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8/6/2019 6. Capacity Planning Facilities Layout
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OPERATIONSOPERATIONSMANAGEMENTMANAGEMENT
O MPCAPACITY PLANNING & FACILITIES LAYOUTS
By:By: --HAKEEMHAKEEMURURREHMANREHMAN
PCBAPCBAUCPUCP
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CAPACITY PLANNINGCAPACITY PLANNING Capacity PlanningCapacity Planning is the longis the longterm strategic decision thatterm strategic decision that
establishes a firms overall level of resources.establishes a firms overall level of resources. SStrategy Formulation With respect to Capacity Planning:trategy Formulation With respect to Capacity Planning:
Capacity strategy for longCapacity strategy for long--term demand which focus onterm demand which focus on demanddemandpatternspatterns and takesinto accountand takesinto account growth rategrowth rate andand variabilityvariability
Facilities that focus on cost of building and operatingFacilities that focus on cost of building and operating
Technological changes relate to rate and direction of technologyTechnological changes relate to rate and direction of technologychangeschanges
Behavior ofcompetitorsBehavior ofcompetitors
Availability ofcapital and other inputsAvailability ofcapital and other inputs
Key Decisions of Capacity PlanningKey Decisions of Capacity Planning
SSome of the common key decisions areome of the common key decisions are Amount ofcapacity neededAmount ofcapacity needed
Timing ofchangesTiming ofchanges
Need to maintain balanceNeed to maintain balance
Extent of flexibility of facilitiesExtent of flexibility of facilities
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CAPACITY PLANNING STRATEGYCAPACITY PLANNING STRATEGY Three basicstrategies for the timing ofcapacity expansion inThree basicstrategies for the timing ofcapacity expansion in
relation to a steady growth in demand.relation to a steady growth in demand. Capacity Lead StrategyCapacity Lead Strategy Average Capacity StrategyAverage Capacity Strategy Capacity Lag StrategyCapacity Lag Strategy
Capacity Lead StrategyCapacity Lead Strategy:: Aggressive strategyAggressive strategy Capacity is expanded in anticipation of demand growth.Capacity is expanded in anticipation of demand growth.
Average Capacity StrategyAverage Capacity Strategy:: Moderate StrategyModerate Strategy Capacity is expanded to coincide with average expected demand.Capacity is expanded to coincide with average expected demand.
Capacity Lag StrategyCapacity Lag Strategy:: Conservative StrategyConservative Strategy Capacity isincreased after an increase in demand has beenCapacity isincreased after an increase in demand has been
documented.documented.
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CAPACITY EXPANSION STRATEGIES
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CAPACITY DECISIONSCAPACITY DECISIONS
CCapacity increase depends on:apacity increase depends on:
volume and certainty of anticipated demandvolume and certainty of anticipated demand
strategic objectivesstrategic objectives
costs of expansion and operationcosts of expansion and operation
Best operating levelBest operating level
% ofcapacity utilization that minimizes unitcosts% ofcapacity utilization that minimizes unitcosts
Capacity cushionCapacity cushion
Which is an amount ofcapacity in excess of expectedWhich is an amount ofcapacity in excess of expecteddemand when there issome uncertainty aboutdemand when there issome uncertainty aboutdemand. (100%demand. (100% -- Utilization)Utilization)
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ECONOMIES OF SCALEECONOMIES OF SCALE IItcosts less per unit to produce high levels of outputtcosts less per unit to produce high levels of output
fixed costscan be spread over a larger number of unitsfixed costscan be spread over a larger number of units production or operating costs do notincrease linearly withproduction or operating costs do notincrease linearly with
output levelsoutput levels
quantity discounts are available for material purchasesquantity discounts are available for material purchases
operating efficiency increases as workers gain experienceoperating efficiency increases as workers gain experience
Best OperatingBest Operating
Level for aLevel for aHotelHotel
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DISECONOMIES OF SCALEDISECONOMIES OF SCALE
WWhen higher levels of outputcost more per unit tohen higher levels of outputcost more per unit to
produce.produce. Diseconomies ofDistributionDiseconomies ofDistribution:: (i.e., Larger stores,Distribution(i.e., Larger stores,Distribution
centre, or manufacturing facilities tend to serve expandedcentre, or manufacturing facilities tend to serve expandedgeographical areas.)geographical areas.)
