9

Layout Strategies

PowerPoint presentation to accompany

Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl

2011 Pearson

9-1

Outline
Global Company Profile:
McDonalds
The Strategic Importance of
Layout Decisions
Types of Layout
Office Layout

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9-2

Outline Continued
Retail Layout
Servicescapes

Warehousing and Storage Layouts

Cross-Docking
Random Docking
Customizing

Fixed-Position Layout
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9-3

Outline Continued
Process-Oriented Layout
Computer Software for ProcessOriented Layouts
Work Cells
Requirements of Work Cells
Staffing and Balancing Work Cells
The Focused Work Center and the
Focused Factory
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9-4

Outline Continued
Repetitive and Product-Oriented
Layout
Assembly-Line Balancing

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9-5

Learning Objectives
When you complete this chapter, you
should be able to:
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
2011 Pearson

9-6

Learning Objectives
When you complete this chapter, you
should be able to:
5. Explain how to achieve a good processoriented 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
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9-7

Innovations at McDonalds
Indoor seating (1950s)
Drive-through window (1970s)
Adding breakfast to the menu
(1980s)
Adding play areas (late 1980s)
Redesign of the kitchens (1990s)
Self-service kiosk (2004)
Now three separate dining sections
2011 Pearson

9-8

Innovations at McDonalds
Indoor seating (1950s)
Drive-through window (1970s)
Adding breakfast to Six
the out
menu
of the
(1980s)
seven are
Adding play areas (late layout
1980s)
decisions!
Redesign of the kitchens (1990s)
Self-service kiosk (2004)
Now three separate dining sections
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9-9

McDonalds New Layout

Seventh major innovation
Redesigning all 30,000 outlets around
the world
Three separate dining areas
Linger zone with comfortable chairs and
Wi-Fi connections
Grab and go zone with tall counters
Flexible zone for kids and families

Facility layout is a source of

competitive advantage
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9 - 10

Strategic Importance of
Layout Decisions
The objective of layout strategy
is to develop an effective and
efficient layout that will meet the
firms competitive requirements

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Layout Design
Considerations
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
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Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout
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Types of Layout
1. Office layout: Positions workers,
their equipment, and spaces/offices
to provide for movement of
information
2. Retail layout: Allocates shelf space
and responds to customer behavior
3. Warehouse layout: Addresses tradeoffs between space and material
handling
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Types of Layout
4. Fixed-position layout: Addresses
the layout requirements of large,
bulky projects such as ships and
buildings
5. Process-oriented layout: Deals with
low-volume, high-variety production
(also called job shop or intermittent
production)
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Types of Layout
6. Work cell layout: Arranges
machinery and equipment to focus
on production of a single product or
group of related products
7. Product-oriented layout: Seeks the
best personnel and machine
utilizations in repetitive or
continuous production
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Layout Strategies
Objectives
Office

Retail

Examples

Locate workers requiring

frequent contact close to one
another

Allstate Insurance

Expose customer to highmargin items

Krogers Supermarket

Microsoft Corp.

Walgreens
Bloomingdales

Warehouse
(storage)

Balance low cost storage

with low-cost material
handling

Federal-Moguls warehouse

Project (fixed
position)

Move material to the limited

storage areas around the site

Ingall Ship Building Corp.

The Gaps distribution center

Trump Plaza
Pittsburgh Airport

Table 9.1

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Layout Strategies
Objectives

Examples

Job Shop
(process
oriented)

Manage varied material flow

for each product

Arnold Palmer Hospital

Work Cell
(product
families)

Identify a product family,

build teams, cross train team
members

Repetitive/
Continuous
(product
oriented)

Equalize the task time at each Sonys TV assembly line

workstation
Toyota Scion

Hard Rock Cafe

Olive Garden
Hallmark Cards
Wheeled Coach
Standard Aero

Table 9.1

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Good Layouts Consider

Material handling equipment
Capacity and space requirements
Environment and aesthetics
Flows of information
Cost of moving between various
work areas

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Office Layout
Grouping of workers, their equipment, and
spaces to provide comfort, safety, and
movement of information
Movement of
information is main
distinction
Typically in state of
flux due to frequent
technological
changes
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Relationship Chart

Figure 9.1

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Supermarket Retail Layout

Objective is to maximize
profitability per square foot of
floor space
Sales and profitability vary
directly with customer exposure

