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PowerPoint presentation to accompanyPowerPoint presentation to accompanyHeizer/Render Heizer/Render Principles of Operations Management, 7ePrinciples of Operations Management, 7eOperations Management, 9e Operations Management, 9e
Global Company Profile: Global Company Profile: McDonaldMcDonald’’ssThe Strategic Importance of The Strategic Importance of Layout DecisionsLayout DecisionsTypes of LayoutTypes of LayoutOffice LayoutOffice Layout
ProcessProcess--Oriented LayoutOriented LayoutComputer Software for ProcessComputer Software for Process--Oriented LayoutsOriented Layouts
Work CellsWork CellsRequirements of Work CellsRequirements of Work CellsStaffing and Balancing Work CellsStaffing and Balancing Work CellsThe Focused Work Center and the The Focused Work Center and the Focused FactoryFocused Factory
Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:
1.1. Discuss important issues in office layoutDiscuss important issues in office layout2.2. Define the objectives of retail layoutDefine the objectives of retail layout3.3. Discuss modern warehouse Discuss modern warehouse
management and terms such as ASRS, management and terms such as ASRS, crosscross--docking, and random stockingdocking, and random stocking
4.4. Identify when fixedIdentify when fixed--position layouts are position layouts are appropriateappropriate
Innovations at McDonaldInnovations at McDonald’’ss
Indoor seating (1950s)Indoor seating (1950s)DriveDrive--through window (1970s)through window (1970s)Adding breakfast to the menu Adding breakfast to the menu (1980s)(1980s)Adding play areas (late 1980s)Adding play areas (late 1980s)Redesign of the kitchens (1990s)Redesign of the kitchens (1990s)SelfSelf--service kiosk (2004)service kiosk (2004)Now three separate dining sectionsNow three separate dining sections
Innovations at McDonaldInnovations at McDonald’’ss
Indoor seating (1950s)Indoor seating (1950s)DriveDrive--through window (1970s)through window (1970s)Adding breakfast to the menu Adding breakfast to the menu (1980s)(1980s)Adding play areas (late 1980s)Adding play areas (late 1980s)Redesign of the kitchens (1990s)Redesign of the kitchens (1990s)SelfSelf--service kiosk (2004)service kiosk (2004)Now three separate dining sectionsNow three separate dining sections
Seventh major innovation Seventh major innovation Redesigning all 30,000 outlets around Redesigning all 30,000 outlets around the worldthe worldThree separate dining areasThree separate dining areas
Linger zone with comfortable chairs and Linger zone with comfortable chairs and WiWi--Fi connectionsFi connectionsGrab and go zone with tall countersGrab and go zone with tall countersFlexible zone for kids and familiesFlexible zone for kids and families
Facility layout is a source of Facility layout is a source of competitive advantagecompetitive advantage
Strategic Importance of Strategic Importance of Layout DecisionsLayout Decisions
The objective of layout strategy The objective of layout strategy is to develop a costis to develop a cost--effective effective layout that will meet a firmlayout that will meet a firm’’s s
Higher utilization of space, equipment, Higher utilization of space, equipment, and peopleand peopleImproved flow of information, materials, Improved flow of information, materials, or peopleor peopleImproved employee morale and safer Improved employee morale and safer working conditionsworking conditionsImproved customer/client interactionImproved customer/client interactionFlexibilityFlexibility
1.1. Office layout: Positions workers, Office layout: Positions workers, their equipment, and spaces/offices their equipment, and spaces/offices to provide for movement of to provide for movement of informationinformation
2.2. Retail layout: Allocates shelf space Retail layout: Allocates shelf space and responds to customer behavior and responds to customer behavior
3.3. Warehouse layout: Addresses tradeWarehouse layout: Addresses trade--offs between space and material offs between space and material handlinghandling
4.4. FixedFixed--position layout: Addresses the position layout: Addresses the layout requirements of large, bulky layout requirements of large, bulky projects such as ships and buildingsprojects such as ships and buildings
5.5. ProcessProcess--oriented layout: Deals with oriented layout: Deals with lowlow--volume, highvolume, high--variety production variety production (also called job shop or intermittent (also called job shop or intermittent production)production)
