Operations Management: Sustainability

and Supply Chain Management Outline (1 of 2)

Thirteenth Edition, Global Edition
• Global Company Profile: McDonald's
• The Strategic Importance of Layout Decisions

Chapter 9 • Types of Layout

Layout Strategies • Office Layout
• Retail Layout
• Warehousing and Storage Layouts

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Outline (2 of 2) Innovations at McDonald's (1 of 2)

• Fixed-Position Layout • Indoor seating (1950s)
• Process-Oriented Layout • Drive-through window (1970s)
• Focused Facilities • Adding breakfast to the menu (1980s)
• Repetitive and Product-Oriented Layout • Adding play areas (late 1980s)
• Redesign of the kitchens (1990s)
• Self-service kiosk (2004)
• Now three separate dining sections

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Innovations at McDonald's (2 of 2) McDonald's New Layout
• Indoor seating (1950s) • Seventh major innovation
• Drive-through window (1970s) • Redesigning all 30,000 outlets around the world
Six out of the
• Adding breakfast to the menu (1980s) seven are layout • Three separate dining areas
decisions! – Linger zone with comfortable chairs and Wi-Fi
• Adding play areas (late 1980s)
connections
• Redesign of the kitchens (1990s) – Grab and go zone with tall counters
• Self-service kiosk (2004) – Flexible zone for kids and families
• Now three separate dining sections • Facility layout is a source of competitive advantage

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Learning Objectives (1 of 2) Learning Objectives (2 of 2)

When you complete this chapter you should be able to: When you complete this chapter you should be able to:
9.1 Discuss important issues in office layout 9.5 Explain how to achieve a good process-oriented facility
layout
9.2 Define the objectives of retail layout
9.6 Define work cell and the requirements of a work cell
9.3 Discuss modern warehouse management and terms
such as ASRS, cross-docking, and random stocking 9.7 Define product-oriented layout
9.4 Identify when fixed-position layouts are appropriate 9.8 Explain how to balance production flow in a repetitive or
product-oriented facility

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Strategic Importance of Layout
Decisions Layout Design Considerations
The objective of layout strategy is to develop an • Higher utilization of space, equipment, and people
effective and efficient layout that will meet the firm’s
• Improved flow of information, materials, and people
competitive requirements
• Improved employee morale and safer working conditions
• Improved customer/client interaction
• Flexibility

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Types of Layout (1 of 4) Types of Layout (2 of 4)

1. Office layout 1. Office layout: Positions workers, their equipment, and
spaces/offices to provide for movement of information
2. Retail layout
2. Retail layout: Allocates display space and responds to
3. Warehouse layout
customer behavior
4. Fixed-position layout
3. Warehouse layout: Addresses trade-offs between space
5. Process-oriented layout and material handling
6. Work-cell layout
7. Product-oriented layout

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Types of Layout (3 of 4) Types of Layout (4 of 4)
4. Fixed-position layout: Addresses the layout requirements 6. Work-cell layout: Arranges machinery and equipment to
of large, bulky projects such as ships and buildings focus on production of a single product or group of
related products
5. Process-oriented layout: Deals with low-volume,
high-variety production (also called job shop or 7. Product-oriented layout: Seeks the best personnel and
intermittent production) machine utilizations in repetitive or continuous production

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Layout Strategies (1 of 2) Layout Strategies (2 of 2)

Table 9.1 Layout Strategies Table 9.1 Layout Strategies

Blank OBJECTIVES EXAMPLES

Office Locate workers requiring Allstate Insurance Blank OBJECTIVES EXAMPLES
frequent contact close to one Microsoft Corp.
Job Shop (process Manage varied material flow Arnold Palmer
another
oriented) for each product Hospital
Retail Expose customer to high-margin Kroger’s Supermarket Hard Rock Cafe
items Walgreen’s Olive Garden
Bloomingdale’s
Work Cell (product Identify a product family, Hallmark Cards
Warehouse (storage) Balance low-cost storage with Federal-Mogul’s families) build teams, cross-train team Wheeled Coach
low-cost material handling warehouse members Ambulances
The Gap’s distribution
center Repetitive/ Equalize the task time at Sony’s TV assembly
Project (fixed position) Move material to the limited Ingall Ship Building Continuous (product each workstation line
storage areas around the site Corp. oriented) Toyota Scion
Trump Plaza
Pittsburgh Airport

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Good Layouts Consider Office Layout (1 of 2)
• Material handling equipment • Grouping of workers, their equipment, and spaces to
provide comfort, safety, and movement of information
• Capacity and space requirements
• Movement of information is main distinction
• Environment and aesthetics
• Typically in state of flux due to frequent technological
• Flows of information
changes
• Cost of moving between various work areas

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Relationship Chart Office Layout (2 of 2)

