Mba Week 3

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MBA Operatio

ns Management Week 3 Factory Layout

Reminder

Product Design ? 4

MRP/MRP11/Capacity Planning 5

JIT short presentation (a pillar each) 6

Assignment will cover MRP/JIT 6 is 3 weeks

enough ? 2500 words only.

Supply Chain Management/Location 7

Quality Management ? 8

PROJECT management ? 9

Cant think any further yet. But at least 1 week on IT

systems for production.

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MBA Operatio


Why Worry?

Key strategic decision that can determine the efficiency of

operations. It can establish priorities in terms ofcapacity,

process, flexibility, cost, product quality, (hard), work/life

quality, and customer image (maybe a bit softer?). All of which

can contribute to competitive advantage.

What Factors are important?

High Utilization of space equipment and people

Efficient Flow of Information, Materials, and peopleHealth & Safety considerations staff morale

Customer interaction

Flexibility

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MBA Operatio


Basic Layout CategoriesProcess utilities and machines arranged by the job that

they do, e.g. drills together, lathes together etc.

Product utilities and machines laid out, according to theproduct they make, e.g. assembly line dedicated to one

product

Fixed (Project) Item of manufacture is stationary

Cellular combination of Process and Product

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MBA Operatio


Fixed- Project (Special Case)

Usually geographically fixed and built insitu, like Civil

Engineering e.g. a motorway bridge (with or without bodies).

Often one off, or at least built one at a time, e.g. may buildmore than one ship, but normally one after the other in the

same yard. Men and materials must move to the job.

Generally not much you can do about the layout, the

geography and restrictions of the site are paramount.

Equipment used is often specialist, and works for short

periods of time, but not worth moving. Some flexibility, e.g.

have goods delivered to differing locations on site.

Types of Production System

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MBA Operatio


Types of Production System

StandardisationLow High

V

O

LU

M

E

Low

High

Job

Batch

Flow/Mass

Continuous

Fixed

process

(Process)

(Product)

(Product)

product

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MBA Operatio


Job Shop

Non Repetitive manufacture

General Purpose Equipment usually low tech and value

High Labour content

High skill levels.

e.g. Tool Making, Specialist joinery

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MBA Operations Management Week 3 Factory Layout

Batch Production -Continuum from process to product

Intermittent production often repeat orders, but not in

sufficient quantity to justify specialist equipment and/or

organisation

Mostly general rather than dedicated machinery

Often ranges of related products of similar technology or

product type

Mix of labour content

Mix of labour skills

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Flow Production (Mass)High volume manufacture

Similar if not identical products

Purpose built layout or even whole buildings

High degree of automation

Low labour content

Low skill levels (per task but often higher in multi-skilled

establishments)

Ranges from large batch manufacturing e.g. Bakery

producing differing types of bread, through to car assembly

lines which have to be totally re-built for major model changes

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Continuous 24/7

Often dictated by technology, which cant be allowed to stop.

Usually non discrete (not pieces as opposed to playing

away) product such as chemicals, paint.

Specially designed equipment that has NO other use

Long development time

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What control can we exercise?

Fixed/Project

Often restricted decision making because of physical

characteristics of site and/or product under construction

JobbingIf architecture and history allows, some control over layout,

in particular spatial relationship between processes. Most

likely to be process orientated, best chance of change is

often a move of premises, or a change in market positioning

towards batch.

Continuous

Often restricted by technology. Usually built on greenfield

site to allow for best solution. Geographical and logistic

decisions can be made.

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Batch

Most difficult area to control, because of variation of product

made, and the batch sizes in which they are made. Ideally

will build in some flexibility for example changing layouts in

particular parts of the plant to cellular (i.e. product rather

than process).

Flow

Technology determines layout to a large degree, but

because of changes in management theory has undergone

a lot of changes in terms of de-centralisation particularly ofinventory and maintenance facilities.

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Factors to Consider when planning layout

Material Handling:- conveyors, cranes, fork lifts etc., how

many and where sited. Distance & frequency of movement

Legal Requirements:- Fire escapes, noise, dust, minimum

space requirements, health & safety rules.

Environment:- Windows, lights, partitions, especially if

customer contact areas, often critical in office layout

Information Flow:- not only in office but on shop floor always

useful if a worker can communicate with previous work-station to report faults (one of the principles of zero defects)

Technical considerations:- process sequence.