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Five Helpful Ideas for

Supermarket Layout
1. Locate high-draw items around the
periphery of the store
2. Use prominent locations for high-impulse
and high-margin items
3. Distribute power items to both sides of
an aisle and disperse them to increase
viewing of other items
4. Use end-aisle locations
5. Convey mission of store through careful
positioning of lead-off department
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Store Layout

Figure 9.2

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Retail Slotting
Manufacturers pay fees to retailers
to get the retailers to display (slot)
their product
Contributing factors
Limited shelf space
An increasing number of new
products
Better information about sales
through POS data collection
Closer control of inventory
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Retail Store Shelf Space

Planogram
5 facings
Shampoo

Shampoo

Shampoo

Shampoo

Shampoo

Shampoo

Conditioner

Shampoo

Shampoo

Shampoo

Conditioner

Conditioner

Computerized
tool for shelfspace
management
Generated from
stores scanner
data on sales
Often supplied
by manufacturer

2 ft.
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Servicescapes
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
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Warehousing and Storage

Layouts
Objective is to optimize trade-offs
between handling costs and costs
associated with warehouse space
Maximize the total cube of the
warehouse utilize its full volume
while maintaining low material
handling costs
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Warehousing and Storage

Layouts
Material Handling Costs
All costs associated with the transaction
Incoming transport
Storage
Finding and moving material
Outgoing transport
Equipment, people, material, supervision,
insurance, depreciation

Minimize damage and spoilage

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Warehousing and Storage

Layouts
Warehouse density tends to vary
inversely with the number of different
items stored
Automated Storage and
Retrieval Systems (ASRSs)
can significantly improve
warehouse productivity by
an estimated 500%
Dock location is a key
design element
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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,
bar code or RFID
identification used for
advanced shipment
notification as
materials
are unloaded
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Random Stocking
Typically requires automatic identification
systems (AISs) and effective information
systems
Random assignment of stocking locations
allows more efficient use of space
Key tasks
1. Maintain list of open locations
2. Maintain accurate records
3. Sequence items to minimize travel, pick time
4. Combine picking orders
5. Assign classes of items to particular areas
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Customizing
Value-added activities performed at
the warehouse
Enable low cost and rapid response
strategies
Assembly of components
Loading software
Repairs
Customized labeling and packaging
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Warehouse Layout
Traditional Layout

Customization

Storage racks

Conveyor
Staging

Office

Shipping and receiving docks

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Warehouse Layout
Cross-Docking Layout

Office

Shipping and receiving docks

Shipping and receiving docks

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Fixed-Position Layout
Product remains in one place
Workers and equipment come to site
Complicating factors
Limited space at site
Different materials
required at different
stages of the project
Volume of materials
needed is dynamic
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Alternative Strategy
As much of the project as possible
is completed off-site in a productoriented facility
This can
significantly
improve
efficiency but
is only possible
when multiple
similar units need to be created
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Process-Oriented Layout
Like machines and equipment are
grouped together
Flexible and capable of handling a
wide variety of products or
services
Scheduling can be difficult and
setup, material handling, and
labor costs can be high
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Process-Oriented Layout
Patient A - broken leg
ER
triage
room

Emergency room admissions

Patient B - erratic heart
pacemaker

Surgery

Laboratories

Radiology

ER Beds

Pharmacy

Billing/exit

Figure 9.3

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Layout at Arnold Palmer Hospital

Pie-shaped
rooms

Central break
and medical
supply rooms
Local linen
supply

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Central nurses
station

Local
nursing pod

9 - 40

Process-Oriented Layout
Arrange work centers so as to
minimize the costs of material
handling
Basic cost elements are
Number of loads (or people)
moving between centers
Distance loads (or people) move
between centers
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Process-Oriented Layout
n

Minimize cost =

Xij Cij

i=1 j=1

where

2011 Pearson

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

9 - 42

Process Layout Example

Arrange six departments in a factory to
minimize the material handling costs.
Each department is 20 x 20 feet and the
building is 60 feet long and 40 feet wide.
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
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Process Layout Example

Number of loads per week
Department Assembly Painting
(1)
(2)
Assembly (1)
Painting (2)
Machine Shop (3)
Receiving (4)
Shipping (5)

50

Machine Receiving
Shop (3)
(4)

Shipping
(5)

Testing
(6)

100

20

30

50

10

20

100

50

0
0

Testing (6)
Figure 9.4

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Process Layout Example

Area 1

Area 2

Area 3

Assembly
Department
(1)

Painting
Department
(2)

Machine Shop
Department
(3)
40

Figure 9.5

Receiving
Department
(4)

