Lecture Operations management: Creating value along the supply chain (Canadian edition) - Chapter 7

OPERATIONS MANAGEMENT:
Creating Value Along the Supply Chain,
Canadian Edition
Robert S. Russell, Bernard W. Taylor III, Ignacio Castillo, Navneet Vidyarthi

CHAPTER 7
Capacity and Facilities Design


Learning Objectives

— Discuss long-term capacity planning strategies.
— Indicate the benefits of effective facility layout.
— Explain the general characters of process, product, and fixed-position

facility layouts.
— Use block diagramming and relationship diagramming to design
process layouts.
— Describe the general considerations for service layouts.
— Design a simple product layout for efficiency (balance basic assembly
line).
— Describe three types of hybrid layouts, including cellular layouts,
flexible manufacturing systems, and mixed-model assembly lines.

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Lecture Outline
—Capacity Planning
—Basic Layouts
—Designing Process Layouts

—Designing Service Layouts
—Designing Product Layouts
—Hybrid Layouts

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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
—average

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Capacity Expansion Strategies

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Capacity
—Capacity increase depends on
—volume and certainty of anticipated demand
—strategic objectives
—costs of expansion and operation
—Best operating level
—% of capacity use that minimizes unit costs

—Capacity cushion
—% of capacity held in reserve for unexpected occurrences

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Economies of Scale
—Unit cost decreases as output volume increases
—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

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Best Operating Level for a Hotel

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Objectives of Facility Layout
—Minimize movement and material-handling costs
—Use space efficiently
—Use labour efficiently
—Eliminate bottlenecks
—Facilitate communication and interaction
—between workers
—between workers and their supervisors
—between workers and customers
—Reduce manufacturing cycle time and customer

service time
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Objectives of Facility Layout
—Eliminate wasted or redundant movement
—Facilitate the 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
—Increase capacity
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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

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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

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Manufacturing Process Layout

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A Product Layout

In

Out

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Comparison of Product
and Process Layouts
Product
— Description

— Type of process

— Product
— Demand
— Volume
— Equipment

w

w

w

w
w
w

Process

Sequential
arrangement of
activities
Continuous, mass
production, mainly
assembly

w

Standardized,
made to stock
Stable
High
Special purpose

w

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w

w
w
w

Functional
grouping of
activities
Intermittent, job
shop, batch
production, mainly
fabrication
Varied, made to
order
Fluctuating
Low
General purpose

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Comparison of Product
and Process Layouts
Product
— Workers
— Inventory
— Storage space
— Material handling
— Aisles
— Scheduling

— Layout decision
— Goal
— Advantage

w
w

w
w
w
w
w
w

w

Limited skills
Low in-process, high
finished goods
Small
Fixed path (conveyor)
Narrow
Part of balancing
Line balancing
Equalize work at each
station
Efficiency

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Process
w
w

w
w
w
w
w
w

w

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

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Fixed-Position Layouts
—Typical of projects

—Fragile, bulky, heavy items
—Equipment, workers & materials brought to site
—Low equipment utilization
—Highly skilled labor
—Typically low fixed cost
—Often high variable costs

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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

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Block Diagramming
—Unit load
—quantity in which

material is normally
moved
—Nonadjacent load
—distance farther than the

next block

—Steps
—create load summary

chart
—calculate composite (two
way) movements
—develop trial layouts
minimizing number of
nonadjacent loads

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Block Diagramming: Example

Load Summary Chart
1

4

2

5

3

FROM/TO

DEPARTMENT

Department

1

2

3

1
2
3
4
5

—

100
—

50
200

—

60

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100
50

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4
50
40
—

5

50
60
—


Block Diagramming: Example

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

110

1

100
150

4

60

2
50

200
50

5
40

Grid 1
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3

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Block Diagramming: Example

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: 0

1

100

110

150

2

200 50

3

40 60
50

Grid 2

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4

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5


Block Diagramming: Example
—Block Diagram
—type of schematic layout diagram; includes space
requirements
(a) Initial block diagram

1

(b) Final block diagram

2

4

3

5

1

4

2

3

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5

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Block Diagramming With Excel

Input load summary
chart and trial layout

Try different layout
configurations

Excel will calculate
composite
movements
and nonadjacent
loads

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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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