PROCESS SELECTION AND FACILITY LAYOUT Chapter 6 MIS 373: Basic Operations Management.

PROCESS SELECTION AND FACILITY LAYOUTChapter 6

MIS 373: Basic Operations Management

MIS 373: Basic Operations Management 2

LEARNING OBJECTIVES

• After this lecture, students will be able to 1. Compare the four basic processing types2. Describe product layouts and their main advantages and

disadvantages3. Describe process layouts and their main advantages and

disadvantages4. Develop simple product layouts5. Develop simple process layouts


PROCESS SELECTION

• Process selection• Deciding on the way production of goods or

services will be organized

• Occurs when:• Planning of new products or services• Technological changes in product or equipment• Competitive pressure


PROCESS SELECTION AND SYSTEM DESIGN

Forecasting (demand)

Product andService Design

TechnologicalChange

CapacityPlanning

ProcessSelection

Facilities andEquipment

Layout

WorkDesign


PROCESS STRATEGY

• Key aspects of process strategy:• Capital Intensity

• The mix of equipment and labor that will be used by the organization

• Process flexibility• The degree to which the system can be adjusted to

changes in processing requirements due to such factors as

• Product and service design changes• Volume changes• Changes in technology

NEW PROCESS STRATEGY

HBR 12/6/12 Three Examples of New Process StrategyThere are three fundamental ways that companies can improve their

processes in the coming decade: 1. expand the scope of work managed by a company to include customers,

suppliers, and partners; • Shift to global, virtual, cross-organizational teams of specialized entities

that are knitted together to serve customers• To keep such a multiparty system from degenerating into chaos, virtual

process teams must have aligned goals and support systems.

2. target the increasing amount of knowledge work; and • Big data analytics• Crowdsourcing, e.g., innocentive.com, TopCoder.com & Heritage Health Prize

• HBR : Using the Crowd as an Innovation Partner

3. reduce cycle times to durations previously considered impossible• Agile processes• Managers must speed the flow of information so that decisions can be made

faster at all levels, from top to bottom.

http://blogs.hbr.org/2012/12/in-my-last-post-i-1/

http://en.wikipedia.org/wiki/Big_data

https://www.innocentive.com/

http://www.topcoder.com/

http://www.heritagehealthprize.com/c/hhp



http://hbr.org/2013/04/using-the-crowd-as-an-innovation-partner/


PROCESS SELECTION

Process choice is demand driven:

1. Variety: How much?

2. Equipment flexibility: To what degree?

3. Volume: Expected output?

• Process Types


PROCESS SELECTION

Process choice is demand driven:

1. Variety• How much?

2. Equipment flexibility• To what degree?

3. Volume• Expected output?

Process Types

• Job shop• Small scale• e.g., doctor, tailor

• Batch• Moderate volume• e.g., bakery

• Repetitive/assembly line• High volumes of standardized

goods or services• e.g., automobiles

• Continuous• Very high volumes of non-

discrete goods• e.g., petroleum products


TYPES OF PROCESSING

Job Shop BatchRepetitive/Assembly Continuous

Description Customizedgoods orservices

Semi-standardizedgoods or services

Standardizedgoods orservices

Highly standardized

goods or services

Advantages Able to handle a wide variety of work

Flexibility; easy to add or change products or services

Low unit cost, high volume, efficient

Very efficient, very high volume

Disadvantages Slow, high costper unit,complexplanning andscheduling

Moderate costper unit,moderateschedulingcomplexity

Low flexibility,high cost of downtime

Very rigid, lack of variety, costly to change, very high cost of downtime


PRODUCT-PROCESS MATRIX

• The diagonal represents the “ideal” match

• Hybrid process are possible (e.g., job-shop & batch)

• Process choice may change as products goes through its life-cycles

Volume

Flexibility/Variety

Out of pocket costs

Opportunity costs


PROCESS CHOICE EFFECTS

Project: used for work that is none routine with a unique set of objective to be accomplished in a limited time frame, e.g., launching a new product, publishing a book

