MGT3303 Michel Leseure Facility Decisions Learning objectives: –To discuss facility location...
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Transcript of MGT3303 Michel Leseure Facility Decisions Learning objectives: –To discuss facility location...
MGT3303Michel Leseure
Facility Decisions
• Learning objectives:– To discuss facility location decisions– To discuss capacity planning– To discuss factory layout problems
• Reading: Chapter 5 and its supplement
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Location Problems
• Where should a facility be located:– Given a range of qualitative and
quantitative decision variables
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Qualitative Location Factors
• Local Infrastructure– Institutional (e.g., reliable electrical power grid)– Transportational (e.g., railway systems)
• Worker Education and Skills– Education and skills of local workers.
• Product Content Requirements– The minimum percentage of product that must be
produced in a country in order for the product to be sold in that country.
• Political/Economic Stability
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Quantitative Location Factors
• Labor Costs– Labor costs vary dramatically, depending on
location. Cheap labor often lacks needed education and skills.
• Distribution Costs– Distance and the time required to deliver products
can offset lower location costs.
• Facility Costs– Special economic zones (SEZ)
• Duty-free areas established to attract foreign investment in the form of manufacturing facilities
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Quantitative Location Factors
• Exchange Rates– Variations in rates can have a significant
effect on sales and profits.
• Tax Rates– Taxes vary considerably between countries
and within countries.– All forms of taxes should be considered
(property, payroll, inventory, and investment taxes).
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Geographic Information Systems (GIS)
– Computer tool that assesses alternative locations for operations.
– Provides a “bird’s eye view” of a particular region of interest.
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Evaluating Potential Locations
• Factor Rating System1. Identify the specific criteria or factors to be
considered.
2. Assign a weight to each factor.
3. Select a common scale for rating each factor.
4. Rate each potential location on each of the factors.
5. Multiply each factor’s score by its weight.
6. Sum the weighted scores and select the location with the highest score.
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Factor-Rating System Example
Factor Weight Rating Site A
Rating Site B
Score Site A
Score Site B
Size and education of workforce within 15 miles 20 60 75 1,200 1,500
Availability of part-time workers (students) 10 45 20 450 200
Distance to telecommunication infrastructure 25 80 90 2,000 2,250
Distance to higher education facilities 5 50 35 250 175
Cost of living index 15 85 80 1,275 1,200
Cultural amenities 10 65 40 650 400
Crime statistics 15 95 90 1,425 1,350
Totals 100 7,250 7,075
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Evaluating Potential Locations
• Center of Gravity Method– Used to determine the optimal location of a
facility based on minimizing the transportation costs between where the goods are produced and where they are sold or redistributed.
– Locate each existing operation on an X and Y coordinate grid map.
– Calculate X coordinate of center of gravity– Calculate Y coordinate of center of gravity
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Center of Gravity Formulas
Cx = X coordinate of the center of gravity
Cy = Y coordinate of the center of gravity
dix = X coordinate of the ith location
diy = Y coordinate of the ith location
Vi = Volume of goods transported to the ith location
VVdi
iixxC
V
Vd
i
iiyyC
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Example
Question: What is the best location for a new Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per month?
Question: What is the best location for a new Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per month?
Several automobile showrooms are located according to the following grid which represents coordinate locations for each showroom
S howroom No o f Z-Mo b ile s s o ld p e r mo nth
A 1250
D 1900
Q 2300
X
Y
A(100,200)
D(250,580)
Q(790,900)
(0,0)
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Example
C = 100(1250) + 250(1900) + 790(2300)
1250 + 1900 + 2300 =
2,417,000
5,450 = x 443.49C =
100(1250) + 250(1900) + 790(2300)
1250 + 1900 + 2300 =
2,417,000
5,450 = x 443.49
C = 200(1250) + 580(1900) + 900(2300)
1250 + 1900 + 2300 =
3,422,000
5,450 = y 627.89C =
200(1250) + 580(1900) + 900(2300)
1250 + 1900 + 2300 =
3,422,000
5,450 = y 627.89
You then compute the new coordinates using the formulas:You then compute the new coordinates using the formulas:
You then take the coordinates and place them on the map:You then take the coordinates and place them on the map:
S ho wro o m No o f Z-Mo b ile s s o ld p e r mo nth
A 1250
D 1900
Q 2300X
Y
A(100,200)
D(250,580)
Q(790,900)
(0,0)
ZZ
New location of facility Z about (443,627)
New location of facility Z about (443,627)
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Capacity Planning
• Establishes the overall level of productive resources for a firm
• Usually results in a capital investment decision – long term focus
• These decisions are usually irreversible!• Given:
• a sales forecast
• a risk profile (aggressive, risk-averse, etc.)
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Measuring Capacity
• Objective is to measure a level of activity• Several possible measures, based either on staff
or plant/equipment– An hospital would measure capacity according to
its number of beds or overall capacity• different units for emergency room (staff)
– A building contractor would measure a project in terms of staff
– Precision machinist: Machine hours per month
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Measuring Capacity
• It is important to differentiate:– Planned capacity:
• the theoretical capacity of a system given some allowances
– Actual capacity: • the actual demand of the usage of resources, under- or
over-capacity
– Efficiency: • the degree to which production is as efficient as planned
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Example
• A precision machinist has a theoretical capacity of 15,000 hours. In a given month, 16,000 hours were sold. 3,000 hours were subcontracted.
