CHAPTER SIX

FACILITY LAYOUT
6.1. Introduction
Layout is defined as the most effective physical arrangement of machines, processing equipment,
and service departments to have the best co-ordination and efficiency of man, machine and
material in an organization. It is the spatial arrangement of physical resources used to create the
product. It also means how the space needed for material movement, storage, indirect labor, etc
is arranged in a factory. For a factory which is already in operation, this may mean the
arrangement that is already present. However, for a new factory this means the plan of how the
machines, equipment, etc. will be arranged in the different sections or shops. These should be
arranged in such a way that material movement cost, cost of storage in between processes, the
investment on machines and equipment etc. should be optimal and the product is as cheap as
possible.
The objective of layout strategy is to develop an economic layout that will meet the firm’s
competitive requirements. In any cases, layout design must consider how to achieve the
following:
Higher utilization of space, equipment, and people
Improved flow of information, materials, or people
Improved employee morale and safer working conditions
Improved customer/client interaction
Flexibility (whatever the layout is now, it will need to change)

6.2. Types of Layout

There are four basic layout types: process, product, hybrid, and fixed position. In this section we
look at the basic characteristics of each of these types. Then we examine the details of designing
some of the main types.
1. Process layouts: Process layouts are layouts that group resources based on similar
processes or functions. This type of layout is seen in companies with intermittent
processing systems. You would see a process layout in environments in which a large
variety of items are produced in a low volume. Since many different items are produced,

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 each with unique processing requirements, it is not possible to dedicate an entire facility
to each item. It is more efficient to group resources based on their function. The products
are then moved from one resource to another, based on their unique needs. The challenge
in process layouts is to arrange resources to maximize efficiency and minimize waste of
movement. If the process layout has not been designed properly, many products will have
to be moved long distances, often on a daily basis.

Process layouts are very common. A hospital is an example of process layout.

Departments are grouped based on their function, such as cardiology, radiology,
laboratory, oncology, and pediatrics. The patient, the product in this case, is moved
between departments based on his or her individual needs. A university is another
example. Colleges and departments are grouped based on their function. You, the student,
move between departments based on the unique program you have chosen.

Advantage of process layout

 Flexibility of equipment and labor assignment
 Breakdown of one machine does not stop the whole process
Disadvantage of process layout
 Orders take more time and money
 High labor skill increases required level of training and experience
Recall that process layouts are designed to produce many different items, often to customer
specifications. To achieve this goal they have certain unique characteristics:
1. Resources used are general purpose. The resources in a process layout need to be capable
of producing many different products.
2. Facilities are less capital intensive. Process layouts have less automation, which is
typically devoted to the production of one product.
3. Facilities are more labor intensive. Process layouts typically rely on higher-skilled
workers who can perform different functions.
4. Resources have greater flexibility. Process layouts need to have the ability to easily add
or delete products from their existing product line, depending on market demands.

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 5. Processing rates are slower. Process layouts produce many different products, and there is
greater movement between workstations. Consequently, it takes longer to produce a
product.
6. Material handling costs are higher. It costs more to move goods from one process to
another.
7. Scheduling resources is more challenging. Scheduling equipment and machines is
particularly important in this environment. If it is not done properly, long waiting lines
can form in front of some work centers while others remain idle.
8. Space requirements are higher. This type of layout needs more space due to higher
inventory storage needs. Improper design of process layouts can result in costly
inefficiencies, such as high material handling costs. A good design can help bring order
to an environment that might otherwise be very chaotic.

2. Product layouts are layouts that arrange resources in a straight-line fashion to promote
efficient production. They are called product layouts because all resources are arranged to
meet the production needs of the product. This type of layout is used by companies that
have repetitive processing systems and produce one or a few standardized products in
large volume. Examples of product layouts are seen on assembly lines, in cafeterias, or
even at a car wash. In product layouts the material moves continuously and uniformly
through a series of workstations until the product is completed.