Activity/Function Projects Job Shop Batch Repetitive Continuous

Cost estimation Simple to complex Difficult Somewhat routine Routine Routine

Cost per unit Very high High Moderate Low Low

Equipment used Varied General purpose General purpose Special purpose Special purpose

Fixed costs Varied Low Moderate High Very high

Variable costs High High Moderate Low Very low

Labor skills Low to high High Moderate Low Low to high

Marketing Promotecapabilities

Promotecapabilities

Promotecapabilities; semi-standardized goods and services

Promotestandardized goods and services

Promotestandardized goods and services

Scheduling Complex, subjectto change

Complex Moderately complex Routine Routine


PRODUCT AND SERVICE PROFILING

Product or service profilingLinking key product or service requirements to process

capabilities

Key dimensions relate too Range of products or services that can be processedo Expected order sizeso Expected frequency of schedule changes

DISCUSSION

Work with a partner and match the following products or services with the best process

Ice-cream manufacturer

Automatic carwash

Steel

Books

Airlines

Surgery

Movie theater

Sugar

Beer

Flour

Job-shop

Repetitive

Continuous

Batch

Products/Services Processes

Tips: Think in terms of those key dimensions:o Range of products or services that can be processedo Expected order sizeso Expected frequency of schedule changes


TECHNOLOGY

• Technological Innovation• The discovery and development of new or improved products,

services, or processes for producing or providing them

• Technology• The application of scientific discoveries to the development and

improvement of products and services and/or the processes that produce or provide them

• Process technology includes methods, procedures, and equipment used to produce goods and provide services.

• RFID, online banking, 3D printing, …


FACILITIES LAYOUT

• Layout• The configuration of departments, work centers, and equipment, with

particular emphasis on movement of work (customers or materials) through the system

• Facilities layout decisions arise when:• Designing new facilities• Re-designing existing facilities

• The basic objective of layout design is to facilitate a smooth flow of work, material, and information through the system.


BASIC LAYOUT TYPES

• Product layout • Layout that uses standardized processing operations to

achieve smooth, rapid, high-volume flow

• Process layout• Layout that can handle varied processing requirements

• Fixed position layout• Layout in which the product or project remains stationary,

and workers, materials, and equipment are moved as needed

• Combination layouts


PRODUCT LAYOUTS

• Product layout • Layout that uses standardized processing operations to achieve

smooth, rapid, high-volume flow• How?

Used for Repetitive ProcessingRepetitive or Continuous

Raw materialsor customer

Finished item

Station 2

Station 3

Station 4

Material and/or labor




Station 1


PRODUCT LAYOUTS

• Although product layouts often follow a straight line, a straight line is not always the best, and layouts may take an L, O, S, or U shape. Why?

• L:• O:• S:• U: more compact, increased communication facilitating team work,

minimize the material handling

Image source: mdcegypt.com


NON-REPETITIVE PROCESSING: PROCESS LAYOUTS

• Process layouts• Layouts that can handle varied processing requirements

Used for Intermittent processingJob Shop or Batch

Dept. A

Dept. B Dept. D

Dept. C

Dept. F

Dept. E

20

PRODUCT LAYOUTS

Advantages

• High rate of output

• Low unit cost

• Labor specialization

• Low material handling cost per unit

• High utilization of labor and equipment

• Established routing and scheduling

• Routine accounting, purchasing, and inventory control

DisadvantagesCreates dull, repetitive jobsPoorly skilled workers may not

maintain equipment or quality of output

Fairly inflexible to changes in volume or product or process design

Highly susceptible to shutdownsPreventive maintenance, capacity

for quick repair and spare-parts inventories are necessary expenses

Individual incentive plans are impractical


21

PROCESS LAYOUTS

Advantages

• Can handle a variety of processing requirements

• Not particularly vulnerable to equipment failures

• General-purpose equipment is often less costly and easier and less costly to maintain

