process selection & layout

Chackrit Duangphastra,PhD 1

Process Selection &

Capacity Planning

ผศ.ดร.จั�กรกฤษณ์� ดวงพั�สตรา


Process SelectionProcess Selection

• Process selection includes:• Technical issues–basic technology

used to produce a service or good• Volume or scale decision–using

the proper amount of mechanization to leverage the organization’s work force


Product Design, Process Selection, & Capacity DecisionsProduct Design, Process Selection, & Capacity Decisions


Understanding the Scale FactorUnderstanding the Scale Factor

• Economies of Scale: • Efficiencies of prorating costs over greater

volumes of a single product/service.

• Economies of scope:• Efficiencies of prorating processing costs

over a greater number of different process/services, which are processed (individually) in smaller item volumes but (collectively) at greater total volume.


Outline• Four Process Strategies

• Process Focus• Repetitive Focus• Product Focus• Mass Customization Focus• Comparison of Process Choices

• Process Analysis and Design• Flow Diagrams• Time-Function Mapping• Process Charts• Work Flow Analysis• Service Blueprinting


Outline

• Service Process Design• Customer Interaction and Process Design• More Opportunities to Improve Service Processes

• Process Reengineering• Environmentally Friendly Processes• Selection of Equipment and Technology• Capacity

• Defining Capacity• Forecasting Capacity Requirements• Applying Decision Trees to Capacity Decisions• Managing Demand


Outline• Break-Even Analysis

• Single-Product Case• Multiproduct Case

• Strategy-Driven Investments• Investment, Variable Cost, and Cash

Flow• Net Present Value


Learning Objectives

• Identify or Define:• Process focus• Repetitive focus• Product focus• Process reengineering• Service process issues• Environmental issues• Process analysis• Lean production• Green manufacturing• The capacity issue• Breakeven analysis• Financial considerations• Strategy-driven investments


Fit of Process, Volume, and Variety

Process focusprojects, job shops,

(machine, print, carpentry)

Standard RegisterRepetitive

(autos, motorcycles)Harley Davidson

Product focus(commercial baked goods, steel, glass)

Nucor Steel

High VarietyOne or few units per run, high variety(allows customization)

Changes in modulesModest runs, standardized modules

Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only

Mass Customization

(difficult to achieve, but huge

rewards)

Dell Computer Co.

Poor strategy

(Variable costs are high)

Low-Volume(Intermittent)

Repetitive Process(Modular)

High-Volume(Continuous)


Production Process Flow Diagram

Shipping

Customer

Customer sales representative

take order

Prepress Department(Prepare printing plates

and negatives)

Printing Department

Collating Department

Gluing, binding, stapling, labeling

Polywrap Department

Purchasing(order inks, paper,

other supplies)

Vendors

Receiving

Warehousing(ink, paper, etc.)

Accounting

Information flowMaterial flow


Process Strategies• Involve determining how to produce

a product or provide a service• Objective

• Meet or exceed customer requirements• Meet cost & managerial goals

• Has long-run effects• Product & volume flexibility• Costs & quality


Types of Process Strategies

ContinuumContinuum

• Process strategies that follow a continuum• Within a given facility, several strategies may be

used• These strategies are often classified as:

Repetitive-Focused Product-FocusedProcess-Focused


Process-Focused Strategy

• Facilities are organized by process• Similar processes are together

• Example: All drill presses are together

• Low volume, high variety products• ‘Jumbled’ flow

OperationProduct A

Product B

1111 2222 3333• Other names• Intermittent process• Job shop


Figure 7A


Process Flows Before Applying Group Technology

Process Flows Before Applying Group Technology


Process Flows After Applying Group Technology Process Flows After Applying Group Technology


Process-Focused Strategy Examples

Bank

© 1995 Corel Corp.

Machine Shop© 1995 Corel Corp.

Hospital© 1995 Corel Corp.


