Operations

Management

Layout Strategy
Lecture 10
Sharjeel Ahmad
PhD Scholar Maritime Supply Chain
 • Global Company Profile:
McDonald's
• Strategic Importance of Layout
Decisions
• Types of Layout

Today’s •

•
Office Layout
Retail Layout
Roadmap • Warehousing and Storage Layouts
• Fixed-Position Layout
• Process-Oriented Layout
• Work Cells
• Repetitive and Product-Oriented
Layout
Innovations at McDonald's
• Indoor seating (1950s)
• Drive-through window (1970s)
• Adding breakfast to the menu
(1980s)
• Adding play areas (late 1980s)
• Redesign of the kitchens (1990s)
• Self-service kiosk (2004)
• Now three separate dining sections
Six out of the seven are layout
decisions!
Innovations at McDonald's
• Seventh major innovation
• Redesigning all 30,000 outlets
around the world
• Three separate dining areas
– Linger zone with comfortable
chairs and Wi-Fi connections
– Grab and go zone with tall
counters
– Flexible zone for kids and
families
• Facility layout is a source of
Innovations at McDonald's
Innovations at McDonald's
Innovations at McDonald's
 Discuss important issues in office layout

Define objectives of retail layout

Discuss modern warehouse management

& terms such as A S R S, cross-docking, &
random stocking

Learning Identify when fixed-position layouts are

appropriate

Objectives Explain how to achieve a good process-

oriented facility layout

Define work cell and the requirements of

a work cell

Define product-oriented layout

Explain how to balance production flow

in a repetitive or product-oriented facility
Objective of layout
strategy is to
develop an effective
& efficient layout
that will meet firm’s
competitive
requirements
 Importance of Layout
• Higher utilization of space,
equipment, & people
• Improved flow of information,
materials, or people
• Improved employee morale &
safer working conditions
• Improved customer/client
interaction
• Flexibility
Layout Considerations
• Higher utilization of space,
equipment, & people
• Improved flow of information,
materials, or people
• Improved employee morale & safer
working conditions
• Improved customer/client
interaction
• Flexibility
Layout Types
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout
Layout Types
Office layout: Positions workers, their
equipment, and spaces/offices to
provide for movement of information

Retail layout: Allocates display space

and responds to customer behavior

Warehouse layout: Addresses trade-

offs between space and material
handling
Layout Types
Fixed-position layout: Addresses
the layout requirements of large,
bulky projects such as ships &
buildings

Process-oriented layout: Deals

with low-volume, high-variety
production (also called job shop or
intermittent production)
Layout Types
Work cell layout: Arranges
machinery & equipment to focus on
production of a single product or
group of related products

Product-oriented layout: Seeks

best personnel & machine
utilizations in repetitive or
continuous production
Video Clip

https://youtu.be/qKca93vGPho?si=cqRHfd4pxTlZS1T1
Layout Strategies
What makes a efficient layout
• Material handling equipment
• Capacity and space requirements
• Environment and aesthetics
• Flows of information
• Cost of moving between various
work areas
Office Layout

• Grouping of workers, their

equipment, & spaces to
provide comfort, safety,
&movement of information
• Movement of information -
main distinction
• Typically in state of flux due
to frequent technological
changes
Office Layout

This chart, prepared for a software firm, indicates that operations

must be near accounting and marketing, but it does not need to be
near the graphic arts staff
Office Layout

• Three physical and social aspects

– Proximity
– Privacy
– Permission
• Two major trends
– Information technology
– Dynamic needs for space and
services
Retail Layout
• Objective is to maximize
profitability per square foot of floor
space
• Sales & profitability vary directly
with customer exposure
Action points for supermarket layout
1. Locate high-draw items around the periphery of the store

2. Use prominent locations for high-impulse and high-margin items

3. Distribute power items to both sides of an aisle and disperse them to increase
viewing of other items

4. Use end-aisle locations

5. Convey mission of store through careful positioning of lead-off department

Store Layout with Dairy and Bakery, High-Draw Items, in
Different Areas of the Store
 Retail Layout Practices-Slotting

• Manufacturers pay slotting fees to retailers to

get the retailers to display (slot) their product
• Contributing factors
– Limited shelf space
– An increasing number of new products
– Better information about sales through P OS
data collection
– Closer control of inventory
Retail Layout Practices-Servicescapes
Ambient conditions -
background characteristics
such as lighting, sound, smell,
and temperature

Spatial layout &

functionality - which involve
customer
circulation path planning, aisle
characteristics, and product
grouping

