PROCESS
SELECTION AND
FACILITY LAYOUT
Chapter 6
MIS 373: Basic Operations Management
LEARNING OBJECTIVES
• After this lecture, students will be able to
1. Compare the four basic processing types
2. Describe product layouts and their main advantages and
disadvantages
3. Describe process layouts and their main advantages and
disadvantages
4. Develop simple product layouts
5. Develop simple process layouts
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PROCESS SELECTION
• Process selection
• Deciding on the way production of goods or
services will be organized
• Occurs when:
• Planning of new products or services
• Technological changes in product or equipment
• Competitive pressure
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PROCESS SELECTION AND
SYSTEM DESIGN
Forecasting
(demand)
Capacity
Planning
Layout
Product and
Service Design
Technological
Change
MIS 373: Basic Operations Management
Facilities and
Equipment
Process
Selection
Work
Design
4
PROCESS STRATEGY
• Key aspects of process strategy:
• Capital Intensity
• The mix of equipment and labor that will be used by
the organization
• Process flexibility
• The degree to which the system can be adjusted to
changes in processing requirements due to such
factors as
• Product and service design changes
• Volume changes
• Changes in technology
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NEW PROCESS STRATEGY
 HBR 12/6/12 Three Examples of New Process Strategy
 There are three fundamental ways that companies can improve their
processes in the coming decade:
1. expand the scope of work managed by a company to include customers,
suppliers, and partners;
• Shift to global, virtual, cross-organizational teams of specialized entities
that are knitted together to serve customers
• To keep such a multiparty system from degenerating into chaos, virtual
process teams must have aligned goals and support systems.
2. target the increasing amount of knowledge work; and
• Big data analytics
• Crowdsourcing, e.g., innocentive.com, TopCoder.com & Heritage Health Prize
• HBR : Using the Crowd as an Innovation Partner
3. reduce cycle times to durations previously considered impossible
• Agile processes
• Managers must speed the flow of information so that decisions can be made
faster at all levels, from top to bottom.
PROCESS SELECTION
Process choice is demand driven:
1. Variety: How much?
2. Equipment flexibility: To what degree?
3. Volume: Expected output?
• Process Types
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PROCESS SELECTION
Process choice is demand driven:
1. Variety
• How much?
2.
3.
Equipment flexibility
• To what degree?
Volume
• Expected output?
Process Types
• Job shop
• Small scale
• e.g., doctor, tailor
• Batch
• Moderate volume
• e.g., bakery
• Repetitive/assembly line
• High volumes of standardized
goods or services
• e.g., automobiles
• Continuous
• Very high volumes of nondiscrete goods
• e.g., petroleum products
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TYPES OF PROCESSING
Repetitive/
Assembly
Job Shop
Batch
Description
Customized
goods or
services
Semistandardized
goods or
services
Standardized
goods or
services
Highly
standardized
goods or
services
Advantages
Able to handle a
wide variety
of work
Flexibility; easy
to add or
change
products or
services
Low unit cost,
high volume,
efficient
Very efficient,
very high
volume
Moderate cost
per unit,
moderate
scheduling
complexity
Low flexibility,
high cost of
downtime
Very rigid, lack of
variety, costly
to change,
very high cost
of downtime
Disadvantages Slow, high cost
per unit,
complex
planning and
scheduling
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Continuous
9
PRODUCT-PROCESS MATRIX
Flexibility/Variety
Opportunity
costs
Volume
Out of
pocket costs
• The diagonal represents the “ideal” match
• Hybrid process are possible (e.g., job-shop & batch)
• Process choice may change as products goes through its life-cycles
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PROCESS CHOICE EFFECTS
Activity/
Function
Projects
Batch
Repetitive
Continuous
Cost estimation Simple to complex Difficult
Somewhat routine
Routine
Routine
Cost per unit
Moderate
Low
Low
Very high
Job Shop
High
Equipment used Varied
General purpose General purpose
Special purpose Special purpose
Fixed costs
Varied
Low
Moderate
High
Very high
Variable costs
High
High
Moderate
Low
Very low
Labor skills
Low to high
High
Moderate
Low
Low to high
Marketing
Promote
capabilities
Promote
capabilities
Promote
Promote
Promote
capabilities; semistandardized
standardized
standardized
goods and
goods and
goods and services services
services
Scheduling
Complex, subject Complex
to change
Moderately complex
Routine
Routine
Project: used for work that is none routine with a unique set of objective to be
accomplished in a limited time frame, e.g., launching a new product, publishing a book
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PRODUCT AND SERVICE
PROFILING
 Product or service profiling
 Linking key product or service requirements to process
capabilities
 Key dimensions relate to
o Range of products or services that can be processed
o Expected order sizes
o Expected frequency of schedule changes
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DISCUSSION
 Work with a partner and match the following products or
services with the best process
Products/Services
Processes
Ice-cream manufacturer
Automatic carwash
Job-shop
Batch
Steel
Repetitive
Books
Continuous
Airlines
Surgery
Movie theater
Sugar
Beer
Flour
Tips: Think in terms of those key dimensions:
o
o
o
Range of products or services that can be processed
Expected order sizes
Expected frequency of schedule changes
TECHNOLOGY
• Technological Innovation
• The discovery and development of new or improved products,
services, or processes for producing or providing them
• Technology
• The application of scientific discoveries to the development and
improvement of products and services and/or the processes that
produce or provide them
• Process technology includes methods, procedures, and
equipment used to produce goods and provide services.