The challenge in designing product layouts is to arrange workstations in sequence and

designate the jobs that will be performed by each station in order to produce the product
in the most efficient way possible.

Advantage of product layout

 High rate of output
 Low unit due to high volume
 Labor specialization reduces training costs and time
 High utilization of labor and equipment

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Disadvantage of product layout
 Poorly skilled workers exhibit little interests in maintaining equipment or in the quality of
output
 The system is inflexible in response to changes in the volume of output or changes in product
or process design.
Remember that product layouts are designed to produce one type or just a few types of products in
high volume. Product layouts have the following characteristics:
1. Resources are specialized. Product layouts use specialized resources designed to produce
large quantities of a product.
2. Facilities are capital intensive. Product layouts make heavy use of automation, which is
specifically designed to increase production.
3. Processing rates are faster. Processing rates are fast, as all resources are arranged in
sequence for efficient production.
4. Material handling costs are lower. Due to the arrangement of work centers in close
proximity to one another, material handling costs are significantly lower than for process
layouts.
5. Space requirements for inventory storage are lower. Product layouts have much faster
processing rates and less need for inventory storage.
6. Flexibility is low relative to the market. Because all facilities and resources are
specialized, product layouts are locked into producing one type of product. They cannot
easily add or delete products from the existing product line.

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 3. Hybrid Layouts: Hybrid layouts combine aspects of both process and product layouts.
This is the case in facilities where part of the operation is performed using an intermittent
processing system and another part is performed using a continuous processing system.
For example, Winnebago, which makes mobile campers, manufactures the vehicle itself
as well as the curtains and bedspreads that go into the camper. The vehicles are produced
on a typical assembly line, whereas the curtains and bedspreads are made in a fabrication
shop that uses a process layout.

Hybrid layouts are often created in an attempt to bring the efficiencies of a product layout
to a process layout environment. To develop a hybrid layout, we can try to identify parts
of the process layout operation that can be standardized and produce them in a product
layout format.
4. Fixed-position layout: Fixed-position layout is used when the product is large and
cannot be moved due to its size. All the resources for producing the product including
equipment, labor, tools, and all other resources have to be brought to the site where the
product is located. Examples of fixed-position layouts include building construction, dam
or bridge construction, shipbuilding, or large aircraft manufacture. The challenge with a
fixed-position layout is scheduling different work crews and jobs and managing the
project.
6.3. Service Layout
The major factors considered for service providers, is an impact of location on sales and
customer satisfaction. Service facility layout will be designed based on degree of customer
contact and the service needed by a customer. These service layouts follow conventional layouts
as required. For example, for car service station, product layout is adopted, where the activities
for servicing a car follows a sequence of operation irrespective of the type of car. Hospital
service is the best example for adaptation of process layout. Here, the service required for a
customer will follow an independent path.

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Other Service Layouts
Office Layout: The criteria for a rational approach to office layouts in terms of workflow are the
same as those for manufacturing tangible goods. That is, we can organize around either processes
or products. In most organizations, however, there is some middle ground where, for example,
the accounts receivable department handles receivables the order department handles incoming
orders, and the accounts payable department handles results or purchases and other bills. This
middle ground can be thought of as cellular organizations arranged and rearranged as work
procedures and volumes change. The frequent rearrangement of offices is witness to the
flexibility of this cellular relationship.

As a final comment on the layout of offices, we should note two major trends, First, technology,
such as cellular phones, beepers, faxes, the internet, home offices layout laptop computers, and
personal digital assistants, allows ever increasing flexibility when information can be moved
electronically. Second, virtual companies create dynamic needs for space and services. These
two changes require fewer office employees on sit.