6.6. Work cell layout: Arranges Work cell layout: Arranges machinery and equipment to focus machinery and equipment to focus on production of a single product or on production of a single product or group of related productsgroup of related products
7.7. ProductProduct--oriented layout: Seeks the oriented layout: Seeks the best personnel and machine best personnel and machine utilizations in repetitive or utilizations in repetitive or continuous productioncontinuous production
1.1. Material handling equipmentMaterial handling equipment2.2. Capacity and space requirementsCapacity and space requirements3.3. Environment and aestheticsEnvironment and aesthetics4.4. Flows of informationFlows of information5.5. Cost of moving between various Cost of moving between various
Office LayoutOffice LayoutGrouping of workers, their equipment, Grouping of workers, their equipment, and spaces to provide comfort, and spaces to provide comfort, safety, and movement of informationsafety, and movement of informationMovement of Movement of information is main information is main distinctiondistinctionTypically in state of Typically in state of flux due to frequent flux due to frequent technological technological changeschanges
Objective is to maximize Objective is to maximize profitability per square foot of profitability per square foot of floor spacefloor spaceSales and profitability vary Sales and profitability vary directly with customer exposuredirectly with customer exposure
Five Helpful Ideas for Five Helpful Ideas for Supermarket LayoutSupermarket Layout
1.1. Locate highLocate high--draw items around the draw items around the periphery of the storeperiphery of the store
2.2. Use prominent locations for highUse prominent locations for high--impulse impulse and highand high--margin itemsmargin items
3.3. Distribute power items to both sides of Distribute power items to both sides of an aisle and disperse them to increase an aisle and disperse them to increase viewing of other itemsviewing of other items
4.4. Use endUse end--aisle locationsaisle locations5.5. Convey mission of store through careful Convey mission of store through careful
positioning of leadpositioning of lead--off departmentoff department
Retail SlottingRetail SlottingManufacturers pay fees to retailers Manufacturers pay fees to retailers to get the retailers to display (slot) to get the retailers to display (slot) their producttheir productContributing factorsContributing factors
Limited shelf spaceLimited shelf spaceAn increasing number of new An increasing number of new productsproductsBetter information about sales Better information about sales through POS data collectionthrough POS data collectionCloser control of inventoryCloser control of inventory
Retail Store Shelf Space Retail Store Shelf Space PlanogramPlanogram
Computerized Computerized tool for shelftool for shelf--space space managementmanagementGenerated from Generated from storestore’’s scanner s scanner data on salesdata on salesOften supplied Often supplied by manufacturerby manufacturer
ServicescapesServicescapesAmbient conditions Ambient conditions -- background background characteristics such as lighting, sound, characteristics such as lighting, sound, smell, and temperaturesmell, and temperatureSpatial layout and functionality Spatial layout and functionality -- which which involve customer involve customer circulation path planning, circulation path planning, aisle characteristics, and aisle characteristics, and product groupingproduct groupingSigns, symbols, and Signs, symbols, and artifacts artifacts -- characteristics characteristics of building design that of building design that carry social significancecarry social significance
Warehousing and Storage Warehousing and Storage LayoutsLayouts
Objective is to optimize tradeObjective is to optimize trade--offs offs between handling costs and costs between handling costs and costs associated with warehouse spaceassociated with warehouse spaceMaximize the total Maximize the total ““cubecube”” of the of the warehouse warehouse –– utilize its full volume utilize its full volume while maintaining low material while maintaining low material handling costshandling costs
Warehousing and Storage Warehousing and Storage LayoutsLayouts
All costs associated with the transactionAll costs associated with the transactionIncoming transportIncoming transportStorageStorageFinding and moving materialFinding and moving materialOutgoing transportOutgoing transportEquipment, people, material, supervision, Equipment, people, material, supervision, insurance, depreciationinsurance, depreciation
