Usedwhen the operations system must handle a

 Fixed-position layouts are used in large construction

 Fixed-position layouts are widely used for farming,

 An example of a hybrid layout is where departments are

 For instance, supermarket layouts are fundamentally of a

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