St i D l iSt i D l i

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Transparency Masters to accompanyHeizer/Render Principles of Operations Management, 5e, and Operations

Management, 7e

9-25 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Steps in Developing aSteps in Developing aProcessProcess--Oriented LayoutOriented Layout

1 Construct a from-to matrix2 Determine space requirements for each

department

3 Develop an initial schematic diagram

4 Determine the cost of this layout

5 By trial-and-error (or more sophisticated means),try to improve the initial layout

6 Prepare a detailed plan that evaluates factors inaddition to transportation cost

Steps to Develop a Process Orientated Layout

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Transparency Masters to accompany Heizer/Render Principles ofOperations Management, 5e, and Operations

Management, 7e

9-27 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 0745 8

Interdepartmental Flow of PartsInterdepartmental Flow of Parts1 2 3 4 5 6

1

2

3

4

5

6

50 100 0 0 20

30 50 10 0

20 0 100

50 0

0

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Assume 1 for single, 2

for 2 department moveTo Cost Total

From Element Cost

1-2 50*1 50

1-3 100*2 200

1-6 20*2 40

2-3 30*1 30

2-4 50*1 50

2-5 10*1 10

3-4 20*2 40

3-6 100*1 100

4-5 50*1 50

Total 570sparency Masters to accompanyHeizer/Render iples of Operations Management, 5e, and Operationsgement, 7e

9-28 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Interdepartmental Flow GraphInterdepartmental Flow Graph

howing Number of Weekly Loadshowing Number of Weekly Loads100

50 30

10

20

50

20

10050

1 2 3

4 5 6

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To Cost Total

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1-2 50*1 50

1-3 100*1 100

1-6 20*1 20

2-3 30*2 60

2-4 50*1 50

2-5 10*1 10

3-4 20*2 40

3-6 100*1 100

4-5 50*1 50

Total 480

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Computerised programs e.g. (CRAFT) exist to perform

iterative departmental changes are re-calculating costs foreach solution to optimise layout. Distance, frequency, load

size(difficulty) can all be factored in to the program.OutOut--Patient Hospital ExamplePatient Hospital ExampleCRAFTCRAFT

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Total cost: 20,100Est. Cost Reduction .00Iteration 0

Total cost: 14,390Est. Cost Reduction 70.Iteration 3

Legend:

A = xray/MRI rooms

B = laboratories

C = admissions

D = exam rooms

E = operating rooms

F = recovery rooms

Hospital Example

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Relationship Diagram (Muthers Grid)

Production

Offices

Stockroom

Shipping

Locker Room

Toolroom

O

A

I

EA

U

O

U

XA

U

OU

O

O

A Absolutely Necessary

E Especially Important

I Important

O OK

U Unimportant

X - Undesirable

Reason

1 - Convenience

2 Shared Facilities

3 Day to Day Working

4 - Interference

5 Different Ambience

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Assumptions for Product Orientated Layout

Volume is adequate to fully utilise machines used

Product demand is high enough to justify special equipment

Product is standard enough to justify special equipment

Raw Material supply is adequate to support system

Labour is available and trained to support system

Resources dedicated to one product

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Transparency asters t

accompanyHei

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PrinciplesofOperations anagement,

e, and Operations anagement,

e

9-

yPrenticeHall, Inc., pperSaddle i

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.

ProductProduct--Oriented Layout AdvantagesOriented Layout Advantages

j Lowervariablecost perunit

j Lowermaterial handlingcosts

j Lowerwork-in-process

inventories

j Easiertraining & supervision

j Rapid throughput

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TransparencyMasters to accompany Heizer/ o ender Principles of Operations Management, 5e, and Operations 9-65

2004 by Prentice Hall, Inc., Upper Saddle o iver, N.J. 07458

Assembly ine BalancingAssembly ine Balancing

j Analysis of production lines

j Nearly equally divides wor between wor stations

w ile meeting required output

j

Objectivesj Maximize efficiency

j Minimize number of

wor stations

Main Objective for Product Orientated Layout is

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Use a Project Management Approach

Task Time Must Follow

A 10 -

B 11 A

C 5 B

D 4 B

E 12 A

F 3 C,D

G 7 FH 11 E

I 3 G,H

Total 66

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T anspa ency aste s to accompanyHe ize /Rende

P inciples ofOpe ations anagement,

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anagement,

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9-

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by P entice Hall, Inc., { ppe Saddle Rive , | .}

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Si Station SolutionSi Station Solution

A

C

E

D

G

I

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1 11 3

3

111

4

6 Station Solution

Critical path ABCFGI = 10+11+5+3+7+3 = 39 mins

Time at each Station 1 = 10, 2 = 11, 3 = 12, 4 = 12,

5 = 11, 6 = 10

1 2

3

4

5

6

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Tr

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9-69 2004

yPrenticeHall, Inc., U pperSaddle

iver, N.J. 07458

Asse bly LineBalancing EquationsAsse bly LineBalancing Equations

ycle ti e =Production ti eavailable

De andperday

ini u

nu berofwor stations

7 Tas ti es

ycle ti e

Efficiency =

=

7 Tas ti es

* (Cycle ti e)(Actual nu ber

of wor stations)