• RFID, online banking, 3D printing, …
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FACILITIES LAYOUT
• Layout
• The configuration of departments, work centers, and equipment, with
particular emphasis on movement of work (customers or materials)
through the system
• Facilities layout decisions arise when:
• Designing new facilities
• Re-designing existing facilities
• The basic objective of layout design is to facilitate a smooth flow of
work, material, and information through the system.
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BASIC LAYOUT TYPES
• Product layout
•
Layout that uses standardized processing operations to
achieve smooth, rapid, high-volume flow
• Process layout
•
Layout that can handle varied processing requirements
• Fixed position layout
•
Layout in which the product or project remains stationary,
and workers, materials, and equipment are moved as
needed
• Combination layouts
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PRODUCT LAYOUTS
• Product layout
•
•
Layout that uses standardized processing operations to achieve
smooth, rapid, high-volume flow
How?
Raw materials
or customer
Material
and/or
labor
Station
1
Material
and/or
labor
Station
2
Material
and/or
labor
Station
3
Station
4
Finished
item
Material
and/or
labor
Used for Repetitive Processing
Repetitive or Continuous
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PRODUCT LAYOUTS
• Although product layouts often follow a straight line, a straight
line is not always the best, and layouts may take an L, O, S,
or U shape. Why?
•
•
•
•
L:
Image source: mdcegypt.com
O:
S:
U: more compact, increased communication facilitating team work,
minimize the material handling
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NON-REPETITIVE PROCESSING:
PROCESS LAYOUTS
• Process layouts
• Layouts that can handle varied processing requirements
Dept. A
Dept. C
Dept. E
Dept. B
Dept. D
Dept. F
Used for Intermittent processing
Job Shop or Batch
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PRODUCT LAYOUTS
Advantages
• High rate of output
• Low unit cost
• Labor specialization
• Low material handling cost per
unit
• High utilization of labor and
equipment
• Established routing and
scheduling
• Routine accounting,
purchasing, and inventory
control
MIS 373: Basic Operations Management
Disadvantages
 Creates dull, repetitive jobs
 Poorly skilled workers may not
maintain equipment or quality of
output
 Fairly inflexible to changes in
volume or product or process
design
 Highly susceptible to shutdowns
 Preventive maintenance, capacity
for quick repair and spare-parts
inventories are necessary
expenses
 Individual incentive plans are
impractical
20
PROCESS LAYOUTS
Advantages
• Can handle a variety of
processing requirements
• Not particularly vulnerable to
equipment failures
• General-purpose equipment is
often less costly and easier
and less costly to maintain
• It is possible to use individual
incentive systems
MIS 373: Basic Operations Management
Disadvantages
• In-process inventories can be high
• Routing and scheduling pose
continual challenges
• Equipment utilization rates are low
• Material handling is slow and less
efficient
• Complicates supervision
• Special attention necessary for
each product or customer
• Accounting, inventory control, and
purchasing are more complex
21
FIXED POSITION LAYOUTS
• Fixed Position Layout
• Layout in which the product or project remains stationary, and
workers, materials, and equipment are moved as needed
• E.g., farming, firefighting, road building, home building, remodeling
and repair, and drilling for oil
MIS 373: Basic Operations Management
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COMBINATION LAYOUTS
• Some operational environments use a combination of the
three basic layout types:
• Hospitals
• Supermarket
• Shipyards
• Some organizations are moving away from process layouts in
an effort to capture the benefits of product layouts
MIS 373: Basic Operations Management
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LINE BALANCING
 Line balancing
 The process of assigning tasks to workstations in such a way that the
workstations have approximately equal time requirements
 Goal:
 Obtain task grouping that represent approximately equal time
requirements since this minimizes idle time along the line and results in a
high utilization of equipment and labor
 Why is line balancing important?