Process Focused Strategy

• Advantages• Greater product flexibility• More general purpose equipment• Lower initial capital investment

• Disadvantages• More highly trained personnel• More difficult production planning & control• Low equipment utilization (5% to 25%)


Repetitive Focused Strategy

• Facilities often organized by assembly lines

• Characterized by modules• Parts & assemblies made previously

• Modules combined for many output options

• Other names• Assembly line • Production line


Figure 7B


Repetitive Focused Strategy -Considerations

• More structured than process-focused, less structured than product focused

• Enables quasi-customization• Using modules, it enjoys economic

advantage of continuous process, and custom advantage of low-volume, high-variety model


Repetitive-Focused Strategy - Examples

Truck

© 1995 Corel Corp.

Clothes Dryer

© 1995 Corel Corp.

Fast Food

McDonald’sover 95 billion served

McDonald’sover 95 billion served

© 1984-1994 T/Maker Co.


Product-Focused Strategy• Facilities are organized by product• High volume, low variety products• Where found

• Discrete unit manufacturing• Continuous process manufacturing

Operation

Products A & B

11 22 33

• Other names• Line flow production• Continuous production


Product-Focused Strategy

• Advantages• Lower variable cost per unit• Lower but more specialized labor skills• Easier production planning and control• Higher equipment utilization (70% to 90%)

• Disadvantages• Lower product flexibility• More specialized equipment• Usually higher capital investment


Product-Focused Examples

Light Bulbs (Discrete)

Paper (Continuous)

Soft Drinks (Continuous, then Discrete)

Mass Flu Shots (Discrete)


Process Focus Repetitive Focus Product Focus

1. Product: Smallquantity, largevariety

1. Product: Long runs,usually standardized

1. Product: Largequantities, smallvariety

2. Equipment:General purpose

2. Equipment: Special;assembly line

2. Equipment:Special-purpose

3. Operators broadlyskilled

3. Employees modestlytrained

3. Operators lessbroadly skilled

4. Many jobinstructions

4. Repetitive operations 4. Few work orders andjob instructions;standardization



5. Raw materialinventory value highrelative to productvalue

5. Just-in-timeprocurement

5. Raw materialinventory value lowcompared to productvalue

6. Work-in-processinventory highrelative to output

6. Just-in-timeinventory

6. Work-in-processinventory lowcompared to output

7. Units move slowlythrough plant

7. Movementmeasured in hours anddays

7. Swift movementof units throughfacility

8. Make to order 8. Make to forecast 8. Make to forecast;inventory



9. Schedulingcomplex; trade-offbetween inventoryavailability, capacity,and customer service

9. Scheduling based onmodels

9. Scheduling simple;establishing a rate ofoutput sufficient tomeet sales forecasts

10. High fixed costs,low variable costs

10. Fixed costsdependent uponflexibility of facility

10. High fixed costs,low variable costs

11. Cost, estimatedprior to job;knownonly aftercompletion

11. Costs usuallyknown because ofexperience

11. Costs highlydependent uponutilization of capacity


Process Continuum

Process Focused(intermittent process)

Repetitive Focus

(assembly line)

Product Focused (continuous process)

Continuum

High variety, low volumeLow utilization (5% - 25%)

General-purpose equipment

Low variety, high volumeHigh utilization (70% - 90%)

Specialized equipment

ModularFlexible equipment


Volume and Variety of Products

Poor Strategy(Fixed costs and cost changing to

other products are high).

Volume andVariety ofProducts

Low Volume HighVariety Process

(Intermittent)

RepetitiveProcess

(Modular)

High VolumeLow Variety

Process(Continuous)

One or very fewunits per lot

Projects

Very small runs, highvariety

Job Shops

Modest runs, modestvariety

DisconnectedRepetitive

Long runs, modestvariations

ConnectedRepetitive

Very long runs,changes inattributes

Continuous

Equipment utilization 5%-25% 20%-75% 70%-80%

Poor Strategy(High variable

costs)


Mass Customization• Using technology and imagination to

rapidly mass-produce products that cater to sundry unique customer desires.

• Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.


Mass Customization - More Choices Than even

Item Early 1970s

Late1990s

Vehicle models 140 260Vehicle styles 18 1,212Bicycle types 8 19Software titles 0 380,000Web sites 0 9,865,982Movie releases 267 458New book titles 40,530 77,446Houston TV channels 5 851Breakfast cereals 160 340Items in supermartkets 14,000 20,000


Repetitive Focus Assembly line

Modular Design Flexible equipment

Mass Customization

Process focus Intermittent process

High variety, low volumeLow utilization (5%-25%) general purpose equipment

Product focus

Continuous ProcessLow variety, high volume

High utilization (70%-90%) Specialized equipment

Modular techniques

Scheduling techniques

Rapid throughput


Questions for Process Analysis and Design

• Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost?