Figure 9.1 • Three physical and social
aspects
– Proximity
– Privacy
– Permission
• Two major trends
– Information technology
increases flexibility in layout
and employee location
– Dynamic needs for space
and services
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 Five Helpful Ideas for Supermarket
Retail Layout Layout
• Objective is to maximize profitability per square foot of 1. Locate high-draw items around the periphery of the store
floor space
2. Use prominent locations for high-impulse and
• Sales and profitability vary directly with customer exposure high-margin items
3. Distribute power items to both sides of an aisle and
disperse them to increase viewing of other items
4. Use end-aisle locations
5. Convey mission of store through careful positioning of
lead-off department

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Store Layout Retail Layout Objective

Figure 9.2 • Maximize profitability per square foot of floor space
– Category Management – analysis of profitability of
merchandising plans for hundreds of categories
– Slotting – manufacturers pay slotting fees to retailers
to get the retailers to display (slot) their product

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 Servicescapes
Slotting 1. Ambient conditions - background characteristics such as lighting,
sound, smell, and temperature
• Contributing factors 2. Spatial layout and functionality - which involve customer circulation
– Limited shelf space path planning, aisle characteristics, and product grouping
– An increasing number of new products 3. Signs, symbols, and artifacts - characteristics of building design that
– Better information about sales through POS data carry social significance
collection
– Closer control of inventory
• Ethical issues
– Stifle new products
– Limit expansion

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Warehousing and Storage Layouts

Warehouse and Storage Layouts (1 of 2)

• Objective is to find the optimum trade-offs between Material Handling Costs

handling costs and costs associated with warehouse
• All costs associated with the transaction
space
– Incoming transport
• Maximize the total "cube" of the warehouse – utilize its full
– Storage
volume while maintaining low material handling costs
– Finding and moving material
– Outgoing transport
– Equipment, people, material, supervision, insurance,
depreciation
• Minimize damage and spoilage

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Warehousing and Storage Layouts
(2 of 2) Cross-Docking
• Warehouse density tends to vary • Materials are moved directly
inversely with the number of from receiving to shipping
different items stored and are not placed in
storage in the warehouse
• Automated Storage and Retrieval
Systems (ASRSs) can • Requires tight scheduling
significantly improve warehouse and accurate shipments, bar
productivity code or RFID identification
used for advanced shipment
• Dock location is a key design
notification as materials are
element
unloaded

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Random Stocking Customizing

• Typically requires automatic identification systems (AISs) • Value-added activities performed at the warehouse
and effective information systems
• Enables low cost and rapid response strategies
• Allows more efficient use of space – Assembly of components
• Key tasks – Loading software
1. Maintain list of “open” locations – Repairs
2. Maintain accurate records – Customized labeling and packaging
3. Sequence items to minimize travel, “pick” time
4. Combine picking orders
5. Assign classes of items to particular areas

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Fixed-Position Layout Alternative Strategy
• Product remains in one place • As much of the project as
possible is completed
• Workers and equipment
off-site in a
come to site
product-oriented facility
• Complicating factors
• This can significantly
– Limited space at site improve efficiency but is
– Different materials only possible when
required at different multiple similar units need
stages of the project to be created
– Volume of materials
needed is dynamic

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Process-Oriented Layout (1 of 4) Process-Oriented Layout (2 of 4)

• Like machines and equipment are grouped together Figure 9.3
• Flexible and capable of handling a wide variety of products
or services
• Scheduling can be difficult and setup, material handling,
and labor costs can be high

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Process-Oriented Layout (3 of 4) Process-Oriented Layout (4 of 4)
• Arrange work centers so as to minimize the costs of
material handling
• Basic cost elements are
– Number of loads (or people) moving between centers where n = total number of work centers or
– Distance loads (or people) move between centers departments
i, j = individual departments
Xij = number of loads moved from
department i to department j
Cij = cost to move a load between
department i and department j
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Process Layout Example (1 of 8) Process Layout Example (2 of 8)

• Figure 9.4

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Process Layout Example (3 of 8) Process Layout Example (4 of 8)
Figure 9.5 Figure 9.6
Interdepartmental Flow Graph

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Process Layout Example (5 of 8) Process Layout Example (6 of 8)

Figure 9.7
Revised Interdepartmental Flow Graph

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Process Layout Example (7 of 8) Process Layout Example (8 of 8)
Figure 9.8

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Computer Software (1 of 4) Computer Software (2 of 4)

•Graphical approach only works for small problems • Proplanner flow path calculator
• Computer programs are available to solve bigger problems – Generate material flow diagrams
– Flowcharts – Calculate material handling distances, times, costs
– Multi-story capability – Color-coded flow lines
– Storage and container placement – Helps identify excessive material handling
– Material volumes
– Time and cost analysis