Diseconomies of BureaucracyDiseconomies of Bureaucracy:: (i.e., Large facilities require more(i.e., Large facilities require morestaff)staff)
Diseconomies ofConfusionDiseconomies ofConfusion:: (i.e.,Complexity increases with(i.e.,Complexity increases withnumber of linkages between department)number of linkages between department)
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FACILITY LAYOUTFACILITY LAYOUT
Minimize material-handlingcosts
Utilize space efficiently Utilize labor efficiently Eliminate bottlenecks Facilitate communication and
interaction Reduce manufacturing cycle
time Reduce customer service time Eliminate wasted or
redundant movement Increase capacity
Facilitate entry, exit, andplacement of material, products,and people
Incorporate safety and securitymeasures
Promote product and servicequality
Encourage proper maintenanceactivities
Provide a visual control ofactivities
Provide flexibility to adapt tochanging conditions
Arrangement of areas within a facility to:
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TYPES OF LAYOUTSTYPES OF LAYOUTS
Basic LayoutsBasic Layouts
Process LayoutProcess Layout
Product LayoutProduct Layout
FixedFixedPosition LayoutPosition Layout
Hybrid LayoutsHybrid Layouts
Cellular LayoutsCellular Layouts
Flexible Manufacturing SystemsFlexible Manufacturing Systems
MixedMixedModel Assembly LinesModel Assembly Lines
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BASIC LAYOUTS
Process layouts group similar activities together according to
process or function they perform
Product layouts arrange activitiesin line according to sequence of
operations for a particular product or service
Fixed-position layouts are used for projectsin which productcannot be
moved
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PROCESS LAYOUT INPROCESS LAYOUT IN
SERVICESSERVICESWomenslingerie
Womens dresses
Womenssportswear
Shoes
Cosmetics andjewelry
Entry and displayarea
Housewares
Childrensdepartment
Mensdepartment
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MANUFACTURING PROCESSMANUFACTURING PROCESSLAYOUTLAYOUT
L
L
L
L
L
L
L
L
L
LM
M
M
M
D
D
D
D
D
D
D
D
G
G
G
G
G
G
A A AReceiving andShipping Assembly
Painting Department
Lathe DepartmentMilling
Department Drilling Department
GrindingDepartment
P
P
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A PRODUCT LAYOUTA PRODUCT LAYOUT
InIn
OutOut
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FIXEDFIXED--POSITION LAYOUTSPOSITION LAYOUTS
Typical of projectsTypical of projects
Equipment, workers,Equipment, workers,materials, othermaterials, other
resources brought to theresources brought to thesitesite
Highly skilled laborHighly skilled labor
Often low fixed CostOften low fixed Cost
Typically high variableTypically high variablecostscosts
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DESIGNING PROCESSDESIGNING PROCESS
LAYOUTSLAYOUTS GoalGoal:: minimize material handling costsminimize material handling costs
Block DiagrammingBlock Diagramming minimize nonadjacent loadsminimize nonadjacent loads use when quantitative data is availableuse when quantitative data is available
Relationship DiagrammingRelationship Diagramming based on location preference between areasbased on location preference between areas use when quantitative data is not availableuse when quantitative data is not available
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BLOCK DIAGRAMMINGBLOCK DIAGRAMMING
Unit loadUnit load
quantity in whichquantity in whichmaterial is normallymaterial is normallymovedmoved
Nonadjacent loadNonadjacent load
distance farther thandistance farther thanthe next blockthe next block
STEPSSTEPS
create load summary chartcreate load summary chart
calculate composite (two way)calculate composite (two way)
movementsmovements develop trial layoutsdevelop trial layouts
minimizing number ofminimizing number ofnonadjacent loadsnonadjacent loads
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BLOCK DIAGRAMMING:BLOCK DIAGRAMMING:
EXAMPLEEXAMPLE
DepartmentDepartment 11 22 33 44 55
Load Summary ChartLoad Summary Chart
FROM/TOFROM/TO DEPARTMENTDEPARTMENT
11 100100 5050
22 200200 5050
33 6060 4040 5050
44 100100 606055 5050
1 2 3
4 5
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BLOCK DIAGRAMMING:BLOCK DIAGRAMMING:
EXAMPLE (CONT.)EXAMPLE (CONT.)