• It is possible to use individual incentive systems

Disadvantages

• In-process inventories can be high

• Routing and scheduling pose continual challenges

• Equipment utilization rates are low

• Material handling is slow and less efficient

• Complicates supervision

• Special attention necessary for each product or customer

• Accounting, inventory control, and purchasing are more complex



FIXED POSITION LAYOUTS

• Fixed Position Layout• Layout in which the product or project remains stationary, and

workers, materials, and equipment are moved as needed• E.g., farming, firefighting, road building, home building, remodeling

and repair, and drilling for oil


COMBINATION LAYOUTS

• Some operational environments use a combination of the three basic layout types:

• Hospitals• Supermarket• Shipyards

• Some organizations are moving away from process layouts in an effort to capture the benefits of product layouts


LINE BALANCINGLine balancing

The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements

Goal:Obtain task grouping that represent approximately equal time

requirements since this minimizes idle time along the line and results in a high utilization of equipment and labor

Why is line balancing important?1. It allows us to use labor and equipment more efficiently.2. To avoid fairness issues that arise when one workstation must

work harder than another.• Input

• Tasks sequencing (precedence diagram)• Tasks time• Operating time


PRECEDENCE DIAGRAM

• Precedence diagram• A diagram that shows elemental tasks and their

precedence requirements

Task Duration (min)

Immediate predecessor

a Select material 0.1 -

b Make petals 1.0 a

c Select rhinestones

0.7 -

d Glue rhinestones

0.5 b, c

e Package 0.2 d


CYCLE TIME

• Cycle time• The maximum time allowed at each workstation to

complete its set of tasks on a unit• Minimum Cycle Time = longest task time = 1.0 min• Maximum Cycle time = Σt = sum of task time = 2.5 min


OUTPUT RATE OF A LINE

• Cycle time also establishes the output rate of a line

Cycle time = Operating time per

day

Desired output rate

Output rate = Operating time per

day

Cycle time


HOW MANY WORKSTATIONS ARE NEEDED?

• The required number of workstations is a function of:• Desired output rate• The ability to combine tasks into a workstation

• (theoretical) Minimum number of stations

Nmin= ∑ t

Cycle time

where

Nmin = theoretical minimum number of stations

∑ t = sum of task times


HOW MANY WORKSTATIONS ARE NEEDED?

• The required number of workstations is a function of:• Desired output rate• The ability to combine tasks into a workstation

• (theoretical) Minimum number of stations

Nmin= ∑ t

Cycle time

where



Q: Why this is a theoretical value?A: There are often scraps or idle times.

Example: 4 tasks, each require 6 hours to finishA station can handle 8 hours amount of tasks a day.You will need 4 stations to complete all tasks, instead of 3.Nmin = (6+6+6+6) / 8 = 3


DESIGNING PRODUCT LAYOUTS

Some Heuristic (Intuitive, may not result in optimal solution) Rules:Assign tasks in order of most following tasks

Count the number of tasks that follow

Assign tasks in order of greatest positional weight. Positional weight is the sum of each task’s time and the times of

all following tasks.


EXAMPLE: ASSEMBLY LINE BALANCING

• Arrange tasks (shown in the figure) into three workstations• Assume the cycle time of each workstation is 1.2 min.• Assign tasks in order of the most number of followers• Break tie using greatest positional weight


• Assign tasks in order of the most number of followers

WorkstationTimeRemaining Eligible

AssignTask

RevisedTime Remaining

StationIdle Time

1 1.2 a, c

2

3

Start with CT (1.2 min. in this example)


• Assign tasks in order of the most number of followers


AssignTask


StationIdle Time

1 1.2 a, c a 1.1

2

3



AssignTask


StationIdle Time

1 1.21.1

a, cc, b

a 1.1

2

3



AssignTask


StationIdle Time

1 1.21.1

a, cc, b

ab

1.10.1

2

3

Break tie using greatest positional weight



AssignTask


StationIdle Time

1 1.21.10.1

a, cc, bc

ab

1.10.1

2

3



AssignTask


StationIdle Time

1 1.21.10.1

a, cc, bc

ab-

1.10.1

0.1

2

3

Can’t assign c to this workstation because the workstation doesn’t have enough time (0.1) to complete c (0.7).