1. It allows us to use labor and equipment more efficiently.
2. To avoid fairness issues that arise when one workstation must
work harder than another.
• Input
• Tasks sequencing (precedence diagram)
• Tasks time
• Operating time
MIS 373: Basic Operations Management
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PRECEDENCE DIAGRAM
• Precedence diagram
• A diagram that shows elemental tasks and their
precedence requirements
Task
Duration Immediate
(min)
predecessor
a
Select material 0.1
-
b
Make petals
1.0
a
c
Select
rhinestones
0.7
-
d
Glue
rhinestones
0.5
b, c
e
Package
0.2
d
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CYCLE TIME
• Cycle time
• The maximum time allowed at each workstation to
complete its set of tasks on a unit
• Minimum Cycle Time = longest task time = 1.0 min
• Maximum Cycle time = Σt = sum of task time = 2.5 min
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OUTPUT RATE OF A LINE
• Cycle time also establishes the output rate of a line
Operating time per day
Cycle time =
Desired output rate
Operating time per day
Output rate =
Cycle time
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HOW MANY WORKSTATIONS
ARE NEEDED?
• The required number of workstations is a function of:
• Desired output rate
• The ability to combine tasks into a workstation
• (theoretical) Minimum number of stations
Nmin=
∑t
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
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HOW MANY WORKSTATIONS
ARE NEEDED?
• The required number of workstations is a function of:
• Desired output rate
The ability
to a
combine
tasks into
a workstation
Q:• Why
this is
theoretical
value?
A: There are often scraps or idle times.
• (theoretical) Minimum number of stations
Example:
∑ tto finish
4 tasks, each require 6 hours
Nmin=
A station can handle 8 hours
of tasks a day.
Cycle amount
time
You will need 4 stations to complete all tasks, instead of 3.
where
Nmin = (6+6+6+6) / 8 = 3
Nmin = theoretical minimum number of stations
∑ t = sum of task times
MIS 373: Basic Operations Management
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DESIGNING PRODUCT
LAYOUTS
 Some Heuristic (Intuitive, may not result in optimal solution)
Rules:
 Assign tasks in order of most following tasks
 Count the number of tasks that follow
 Assign tasks in order of greatest positional weight.

Positional weight is the sum of each task’s time and the times of all
following tasks.
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EXAMPLE:
ASSEMBLY LINE BALANCING
• Arrange tasks (shown in the figure) into three workstations
• Assume the cycle time of each workstation is 1.2 min.
• Assign tasks in order of the most number of followers
• Break tie using greatest positional weight
MIS 373: Basic Operations Management
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• Assign tasks in order of the most number of followers
Time
Workstation Remaining
1
1.2
Eligible
Revised
Assign Time
Task
Remaining
Station
Idle Time
a, c
2
3
Start with CT
(1.2 min. in this
example)
MIS 373: Basic Operations Management
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• Assign tasks in order of the most number of followers
Time
Workstation Remaining
1
1.2
Eligible
Revised
Assign Time
Task
Remaining
a, c
a
Station
Idle Time
1.1
2
3
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Time
Workstation Remaining
1
1.2
1.1
Eligible
a, c
c, b
Revised
Assign Time
Task
Remaining
a
Station
Idle Time
1.1
2
3
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Time
Workstation Remaining
1
1.2
1.1
Eligible
Revised
Assign Time
Task
Remaining
a, c
c, b
a
b
Station
Idle Time
1.1
0.1
2
3
Break tie using
greatest
positional weight
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Time
Workstation Remaining
1
1.2
1.1
0.1
Eligible
a, c
c, b
c
Revised
Assign Time
Task
Remaining
a
b
Station
Idle Time
1.1
0.1
2
3
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Time
Workstation Remaining
1
1.2
1.1
0.1
Eligible
Revised
Assign Time
Task
Remaining
a, c
c, b
c
a
b
-
Station
Idle Time
1.1
0.1
0.1
2
3
Can’t assign c to this
workstation because the
workstation doesn’t have
enough time (0.1) to
complete c (0.7).
