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I. Facility Layout
A. Definition
The arrangement of machines, workstations, storage areas etc. to enable an
operation to function efficiently, safely and in a cost-effective manner
Refers to the specific configuration of physical facilities in an organization.
Helps achieve competitive advantage
Determines productivity, cost, quality, flexibility, image, etc.
Trend is toward flexible and dynamic
2. Retail layout
a. Definition
Allocates shelf space and responds to customer behavior
Maximize product exposure to customers.
Maximize profitability per square foot of floor space or per linear foot of shelf
space.
Decision variables
Arrangement of store
Store flow pattern
Allocation of (shelf) space to products
b. Ideas for Retail Layout
Locate high-draw items around the periphery of the store
Use prominent locations for high-impulse and high-margin items
Distribute power items to both sides of an aisle and disperse them to increase
viewing of other items
Use end-aisle locations
Convey mission of store through careful positioning of lead-off department
c. Category Management
Computerized programs are available to assist managers in evaluating
the profitability of various merchandising plans for hundreds of categories
d. Retail Slotting
Slotting Fees
Fees manufacturers pay to get their goods on the shelf in a retail store or
supermarket
Contributing factors
Limited shelf space
An increasing number of new products
Better information about sales through POS data collection
Closer control of inventory
3. Warehouse layout
a. Definition
Addresses trade-offs between space and material handling
b. Objectives
Objective is to optimize trade-offs between handling costs and costs
associated with warehouse space
Maximize the utilization of the total “cube” of the warehouse while maintaining
low material handling cost.
Material Handling cost: all the cost related to the transaction
Incoming transport
Storage
Finding and moving material
Outgoing transport
Equipment, people, material, supervision, insurance, depreciation
Minimize damage and spoilage
3. Customizing
o Value-added activities performed at the warehouse
o Enable low cost and rapid response strategies
Assembly of components
Loading software
Repairs
Customized labelling and packaging
f. Advantages
Track exact location with one storage location with FIFO
Provides better picking functionality
Allows for picking locations wit replenishment when falls below a define
quantity
Allow segregation of stock types within the warehouse
g. Disadvantages
Increased master data maintenance
Requires expert knowledge to configure for maximum benefit
More complex to resolve problems caused by incorrect processing
4. Fixed-position layout:
a. Definition
Addresses the layout requirements of large, bulky projects such as ships and
buildings
Used when product is large
Product is difficult or impossible to move. (i.e. very large or fixed)
All resources must be brought to the site
Scheduling of crews and resources is a challenge
b. Disadvantages
Due to the nature of the product, the user has little choice in the use of a
fixed-position layout. Disadvantages include:
Space. For many fixed-position layouts, the work area may be crowded so
that little storage space is available. This also can cause material handling
problems.
Administration. Oftentimes, the administrative burden is higher for fixed-
position layouts. The span of control can be narrow, and coordination difficult.
5. Process-oriented layout:
a. Definition
Deals with low-volume, high-variety production (also called job shop or
intermittent production)
Place departments with large flows of material or people together
Department areas having similar processes are located in close proximity
e.g., All x-ray machines in same area
Possible Layout 2
d. Cellular Layout Work Cells
Definition
Special case of product-oriented layout - in what is ordinarily a
process-oriented facility
Consists of different machines brought together to make a product
Temporary arrangement only
Example: Assembly line set up to produce 3000 identical parts in
a job shop
Work Cell Concept
Advantages
Inventory
Floor space
Direct labor costs
Equipment utilization
Employee participation
Quality
Work Cell Floor Plan
Work Cell
A temporary assembly-line-oriented arrangement of machines and personnel in
what is ordinarily a process-oriented facility
Example: job shop with rearranged machinery and personnel to produce 30
unique control panels
Focused Work Center
A permanent assembly-line-oriented arrangement of machines and personnel in
what is ordinarily a process-oriented facility
Example: manufacturing of pipe brackets at a shipyard
Focused Factory
A permanent facility to produce a product in a product-oriented facility
Example: a plant to produce window mechanisms for automobiles
e. Advantages
Flexibility. The firm has the ability to handle variety or processing
requirements
Motivation. Employees in this type of layout will probably be able to perform a
variety of tasks on multiple machines, as opposed to the boredom of
performing a repetitive task on an assembly line. A process layout also allows
the employer to use some type of individual incentive system
System protection. Since there are multiple machines available, process
layouts are not particularly vulnerable to equipment failures.
f. Disadvantages
Utilization. Equipment utilization rates in process layout are frequently very
low, because machine usage is dependent upon a variety of output
requirements.
Cost. If batch processing is used, in-process inventory costs could be high.
Lower volume means higher per-unit costs. More specialized attention is
necessary for both products and customers. Setups are more frequent, hence
higher setup costs. Material handling is slower and more inefficient. The span
of supervision is small due to job complexities (routing, setups, etc.), so
supervisory costs are higher.
Confusion. Constantly changing schedules and routings
make juggling process requirements more difficult.
6. Product-oriented layout:
a. Definition
Seeks the best personnel and machine utilizations in repetitive or
continuous production
Used with product-focused processes
Facility organized around product.
High volume, low variety.
Divide work into small tasks. To be done by workers or machines.
Assign tasks to workstations.
Balance output of each workstation.
To smooth operations of the line.
To make workload equal.
To minimize idle time.
To achieve desired output
b. Types of Product Oriented Layout
Fabrication Line
A machine-paced, product-oriented facility for building
components
Assembly Line
An approach that puts fabricated parts together at a series of
workstations; used in repetitive processes
c. Requirements of a Product-Oriented Layout
Standardized product.
High production volume.
Stable production quantities.
Uniform quality of raw materials & components.
d. Advantages/Disadvantages
Advantages
Lower variable cost per unit.
Lower material handling costs.
High utilization of labor and equipment
Accounting, purchasing and inventory control are fairly routine
Easier training & supervision.
Disadvantages
Higher capital investment for special equipment.
Any work stoppage stops whole process.
Lack of flexibility in volume and product.
Example of an Assembly Line