AssignTask


StationIdle Time

1 1.21.10.1

a, cc, bc

ab-

1.10.1

0.1

2 1.2 c c 0.5

3



AssignTask


StationIdle Time

1 1.21.10.1

a, cc, bc

ab-

1.10.1

0.1

2 1.20.5

cd

cd

0.50 0

3




AssignTask


StationIdle Time

1 1.21.10.1

a, cc, bc

ab-

1.10.1

0.1

2 1.20.5

cd

cd

0.50 0.0

3 1.2 e e 11.0



AssignTask


StationIdle Time

1 1.21.10.1

a, cc, bc

ab-

1.10.1

0.1

2 1.20.5

cd

cd

0.50 0.0

3 1.2 e e 11.0

Idle time per cycle=0.1+0.0+1.0=1.1


LAYOUT

a & b(0.1+1.0)

c & d(0.7+0.5)

e(0.2)

Task Duration (min)

Immediate predecessor

a Select material 0.1 -

b Make petals 1.0 a

c Select rhinestones

0.7 -

d Glue rhinestones

0.5 b, c

e Package 0.2 d


MEASURING EFFECTIVENESS

• Balance delay (percentage of idle time)• Percentage of idle time of a line

• Efficiency• Percentage of busy time of a line

Balance Delay = Idle time per cycle

× 100%Nactual × Cycle time

where

Nactual = actual number of stations

Efficiency = 100% − Balance Delay


EXAMPLE:MEASURING EFFECTIVENESS


AssignTask


StationIdle Time

1 1.21.10.1

a, cc, bc

ab-

1.10.1

0.1

2 1.20.5

cd

cd

0.50 0.0

3 1.2 e e 1.01.0

Efficiency = 100% – 30.55% = 69.45%

Percentage of idle time = [(0.1 + 0 + 1.0) ÷ (3 × 1.2)] × 100% = 30.55%

EXERCISE PROBLEMS

(Textbook page 267) Using the information contained in the table shown, do each of the following:

1. Draw a precedence diagram.2. Assuming an eight-hour workday,

compute the cycle time needed to obtain an output of 400 units per day.

3. Determine the minimum number of workstations required.

4. Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.

5. Compute the resulting percent idle time and efficiency of the system

EXERCISE SOLUTION

1. Draw a precedence diagram

EXERCISE SOLUTION

2. Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day

Cycle time =

Operating time per

day =

480 minutes per day = 1.2 minutes per

cycleDesired

output rate400 units per day

EXERCISE SOLUTION

3. Determine the minimum number of workstations required

Nmin= ∑ t

=

Cycle time

where



= 3.17 stations ( round to 4)

3.8 minutes per unit

1.2 minutes per cycle time per station

EXERCISE SOLUTION

4. Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.

EXERCISE SOLUTION

5. Compute the resulting percent idle time and efficiency of the system

Percent idle time =

Idle time per cycle

=

1.0 min.× 100%Nactual × Cycle

time4 × 1.2 min. = 20.83%


DESIGNING PROCESS LAYOUTS

• The main issue in designing process layouts concerns the relative placement of the departments

• Measuring effectiveness• key objectives in designing process layouts are to

minimize:• transportation cost• distance• time


INFORMATION REQUIREMENTS

• In designing process layouts, the following information is required:1. A list of work stations (departments) to be arranged and

their dimensions2. A projection of future work flows between the pairs of

work centers3. The distance between locations - and the cost per unit of

distance to move loads between them4. The amount of money to be invested in the layout5. A list of any special considerations6. The location of key utilities, access and exit points, etc.


