Introduction
Case study:
reconfiguring a
manufacturing system
for strategic advantage
– a real-world
application
Ashok Kumar and
Jaideep Motwani
The authors
Ashok Kumar is Associate Professor of Management,
Department of Management, Grand Valley State University,
Grand Rapids, Michigan, USA.
Jaideep Motwani is Director of Seidman Business and
Research Center, Grand Valley State University, Grand
Rapids, Michigan, USA.
Abstract
Over the last ten years scores of methodologies have
emerged in management science/operations research/sta-
tistics that employ techniques such as mathematical
programming, simulation, artificial intelligence, and
clustering to convert a flexible manufacturing system into
a cellular one. Based on a real-life case that involved over
1,000 components and 3,000 operations, related to a
world-class furniture manufacturing company, finds that
the somewhat outdated King’s algorithm, after partial
linearization, works as well as the other sophisticated
techniques in terms of speed and problem size. The case
study drives home the point that a shift to cellular configu-
ration from functional layout results in across the board
savings in material movement, setup times, hilo moves,
WIP, work area and in manufacturing leadtime. The
company under study benefited to the tune of $164,000
per year from switch to single cell. The projected savings
are expected to exceed $700,000 per year when the
reconfiguration is completed.
Logistics Information Management
Volume 11 · Number 4 · 1998 · pp. 244–256
© MCB University Press · ISSN 0957-6053
244
The application of King’s methodology
(King, 1980) in configuring cellular manufac-
turing systems has been limited due to the
general perception that it is unsuitable for
large-scale problems. The unsuitability is
ascribed to the exponential weights employed
in its development. On the other hand, King’s
algorithm is quite attractive because of its
simplicity and ease of implementation in
comparison to numerous other math pro-
gramming and clustering based methodolo-
gies that have evolved since 1980.
This work describes how King’s algorithm
was improvised to effect a change in the con-
figuration of a utility machine area of the
Panel division of a world class furniture and
office equipment manufacturing company
located in west Michigan. The Panel division
of the company included numerous types of
machines, such as brakes, small presses, large
presses, shears, and a variety of other
machines. The company was facing stiff
competition from several other office equip-
ment and furniture manufacturers, and was
experiencing declining market share. The
factors identified for such a decline were:
large manufacturing lead-time, low efficiency,
and high cost of production. In terms of the
internal factors, these factors were reflected
into excessive material movement in terms of
distance, excessive material movement in
terms of volume, excessive number of setups,
too much space/floor area with respect to the
output, excessive work in process, long waits
in front of machines, long queues, large
batches of materials, rigid information flow
(top to bottom) generally, and a significant
absence of teamwork between employees. To
help alleviate the problems, a change of layout
from functional to cellular was contemplated.
Also, it was considered wise to start small, and
then expand the project to the length and
breadth of the company once the teething
troubles and initial lessons were learnt. Panel
division, with its high density of problems,
and similarity between different parts
processed, was considered to be a good candi-
date for the first cut.
Prior to the switch, the operational lead-
time of a typical part in panel division was
eight to ten days involving three to four opera-
tions. Of the total flow time of a part in the
division, up to 80 percent was spent in waiting
for machine availability or for transit vehicles.
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
Setup operators tried to run parts with similar
operational requirements “back to back” but
experienced difficulties due to the confusion
associated with 26 machines and 1,000 plus
parts. Indeed, this resulted in an increase in
lead-time because of the secondary queuing
that this generated.
Based on numerous success stories, the
management was convinced that a change of
configuration to cellular would not only
reduce the lead-time substantially but also
bring in the “focus” needed (and advocated
by such eminent strategists as Hayes and
Wheelright (1979), Skinner (1969; 1974) and
others). This, in turn was expected to provide,
in somewhat longer term, additional advan-
tages in a market that sought quality, speed,
and customization to the maximum extent
possible. Finally, it was felt that such a focus
would constitute an excellent precursor to
dovetail this effort into the long-term plans of
the company to go “JIT”.
Literature survey
Over the years, numerous studies have sur-
faced that have proposed new methodologies
and algorithms dealing with the issue of cellu-
larization of process layouts. Cheng et al.
(1995) present a comparison of several tech-
niques developed in cellular layout starting
from a functional layout. In general, the
literature on cellular manufacturing can be
classified into two broad groups: algorithms
that are used for generalized model formula-
tion, and clustering algorithms for solving a
cell formulation problem.
Algorithms for generalized model
formulation
The algorithms for generalized model formu-
lation address the design issues in the cellular
manufacturing layout. These algorithms can
be further classified as:
(1) part family models;
(2) machine assignment models; and
(3) cell formation models.
A part family model groups n parts into p
families based on similar geometric character-
istics or processing requirements to take
advantage of the similarities in design and
manufacturing processing of parts. A machine
assignment model assigns machines to
machine cells to process part families effi-
ciently. A cell formation model decides the
245
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
grouping of parts and clustering of cells
simultaneously.
Some of the well-known model formula-
tion algorithms include: Clustering analysis
(Kusiak et al., 1986) and similarity coefficient
(Tam, 1990) for part families formations;
assignment model (Offodile, 1993); branch-
and-bound (Cheng et al., 1991), tree search
(Cheng, 1993), integer programming
(Gunasingh and Lashkari, 1989a; Rajamani et
al., 1992), graph theory (Askin and Chiu,
1990; Rajgopalan and Batra, 1975), and
simulation annealing (Venugopal and
Narendran, 1992) for solving the machine
allocation and grouping problems; cost-based
(Askin and Subramanian, 1987), sequential
modeling (Gunasingh and Lashkari, 1989b),
and mathematical programming (Sharer et al.,
1992; Wei and Gaither, 1990) for cell forma-
tion in cellular manufacturing.
