6. Processes
Selection and Layout
Operations Management
Dr. Ron Lembke
Process Flow Structures
• Job Shop - low standardization, every order is a
different product, new design
• Batch Shop - Stable line of products, produced in
batches
• Assembly Line - Discrete parts moving from
workstation to workstation
• Continuous Flow - Undifferentiated flow of
product (beer, paper, etc.)
Process Strategy
Variety
High
Medium
project
Workcenter Manufacturing
Cell
Assembly
Line Continuous
Process
Low
Low
Medium
High
Volume
Process Strategy
Variety
High
Process Focus
(job shops)
Repetitive (cars,
motorcycles)
Medium
Product Focus
(steel, glass)
Low
Low
Medium
High
Volume
Process Focus (Job Shop)
•
•
•
•
•
•
Low volume, high variety, “do it all”
“Job shop” environment (e.g. Kinko’s)
High amount of flexibility
Each job is different
Relatively high cost per unit
Very high flexibility
Process Selection / Evolution
•
•
•
Products tend to move through the four stages over life cycle.
Unit costs decrease as standardization increases, and
production increases.
Flexibility decreases as volume, standardization increase
Designing the System
• How do we decide where to put things?
Layout Types
•
•
•
•
•
•
Project or Fixed-position layout
Process-oriented layout
Product-oriented layout
Office layout
Warehouse layout
Retail/service layout
Project or Fixed-Position
• Design is for stationary project
• Workers & equipment come to site
• Complicating factors
•
•
Limited space at site
Changing material needs
• Examples
•
•
Ship building
Highway construction
Process-Oriented Layout
• Design places departments with large flows of material or people
together
• Dept. areas have similar processes
•
e.g., All x-ray machines in same area
• Used with process-focused processes
• Examples
•
•
Hospitals
Machine shops
Process-Oriented Layout
Floor Plan
Table Saws
Office
© 1995
Corel Corp.
Drill Presses
Tool Room
© 1995 Corel Corp.
Process Layout
+ Allows specialization - focus on one skill
+ Allows economies of scale - worker can watch several
machines at once
+ High level of product flexibility
-- Encourages large lot sizes
-- Difficult to incorporate into JIT
-- Makes cross-training difficult
Product-Oriented Layout
• Facility organized around product
• Design minimizes line imbalance
•
Delay between work stations
• Types: Fabrication line; assembly line
• Examples
•
•
•
Auto assembly line
Brewery
Paper manufacturing.
Cellular Layout (Work Cells)
• Special case of process-oriented layout
• Consists of different machines brought together to make a
product
• May be temporary or permanent
• Example: Assembly line set up to produce 3000 identical parts
in a
job shop
Work Cell Floor Plan
Saws
Tool Room
Drills
Work Cell
Office
Work Cell Advantages
Reduces:
Inventory
Floor space
Direct labor
costs
Increases:
Equipment
utilization
Employee
participation
Quality
Work Cell Layout
+ Facilitates cross-training
+ Can easily adjust production volumes
+ Easy to incorporate into JIT
-- Requires higher volumes to justify
-- May require more capital for equipment
Process-Oriented Example
You work in facilities engineering. You want to find
the cost of this layout. The cost of moving 1 load
between adjacent dept. is $1. The cost between
nonadjacent dept. is $2.
Dept. 1
Dept. 2
Dept. 3
40 ft.
Dept. 4
Dept. 5
Dept. 6
60 ft.
There are 6! or 720 possibilities! Clearly,
we can’t look at them all.
From-to-Matrix
1
1
2
Dept.
2
50
Department
3
4
5
6
6
100
0
0
20
30
50
10
0
20
0
100
50
0
3
4
5
Number of Trips
0
Schematic Diagram & Cost
100
50
1
20
50
3
10
20
50
4
2
30
100
5
6
Dept.
Dept.
1
1
1
4
4
4
2
2
3
3
2
6
2
3
5
5
3
6
Total Cost
Cost
$
$
$
$
$
$
$
$
$
200
50
40
50
40
50
10
30
100
$570
Schematic Diagram & Cost
Dept.
30
2
50
1
100
10
50
20
20
4
50
5
1
1
1
4
3
4
4
2
100 2
3
Dept.