Shipping
Department
(5)

Testing
Department
(6)

Area 4

Area 5
60

Area 6

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Process Layout Example

Interdepartmental Flow Graph
100

50

Assembly
(1)

20

10

50

Receiving
(4)

Painting
(2)

30

Machine
Shop (3)

20

100

50

Shipping
(5)

Testing
(6)

Figure 9.6

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Process Layout Example

n

Cost =

Xij Cij

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
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Process Layout Example

Revised Interdepartmental Flow Graph
30

Painting
(2)

50
10

50
Receiving
(4)

50

Assembly
(1)

20

Shipping
(5)

100

Machine
Shop (3)

20

100

Testing
(6)

Figure 9.7

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Process Layout Example

n

Cost =

Xij Cij

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
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Process Layout Example

Area 1

Area 2

Area 3

Painting
Department
(2)

Assembly
Department
(1)

Machine Shop
Department
(3)
40

Figure 9.8

Receiving
Department
(4)

Shipping
Department
(5)

Testing
Department
(6)

Area 4

Area 5
60

Area 6

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Computer Software
Graphical approach only works for
small problems
Computer programs are available to
solve bigger problems
CRAFT
ALDEP
CORELAP
Factory Flow
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CRAFT Example
A

TOTAL COST
20,100
EST. COST REDUCTION
ITERATION
0

(a)

.00

TOTAL COST
14,390
EST. COST REDUCTION
ITERATION
3

70

(b)
Figure 9.9

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

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Work Cells
Reorganizes people and machines
into groups to focus on single
products or product groups
Group technology identifies
products that have similar
characteristics for particular cells
Volume must justify cells
Cells can be reconfigured as
designs or volume changes
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Advantages of Work Cells

1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished
goods inventory
4. Reduced direct labor
5. Heightened sense of employee
participation
6. Increased use of equipment and
machinery
7. Reduced investment in machinery and
equipment
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Requirements of Work Cells

1. Identification of families of products
2. A high level of training, flexibility
and empowerment of employees
3. Being self-contained, with its own
equipment and resources
4. Test (poka-yoke) at each station in
the cell
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Improving Layouts Using

Work Cells

Current layout - workers in

small closed areas.
Improved layout - cross-trained
workers can assist each other.
May be able to add a third worker
as additional output is needed.
Figure 9.10 (a)

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Improving Layouts Using

Work Cells

Current layout - straight

lines make it hard to balance
tasks because work may not
be divided evenly

Improved layout - in U
shape, workers have better
access. Four cross-trained
workers were reduced.

U-shaped line may reduce employee movement

and space requirements while enhancing
communication, reducing the number of
workers, and facilitating inspection
Figure 9.10 (b)

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Staffing and Balancing Work

Cells
Determine the takt time
Total work time available
Takt time =
Units required

Determine the number

of operators required
Total operation time required
Workers required =
Takt time
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Staffing Work Cells Example

Standard time required

600 Mirrors per day required

Mirror production scheduled for 8 hours per day
60
From a work balance
chart total
50
operation time
40
= 140 seconds
30
20
10
0

Assemble Paint

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Test

Label Pack for

shipment

Operations

9 - 60

Staffing Work Cells Example

600 Mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance
chart total
operation time
= 140 seconds
Takt time = (8 hrs x 60 mins) / 600 units
= .8 mins = 48 seconds
Total operation time required
Workers required =
Takt time
= 140 / 48 = 2.91
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Work Balance Charts

Used for evaluating operation
times in work cells
Can help identify bottleneck
operations
Flexible, cross-trained employees
can help address labor bottlenecks
Machine bottlenecks may require
other approaches
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Focused Work Center and

Focused Factory
Focused Work Center
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

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
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Focused Work Center and

Focused Factory
Work Cell

Focused Work Center

Focused Factory

Description: Work cell is A focused work center is

a temporary producta permanent productoriented arrangement
oriented arrangement
of machines and
of machines and
personnel in what is
personnel in what is
ordinarily a processordinarily a processoriented facility
oriented facility

A focused factory is a
permanent facility to
produce a product or
component in a
product-oriented
facility. Many focused
factories currently
being built were
originally part of a
process-oriented
facility

Example: A job shop

with machinery and
personnel rearranged
to produce 300 unique
control panels

Example: A plant to
produce window
mechanism for
automobiles

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Example: Pipe bracket

manufacturing at a
shipyard

Table 9.2

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Repetitive and ProductOriented Layout

Organized around products or families of
similar high-volume, low-variety products
1. Volume is adequate for high equipment
utilization
2. Product demand is stable enough to justify high
investment in specialized equipment
3. Product is standardized or approaching a phase
of life cycle that justifies investment
4. Supplies of raw materials and components are
adequate and of uniform quality
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Product-Oriented Layouts
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
Both types of lines must be balanced so that the
time to perform the work at each station is the same
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Product-Oriented Layouts
Advantages
1.
2.
3.
4.
5.