MIS 373: Basic Operations Management
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Eligible
Revised
Assign Time
Task
Remaining
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
1.2
c
c
0.5
Time
Workstation Remaining
1
2
Station
Idle Time
0.1
3
Start with CT
(1.2 min. in this
example)
MIS 373: Basic Operations Management
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Eligible
Revised
Assign Time
Task
Remaining
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
1.2
0.5
c
d
c
d
0.5
0
Time
Workstation Remaining
1
2
Station
Idle Time
0.1
0
3
MIS 373: Basic Operations Management
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Eligible
Revised
Assign Time
Task
Remaining
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
1.2
0.5
c
d
c
d
0.5
0
1.2
e
e
1
Time
Workstation Remaining
1
2
3
Station
Idle Time
0.1
0.0
1.0
Start with CT
(1.2 min. in this
example)
MIS 373: Basic Operations Management
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Eligible
Revised
Assign Time
Task
Remaining
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
1.2
0.5
c
d
c
d
0.5
0
1.2
e
e
1
Time
Workstation Remaining
1
2
3
Station
Idle Time
0.1
0.0
1.0
Idle time per cycle
=0.1+0.0+1.0=1.1
MIS 373: Basic Operations Management
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LAYOUT
a&b
c&d
e
(0.1+1.0)
(0.7+0.5)
(0.2)
Task
Duration Immediate
(min)
predecessor
a
Select material 0.1
-
b
Make petals
1.0
a
c
Select
rhinestones
0.7
-
d
Glue
rhinestones
0.5
b, c
e
Package
0.2
d
MIS 373: Basic Operations Management
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MEASURING EFFECTIVENESS
• Balance delay (percentage of idle time)
• Percentage of idle time of a line
Balance Delay =
Idle time per cycle
Nactual × Cycle time
× 100%
where
Nactual = actual number of stations
• Efficiency
• Percentage of busy time of a line
Efficiency = 100% − Balance Delay
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EXAMPLE:
MEASURING EFFECTIVENESS
Eligible
Revised
Assign Time
Task
Remaining
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
1.2
0.5
c
d
c
d
0.5
0
1.2
e
e
1.0
Time
Workstation Remaining
1
2
3
Station
Idle Time
0.1
0.0
1.0
Percentage of idle time = [(0.1 + 0 + 1.0) ÷ (3 × 1.2)] × 100% = 30.55%
Efficiency = 100% – 30.55% = 69.45%
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EXERCISE PROBLEMS
 (Textbook page 267) Using the information contained in the
table shown, do each of the following:
1. Draw a precedence diagram.
2. Assuming an eight-hour workday,
compute the cycle time needed to
obtain an output of 400 units per day.
3. Determine the minimum number of
workstations required.
4. Assign tasks to workstations using
this rule: Assign tasks according to
greatest number of following tasks.
In case of a tie, use the tiebreaker of
assigning the task with the longest
processing time first.
5. Compute the resulting percent idle
time and efficiency of the system
EXERCISE SOLUTION
1. Draw a precedence diagram
EXERCISE SOLUTION
2. Assuming an eight-hour
workday, compute the cycle time
needed to obtain an output of 400
units per day
Cycle time =
Operating
time per day
Desired
output rate
=
480 minutes
per day
400 units per
day
= 1.2 minutes per cycle
EXERCISE SOLUTION
3. Determine the minimum number
of workstations required
∑t
3.8 minutes per unit
Nmin=
=
1.2 minutes per cycle
Cycle time
time per station
where
= 3.17 stations
( round to 4)
Nmin = theoretical minimum number of stations
∑ t = sum of task times
EXERCISE SOLUTION
4. Assign tasks to workstations using this rule: Assign tasks
according to greatest number of following tasks. In case of a
tie, use the tiebreaker of assigning the task with the longest
processing time first.
EXERCISE SOLUTION
5. Compute the resulting percent idle time and efficiency of the
system
Percent idle time =
Idle time per cycle
Nactual × Cycle time
=
1.0 min.
4 × 1.2 min.
= 20.83%
× 100%
DESIGNING PROCESS
LAYOUTS
• The main issue in designing process layouts concerns the
relative placement of the departments
• Measuring effectiveness
• key objectives in designing process layouts are to
minimize:
• transportation cost
• distance
• time
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INFORMATION REQUIREMENTS
• In designing process layouts, the following
information is required:
1. A list of work stations (departments) to be arranged and
their dimensions
2. A projection of future work flows between the pairs of
work centers
3. The distance between locations - and the cost per unit of
distance to move loads between them
4. The amount of money to be invested in the layout
5. A list of any special considerations
6. The location of key utilities, access and exit points, etc.
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DESIGNING PROCESS LAYOUTS
MINIMIZE TRANSPORTATION COSTS
• Goal:
• Assign departments 1, 2, 3 to locations A, B, C in a way that
minimizes transportation costs.