2
3
6
2
3
5
5
3
6
Cost
$
$
$
$
$
$
$
$
$
50
100
20
50
40
50
10
60
100
6
Total Cost
$480
Line Balancing
•
•
•
•
•
Situation: Assembly-line production.
Many tasks must be performed, and the sequence is flexible
Parts at each station same time
Tasks take different amounts of time
How to give everyone enough, but not too much work for the
limited time.
Product-Oriented Layout
Operations
Belt
Conveyor
Precedence Diagram
Draw precedence graph
(times in seconds)
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Cycle Time
• The more units you want to produce per hour, the less
time a part can spend at each station.
• Cycle time = time spent at each spot
CT =
Production Time in each day
Required output per day (in units)
• C = 800 min / 32 = 25 min
• 800 min = 13:20
Number of Workstations
• Given required cycle time, find out the theoretical minimum
number of stations
Nt =
Sum of task times (T)
Cycle Time (C)
• Nt = 97 / 25 = 3.88 = 4 (must round up)
Assignments
Assign tasks by choosing tasks:
• with largest number of following tasks
• OR by longest time to complete
Break ties by using the other rule
Number of Following Tasks
Nodes
C
D
A
B,E,F
G,H
I
# after
6
5
4
3
2
1
Choose C first, then, if possible,
add D to it, then A, if possible.
Precedence Diagram
Draw precedence graph
(times in seconds)
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Number of Following Tasks
Nodes
A
B,E,F
G,H
I
# after
4
3
2
1
A could not be added to first
station, so a new station must be
created with A.
B, E, F all have 3 stations after,
so use tiebreaker rule: time.
B=5
E=8
F=3
Use E, then B, then F.
Precedence Diagram
E cannot be added to A, but E can be added to C&D.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
Next priority B can be added to A.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
Next priority B can be added to A.
Next priority F can’t be added to either.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Number of Following Tasks
Nodes
G,H 2
I
# after
1
G and H tie on number coming
after.
G takes 15, H is 12, so G goes
first.
Precedence Diagram
G can be added to F.
H cannot be added.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
I is next, and can be added to H, but J cannot be added also.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Calculate Efficiency
• We know that at least 4 workstations will be needed. We
needed 5.
Efficiencyt =
Sum of task times (T)
Actual # WS * Cycle Time
• = 97 / ( 5 * 25 ) = 0.776
• We are paying for 125 minutes of work, where it only takes 97.
Precedence Diagram
Try choosing longest activities first.
A is first, then G, which can’t be added to A.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
H and I both take 12, but H has more coming after it, then add I.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
D is next, followed by E, so we combine them, but we could have
combined E&G. We’ll try that later.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
J is next, all alone, followed by C and B.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
F is last. We end up with 6 workstations.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
Go back and try combining G and E instead of D and E.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
J is next, all alone. C is added to D, and B is added to A.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Can we do better?
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Precedence Diagram
F can be added to C&D. Five WS again.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Reduced CT
•
•
•
•
Efficiency = 97/100 = 0.97. Much better.
If we set CT = 20, we can produce 3 units per hour.
Goal of 32 units can be produced in 20 * 32 = 640 minutes.
Significant savings over original 800 minutes.
Can we do better?
If we have to use 5 stations, we can get a solution with CT = 20.
A
B
G
5
20
E
C
D
8
5
10
F
15
H
3
12
I
J
12
7
Calculate Efficiency
• With 5 WS at CT = 20
Efficiencyt =
Sum of task times (T)
Actual # WS * Cycle Time
• = 97 / ( 5 * 20 ) = 0.97
• We are paying for 100 minutes of work, where it only takes 97.
Output and Labor Costs
• With 20 min CT, and 800 minute workday
• Output = 800 min / 20 min/unit = 40
• Don’t need to work 800 min
• Goal 25 units: 25 * 20 = 500 min/day
• 5 workers * 500 min = 2,500 labor min.
• We were trying to achieve
• 4 stations * 800 min = 3,200 labor min.
• Significant labor cost savings
Handling Long Tasks
• Long tasks make it hard to get efficient combinations.
• Consider splitting tasks, if physically possible.
• If not:
• Parallel workstations
• use skilled (faster) worker to speed up
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
• No. items picked
© 1995 Corel Corp.