Signs, symbols, & artifacts -

characteristics of building
design that carry social
significance
 Warehouse and Storage Layout
• Objective is to find optimum trade-offs between handling
costs & costs associated with warehouse space

• Maximize total "cube" of the warehouse – utilize its full volume

while maintaining low material handling costs

Material Handling Costs

• All costs associated with the transaction
– Incoming transport
– Storage
– Finding and moving material
– Outgoing transport
– Equipment, people, material, supervision, insurance,
depreciation
Warehouse and Storage Layout-Strategies/ practices

• Warehouse density tends to vary

inversely with number of different
items stored

• Automated Storage and Retrieval

Systems (ASRSs)

• Can significantly improve warehouse

productivity

• Dock location is a key design element

Cross Docking
• Materials moved directly from
receiving to shipping & are not placed
in storage in warehouse

• Requires tight scheduling & accurate

shipments, bar code or R F I D
identification used for advanced
shipment
notification as materials are unloaded
Random Stocking
• Used in warehousing to locate stock wherever there is an open
location
• Typically requires automatic identification systems (A IS) &
effective information systems
• Allows more efficient use of space
• Key Tasks

1. Maintain list of “open” locations

2. Maintain accurate records
3. Sequence items to minimize travel, “pick” time
4. Combine picking orders
5. Assign classes of items to particular areas
Customizing
• Warehouse customization useful way to generate
competitive advantage in markets where products have
multiple configurations
• For instance, a warehouse can be a place where
computer components are put together, software
loaded, & repairs made.
• Warehouses also provide customized labeling &
packaging for retailers so items arrive ready for display
• This type of work goes on adjacent to major airports, in
facilities such as the FedEx terminal in Memphis. Adding
value at warehouses adjacent to major airports also
facilitates overnight delivery
Customizing
For example, if your computer has failed, the
replacement may be sent to you from such a warehouse
for delivery the next morning. When your old machine
arrives back at the warehouse, it is repaired and sent to
someone else. These value-added activities at “ quasi-
warehouses” contribute to strategies of differentiation,
low cost, and rapid response
Layout- Practical Examples
Fixed Position Layout
• Product remains in one place

• Workers and equipment come to site

• Complicating factors

– Limited space at site

– Different materials required at

different stages of the project

– Volume of materials needed is

dynamic
Process- Oriented Layout
• Like machines & equipment are
grouped together

• Flexible & capable of handling a

wide variety of products or
services

• Scheduling can be difficult & setup,

material handling, and labor costs
can be high
Work Cell

An arrangement of
machines & personnel
that focuses on
making a single
product or family of
related products
Work Cell
• Reorganizes people and machines into
groups to focus on single products or
product groups

• Group technology identifies products

that have similar characteristics for
particular cells

• Volume must justify cells

• Cells can be reconfigured as designs or

volume changes
Advantages of Work Cell
 Reduced work-in-process inventory
 Less floor space required
 Reduced raw material and finished goods
inventories
 Reduced direct labor cost
 Heightened sense of employee participation
 Increased equipment and machinery utilization
 Reduced investment in machinery and equipment
Improving Layouts through Work Cell
 Improving Layouts through Work Cell

U-shaped line may reduce employee movement and space

requirements while enhancing communication, reducing the
number of workers, and facilitating inspection
Staffing and Balancing Work Cell
Determine the takt time

Total work time available

Takt time =
Units required to satisfy customer demand

Determine the number of operators

required

Total operation time required

Workers required =
Takt time

TAKT TIME----------Pace of production to meet customer demands

Staffing and Balancing Work Cell- Problem
Stephen Hall’s company in Dayton makes auto mirrors. The
major customer is the Honda plant nearby. Honda expects
600 mirrors delivered daily, and the work cell producing the
mirrors is scheduled for 8 hours. Hall wants to determine the
takt time and the number of workers required

Work Balance Chart for Mirror Production

Staffing and Balancing Work Cell-Problem
Work Balance Chart
• Used for evaluating operation times in work cells

• Can help identify bottleneck operations

• Flexible, cross-trained employees can help address

labor bottlenecks

• Machine bottlenecks may require other

approaches (adjustment in machinery, process, or
operations)
Focused Work Center and Focused Factory
• Focused Work Center

– Identify a large family of similar

products that have a large and stable
demand
– Moves production from a general-
purpose, process-oriented facility to
a large work cell
• Focused Factory
– A focused work cell in a separate
facility

– May be focused by product line,

layout, quality, new product
Repetitive and Product Oriented Layout
Organized around products or families of similar
high-volume, low-variety products