• Does the process eliminate steps that do not add value?

• Does the process maximize customer value as perceived by the customer?

• Will the process win orders?


Tools for Process Design

• Flow Diagrams• Process Charts• Time-Function/Process Mapping• Work Flow Analysis


Production Process Flow Diagram

Shipping

Customer

Customer sales representative

take order

Prepress Department(Prepare printing plates

and negatives)

Printing Department

Collating Department

Gluing, binding, stapling, labeling

Polywrap Department

Purchasing(order inks, paper,

other supplies)

Vendors

Receiving

Warehousing(ink, paper, etc.)

Accounting

Information flowMaterial flow


Time Function MapCustomer

Sales

Production control

Plant A

Warehouse

Plant B

Transport

Order Product

Process Order

Print

Extrude

Receive product

Wait

Move

Wait Wait Wait

Move

Ord

er

Ord

er

WIP

WIP

WIP W

IP

Prod

uct

Prod

uct

Prod

uct

12 days 1 day 1 day 1 day 1 day13 days 4 days 10 days 9 days


SUBJECT: Request tool purchase

Dist (ft) Time (min) Symbol Description

D Write order

On desk

75 D To buyer

D Examine

= Operation; = Transport; = Inspect; D = Delay; = Storage

Process Chart Example


Work Flow Analysis - Four Phases

• Request from a customer or an offer to provide services by a performer

• Negotiation, allowing the customer and the performer to agree on how the work should be done and what will constitute customer satisfaction

• Performance of the assignment and completion

• Acceptance, closing the transaction provided the customer expresses satisfaction and agrees that the conditions were met.


Process Reengineering• The fundamental rethinking and radical

redesign of business processes to bring about dramatic improvements in performance

• Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions

• Requires reexamination of the basic process and its objectives

• Focuses on activities that cross boundaries


Attaining Lean Production

• Focus on inventory reduction• Build systems that help employees• Reduce space requirements• Develop close relationships with suppliers• Educate suppliers• Eliminate all but value-added activities• Develop the workforce• Make jobs more challenging• Set sights on perfection!


Customer Interaction and Process Strategy

Mass Service Professional Service

Service Factory Service Shop

Commercial Banking

General purpose law firms

Fine dining restaurants

Hospitals

Airlines

Full-service stockbroker

Retailing

Personal banking

Boutiques

Law clinics

Fast food restaurants

Warehouse and catalog stores

No frills airlines

Limited service stockbroker

For-profit hospitals

Degree of Interaction and Customization

Deg

ree

of L

abor

Inte

nsity

Low High

High Low


Techniques for Improving Service Productivity

• Separation

• Self-service

• Postponement

• Focus

• Structure service so customers must go where service is offered

• Self-service so customers examine, compare and evaluate at their own pace

• Customizing at delivery

• Restricting the offerings

Strategy Technique


Techniques for Improving Service Productivity

• Modules

• Automation

• Scheduling• Training

• Modular selection of service. Modular production

• Separating services that lend themselves to automation

• Precise personnel scheduling• Clarifying the service options• Explaining problems• Improving employee flexibility


More Opportunities to Improve Service Processes

• Layout• Human Resources• Technology


Showing Sensitivity to the Environment

• Make products recyclable• Use recycled materials• Use less harmful ingredients• Use light components• Use less energy• Use less materials


Factors Affecting Process Alternatives

• Production flexibility• Product volume• Product variety

• Technology• Cost• Human resources• Quality• Reliability

These factors These factors reduce the number reduce the number of alternatives!of alternatives!

These factors These factors reduce the number reduce the number of alternatives!of alternatives!

© 1984-1994 T/Maker Co.