Warehouse Flow
Receiving
Shipping
Warehouse Layout
Try to organize storage in such a way that order pickers
can move through the product in a logical and timely
manner.
Warehouse Layout
•
•
•
•
•
Fastest near the front
Fastest within easy reach
Bulk storage vs. Single item picking
Serpentine vs. oval picking order
Restocking: frequency, safety stock
Cross-Docking
In-coming
Outgoing
• Transferring goods
from incoming
trucks at receiving
docks
to outgoing trucks
at shipping docks
• Avoids placing
goods into storage
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
Retail/Service Layout
• Design maximizes product exposure to customers, profitability per
square foot
• Decision variables
•
•
Store flow pattern
Allocation of (shelf) space to products
• Types
•
•
Grid design
Free-flow design
Video
Retail/Service Layout
Grid Design
Grocery Store
Meat
Milk
Bread
Office
Carts
Checkout
Retail/Service Layout
Free-Flow Design
Apparel Store
Trans.
Counter
Feature
Display
Table
Retail Store
Flow Guidelines
• “Prisoner” aisles make you enter store
in a particular route, and pass by
certain displays
• Often contain less profitable (for the
store) brands
• “Decompression Zone” people walk past
first rows of items before settling into
shopping mode.
Retail Store
Flow Guidelines
• Bakery, coffee shop,
restaurant spread aromas by
entrance to stimulate taste
buds
• Siren song of the Starbucks
(Safeway)
• Food samplers throughout
store do same
Retail Store Flow Guidelines
• Frequently purchased items
at far sides of stores so you
have to go through entire
store (produce or meat).
• Profitable sections like
produce placed where you
keep running into them
Meat
Milk
Produce
Retail Store Flow Guidelines
• Major items in middle of aisles
so you have to walk down into
middle of aisle (Cereal, peanut
butter)
• ‘Power items’ on both sides of
aisle so you have to look at
both sides
Peanut
Butter
Cereal
Retail Store
Flow Guidelines
• Quality of produce section
important in customer
decisions about which
stores to visit, so produce is
often prominently
displayed upon entrance
• People like to see what
they’re looking for, not
read signs
Cereal
Peanut
Butter
produce
Retail Store
Flow Guidelines
• End caps for highvisibility sale items
• Large quantities of
inventory serve as
“psychic stock”
• If there is a lot of it, it
must be on sale
• Stimulates sales
© 1995
Corel
Corp.
Retail Store
Flow Guidelines
• Eliminate cross-over
aisles:
• less wasted floor space,
• you have to look at more
items,
• the more time you spend
in the store, the more you
will buy.
Shelf Space Planogram
•
Example: P&G
2 ft.
SUAVE
SUAVE
VO-5
PERT
VO-5
PERT
PERT
VO-5
VO-5
VO-5
PERT
5 facings
PERT
• Computerized tool for
shelf-space
management
• Generated from
store’s scanner data
on sales
• Often supplied by
manufacturer
Shelf Placement
• Companies prefer to be at eye-level or at child-reaching level
• Close to leading brands or high-draw items: snack foods next
to the peanut butter or across from the cereal:
• Lots of kids visit the area
Slotting Fees
•
•
•
•
Manufacturer pays retailer to get a product into a store
35,000 new grocery products per year
Grocery stores often stock 30,000 items
Impossible to evaluate all new products to choose the
best new ones
• Slotting fees guarantee grocer profits on a product, help
balance risk of trying unknown product.
• Grocery is a narrow margin business, slotting fees can
represent a significant revenue source.
Slotting Fees
• Senate Small Business Committee held hearings
on them in 2000.
• Industry refused to cooperate with GAO.
• Growers of produce (not just brand names) now
getting involved and complaining.
• Small businesses claim they can’t afford the big
payments big companies can make.
• Advocates say small companies can “put their
money where their mouths are” just like anyone
else
Perimeter Items
• People follow perimeter pattern
• Sale items on end – everyone sees
• Half of a store’s profit comes from items on the
perimeter
• Breakfast cereal brings in the most dollars per
square foot
• Manufacturer incentives increase profitability of
soft drinks
• “Anchors” at ends of a section: milk and butter
at opposite ends of dairy case