Minimize damage and spoilageMinimize damage and spoilage
Warehousing and Storage Warehousing and Storage LayoutsLayouts
Warehouse density tends to vary Warehouse density tends to vary inversely with the number of different inversely with the number of different items storeditems storedAutomated Storage and Automated Storage and Retrieval Systems (ASRSs) Retrieval Systems (ASRSs) can significantly improve can significantly improve warehouse productivity by warehouse productivity by an estimated 500%an estimated 500%Dock location is a key Dock location is a key design elementdesign element
CrossCross--DockingDockingMaterials are moved directly from Materials are moved directly from receiving to shipping and are not receiving to shipping and are not placed in storage placed in storage in the warehousein the warehouseRequires tight Requires tight scheduling and scheduling and accurate shipments, accurate shipments, bar code or RFIDbar code or RFIDidentification used foridentification used foradvanced shipmentadvanced shipmentnotification as materialsnotification as materialsare unloadedare unloaded
Random StockingRandom StockingTypically requires automatic identification Typically requires automatic identification systems (AISs) and effective information systems (AISs) and effective information systemssystemsRandom assignment of stocking locations Random assignment of stocking locations allows more efficient use of spaceallows more efficient use of spaceKey tasksKey tasks
1.1. Maintain list of open locationsMaintain list of open locations2.2. Maintain accurate recordsMaintain accurate records3.3. Sequence items to minimize travel, pick timeSequence items to minimize travel, pick time4.4. Combine picking ordersCombine picking orders5.5. Assign classes of items to particular areasAssign classes of items to particular areas
ValueValue--added activities performed at added activities performed at the warehousethe warehouseEnable low cost and rapid response Enable low cost and rapid response strategiesstrategies
Assembly of componentsAssembly of componentsLoading softwareLoading softwareRepairsRepairsCustomized labeling and packagingCustomized labeling and packaging
FixedFixed--Position LayoutPosition LayoutProduct remains in one place Product remains in one place Workers and equipment come to siteWorkers and equipment come to siteComplicating factorsComplicating factors
Limited space at siteLimited space at siteDifferent materials Different materials required at different required at different stages of the projectstages of the projectVolume of materials Volume of materials needed is dynamicneeded is dynamic
Alternative StrategyAlternative StrategyAs much of the project as possible As much of the project as possible is completed offis completed off--site in a productsite in a product--oriented facilityoriented facilityThis can This can significantly significantly improve efficiency improve efficiency but is only but is only possible when possible when multiple similar multiple similar units need to be createdunits need to be created
Like machines and equipment are Like machines and equipment are grouped togethergrouped togetherFlexible and capable of handling a Flexible and capable of handling a wide variety of products or wide variety of products or servicesservicesScheduling can be difficult and Scheduling can be difficult and setup, material handling, and labor setup, material handling, and labor costs can be highcosts can be high
Arrange work centers so as to Arrange work centers so as to minimize the costs of material minimize the costs of material handlinghandlingBasic cost elements areBasic cost elements are
Number of loads (or people) moving Number of loads (or people) moving between centersbetween centersDistance loads (or people) move Distance loads (or people) move between centersbetween centers
1.1. Construct a Construct a ““fromfrom--to matrixto matrix””2.2. Determine the space requirementsDetermine the space requirements3.3. Develop an initial schematic diagramDevelop an initial schematic diagram4.4. Determine the cost of this layout Determine the cost of this layout 5.5. Try to improve the layoutTry to improve the layout6.6. Prepare a detailed plan Prepare a detailed plan
Arrange six departments in a factory to Arrange six departments in a factory to minimize the material handling costs. minimize the material handling costs. Each department is 20 x 20 feet and the Each department is 20 x 20 feet and the building is 60 feet long and 40 feet wide.building is 60 feet long and 40 feet wide.