• How much long-range capacity is needed

• When more capacity is needed• Where facilities should be located

(location)• How facilities should be arranged

(layout)

Facility planning answers:

Facility Planning


Definition and Measures of Capacity

Capacity:

Designed Capacity:

Effective capacity:

Rated Capacity:

The maximum output of a system in agiven period

The maximum capacity that can beachieved under ideal conditions

The percent of design capacity actuallyexpected

Maximum usable capacity of aparticular facility

RC = (Capacity)(Utilization)(Efficiency)


• Measure of planned or actual capacity usage of a facility, work center, or machine

UtilizationExpected capacity

CapacityPlanned hours to be used

Total hours available

=

=

Utilization


• Measure of how well a facility or machine is performing when used

EfficiencyActual output

Effective capacity

Actual output in unitsStandard output in unitsAverage actual time

Standard time

=

=

=

Efficiency


ForecastDemand

ComputeNeededCapacity

ComputeRated

Capacity

EvaluateCapacity

Plans

ImplementBest Plan

QualitativeFactors

(e.g., Skills)

Select BestCapacity

Plan

DevelopAlternative

Plans

QuantitativeFactors

(e.g., Cost)

Capacity Planning Process


• Vary staffing• Change equipment

& processes• Change methods• Redesign the

product for faster processing

Capacity Management

Vary prices Vary promotion Change lead times

(e.g., backorders) Offer complementary

products

Demand Management

Managing Existing Capacity


Complementary Products

Time (Months)

Sales (Units)

Jet Skis

Snow-mobiles

Total

01,000

2,0003,0004,0005,000

J M M J S N J M M J S N J


Approaches to Capacity Expansion

Expected Demand Expected Demand

Expected Demand Expected Demand

Time in Years Time in Years

Time in YearsTime in Years

Dem

and

Dem

and

Dem

and

Dem

and

New Capacity

New Capacity New Capacity

New Capacity

Capacity leads demand with an incremental expansion Capacity leads demand with a one-step expansion

Capacity lags demand with an incremental expansionAttempts to have an average capacity, with an

incremental expansion



Expected Demand

Time in Years

Dem

and

New Capacity

Capacity leads demand with an incremental expansion



Expected Demand

Time in Years

Dem

and

New Capacity

Capacity leads demand with a one-step expansion


Approaches to Capacity ExpansionExpected Demand

Time in Years

Dem

and

New Capacity

Capacity lags demand with an incremental expansion


Approaches to Capacity ExpansionExpected Demand

Time in Years

Dem

and

New Capacity

Attempts to have an average capacity, with an incremental expansion


Breakeven Analysis• Technique for evaluating process &

equipment alternatives• Objective: Find the point ($ or units) at

which total cost equals total revenue• Assumptions

• Revenue & costs are related linearly to volume

• All information is known with certainty• No time value of money


Break-Even Analysis

• Fixed costs: costs that continue even if no units are produced: depreciation, taxes, debt, mortgage payments

• Variable costs: costs that vary with the volume of units produced: labor, materials, portion of utilities


Breakeven Chart

Fixed cost

Variable cost

Total cost line

Total revenue line

ProfitBreakeven pointTotal cost = Total revenue

Volume (units/period)

Cos

t in

Dol

lars

(Tho

usan

ds)

Loss


Break-Even Analysis

• Total cost = fixed costs + variable costs (quantity):

• Revenue = selling price (quantity)

• Break-even point is where total costs = revenue:

QVCFTC

QSPR

VCSP

FQor

QSPQVCForRTC


Example• A firm estimates that the fixed cost

of producing a line of footwear is $52,000 with a $9 variable cost for each pair produced. They want to know:• If each pair sells for $25, how many

pairs must they sell to break-even?• If they sell 4000 pairs at $25 each, how

much money will they make?


Example Solved• Break-even point:

