-
Plant Layout and its Types
Dr. Zargari
Plant layout ideally involves allocation of space and arrangement of equipment in such a manner that overall operating costs are minimized.Layout?
Dr. Zargari
Objectives of LayoutEfficient utilization of available floor spaceTo ensure that work proceeds from one point to another point without any delayProvide enough production capacity.Reduce material handling costsReduce hazards to personnelUtilize labor efficientlyIncrease employee moral.
Dr. Zargari
Objectives of Layout.Cont..Reduce accidentsProvide for volume and product flexibilityProvide ease of supervision and controlProvide for employee safety and healthAllow ease of maintenanceAllow high machine or equipment utilizationImprove productivity
Dr. Zargari
Manufacturing unitsProduct; Process; Fixed Position Combined
Types of Layout
Dr. Zargari
1.Manufacturing Layouta. Product layout(line Layout):The materials move form one workstation to another sequentially without any backtracking or deviation.Materials are fed into 1st machine and semi-finished goods travel automatically from machine to machine.The output of one machine becoming input of the next.
Eg: Food Processing Unit; Paper mill
Dr. Zargari
1.Manufacturing Layouta. Product layout(line Layout):Eg: Paper mill
Dr. Zargari
1.Manufacturing Layouta. Product layout(line Layout):AdvantageDisadvantage1.Low material handling cost2.Continuous work3.Optimum floor space1.Initial cost is very high2.Repetitive process
Dr. Zargari
1.Manufacturing Layoutb. Process (functional)layout:In this type of layout machines of a similar type are arranged together at one place.The work has to be allocated to each department in such a way that no machines are chosen to do as many different job as possible.
Eg: Process oriented layout for an hospital
Dr. Zargari
b. Process (functional)layout:Eg: Process oriented layout for an hospital
Dr. Zargari
Process LayoutsProcess layouts are designed to process items or provide services that involve a variety of processing requirements. *
Dr. Zargari
Process oriented plant layout (Functional Layout)This type of plant layout is useful when the production process is organized in batches.Personnel and equipment to perform the same function are allocated in the same area.The different items have to move from one area to another one, according to the sequence of operations previously established.The variety of products to produce will lead to a diversity of flows through the facility.The variations in the production volumes from one period to the next one (short periods of time) may lead to modifications in the manufactured quantities as well as the types of products to be produced.
Dr. Zargari
1.Manufacturing Layoutb. Process layout:AdvantageDisadvantage1.Low capital2.Overhead cost are relatively low.3.Effective supervision1.High material handling cost2.Time lag is higher
Dr. Zargari
1.Manufacturing Layoutc. Fixed (position) layout:Here, Major products being produced is fixed at one location. All other facilities are brought and arranged around the work center.
Eg: Ship building, Dam construction, flyover construction.
Dr. Zargari
1.Manufacturing Layoutc. Fixed (position) layout:Eg: Ship building, Dam & flyover construction.
Dr. Zargari
1.Manufacturing Layoutc. Fixed (position) layout:AdvantageDisadvantage1.Save cost, as customization is necessary
1.Lengthy production period, heavy investment cost2.Several operations are carried out simultaniously.
Dr. Zargari
1.Manufacturing Layoutd. Combined layout:In many manufacturing units, several products are produced in repeated numbers with no likelihood of continuous production, combined layout is followed.
Eg: Soap industry, all inputs are almost manufactured in separate units viz glycerin, water treatment, fragrance etc.
Dr. Zargari
1.Manufacturing Layoutd.Combined layout:Eg: Soaps
-
Factors affecting Plant LayoutPlant location and buildingNature of ProductType of IndustryPlant EnvironmentSpatial RequirementsRepairs and MaintenanceBalanceManagement PolicyHuman NeedsTypes of machinery and equipment
-
Location Planning and Analysis
Dr. Zargari
Need for Location DecisionsMarketing StrategyCost of Doing BusinessGrowthDepletion of Resources
Dr. Zargari
Nature of Location DecisionsStrategic ImportanceLong term commitment/costsImpact on investments, revenues, and operationsSupply chainsObjectivesProfit potentialIdentify several locations from which to chooseOptionsExpand existing facilitiesAdd new facilitiesMove
Dr. Zargari
Types of FacilitiesHeavy Industry Facilities
Light Industry Facilities
Retail And service facilities
Dr. Zargari
Making Location DecisionsDecide on the criteriaIdentify the important factorsDevelop location alternativesEvaluate the alternativesMake selection
Dr. Zargari
General Factors affecting location decisionAvailability of basic infrastructureBasic amenitiesProximity to raw material and marketsResidential complexes, schools, hospitals, clubs etc.Availability of cheap labourGovt. policiesEnv. And communityCheap land
Dr. Zargari
Locating Foreign operationsTrade barriersInternational CustomersInternational CompetitionRegulationsAdditional ResourcesLow CostsOffensive in Competitors home country
Dr. Zargari
Factors at country levelPolitical Risks, Govt. Regulations, attitudes, incentivesCultural and economic issuesLabour talent, productivity, costAvailability of supplies, infrastructureExchange rates and currency risks
Dr. Zargari
Location Decision FactorsRegional FactorsSite-related FactorsMultiple Plant StrategiesCommunity Considerations
Dr. Zargari
Regional FactorsAttractiveness of region(culture, taxes, climate)Labour availabilityLocation of raw materialsLocation of marketsAvailability of utilitiesGovt. Incentives andpoliciesClimate and taxes
Dr. Zargari
Community ConsiderationsQuality of lifeServicesAttitudesTaxesEnvironmental regulationsUtilities Developer support
Dr. Zargari
Site Related FactorsLandTransportationEnvironmentalLegal
Dr. Zargari
Multiple Plant StrategiesProduct plant strategyMarket area plant strategyProcess plant strategy
-
Comparison of Service and Manufacturing Considerations
Manufacturing/DistributionService/RetailCost FocusRevenue focusTransportation modes/costsDemographics: age,income,etcEnergy availability, costsPopulation/drawing areaLabor cost/availability/skillsCompetitionBuilding/leasing costsTraffic volume/patternsCustomer access/parking
Dr. Zargari
Evaluating LocationsCost-Profit-Volume AnalysisDetermine fixed and variable costsPlot total costsDetermine lowest total costs
Dr. Zargari
Location Cost-Volume AnalysisAssumptionsFixed costs are constantVariable costs are linearOutput can be closely estimatedOnly one product involved
Dr. Zargari
Example 1: Cost-Volume AnalysisFixed and variable costs for four potential locations
Location
Fixed
Cost
Variable
Cost
A
B
C
D
$250,000
100,000
150,000
200,000
$11
30
20
35
Dr. Zargari
Example 1: Solution
Dr. Zargari
Factor-Rating MethodSix steps:Develop a list of relevant factors.Assign a weight to each factor reflecting its relative importance to the firm.Develop a rating scale for the factors.Score each location on each factor based on the scale.Multiply the scores by the weights for each factor and total the weighted scores for each location.Make a recommendation based on the maximum point score, considering other [quantitative?] factors.
Dr. Zargari
Factor Rating Example
Dr. Zargari
Evaluating LocationsCenter of Gravity MethodDecision based on minimum distribution costsLoad Distance modelDecision based on evaluating potential locations based on load distance value.
***********************