DESIGNING PROCESS LAYOUTSMINIMIZE TRANSPORTATION COSTS

• Goal:• Assign departments 1, 2, 3 to locations A, B, C in a way that

minimizes transportation costs.

• Heuristic:• Assign departments with the greatest interdepartmental work flow first

to locations that are closet to each other.

A B C


EXAMPLE: MINIMIZE TRANSPORTATION COSTS

Location

From\To A B C

A - 20 40

B - 30

C -

Department

From\To 1 2 3

1 - 30 170

2 - 100

3 -

Pair Work flow

1-3 170

2-3 100

1-2 30

Trip

A-B 20

B-C 30

A-C 40

Distance

Work flow

A BC

20

40

30

Highest work flow

Closest

Place dept. 1&3

in A&B


EXAMPLE: MINIMIZE TRANSPORTATION COSTS

• Place departments 1&3 in A&B (2 options)

• 2&3 have higher work flow than 1&2 (100>30)• 2&3 should be located closer than 1&2• C closer to B than to A (30<40)

• Solution:

11 33

A B C33 11

A B CA B

C20

40

30

1 3 2

30

170 100

A B C

Trip

A-B 20

B-C 30

A-C 40

Pair

Work flow

1-3 170

2-3 100

1-2 30


CLOSENESS RATINGS

• Allows the considerations of multiple qualitative criteria

• Input from management or subjective analysis

• Indicates the relative importance of each combination of department pairs

Muther’s grid


CLOSENESS RATINGS

A Absolutely necessaryE Very importantI ImportantO Ordinary importanceU UnimportantX Undesirable

• Muther’s grid

Dept. 1

Dept 2.

Dept 3.

Dept 4.

Dept. 5

Dept 6.

X O

A A

U

AA

X

E

A O

A

UI

X

Suppose this is the floor plan of your company, how would you arrange the six departments?


Dept. 1

Dept 2.

Dept 3.

Dept 4.

Dept. 5

Dept 6.

X O

A A

U

AA

X

E

A O

A

UI

X

CLOSENESS RATINGS: EXAMPLE

1. List critical departments (either A or X):

A

1-2

1-3

2-6

3-5

4-6

5-6

X

1-4

3-6

3-4



6-59

2. Form a cluster of A links (beginning with the department that appears most frequently)

A

1-2

1-3

2-6

3-5

4-6

5-6

62

4

5

3. Take the remaining A links in order and add them to this cluster where possible (rearranging as necessary)Form separate clusters for departments that do not link with the main cluster.

62

4

51

3

Dept. 1

Dept 2.

Dept 3.

Dept 4.

Dept. 5

Dept 6.

X O

A A

U

AA

X

E

A O

A

UI

X



4. Graphically portray the X links

43

1

6

5. Adjust A cluster as necessary.

X

1-4

3-6

3-4

62

4

51

3

(in this case, the A cluster also satisfies the X cluster).

Dept. 1

Dept 2.

Dept 3.

Dept 4.

Dept. 5

Dept 6.

X O

A A

U

AA

X

E

A O

A

UI

X



62

4

51

3

6. Fit cluster into arrangement (e.g., 2x3)may require some trial and error.Departments are considered close not only when they touch side to side but also when they touch corner to corner.

7. Check for possible improvements

1 2 6

3 5 4

43

1

6

Dept. 1

Dept 2.

Dept 3.

Dept 4.

Dept. 5

Dept 6.

X O

A A

U

AA

X

E

A O

AU

I X


KEY POINTS

• Process choice is demand driven.

• Process type and layout are a function of expected demand volume and the degree of customization that will be needed.

• Each process type and layout type has advantages and limitations that should be clearly understood when making process selection and layout decisions.

• Line balancing helps improving the efficiency of product layouts whereas Muther’s grid helps deciding process layouts

PROCESS SELECTION AND FACILITY LAYOUT Chapter 6 MIS 373: Basic Operations Management.

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Transcript of PROCESS SELECTION AND FACILITY LAYOUT Chapter 6 MIS 373: Basic Operations Management.