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Computer Software (3 of 4)
• Proplanner flow path calculator Computer Software (4 of 4)
– Generate material flow diagrams
• Three-dimensional visualization software allows managers
– Calculate material handling distances, times, costs
to view possible layouts and assess process, material
– Color-coded flow lines handling, efficiency, and safety issues
– Helps identify excessive material handling

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Focused Facilities (2 of 3)
Focused Facilities (1 of 3) • Compute takt time

• A family of similar products with reasonably stable demand

• Match facilities to customer requirements and demand
•
• Reduces waste and capacity requirements

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Focused Facilities (3 of 3)
• Compute takt time Work Cells
• Reorganizes people and machines into groups to focus on
single products or product groups
•
• Group technology identifies products that have similar
characteristics for particular cells
• Volume must justify cells
• Cells can be reconfigured as design or volume changes

Takt time becomes the drumbeat of the

focused facility to which all facets of the
organization march
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Requirements of Work Cells Advantages of Work Cells

• Identification of families of products 1. Reduced work-in-process inventory
• A high level of training, flexibility, and empowerment of 2. Less floor space required
employees
3. Reduced raw material and finished goods inventories
• Self-contained, with its own equipment and resources
4. Reduced direct labor cost
• Testing (poka-yoke) at each station in the cell
5. Heightened sense of employee participation
6. Increased equipment and machinery utilization
7. Reduced investment in machinery and equipment

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Improving Layouts Using Work Cells Improving Layouts Using Work Cells
(1 of 2) (2 of 2)
Figure 9.10
Figure 9.9

U-shaped line may reduce employee movement and

space requirements while enhancing communication,
reducing the number of workers, and facilitating
inspection
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Focused Work Center and Focused Repetitive and Product-Oriented

Factory Layout
• Focused Work Center Organized around products or families of similar
– Cells may be organized as focused work centers – high-volume, low-variety products
plant within a plant 1. Volume is adequate for high equipment utilization
– Moves production from a general-purpose,
process-oriented facility to a large work cell 2. Product demand is stable enough to justify high
investment in specialized equipment
• Focused Factory
3. Product is standardized or approaching a phase of life
– A focused work cell in a separate facility
cycle that justifies investment
– May be focused by product line, layout, quality, new
product introduction, flexibility, or other requirements 4. Supplies of raw materials and components are adequate
and of uniform quality

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Product-Oriented Layouts (1 of 3) Product-Oriented Layouts (2 of 3)
• Fabrication line • Fabrication line
– Builds components on a series of machines – Builds components on a series of machines
– Machine-paced – Machine-paced
– Require mechanical or engineering changes to balance – Require mechanical or engineering changes to balance

• Assembly line • Assembly line

– Puts fabricated parts together at a series of – Puts fabricated parts together at a series of workstations
workstations – Paced by work tasks
– Paced by work tasks – Balanced by moving tasks
– Balanced by moving tasks Both types of lines must
be balanced so that the
time to perform the work
at each station is the
same

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Product-Oriented Layouts (3 of 3)
Advantages McDonald's Assembly Line
1. Low variable cost per unit
2. Low material handling costs
3. Reduced work-in-process inventories
4. Easier training and supervision
5. Rapid throughput

Disadvantages
1. High volume is required

2. Work stoppage at any point ties up the whole operation

3. Lack of flexibility in product or production rates

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Assembly-Line Balancing Wing Component Example (1 of 6)
• Objective is to minimize the Table 9.2 Precedence Data for Wing Component
imbalance between
machines or personnel while
meeting required output
• Starts with the precedence
relationships
– Determine cycle time
– Calculate theoretical
minimum number of
workstations
– Balance the line by
assigning specific tasks to
workstations

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Wing Component Example (2 of 6) Wing Component Example (3 of 6)

Table 9.2 Precedence Data Table 9.2 Precedence Data Figure 9.12
for Wing Component 480 available for Wing Component
mins per day
40 units required

Figure 9.12

480 available mins per day

40 units required

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Wing Component Example (4 of 6) Wing Component Example (5 of 6)
Figure 9.13
Table 9.3 Layout Heuristics That May Be Used to Assign
Tasks to Workstations in Assembly-Line Balancing

480 available mins per day

40 units required
Cycle time = 12 mins
Minimum workstations = 5.42 or 6
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Wing Component Example (6 of 6)

Table 9.2 Precedence Data for Wing Component
Figure 9.12
Copyright

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480 available mins per day destroy the integrity of the work and is not permitted. The work
40 units required and materials from it should never be made available to students
Cycle time = 12 mins except by instructors using the accompanying text in their
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Minimum workstations = 5.42 or 6 restrictions and to honor the intended pedagogical purposes and
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