Assume

480 minutesproduction

40 per day required

then

CT = 480/40 = 12MWS = 66/12 = 6

Eff = 66/6*12 = 91.7%

If say C & D could not

be done at samestation then

Eff = 66/7*12 = 78.6%

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Cellular Systems

TransparencyMasters to accompany Heizer/ ender Principles of Operations Management, 5e, and Operations

Management, 7e

9-34

2004 by Prentice Hall, Inc., Upper Saddle iver, N.J. 07458

CellularLayoutCellularLayout -- Wor CellsWor Cells

j Special case of product-oriented layout - in w at

is ordinarily a process-oriented facility

j C nsists ofdifferent mac ines broug t toget er toma e a product

j Temporary arrangement only

j Example: Assembly line set up to produce 3000

identical parts in a job s op

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T ansparency asters to accompany ei

er/ ender rinciples of

perations anagement, 5e, and

perations

n m n 7

9-35 2004 by rentice all, Inc., pper

addle iver, .J. 07458

t e Work ell onceptt e Work ell oncept

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TransparencyMasters to acc mpany Hei

er/Render

PrinciplesfOperati

ns Management,

e, andOperati

ns

Management, e

9-39

by Prentice Hall, Inc., Upper Saddle River, N.

.

Requirements for ellularRequirements for ellularPr ducti nPr ducti n

j Identificati n ffamilies fpr ducts - gr up

technol gy c des

jHigh level ftraining andfle ibility nthe part f

the empl yees

jEither staffsupport rfle ible, imaginative

empl yees to establish the rk cells initiallyjTest poka-y ke) at each stati n inthe cell

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Office Layouts

Can still be Process, Product or hybrid

General Sales

Office

Purchasing

Planning

General

Accounts OfficeGoods

Despatched

Sales Team P1

Sales Team P2

Purchasing P1

Planning P1

Purchasing P2

Planning P2

Despatch P1

Despatch P2

Accounts P1

Accounts P2

Sales Team P1

Sales Team P2

Purchasing

Planning

Goods

DespatchedGeneral

Accounts Office

Product

Hybrid

Process

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Elements to Consider in Office Layout

Ease of information flow between workers

Environmental factors very important, e.g. lighting,

heating, space per worker, windows, access (both

for safety and new laws for disabled people) etc.

Grouping of employees to encourage team

mentality ( but not chatter shops)

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andomStocking Systems OftenandomStocking Systems Often

jMaintain a list of openlocations

jMaintain accurate records of e isting inventoryand its locations

jSequence items on orders to minimize travel time

required to pick ordersjCom ine orders to reduce picking time

jAssign certain items or classes of items, such ashigh usage items, to particularw reh use areasso th t distance traveled is minimized

Two basic methods:-

Fixed location easy to find, can be located close to point of

use. Not easy to decide on size of area

Random Stocking efficient use of space, complex put

away rules, complex record keeping

Warehouse Layout

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Transparency asters toaccompanyHeizer/ ender

Principlesof

perations ana

ement, 5e, and

perations

ana

ement, 7e

9-55

2004 byPrenticeHall, Inc., UpperSaddle iver, N.J. 07458

Cross DockingCross Docking

j Transferring oodsj from in omingtru ks at

receivingdo ksj tooutgoingtru ks at shipping

do ks

j Avoids placing oods intostora e

j equires suppliers provideeffective addressing(bar

codes) andpacka ingthatprovides forrapidtranshipment

InIn--

comingcomingOutgoingOutgoing

1984-1994 T/ a er Co.

1995 Core Corp.

Trun ing & Distribution centres, e.g hubs. De ivered

throughout the evening, empty again by 6am.

(Amtrac )

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Transparency asterstoaccompanyHei

er/Render

rinciplesofOperations anagement,

e, and Operations

anagement,

e

9-47 2004 y rentice Hall, Inc., pper

addle Ri

er,

.

. 07458

Retail ayoutsRetail ayouts--Some RulesofThumbSome RulesofThumb

j Locatehigh-draw itemsaroundtheperipheryofthestore

j Useprominent locationssuchasthefirstorlastaisleforhigh-impulseandhighmargin items

j Removecrossoveraislesthatallowcustomerstheopportunitytomovebetweenaisles

j Distributewhatare nown inthetradeas poweritems(itemsthatmaydominateashoppingtrip)tobothsidesofanaisle, anddispersethemto increasetheviewingofotheritems

j Useendaisle locationsbecausetheyhaveaveryhighexposurerate

Documents

Mba Week 3