2 3 200 loads
2 4 150 loads
1 3 110 loads1 2 100 loads
4 5 60 loads
3 5 50 loads
2
5 50
loads3 4 40 loads
1 4 0 loads
1 5 0 loads
1 2 3
4 5
100 200
15050
50
60
40
110
Grid 1
Nonadjacent Loads:
110+40=150
1 2
3
4
5
100
200
150
50
50
60
40
110
Grid 2
Nonadjacent Loads:
0
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BLOCK DIAGRAMMING:BLOCK DIAGRAMMING:
EXAMPLE (CONT.)EXAMPLE (CONT.)
12
3
4
53
2
5
1 4
(a) Initial block diagram(a) Initial block diagram (b) Final block diagram(b) Final block diagram
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RELATIONSHIPRELATIONSHIP
DIAGRAMMINGDIAGRAMMING
Schematic diagram thatSchematic diagram that
uses weighted lines touses weighted lines todenote locationdenote locationpreferencepreference
Muthers gridMuthers grid
format for displayingmanager preferences fordepartment locations
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RELATIONSHIPRELATIONSHIP
DIAGRAMMING: EXAMPLEDIAGRAMMING: EXAMPLE
ProductionProduction
OfficesOffices
StockroomStockroom
Shipping andShipping andreceivingreceiving
Locker roomLocker room
ToolroomToolroom
AA AA
AAOO
OO
OOOO
OO
UU
UU
UU
UU
EEXX
II
A Absolutely necessary
E Especially importantI Important
O Okay
U Unimportant
X Undesirable
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DESIGNING PRODUCT
LAYOUTS Objective
Balance the assembly line
Line balancing tries to equalize the amount of work at each
workstation
Precedence requirements physical restrictions on the order in which operations
are performed
Cycle time maximum amount of time a productis allowed to
spend at each workstation
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CYCLECYCLE
TIMETIMEEXAMPLEEXAMPLE
Cd=
production time available
desired units of output
Cd = (8 hours x 60 minutes / hour)(120 units)
Cd
= = 4 minutes480
120
1 2 3
4 minutes4 minutes 4 minutes4 minutes 4 minutes4 minutes
Flow time = 4 + 4 + 4 = 12 minutesFlow time = 4 + 4 + 4 = 12 minutes
Cycle time = max (4, 4, 4) = 4 minutesCycle time = max (4, 4, 4) = 4 minutes
Cycle time = max time spent at any stationCycle time = max time spent at any station Flow time = time to complete all stationsFlow time = time to complete all stations
FLOW TIMEFLOW TIMEVSVS
CYCLE TIMECYCLE TIME
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EFFICIENCY OF LINE
ii
ii= 1= 1ttii
nCnCaaEE==
ii
ii= 1= 1ttii
CCddNN==
EfficiencyEfficiencyMinimum numberMinimum number
of workstationsof workstations
wherewhere
ttii = completion time for element= completion time for element ii
jj = number of work elements= number of work elements
nn = actual number of workstations= actual number of workstations
CCaa
= actual cycle time= actual cycle time
CCdd
= desired cycle time= desired cycle time
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LINE BALANCING: EXAMPLELINE BALANCING: EXAMPLEWORK ELEMENTWORK ELEMENT PRECEDENCEPRECEDENCE TIME (MIN)TIME (MIN)
AA Press out sheet of fruitPress out sheet of fruit 0.10.1
BB Cut into stripsCut into strips AA 0.20.2
CC Outline fun shapesOutline fun shapes AA 0.40.4DD Roll up and packageRoll up and package B, CB, C 0.30.3
0.10.1
0.20.2
0.40.4
0.30.3D
B
C
A
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LINE BALANCING: EXAMPLELINE BALANCING: EXAMPLE
(CONT.)(CONT.)WORK ELEMENTWORK ELEMENT PRECEDENCEPRECEDENCE TIME (MIN)TIME (MIN)AA Press out sheet of fruitPress out sheet of fruit 0.10.1
BB Cut into stripsCut into strips AA 0.20.2
CC Outline fun shapesOutline fun shapes AA 0.40.4DD Roll up and packageRoll up and package B, CB, C 0.30.3
Cd = = = 0.4 minute
40 hours x 60 minutes / hour
6,000 units
2400
6000
N= = = 2.5 3 workstations1.0
0.4
0.1 + 0.2 + 0.3 + 0.4
0.4
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LINE BALANCING: EXAMPLELINE BALANCING: EXAMPLE
(CONT.)(CONT.)
