Operation management 6e by russel and taylor ch07

Chapter 7

Capacity and Facilities
Operations
Operations Management
Management -- 66thth Edition
Edition
Roberta Russell & Bernard W. Taylor, III

Copyright 2009 John Wiley & Sons, Inc.

Beni Asllani
University of Tennessee at Chattanooga


Lecture Outline
 Capacity Planning
 Basic Layouts
 Designing Process Layouts
 Designing Service Layouts
 Designing Product Layouts
 Hybrid Layouts

Copyright 2009 John Wiley & Sons, Inc.

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Capacity
 Maximum capability to produce
 Capacity planning



establishes overall level of productive
resources for a firm

 3 basic strategies for timing of capacity expansion in
relation to steady growth in demand (lead, lag, and
average)

Copyright 2009 John Wiley & Sons, Inc.

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Capacity Expansion Strategies

Copyright 2009 John Wiley & Sons, Inc.

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Capacity (cont.)
 Capacity increase depends on




volume and certainty of anticipated demand
strategic objectives
costs of expansion and operation

 Best operating level


% of capacity utilization that minimizes unit costs

 Capacity cushion


% of capacity held in reserve for unexpected
occurrences

Copyright 2009 John Wiley & Sons, Inc.

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Economies of Scale
 it costs less per unit to produce high levels of
output








fixed costs can be spread over a larger number of
units

production or operating costs do not increase
linearly with output levels
quantity discounts are available for material
purchases
operating efficiency increases as workers gain
experience
Copyright 2009 John Wiley & Sons, Inc.

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Best Operating Level for a Hotel

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Machine Objectives of
Facility Layout
Arrangement of areas within a facility to:
 Minimize material-handling
costs
 Utilize space efficiently
 Utilize labor efficiently
 Eliminate bottlenecks
 Facilitate communication and
interaction
 Reduce manufacturing cycle
time

 Reduce customer service time
 Eliminate wasted or redundant
movement
 Increase capacity

 Facilitate entry, exit, and
placement of material, products,
and people
 Incorporate safety and security
measures
 Promote product and service
quality
 Encourage proper maintenance
activities
 Provide a visual control of
activities
 Provide flexibility to adapt to
changing conditions

Copyright 2009 John Wiley & Sons, Inc.

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BASIC LAYOUTS
 Process layouts


group similar activities together
according to process or function they

perform

 Product layouts


arrange activities in line according to
sequence of operations for a particular
product or service

 Fixed-position layouts


are used for projects in which product
cannot be moved
Copyright 2009 John Wiley & Sons, Inc.

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Process Layout in Services
Women’s
lingerie

Shoes

Housewares

Women’s
dresses

Cosmetics
and jewelry

Children’s
department

Women’s
sportswear

Entry and
display area

Men’s
department

Copyright 2009 John Wiley & Sons, Inc.

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Manufacturing Process Layout

Copyright 2009 John Wiley & Sons, Inc.

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A Product Layout
In

Out

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Comparison of Product
and Process Layouts
Product
 Description
Description

 Type
Type of
of process
process

 Sequential
arrangement of
activities
 Continuous, mass
production, mainly
assembly

 Product
Product











Demand
Demand
Volume
Volume
Equipment
Equipment

Process

 Functional
grouping of
activities
 Intermittent, job
shop, batch
production, mainly
fabrication
Standardized, made  Varied, made to
to stock
order
 Fluctuating
Stable
 Low

High
 General purpose
Special purpose

Copyright 2009 John Wiley & Sons, Inc.

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Comparison of Product
and Process Layouts
Product
 Workers
Workers
 Inventory
Inventory

 Limited skills
 Low in-process, high
finished goods
 Storage
 Small
Storage space
space
 Material
Material handling
handling  Fixed path (conveyor)
 Aisles
 Narrow
Aisles

 Scheduling
 Part of balancing
Scheduling
 Layout
Layout decision
decision  Line balancing
 Goal
 Equalize work at each
Goal
station
 Advantage
 Efficiency
Advantage

Process
 Varied skills
 High in-process, low
finished goods
 Large
 Variable path (forklift)
 Wide
 Dynamic
 Machine location
 Minimize material
handling cost
 Flexibility

Copyright 2009 John Wiley & Sons, Inc.

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Fixed-Position Layouts
 Typical of projects in
which product produced
is too fragile, bulky, or
heavy to move
 Equipment, workers,
materials, other
resources brought to the
site
 Low equipment utilization
 Highly skilled labor
 Typically low fixed cost
 Often high variable costs
Copyright 2009 John Wiley & Sons, Inc.

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Designing Process Layouts
 Goal: minimize material handling costs
 Block Diagramming



minimize nonadjacent loads
use when quantitative data is available

 Relationship Diagramming




based on location preference between areas
use when quantitative data is not available

Copyright 2009 John Wiley & Sons, Inc.

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Block Diagramming
 STEPS
 create load summary chart
 quantity in which
 calculate composite (two
material is normally
moved
way) movements
 develop trial layouts
 Nonadjacent load
minimizing number of
 distance farther
nonadjacent loads
than the next block

 Unit load

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Block Diagramming: Example
Load Summary Chart
1

4

2

5

3

FROM/TO

DEPARTMENT

Department 1

2

3

100
—

50
200

—

1
2
3
4
5

—
60

100

Copyright 2009 John Wiley & Sons, Inc.

50

4
50
40
—

5

50
60
—

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Block Diagramming:
Example (cont.)
2
2
1
1
4
3
2
3
1
1

3
4
3
2
5
5
5
4
4
5

200 loads
150 loads
110 loads
100 loads
60 loads

50 loads
50 loads
40 loads
0 loads
0 loads

Nonadjacent Loads:
110+40=150
0
110

1

4

100

2

150
200

3
4

150 200
50 5050 40 60
110
50
60

Grid 2
1

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3
5

5

40

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Block Diagramming:
Example (cont.)
 Block Diagram


type of schematic layout diagram; includes space requirements

(a) Initial block diagram

1

(b) Final block diagram

2

4

3

5

1

3

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2

4

5

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Relationship Diagramming

 Schematic diagram that
uses weighted lines to
denote location preference
 Muther’s grid


format for displaying
manager preferences for
department locations

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Relationship Diagramming: Excel

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Relationship AEA Absolutely
Absolutelynecessary
necessary
E Especially
Especiallyimportant
important
II Important
Diagramming: Example
Important
O Okay
Production
Offices
Stockroom
Shipping and

receiving
Locker room

O
UU
XX

O
U
A
U
O

A
O
U
O

I
X
O

Okay
Unimportant
Unimportant
Undesirable
Undesirable

E
U

A

Toolroom

Copyright 2009 John Wiley & Sons, Inc.

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Relationship Diagrams: Example (cont.)
(a) Relationship diagram of original layout

Offices

Stockroom

Locker
room

Toolroom

Shipping
and
receiving
Key: A
E
I
Production
O

U
X

Copyright 2009 John Wiley & Sons, Inc.

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Relationship Diagrams: Example (cont.)
(b) Relationship diagram of revised layout

Stockroom
Shipping
and
receiving

Offices

Toolroom

Production

Locker
room

Copyright 2009 John Wiley & Sons, Inc.

Key: A
E
I

O
U
X

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