A
B
C
• Heuristic:
• Assign departments with the greatest interdepartmental work flow first
to locations that are closet to each other.
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EXAMPLE: MINIMIZE
TRANSPORTATION COSTS
Distance
Location
40
Trip
From\To
A
B
C
A-B
20
A
-
20
40
B-C
30
-
30
A-C
40
B
C
Closest
-
Pair
Work flow
From\To
1
2
3
1-3
170
1
-
30
170
2-3
100
-
100
1-2
30
2
3
MIS 373: Basic Operations Management
20
B
30
C
Place dept. 1&3
in A&B
Work flow
Department
A
Highest work flow
54
EXAMPLE: MINIMIZE
TRANSPORTATION COSTS
• Place departments 1&3 in A&B (2 options)
1
A
3
B
3
C
A
1
B
C
• 2&3 have higher work flow than 1&2
(100>30)
• 2&3 should be located closer than 1&2
• C closer to B than to A (30<40)
• Solution:
30
1
A
170
3
B
MIS 373: Basic Operations Management
100
40
A
20
Trip
B
30
C
Pair
Work flow
A-B
20
1-3
170
B-C
30
2-3
100
A-C
40
1-2
30
2
C
55
CLOSENESS RATINGS
• Allows the considerations
of multiple qualitative
criteria
• Input from management or
subjective analysis
• Indicates the relative
importance of each
combination of department
pairs
Muther’s grid
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56
CLOSENESS RATINGS
• Muther’s grid
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
A
A
E
X
U
U
X
O
I
A
A
O
X
A
A
Dept 6.
MIS 373: Basic Operations Management
A
E
I
O
U
X
Absolutely necessary
Very important
Important
Ordinary importance
Unimportant
Undesirable
Suppose this is the floor plan of
your company, how would you
arrange the six departments?
57
CLOSENESS RATINGS:
EXAMPLE
1. List critical departments (either A or X):
A
X
Dept. 1
1-2
1-4
Dept 2.
1-3
3-6
Dept 3.
2-6
3-4
3-5
Dept 4.
4-6
Dept. 5
5-6
Dept 6.
MIS 373: Basic Operations Management
A
A
E
X
U
U
X
O
I
A
A
O
X
A
A
58
CLOSENESS RATINGS:
EXAMPLE
2. Form a cluster of A links
(beginning with the department
that appears most frequently)
4
2
A
1-2
Dept. 1
1-3
Dept 2.
2-6
3-5
4-6
6
5
5-6
A
A
E
X
U
U
X
O
I
A
A
O
X
A
A
Dept 3.
Dept 4.
Dept. 5
Dept 6.
3. Take the remaining A links in order and
add them to this cluster where possible
(rearranging as necessary)
Form separate clusters for departments
that do not link with the main cluster.
MIS 373: Basic Operations Management
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2
1
6
5
3
6-59
CLOSENESS RATINGS:
EXAMPLE
4. Graphically portray the X links
1
3
4
X
1-4
3-6
3-4
6
Dept. 1
A
A
E
X
U
U
X
O
I
A
A
O
X
A
A
Dept 2.
Dept 3.
Dept 4.
Dept. 5
5. Adjust A cluster as necessary.
Dept 6.
(in this case, the A cluster also satisfies
the X cluster).
4
2
1
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5
3
60
CLOSENESS RATINGS:
EXAMPLE
4
2
6
1
Dept. 1
5
1
3
4
3
6
6. Fit cluster into arrangement (e.g., 2x3)
may require some trial and error.
Departments are considered close not only when they touch side
to side but also when they touch corner to corner.
1
2
6
3
5
4
Dept 2.
Dept 3.
Dept 4.
Dept. 5
A
A
E
X
U U
X
O
I
A A
O X
A
A
Dept 6.
7. Check for possible improvements
MIS 373: Basic Operations Management
61
KEY POINTS
• Process choice is demand driven.
• Process type and layout are a function of expected demand
volume and the degree of customization that will be needed.
• Each process type and layout type has advantages and
limitations that should be clearly understood when making
process selection and layout decisions.
• Line balancing helps improving the efficiency of product
layouts whereas Muther’s grid helps deciding process layouts
MIS 373: Basic Operations Management
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