• Profit = total revenue – total costs

pairsVCSP

FQ 250,3

9$25$

000,52$

000,12$

000,49$000,52$000,425$

QVCFQSPP


Crossover Chart

Fixed cost - Process A

Fixed cost - Process BFixed cost - Process C

Total cost - Process CTotal cost - Process B

Total co

st - P

roce

ss A

Process A: low volume, high varietyProcess B: Repetitive

Process C: High volume, low variety

Process CProcess BProcess A Lowest cost process


Cost of Wrong Process Found Via Breakeven Analysis

Fixed cost

$

Variablecost

Fixed cost

$Variable

cost

Fixed cost

$Variable

cost

Low volume, highvariety process

Repetitive process High volume, lowvariety process

A B Volume

B1

B2B3

Total cost for lowvolume high variety

Total cost for repetitive processTotal cost for high volume,

low variety process


Strategy Driven Investment

• Select investments as part of a coordinated strategic plan

• Choose investments yielding competitive advantage

• Consider product life cycles• Include a variety of operating factors in

the financial return analysis• Test investments in light of several

revenue projections


Limitations of Net Present Value• Investments with the same present value

may have significantly different project lives and different salvage values

• Investments with the same net present values may have different cash flows

• We assume that we know future interest rates - which we do not

• We assume that payments are always made at the end of the period - which is not always the case


Facility Layout Planning

ผศ.ดร.จั�กรกฤษณ์� ดวงพั�สตรา


Learning Objectives• Identify or Define:

• Fixed-position layout• Process-oriented layout• Work cells• Focused work center• Office layout• Retail layout• Warehouse layout• Product-oriented layout• Assembly-line factory

• Describe or explain:• How to achieve a good layout for the process facility• How to balance production flow in a repetitive or

product-oriented facility


What Is Facility Layout Planning

• Location or arrangement of everything within & around buildings

• Objectives are to maximize• Customer satisfaction • Utilization of space, equipment, & people• Efficient flow of information, material, &

people• Employee morale & safety


Strategic Importance of Layout

Proper layout enables:• Higher utilization of space, equipment,and

people• Improved flow of information, materials, or

people• Improved employee morale and safer working

conditions• Improved customer/client interaction• Flexibility


Types of Layout• Fixed-position layout

• large bulky projects such as ships and buildings• Process-oriented layout

• deals with low-volume, high-variety production (“job shop”, intermittent production)

• Office layout• positions workers, their equipment, and spaces/offices

to provide for movement of information• Retail/service layout

• allocates shelf space and responds to customer behavior

• Warehouse layout• addresses trade-offs between space and material

handling• Product-oriented layout

• seeks the best personnel and machine use in repetitive or continuous production


Layout Example


Areas of Concern in Layout Strategy

LayoutStrategy

MaterialFlow

Communication

WorkCell

Safety

MaterialAttributes

Warehousing

ServiceAreas


Fixed Position Layout• Design is for stationary project • Workers and equipment come to site• Usually used because product movement

is difficult (ship building) or for convenience (on-site repair).

• This is often managed through Project Management.

• Complicating factors• Limited space at site• Changing material needs in different stages in

construction process


Process Oriented Layout• Similar processes/functions are grouped

together (job shop)• Department areas having similar

processes located in close proximity

• Primary advantages• flexibility, utilization of machinery/equipment.

• Disadvantages• greater handling of materials/customers, more

complex scheduling, WIP/waiting lines, departmental boundaries


Traditional Process Layout


Emergency Room Layout (Process Oriented)

Surgery

RadiologyE.R. beds Pharmacy Billing/exit

E.R.Triage room

E.R. AdmissionsPatient B - erratic pacemaker

Patient A - broken leg

Hallway


Process Layouts• General purpose & flexible resources • Lower capital intensity & automation• Higher labor intensity• Resources have greater flexibility• Processing rates are slower• Material handling costs are higher• Scheduling resources & work flow is more

complex• Space requirements are higher


Designing Process Layouts• Step 1: Gather information:

• Space needed, space available, importance of proximity between various units

• Step 2: Develop alternative block plans:• Using trial-and-error or decision support tools

• Step 3: Develop a detailed layout• Consider exact sizes and shapes of

departments and work centers including aisles and stairways

• Tools like drawings, 3-D models, and CAD software are available to facilitate this process


Comparing Alternatives

• Load-distance measures• Load: # of trips, weight moved, $-value moved• Distance: rectilinear distance (using north-

south & east-west movements)

• REL charts: • Management opinion on strength of

relationships

• Software tools:• CRAFT: computerized relative allocation of

facilities technique• ALDEP: automated layout design program


Process Layout Example


Process Layout Steps• Step 1: Gather information like space needed, from-to

matrix, and REL Chart for Recovery First Sports Medicine Clinic (total space 3750 sq. ft.)

ARadiology

400 sq. ft.