Computer SoftwareComputer SoftwareGraphical approach only works for Graphical approach only works for small problemssmall problemsComputer programs are available to Computer programs are available to solve bigger problemssolve bigger problems
Computer SoftwareComputer SoftwareThree dimensional visualization Three dimensional visualization software allows managers to view software allows managers to view possible layouts and assess process, possible layouts and assess process, material material handling, handling, efficiency, efficiency, and safety and safety issuesissues
Work CellsWork CellsReorganizes people and machines Reorganizes people and machines into groups to focus on single into groups to focus on single products or product groupsproducts or product groupsGroup technology identifies Group technology identifies products that have similar products that have similar characteristics for particular cellscharacteristics for particular cellsVolume must justify cellsVolume must justify cellsCells can be reconfigured as Cells can be reconfigured as designs or volume changesdesigns or volume changes
Advantages of Work CellsAdvantages of Work Cells1.1. Reduced workReduced work--inin--process inventoryprocess inventory2.2. Less floor space requiredLess floor space required3.3. Reduced raw material and finished Reduced raw material and finished
goods inventorygoods inventory4.4. Reduced direct laborReduced direct labor5.5. Heightened sense of employee Heightened sense of employee
participationparticipation6.6. Increased use of equipment and Increased use of equipment and
machinerymachinery7.7. Reduced investment in machinery Reduced investment in machinery
Improving Layouts Using Improving Layouts Using Work CellsWork Cells
Current layout Current layout -- workers workers in small closed areas. in small closed areas. Cannot increase output Cannot increase output without a third worker and without a third worker and third set of equipment.third set of equipment. Improved layout Improved layout -- crosscross--trained trained
workers can assist each other. workers can assist each other. May be able to add a third worker May be able to add a third worker as additional output is needed.as additional output is needed.
Improving Layouts Using Improving Layouts Using Work CellsWork Cells
Current layout Current layout -- straight straight lines make it hard to balance lines make it hard to balance tasks because work may not tasks because work may not be divided evenlybe divided evenly
Improved layout Improved layout -- in U in U shape, workers have better shape, workers have better access. Four crossaccess. Four cross--trained trained workers were reduced.workers were reduced.
Figure 9.10 (b)Figure 9.10 (b)
U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection
Requirements of Work CellsRequirements of Work Cells
1.1. Identification of families of productsIdentification of families of products2.2. A high level of training, flexibility A high level of training, flexibility
and empowerment of employeesand empowerment of employees3.3. Being selfBeing self--contained, with its own contained, with its own
equipment and resourcesequipment and resources4.4. Test (pokaTest (poka--yoke) at each station in yoke) at each station in
Staffing Work Cells Staffing Work Cells ExampleExample
600 600 Mirrors per day requiredMirrors per day requiredMirror production scheduled for Mirror production scheduled for 88 hours per dayhours per dayFrom a work balance chart From a work balance chart
total operation time total operation time = 140= 140 secondsseconds
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OperationsOperationsAssembleAssemble PaintPaint TestTest LabelLabel Pack forPack for
Staffing Work Cells Staffing Work Cells ExampleExample
600 600 Mirrors per day requiredMirrors per day requiredMirror production scheduled for Mirror production scheduled for 88 hours per dayhours per dayFrom a work balance chart From a work balance chart
total operation time total operation time = 140= 140 secondsseconds
Takt timeTakt time = = (8(8 hrs hrs x 60x 60 minsmins) / 600) / 600 units units = .8= .8 mins mins = 48= 48 secondsseconds
Workers requiredWorkers required ==Total operation time requiredTotal operation time required
Used for evaluating operation Used for evaluating operation times in work cellstimes in work cellsCan help identify bottleneck Can help identify bottleneck operationsoperationsFlexible, crossFlexible, cross--trained employees trained employees can help address labor bottleneckscan help address labor bottlenecksMachine bottlenecks may require Machine bottlenecks may require other approachesother approaches
Focused Work Center and Focused Work Center and Focused FactoryFocused Factory
Focused Work CenterFocused Work CenterIdentify a large family of similar products Identify a large family of similar products that have a large and stable demandthat have a large and stable demandMoves production from a generalMoves production from a general--purpose, purpose, processprocess--oriented facility to a large work celloriented facility to a large work cell
Focused FactoryFocused FactoryA focused work cell in a separate facilityA focused work cell in a separate facilityMay be focused by product line, layout, May be focused by product line, layout, quality, new product introduction, flexibility, quality, new product introduction, flexibility, or other requirementsor other requirements
Focused Work Center and Focused Work Center and Focused FactoryFocused Factory
Table 9.2Table 9.2
Example: A plant to Example: A plant to produce window produce window mechanism for mechanism for automobiles.automobiles.