• This case:– is an example of under-capacity– is an example of 100% utilisation– the efficiency is 87% (13,000/15,000)
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Capacity Planning: Decision objectives
• Decisions objectives are:– Anticipate growth or wait?– Forecast the end of a growth period– Avoid overcapacity (unit cost
consequence!)– What should be done in the case of over-
capacity?
Size of operations unit Timing of capacity
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Best Operating Levels With Economies & Diseconomies Of Scale
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Timing of capacity
UnitsCapacity
Time
Demand
Units
Capacity
Time
Demand
Capacity
Time
Demand
Units
Incrementalexpansion
Demand
Capacity lead strategy
Capacity lag strategy
Average capacity strategy
One-step expansion
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Layout Decisions
• How should machines, workers, departments, etc. be arranged?
• Several generic options
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Types of Layout
Layout Type
Process Similar operations are performed in a common or functional area, regardless of the product in which the parts are used.
Product (Flow-shop layout)
Equipment/operations are located according to the progressive steps required to make the product.
Group Technology (GT) or Cellular
Groups of dissimilar machines are brought together in a work cell to perform tasks on a family of products that share common interests.
Fixed-Position The product, because of its size and/or weight, remains in one location and processes are brought to it.
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Process or Functional Layout
• Job and batch systems are based on functional layouts– machines, processes
and equipment of the same type are grouped together in the same department or area
Materials in
Finished goodsout
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Product Layout
• High volume production systems use product layouts– machines, equipment and workplaces are
arranged according to the order in which operations need to be carried out to produce a complete component, product or sub‑assembly (lines, flow systems)
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Flexible Line Layouts
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Design Methods – Process Layouts
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Design Methods – Process Layouts
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Design Methods – Process Layouts
Total cost: $2,223($1 for adjacent departments - $1 for each travel-through)
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Improvement: 3-5 Permutation
*Only interdepartmental flow with effect on cost is depicted.
Total cost: $1,878(= $2,223 – 230 + 50 - 165)
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Assembly Line Balancing
• Means the design of the layout of an efficient assembly line– Product Layout– Also called flowlines, as product flows
through workstations– Is also a pre-schedule of operations
Labour resources and physical facilities
Material inputs
Finished products
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Problem Statement
Tasks to be allocatedto work stations
Flow of material
Workstations
Objective:To find the best allocation of taskswhich will produce the desiredoutput while maximising efficiencyand achieving good 'balance'
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Line Balancing
• The main objective of line design will be to maximise line efficiency (or minimise total work station idle time)
• At the same time any idle time should be spread as evenly as possible among the work stations, ie the line should be 'balanced'
Cycle time
Station work
content
Idle time
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Procedure
• Summarise precedence data in a table• Draw a precedence diagram• Compute the desired cycle time• Compute the theoretical number of
workstations• Assign tasks to workstation (heuristics)• Draw layout and compute efficiency
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Example• Cold Sheffield Ltd needs 5 tasks to assemble its
product. It has 1200 minutes of assembly workforce time available per day and it needs to produce 100 units per day. Precedence relationships between the task are:
• Tasks Time Predecessors• A 4 (mn) None• B 5 A• C 2 B• D 10 A• E 3 C,D• Design a balanced assembly line.
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Draw a Precedence Diagram
A
B4
5
C
2
D
10
E
3
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Cycle Time Computation
• Target output: 100 units/day• Target cycle time:
– The number of minutes to complete work at one workstation
– A measure of the frequency with which products roll off the assembly line
• Available work time: 1200 minutes per day
production time availabledesired output
C =
1200 100
C = = 12 minutes / units
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Theoretical Number of Workstations
Sum of elementary tasks timeCycle Time
Theoretical number
of workstations
=
= 24 / 12 = 2
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Task Assignment
A B
4 5
C
2
D
10
E
3
Workstation 1(11 minutes)
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Task Assignment
A B
4 5
C
2
D
10
E
3
Workstation 1(11 minutes)
Workstation 2(10 minutes)
Workstation 3(3 minutes)
(Alternative AB and CD)
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Summary of Solution
Workstation 1 (ABC)- 11 mn
Efficiency of line = 24 / 3 * 12 = 24/36 = 66.7%(sum of tasks time divided by number of workstations times cycle time)
Workstation 2 (D)- 10 mn
Workstation 3 (E)-3 mn
Linear layout
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Low Efficiency
• Although with 2 workstations, there would be enough time to complete all tasks (24 mn), the tasks cannot be combined in a linear layout in 2 workstations!
• Try alternative forms of layouts– U-shaped layouts– Gives the option to combine non
sequential tasks
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U-Shape Layout Solution
Workstation 1
A,BWorkstation 2
C,D
E12 mn 12 mn
Line is perfectly balanced – 100% efficiency
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Class Exercise
Problem 5-1, p. 190
Problem 5-11, p. 192
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Suggested Homework
• Solved Problems p. 188• Problem 5-2 p. 191• Problem 5-12 p. 192• Problems S5-1, S5-2, p. 210