BLaboratory

300 sq. ft.

CLobby & Waiting

300 sq. ft.

DExamining

Rooms800 sq. ft.

ESurgery & Recovery900 sq. ft.

FPhysical Therapy

1050 sq. ft.


Step 1: Gather Information

(continued)


Step 2: Develop a Block Layout• Use trial and error with from-to and

REL Charts as a guide• Use computer software like ALDEP or

CRAFT


Other Example of Process Oriented Layout


Cost of Process-Oriented Layout

j department and i departmentbetween load a move cost to C

j department toi department from moved loads ofnumber X

sdepartment individual ji,

sdepartmentor centers work ofnumber totaln where

CX cost Minimize

ij

ij

n

1i

n

1jijij


Interdepartmental Flow of Parts

1 2 3 4 5 6

1

2

3

4

5

6

50 100 0 0 20

30 50 10 0

20 0 100

50 0

0


Interdepartmental Flow Graph Showing Number of Weekly Loads

100

50 30

1020

50

20

10050

1 2 3

4 5 6


Possible Layout 1

AssemblyDepartment

(1)

PrintingDepartment

(2)

Machine shopDepartment

(3)

ReceivingDepartment

(4)

ShippingDepartment

(5)

TestingDepartment

(6)

Room 1 Room 2 Room 2

Room 4 Room 5 Room 660’

40’


Interdepartmental Flow Graph Showing Number of Weekly Loads

10050

30

10

20

50

20 10050

1 2 3

4 5 6


Possible Layout 2

PrintingDepartment

(1)

AssemblyDepartment

(2)

Machine shopDepartment

(3)

ReceivingDepartment

(4)

ShippingDepartment

(5)

TestingDepartment

(6)

Room 1 Room 2 Room 2

Room 4 Room 5 Room 660’

40’


Office Layout• Design positions people, equipment,

& offices for maximum information flow

• Arranged by process or product• Example: Payroll dept. is by process

• Relationship chart used• Examples

• Insurance company• Software company


Office Layout Floor Plan

AccountingAccounting

ManagerManager Brand XBrand X

FinanceFinanceFin. Acct.


Relationship Chart

1 PresidentO

2 Costing UA A

3 Engineering IO

4 President’s Secretary

1122

33

Ordinary Ordinary closeness: closeness: President (1) & President (1) & Costing (2)Costing (2)

Absolutely necessary: Absolutely necessary: President (1) & President (1) &

Secretary (4)Secretary (4)

44

I = Important

U = Unimportant


Retail/Service Layout

• Design maximizes product exposure to customers

• Decision variables• Store flow pattern• Allocation of (shelf) space to

products

• Types• Grid design• Free-flow design

Video


Retail Layouts - Some Rules of Thumb

• Locate high-draw items around the periphery of the store

• Use prominent locations such as the first or last aisle for high-impulse and high margin items

• Remove crossover aisles that allow customers the opportunity to move between aisles

• Distribute what are known in the trade as “power items” (items that may dominate a shopping trip) to both sides of an aisle, and disperse them to increase the viewing of other items

• Use end aisle locations because they have a very high exposure rate


Retail /Service Layout - Grid Design

OfficeOffice CartsCarts Check-Check-outout

Grocery StoreGrocery StoreMeatBread

Milk

ProduceFrozen Foods


Store Layout - with Dairy, Bread, High Drawer Items in Corners


Retail/Service Layout - Free-Flow Design

FeatureFeature

Display Display TableTable

Trans.Trans.CounterCounter

Apparel StoreApparel Store


Retail Store Shelf Space Planogram• Computerized

tool for shelf-space management

• Generated from store’s scanner data on sales

• Often supplied by manufacturer• Example: P&G

2 ft2 ft..

55 facingsfacings

VO

-5

VO

-5

VO

-5

SU

AV

E

SU

AV

E

VO

-5P

ER

T

PE

RT

PE

RT

PE

RT

PE

RT

VO

-5


A Good Service Layout (Servicescape) Considers

• Ambient conditions - background characteristics such as lighting, sound, smell, and temperature.

