Operations
Management
Chapter 9 –
Layout Strategy
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
© 2006
Prentice
Hall, Inc. Hall, Inc.
©
2006
Prentice
9–1
Innovations at McDonald’s
 Indoor seating (1950s)
 Drive-through window (1970s)
 Adding breakfast to the menu
(1980s)
 Adding play areas (1990s)
Three out of the four are layout
decisions!
© 2006 Prentice Hall, Inc.
9–2
McDonald’s New Kitchen
Layout
 Fifth major innovation
 Sandwiches assembled in order
 Elimination of some steps, shortening of
others
 No food prepared ahead except patty
 New bun toasting machine and new bun
formulation
 Repositioning condiment containers
 Savings of $100,000,000 per year in food
costs
© 2006 Prentice Hall, Inc.
9–3
McDonald’s
New Kitchen
Layout
© 2006 Prentice Hall, Inc.
9–4
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
© 2006 Prentice Hall, Inc.
9–5
Analyzing Service Processes
• Diagramming a process to identify the bottleneck
in operations:
– Operation
– Decision
– Wait
– Flow
© 2006 Prentice Hall, Inc.
9–6
Process Analysis
Terminology
• Cycle Time – the average time between
completions of successive units
• Bottleneck – the factor that limits
production. A bottleneck is a constraint
on the output of the system and could
arise from several sources.
© 2006 Prentice Hall, Inc.
9–7
Process Analysis
Terminology
• Capacity – measure of output per unit of
time when the system is fully busy
• Capacity Utilization – measure of how
much output is actually achieved when the
system is fully busy
© 2006 Prentice Hall, Inc.
9–8
Process Analysis
Terminology
• Throughput Time – the time it takes to
complete a process from time of arrival to
time of exit. It is the sum of the critical
path and the average time spent waiting.
• Rush Order Flow Time – the time it takes
to go through the system from beginning
to end without the waiting time.
© 2006 Prentice Hall, Inc.
9–9
Process Analysis
Terminology
• Direct Labor Utilization – measure of
the percentage of time that workers
are actually contributing value to the
service
• Equal to:
Total Direct Labor Content
(Process Cycle Time) (Number of Workers)
© 2006 Prentice Hall, Inc.
9 – 10
Example
• Drivers license office is under
pressure to increase productivity to
accommodate 120 license renewal
applicants per hour
• One clerk will be added to the staff
• How can the system be changed to
meet this goal?
© 2006 Prentice Hall, Inc.
9 – 11
Driver’s License Example
Activity
Description
CT in seconds
1
15
4
Review app for
correctness
Process & record
payment
Check for traffic
violations
Conduct eye test
5
Photo
20
6
Issue updated
license
30
2
3
© 2006 Prentice Hall, Inc.
30
60
40
9 – 12
Example
Can only process
60 applications/hr
Can process
120 apps/hour
With 1 additional
staff
130/hr
© 2006 Prentice Hall, Inc.
120/hr
9 – 13
Driver’s License Example
Can process
120 apps/hour
With 1 additional
staff
132/hr
© 2006 Prentice Hall, Inc.
9 – 14
Servicescapes
 Ambient conditions - background
characteristics such as lighting,
sound, smell, and temperature
 Spatial layout and functionality which involve customer circulation
path planning, aisle characteristics,
and product grouping
 Signs, symbols, and artifacts characteristics of building design
that carry social significance
© 2006 Prentice Hall, Inc.
9 – 15