1. Volume is adequate for high equipment utilization

2. Product demand is stable enough to justify high

investment in specialized equipment

3. Product is standardized or approaching a phase of life

cycle that justifies investment

4. Supplies of raw materials and components are adequate

and of uniform quality
Product Oriented Layout
• Fabrication line
– Builds components on a series of machines
– Machine-paced
– Require mechanical or engineering changes to
balance
• Assembly line
– Puts fabricated parts together at a series of
workstations
– Paced by work tasks
– Balanced by moving tasks
Advantages and Disadvantages Product
Oriented Layout
Advantages

1. Low variable cost per unit Disadvantages

2. Low material handling costs
3. Reduced work-in-process 1. High volume is required
inventories
2. Work stoppage at any point
4. Easier training and ties up the whole operation
supervision
3. Lack of flexibility in product
5. Rapid throughput or production rates
Assembly Line Balancing
• Objective is to minimize the imbalance between
machines or personnel while meeting required output

• Starts with the precedence relationships

– Determine cycle time

– Calculate theoretical minimum number of

workstations

– Balance the line by assigning specific tasks to

workstations
McDonald Assembly Line
Assembly Line- gives what output?
Boeing Wing Component- Precedence Diagram
Boeing wants to develop a precedence diagram for an
electrostatic wing component that requires a total assembly
time of 65 minutes
Boeing Wing Component- Precedence Diagram
 Boeing Wing Component- Precedence Diagram
Once we have constructed a precedence chart summarizing the sequences and
performance times, we turn to the job of grouping tasks into job stations so that we can
meet the specified production rate. This process involves three steps:

1. Take the units required (demand or production rate) per day and divide them into the
productive time available per day (in minutes or seconds). This operation gives us what
is called the cycle time —namely, the maximum time allowed at each workstation if the
production rate is to be achieved:

Cycle time = Production time available per day/ Units required per day

2. Calculate the theoretical minimum number of workstations. This is the total task-
duration time (the time it takes to make the product) divided by the cycle time. Fractions
are rounded to the next higher whole number:
n
Minimum number of workstations = ∑ Time for task i / Cycle time (n is
number of assembly tasks)
i=1
Boeing Wing Component- Precedence Diagram
Balance the line by assigning specific assembly tasks to each workstation. An
efficient balance is one that will complete the required assembly, follow the
specified sequence, and keep the idle time at each workstation to a minimum. A
formal procedure for doing this is the following:

a. Identify a master list of tasks

b. Eliminate those tasks that have been assigned

c. Eliminate those tasks whose precedence relationship has not been

satisfied

d. Eliminate those tasks for which inadequate time is available at the

workstation

e. Use one of the line-balancing “heuristics***” described in next slide

***Problem solving using procedures and rules rather than mathematical

optimization
Boeing Wing Component- Precedence Diagram
1. Longest task time From the available tasks, choose the task with the
largest (longest) task time
2.Most following tasks From the available tasks, choose the task with
the largest number of following tasks
3. Ranked positional weight From the available tasks, choose the task for which
the sum of following task times is the longest

4. Shortest task time From the available tasks, choose the task with the
shortest task time
5. Least number of following From the available tasks, choose the task with the
tasks least number of subsequent tasks
Boeing Wing Component- Problem
On the basis of the precedence diagram and activity times given in
previous slides , Boeing determines that there are 480 productive
minutes of work available per day. Furthermore, the production
schedule requires that 40 units of the wing component be completed
as output from the assembly line each day. It now wants to group the
tasks into workstations
n
480 available mins per day
Minimum number 
Time for task i
40 units required = i =1
of workstations cycle time
Production time available per day
Cycle time =
Units required per day 65
= = 5.42, or 6 stations
12
480 = 12 minutes per unit
=
40
Boeing Wing Component- Balancing
Figure below shows one solution that does not violate the sequence requirements
and that groups tasks into six one-person stations. To obtain this solution, activities
with the most following tasks were moved into workstations to use as much of the
available cycle time of 12 minutes as possible. The first workstation consumes 10
mins
Boeing Wing Component- Balancing

This is a reasonably well-balanced assembly line. The second and third workstations use
11 minutes. The fourth workstation groups three small tasks and balances perfectly at 12
minutes. The fifth has 1 minute of idle time, and the sixth (consisting of tasks G and I) has 2
minutes of idle time per cycle. Total idle time for this solution is 7 minutes per cycle.

If task I required 6 minutes (instead of 3 minutes), how would this change the solution?

[Answer: The cycle time would not change, and the theoretical minimum number of
workstations would still be 6 (rounded up from 5.67), but it would take 7 stations to balance
the line.]
Boeing Wing Component- Efficiency
 Sharjeel Ahmad
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