• Spatial layout and functionality - which involve customer circulation path planning

• Signs, Symbols, and Artifacts - characteristics of building design that carry social significance


Warehouse Layout

• Design balances space (cube) utilization & handling cost

• Similar to process layout• Items moved between dock

& various storage areas• Optimum layout depends on

• Variety of items stored• Number of items picked


Warehouse Layout Floor Plan

ZonesZones

ConveyorConveyorTruckTruck

Order PickerOrder Picker


Cross Docking• Transferring goods

• from incoming trucks at receiving docks

• to outgoing trucks at shipping docks

• Avoids placing goods into storage

• Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transhipment

In-In-comingcoming

OutgoingOutgoing

© 1984-1994 T/Maker Co.© 1995 Corel Corp.


Random Stocking Systems Often:

• Maintain a list of “open” locations• Maintain accurate records of existing inventory

and its locations• Sequence items on orders to minimize travel

time required to pick orders• Combine orders to reduce picking time• Assign certain items or classes of items, such as

high usage items, to particular warehouse areas so that distance traveled is minimized


Product Layout

• Processes/work stations arranged in sequence of activities required to produce the product/service (Assembly Line).• Use for high volume, standardized products and

services• WIP and handling of materials/customers is

minimized• Equipment is specialized, capital intensive• Output is dependent on the slowest work

station• The “line” must be balanced for effectiveness.


Product Layouts

• Specialized equipment • High capital intensity & wide use of

automation• Processing rates are faster• Material handling costs are lower• Less space required for inventories• Less volume or design flexibility


Product Layout

Product A

Product B

Product C

Step 1

Step 1

Step 1

Step 2

Step 2

Step 2

Step 3

Step 3

Step 3

Step 4

Step 4

Step 4

7-14


Repetitive Layout

1 3

2

4

5

WorkWork

OfficeOffice

Belt ConveyorBelt Conveyor

Work Work StationStation

Note: 5 tasks or operations; 3 work stationsNote: 5 tasks or operations; 3 work stations

Work StationWork Station

StationStation


Assembly Line Balancing

• Analysis of production lines• Nearly equally divides work between

workstations while meeting required output

• Objectives• Maximize efficiency• Minimize number of

work stations


Assembly Line Balancing1. Precedence diagram: circles=tasks, arrows show

the required sequence.2. Determine cycle time:

3. Determine required workstations (theoretical minimum Work)

4. Set rules for assigning tasks (number of following tasks, longest task time)

unitput)/time_demand(out/time_unitproduction

DP

C

cycle_timetask_times

CT

N

t


Assembly Line Balancing5. Assign tasks to first workstation, using

rules and staying within cycle time. Repeat for following workstations until all tasks are assigned.

6. Evaluate line efficiency:

7. Rebalance if efficiency is not satisfactory.

kstationsactual_worN;CN

TE a

a


Designing Product Layouts• Step 1: Identify tasks & immediate

predecessors

• Step 2: Determine the desired output rate

• Step 3: Calculate the cycle time

• Step 4: Compute the theoretical minimum number

of workstations

• Step 5: Assign tasks to workstations (balance the line)

• Step 6: Compute efficiency, idle time & balance delay


Step 1: Identify Tasks & Immediate PredecessorsExample 10.4 Vicki's Pizzeria and the Precedence Diagram

Immediate Task TimeWork Element Task Description Predecessor (seconds

A Roll dough None 50B Place on cardboard backing A 5C Sprinkle cheese B 25D Spread Sauce C 15E Add pepperoni D 12F Add sausage D 10G Add mushrooms D 15H Shrinkwrap pizza E,F,G 18I Pack in box H 15

Total task time 165


Layout Calculations• Step 2: Determine output rate

• Vicki needs to produce 60 pizzas per hour

• Step 3: Determine cycle time• The amount of time each workstation is allowed

to complete its tasks

• Limited by the bottleneck task (the longest task in a process):

sec./unit 60

units/hr 60

sec/min 60x min/hr 60

units/hroutput desired

sec./day time available)(sec./unit time Cycle

hourper pizzasor units/hr, 72sec./unit 50

sec./hr. 3600

time task bottleneck

time availableoutput Maximum


Layout Calculations (continued)

• Step 4: Compute the theoretical minimum number of stations• TM = number of stations needed to

achieve 100% efficiency (every second is used)