Example: Pipe bracket Example: Pipe bracket manufacturing at a manufacturing at a shipyard.shipyard.
Example: A job shop Example: A job shop with machinery and with machinery and personnel rearranged personnel rearranged to produce 300 unique to produce 300 unique control panels.control panels.
A focused factory is a A focused factory is a permanent facility to permanent facility to produce a product or produce a product or component in a component in a productproduct--oriented oriented facility. Many focused facility. Many focused factories currently factories currently being built were being built were originally part of a originally part of a processprocess--oriented oriented facility.facility.
A focused work center is A focused work center is a permanent producta permanent product--oriented arrangement oriented arrangement of machines and of machines and personnel in what is personnel in what is ordinarily a processordinarily a process--oriented facility.oriented facility.
A work cell is a A work cell is a temporary producttemporary product--oriented arrangement oriented arrangement of machines and of machines and personnel in what is personnel in what is ordinarily a processordinarily a process--oriented facility.oriented facility.
Focused FactoryFocused FactoryFocused Work CenterFocused Work CenterWork CellWork Cell
Repetitive and ProductRepetitive and Product--Oriented LayoutOriented Layout
1.1. Volume is adequate for high equipment Volume is adequate for high equipment utilizationutilization
2.2. Product demand is stable enough to justify high Product demand is stable enough to justify high investment in specialized equipmentinvestment in specialized equipment
3.3. Product is standardized or approaching a phase Product is standardized or approaching a phase of life cycle that justifies investment of life cycle that justifies investment
4.4. Supplies of raw materials and components are Supplies of raw materials and components are adequate and of uniform qualityadequate and of uniform quality
Organized around products or families of Organized around products or families of similar highsimilar high--volume, lowvolume, low--variety productsvariety products
ProductProduct--Oriented LayoutsOriented LayoutsFabrication lineFabrication line
Builds components on a series of machinesBuilds components on a series of machinesMachineMachine--pacedpacedRequire mechanical or engineering changes Require mechanical or engineering changes to balanceto balance
Assembly lineAssembly linePuts fabricated parts together at a series of Puts fabricated parts together at a series of workstationsworkstationsPaced by work tasksPaced by work tasksBalanced by moving tasksBalanced by moving tasks
Both types of lines must be balanced so that the Both types of lines must be balanced so that the time to perform the work at each station is the sametime to perform the work at each station is the same
1.1. Low variable cost per unitLow variable cost per unit2.2. Low material handling costsLow material handling costs3.3. Reduced workReduced work--inin--process inventoriesprocess inventories4.4. Easier training and supervisionEasier training and supervision5.5. Rapid throughputRapid throughput
AdvantagesAdvantages
1.1. High volume is requiredHigh volume is required2.2. Work stoppage at any point ties up the Work stoppage at any point ties up the
whole operationwhole operation3.3. Lack of flexibility in product or production Lack of flexibility in product or production
AssemblyAssembly--Line BalancingLine BalancingObjective is to minimize the imbalance Objective is to minimize the imbalance between machines or personnel while between machines or personnel while meeting required outputmeeting required outputStarts with the precedence Starts with the precedence relationshipsrelationships
This means that This means that tasks B and E tasks B and E cannot be done cannot be done until task A has until task A has been completedbeen completed
PerformancePerformance Task Must FollowTask Must FollowTimeTime Task ListedTask Listed
TaskTask (minutes)(minutes) BelowBelowAA 1010 ——BB 1111 AACC 55 BBDD 44 BBEE 1212 AAFF 33 C, DC, DGG 77 FFHH 1111 EEII 33 G, HG, HTotal time Total time 6666