Low variable cost per unit

Low material handling costs
Reduced work-in-process inventories
Easier training and supervision
Rapid throughput

Disadvantages
1. High volume is required
2. Work stoppage at any point ties up the
whole operation
3. Lack of flexibility in product or production
rates
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McDonalds Assembly Line

Figure 9.12

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Disassembly Lines
Disassembly is being considered in new
product designs
Green issues and recycling standards are
important consideration
Automotive
disassembly
is the 16th
largest
industry in
the US
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Assembly-Line Balancing
Objective is to minimize the imbalance
between machines or 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
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Wing Component Example

Performance
Time
Task
(minutes)
A
10
B
11
C
5
D
4
E
12
F
3
G
7
H
11
I
3
Total time 66

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Task Must Follow

Task Listed
Below

A
B
B
A
C, D
F
E
G, H

This means that

tasks B and E
cannot be done
until task A has
been completed

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Wing Component Example

Performance
Time
Task
(minutes)
A
10
B
11
C
5
D
4
E
12
F
3
G
7
H
11
I
3
Total time 66

Task Must Follow

Task Listed
Below

A
B
B
A
C, D
F
10
E
A
G, H

5
11

B
12

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C
4

G
3

11

H
Figure 9.13

9 - 72

Wing Component Example

Performance
Time
Task
(minutes)
A
10
B
11
C
5
D
4
E
12
F
3
G
7
H
11
I
3
Total time 66

480 available
Task Must Follow
mins per day
Task Listed
Below
40 units required

A
Production time
B
available per day
Cycle
B time = Units required per day
A
= 480 / 40
5
C, D
= 12 minutes per unit
C
F
10
11
3
7
n
E
Time
for taskFi
A i
B
G
=1
Minimum
G, H
4
3
number of =
Cycle time
workstations

12

11

= 66 / 12
E
H
= 5.5 or 6 stations

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Figure 9.13

9 - 73

Heuristics
WingLine-Balancing
Component
Example
1. Longest task time
Choose the available
task
480
available
Performance Task Must
Follow
with
the longest task time
mins per day
Time
Task Listed
Task2. Most
(minutes)
40 task
units required
following tasksBelow
Choose the available
A
10
with the largestCycle
number
of= 12 mins
time
B
11
Afollowing tasksMinimum
= 5.5 or 6
C
5
B
workstations
D 3. Ranked4 positional
BChoose the available task for
weight
which the sum of following
E
12
Atask times is the longest
5
F
3
C, D
C task
G 4. Shortest
7 task time
FChoose
available
10 the 11
3
7
H
11
Ewith the shortest task time
A
B
G
F
I
3
G, H
4
3
5.
Least
number
of
Choose
the
available
task
Totalfollowing
time 66 tasks
D
I
with the least12number
of 11
following tasks
E
H
Table 9.4

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Figure 9.13

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Wing Component Example

480 available
Performance Task Must Follow
mins per day
Time
Task Listed
Task
(minutes)
Below
40 units required
A
10

Cycle time = 12 mins

B
11
A
Minimum = 5.5 or 6
Station
5
C
52
B
workstations
C B
D
4
11
3
7
E 10
12
A
B
F
G
F A
3
C, D
4
3
G
7
F
D E Station 3
H
11
I
Station 3
I
3
G, H
12
11
Station
6 6
Station
Total
Stationtime 66
E
H
1
Station
4

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Station
5

Figure 9.14
9 - 75

Wing Component Example

480 available
Performance Task Must Follow
mins per day
Time
Task Listed
Task
(minutes)
Below
40 units required
A
10

Cycle time = 12 mins

B
11
A
Minimum = 5.5 or 6
C
5
B
workstations
D
4
B
E
12
A
F
3
C, D
Task times
G
7
F
Efficiency =
(Actual
number ofEworkstations) x (Largest cycle time)
H
11
I
3 minutes / (6 stations)
G, H
= 66
x (12 minutes)
Total time
66
= 91.7%

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of the publisher.
Printed in the United States of America.

2011 Pearson

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