• Always round up (no partial workstations)• Serves as a lower bound for our analysis

stations 3or 2.75,

nsec/statio 60

seconds 165

time cycle

times taskTM


Layout Calculations (continued)

• Step 5: Assign tasks to workstations• Start at the first station & choose the longest eligible task

following precedence relationships• Continue adding the longest eligible task that fits without going

over the desired cycle time • When no additional tasks can be added within the desired cycle

time, begin assigning tasks to the next workstation until finished

Workstation Eligible task Task Selected Task time Idle time

A A 50 10

B B 5 5

C C 25 35

D D 15 20

E, F, G G 15 5

E, F E 12 48

F F 10 38

H H 18 20

I I 15 5

1

2

3


Last Layout Calculation• Step 6: Compute efficiency and balance

delay• Efficiency (%) is the ratio of total

productive time divided by total time

• Balance delay (%) is the amount by which the line falls short of 100%

91.7%100sec. 60x stations 3

sec. 165

NC

t (%) Efficiency

8.3%91.7%100%delay Balance


Comparison of Product vs. Product Layouts

Process Layouts Product LayoutsProducts: large #, different small # efficiently

Resources: general purpose specialized

Facilities: more labor intensive more capital intensive

Flexibility: greater relative to market lower relative to market

Processing slower fasterRates:

Handling costs: high low

Space requirements: higher lower


Hybrid Layouts

• Combine elements of both product & process layouts• Maintain some of the efficiencies of

product layouts• Maintain some of the flexibility of

process layouts

• Examples: • Group technology & manufacturing

cells• Grocery stores


Hybrid Layouts• Cellular Layout

• Cross between product/process layout

• group a number of machines into a cell to produce a family of parts requiring similar processing (group technology).

• Often arranged into U- or C-shaped line flows

• Modular Layout• achieves layout flexibility so that layouts can

be changed, expanded, or reduced without much difficulty.


Designing Hybrid 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


Process Flows before the Use of GT Cells


Process Flows after the Use of GT Cells


Other Product Layout Considerations

• Shape of the line (S, U, O, L):• Share resources, enhance

communication & visibility, impact location of loading & unloading

• Paced versus un-paced lines• Paced lines use an automatically

enforced cycle time

• Single or mixed-model lines


A Bottleneck in theProduct Flow


Sequential Approach toBottleneck Analysis


Simple Steel Production Flow


Steel Production Flow:A Product Layout


Determining System Capacity


Rounding Out Capacity


7,000 6,000 2 8,000 1 10,000

2,000 1 4,000 3,000

Chemical Corporation:A Product Layout (Slide 1 of 3)

The numbers listed below the departments represent capacity in gallons per hour. The number of the arrows represent the number of parts (ratio) that must be combined to meet the needs of the next department.

A

B

C

D

E

F G

H

1,800

1

3 2



G

FDA

B E H

C

3,600 3,600 6,000 9,000

7,000 6,000 8,000 10,000

1,200 2,400 3,000

2,000 4,000 3,000 1,200

1,800The numbers above the departments represent the production rate required to produce a system capacityof 9,000 gallons per hour. The bottleneck departmentis H.

1

1

3

2

2

1



GFDA

B E H

C

7,000 6,000 8,000 10,000

1,334 2,667 3,333

2,000 4,000 ?????

1,334

1,800

4,000 4,000 6,667 10,0003 2

2 1

1

1

The System capacity can be increased by 1,000 gallonsper hour if the capacity of department H is increased by 333 gallons per hour. If it happens, The bottleneck becomes department G.


Summary• Layout planning is deciding on the best

physical arrangement of resources.• There are four basic types of layouts:

process, product, hybrid, and fixed position.• Process layouts provide flexibility to make a

variety of different products. Product layouts provide greater efficiency for one product.

• The steps for designing process layouts are: gather space and closeness information, develop a block plan, and develop a detailed layout.


Summary• The steps for designing an product layout

are: identify tasks and predecessors, determine output rate, determine cycle time, computing the theoretical minimum number of work stations, assigning tasks to workstations, and computing efficiency and balance delay.

• Hybrids layouts combine elements from both types of layouts to increase efficiency.

• Hybrid layouts combine GT analysis with cellular layout concepts .

process selection & layout

Business