CCdd
= 0.4= 0.4
NN= 2.5= 2.5
REMAINING REMAININGWORKSTATION ELEMENT TIME ELEMENTS
1 A 0.3 B, C
B 0.1 C, D
2 C 0.0 D3 D 0.1 none
0.10.1
0.20.2
0.40.4
0.30.3D
B
C
A
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A, B C D
Work
station 1
Work
station 2
Work
station 3
0.3
minute
0.4
minute
0.3
minute
CCdd
= 0.4= 0.4
NN= 2.5= 2.5
E= = = 0.833 = 83.3%0.1 + 0.2 + 0.3 + 0.4
3(0.4)
1.0
1.2
LINE BALANCING: EXAMPLELINE BALANCING: EXAMPLE
(CONT.)(CONT.)
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HYBRIDS LAYOUTSHYBRIDS LAYOUTS CELLULAR LAYOUTS
group dissimilar machinesinto work centers(called cells) that process families of partswith similar shapes or processing
requirements FLEXIBLE MANUFACTURING SYSTEM
automated machining and material handlingautomated machining and material handlingsystemssystems which can produce an enormous
variety ofitems MIXED-MODEL ASSEMBLY LINE
processes more than one product model inone line
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ORIGINALORIGINALPROCESSPROCESS
LAYOUTLAYOUT
CA B Raw materials
Assembly
1
2
3
4
5
6 7
8
9
10
11
12
Machines
Parts 1 2 3 4 5 6 7 8 9 10 11 12
A x x x x x
B x x x x
C x x x
D x x x x x
E x x x
F x x x
G x x x x
H x x x
PARTPARTROUTINGROUTING
MATRIXMATRIX
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REVISEDREVISEDCELLULARCELLULAR
LAYOUTLAYOUT
Machines
Parts 1 2 4 8 10 3 6 9 5 7 11 12
A x x x x x
D x x x x x
F x x x
C x x x
G x x x x
B x x x x
H x x x
E x x x
3
6
9
Assembly
12
4
8 10
5
7
11
12
A B CRaw materials
Cell 1 Cell 2 Cell 3
REORDEREDREORDEREDROUTINGROUTING
MATRIXMATRIX
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FLEXIBLE MANUFACTURINGFLEXIBLE MANUFACTURINGSYSTEMS (FMS)SYSTEMS (FMS)
FMSconsists of numerous programmablemachine toolsconnected by an automatedmaterial handling system and controlled by a
common computer network FMScombines flexibility with efficiency
FMS layouts differ based on
variety of parts that the system can process size of parts processed
average processing time required for partcompletion
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Mixed ModelMixed Model
Assembly LinesAssembly Lines Produce multiple modelsin any orderProduce multiple modelsin any order
on one assembly lineon one assembly line
Issuesin mixed model linesIssuesin mixed model lines Line balancingLine balancing
UU--shaped lineshaped line
Flexible workforceFlexible workforce Model sequencingModel sequencing
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BALANCING UBALANCING U--SHAPED LINESSHAPED LINES
A B C
D E
Precedence diagram:Precedence diagram:
Cycle time = 12 minCycle time = 12 min
A,B C,D E
(a) Balanced for a straight line(a) Balanced for a straight line
9 min9 min 12 min12 min 3 min3 min
Efficiency = = = .6666 = 66.7 %Efficiency = = = .6666 = 66.7 %24243636
24243(12)3(12)
12 min12 min 12 min12 min
C,D
A,B
E
(b) Balanced for a U(b) Balanced for a U--shaped lineshaped line
Efficiency = = = 100 %Efficiency = = = 100 %2424
2424
2424
2(12)2(12)
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QUESTIONSQUESTIONS