Warehouse or Storage Layout: The objective of warehouse layout is to find the optimum trade-
off between handling cost and costs of warehouse space. So, the management’s task is to
maximize the utilization of the ‘cubic space’ of the warehouse—that is, utilize its full volume
while maintaining low material handling costs, which is defined as all the costs related to the
incoming transport, storage, and outgoing transport of materials to be warehoused. The cost also
includes equipment, people, material, supervision, insurance, and depreciation. Effective
warehouse layouts also minimize the damage and spoilage of material within the warehouse. The
variety of items stored and the number of items ‘picked’ affect the optimum layout. A warehouse
storing a few items leads itself to higher density than a warehouse storing a variety of items.

Retail Layout: Retail layouts are based on the idea that sales and profitability vary directly with
customer exposure to products. Thus, most retail managers try to expose customers to as many
products as possible. Studies show that the greater the rate of exposure, the greater the sales and
the higher the return on investment. Once the overall layout of a retail store has been decided,
products need to be arranged for sale. Many considerations go into this arrangement. However,

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the main objective of retail layout is to maximize profitability per square foot of floor space (or,
in some stores on linear foot of shelf space). Big-ticket, or expensive, items may yield greater
dollar sales, but the profit per square foot may be lower. Computerized programs are available to
assist managers in evaluating the profitability of various merchandising plans.

6.3. Line Balancing

Line balancing is the process of assigning tasks to workstations in a product layout in order to
achieve a desired output and balance the workload among stations. Recall that product layouts
arrange resources in sequence so that the product can be made as efficiently as possible. This
type of layout is used in repetitive processing systems that produce a large volume of one
standardized product.

Steps in assembly line balancing

Step1 Specify the sequential relationships among tasks using a precedence diagram. The
diagram consists of circles and arrows. Circles represent individual tasks; arrows indicate the
order of task performance.
Step 2 Determine output rate
Production time per day
Maximum production = Bottelneck time

Step 3 Determine the required cycle time (C), using the following formula:
Production time per day
C = Output per day ( in units)

Step 4 Determine the theoretical minimum number of workstations (Nt) required to satisfy the
cycle time constraint, using the following formula:
Sum of task times (T )
Nt=
Cycle time (C )

Step 5 Evaluate the efficiency of the balance derived using the formula:
Sum of task times (T )
Actual number of workstations ( N a ) x Cycle time (C )
Efficiency =

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Example
An assembly line must be designed to produce 100 units. The tasks and required time are
provided as follows:
Task Time (minute) Predecessors
A 2 None
B 1 A
C 3.25 None
D 1.2 A,C
E 0.5 D
F 1 E
G 1 B
H 1.4 F,G
Step 2 Determine Maximum output rate

Step 2 Determine Maximum output rate

Production time per day

Maximum production = Bottelneck time
Production time per day = 7 hrs x 60 minute = 420 minutes
Bottleneck time: the longest task in the process i.e 3.25 (task C)

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 420 minute
Maximum production = 3. 25 minute/ unit
Step 3 Determine the cycle time
Production time per day 420 minute
C = Output per day ( in units) C = 100 unit/day = 4.2 minute/ unit

Step 4 Determine the theoretical minimum number of workstations (Nt)

Sum of task times (T ) 11. 35 mins/unit
Nt= Nt=
Cycle time (C ) 4 . 2 mins/unit = 2.702 round up to 3

Step 5 Evaluate the efficiency of the balance derived using the formula:
Sum of task times (T ) 11.35 mins/unit
Actual number of workstations ( N ) x Cycle time (C )
= =0.901
Efficiency = a 3 x 4 .2 mins/unit

or 90 % of efficiency.

Workout:

A firm must produce 40 units/day during an 8-hour workday. Tasks, times, and predecessor
activities are given below.

Task Time (Minutes) Predecessor(s)

A 2 -
B 2 A
C 8 -
D 6 C
E 3 B
F 10 D, E
G 4 F
H 3 G
Total 38 minutes

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Determine the cycle time and the appropriate number of workstations to produce the 40 units per
day.

1 Draw the precedence diagram

2. Determine the theoretical minimum number of workstations (Nt)
3. Evaluate the efficiency of the balance

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