Clustering algorithms for solving a cell
formulation problem
The clustering algorithms developed as solu-
tion techniques for cell formulation problems
can also be classified into three categories:
(1) array-dependent clustering methods,
(2) mathematical programming, and
(3) others.
The array-dependent clustering methods rely
on the spatial characteristics of the initial
matrix to arrive at the final row and column
permutations that define the block diagonal
form (Shargal et al., 1995). The rank order
clustering algorithm (King, 1980), the direct
clustering algorithm (Chan and Milner,
1982), the bond energy algorithm
(McCormick et al., 1972) and the shortest
spanning path (Slagle et al., 1975) are array-
dependent methods.
The mathematical programming models
are used to develop algorithms that use math-
ematical programming approaches to find the
most desirable solution to a problem. Some of
the well-known mathematical programming
models include: close neighboring (Boe and
Cheng, 1991), simulated annealing (Boctor,
1991 ), A*-based approaches (Kusiak et al.,
1993), branch-and-bound (Kusiak and
Cheng, 1990), branching (Kusiak, 1991),
similarity coefficient (Waghodekar and Sahu,
1984), single linkage (McAuley, 1972), aver-
age linkage (Seifoddini and Wolfe, 1986), and
zero-one formulation (Zhu et al., 1995).
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
Other approaches used for cell formation
include: neural networks (Kaparth and
Suresh, 1992; Kusiak and Chung, 1991),
knowledge-based system (Chow and
Hawaleshka, 1993), graph-based approaches
(Askin et al., 1991; Vannelli and Ravi Kumar,
1986), production flow analysis (Burbidge,
1971; Ganesh and Srinivasan, 1994), seed
based (Chandrasekharan and Rajagopalan,
1986; 1987), simulation (Durmusoglu, 1993;
Massay et al., 1995), data envelopment analy-
sis (Shafer and Bradford, 1995), fuzzy adap-
tive resonance theory (Burke and Kamal,
1995), occupancy value based (Khator and
Irani, 1987), and genetic algorithms with
multiple objective (Venugopal and
Narendran, 1992).
Even though there are many approaches to
designing and solving cell formulation prob-
lems, we believe based on experience and
analysis (Cheng et al., 1995) that the partially
linearized King’s algorithm is one of the
simplest and perhaps the most efficient
method for generating cells that constitute the
basis for further discussion.
Implementation of configuration change
The management began by forming a com-
mittee headed by the manufacturing superin-
tendent, and one member each from engi-
neering, methods, process planning, quality
control, and maintenance. The task assigned
was to be completed in two stages. First stage
involved conducting a feasibility study to
bring about a layout transformation from
functional to cellular in a “suitable” area of
the company, and the second stage involved
actual transformation and evaluation of bene-
fits of the switch.
The team devoted its first two meetings to
fine-tune the objective of the study and identi-
fy the “pocket” (as one of the members pre-
ferred to call it) in the company that is best
suited for cellular implementation (we will use
the term GT or group technology or cellular
interchangeably).
Identification of “candidate” areas for
GT implementation
With over 30,000 parts and over 200
machines in the Panel plant, it was apparent
that a smaller “focused” area will have to be
identified that will be the first candidate for
the change. The team converged on such an
area by applying the following rules:
246
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
• Work centers/machines that were too big to
move (e.g. roll-form and tube mill) will not
be considered for reconfigured layout.
• Work centers/machines which were preset
to match with the non-mobile workstations
will not be considered for movement.
• Work centers/machines that were allocated
to certain projects that were assigned as
stand-alone cost- or profit-centers will be
excluded from configuration change.
• Work centers/machines that were posi-
tioned near certain service areas (e.g.
material test), due to frequent mutual
interaction will not be considered.
• Work centers needed for large volume
production and part of other dedicated
systems or transfer lines were excluded
from consideration.
• Finally, work centers/machines that were
perceived by the team not to “fit” the idea
of a “focused” cell will not be moved.
This process eliminated a bulk of machines/
work centers from consideration and the team
was left with 38 work centers. Figure 1 shows
a conceptual layout (functional or process
type) before the change was implemented.
Notice that the machines performing similar
operations are grouped together at this stage.
A further fine-tuning was done based on type
of products that were produced on this
machines and those involved in the produc-
tion of grossly dissimilar parts were also elimi-
nated. The residual 26 work centers were
selected as candidates for reconfiguration.
Creation of database
Using intellect software of AIC, a compound
database query was created using the work
centers as main field and the following infor-
mation was downloaded for each work center:
part numbers processed, standard hours,
setup rate, minimum order quantity, and
average weekly usage (Table I). It turned out
that a total of 1,054 parts would be affected
by the proposed reconfiguration. Unfortu-
nately, the standard code for parts at this
company had no relation with the design,
shape or manufacturing process used for the
part and was therefore irrelevant in terms of
forming a logical basis for classification. It was
necessary to develop a part-process matrix
which is a (0, 1) matrix.
C = [Cij] where Cij = 1 if part i is processed
on machine j, otherwise Cij = 0. This was
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
Figure 1 Functional layout
developed using AIC download information
in Table I.
Application of grouping algorithm
King’s algorithm
Step 0: Assign row numbers 1, ..., m from top
to bottom, and column numbers 1, ...,
n, from left to right.
Step 1: For each column j, compute total
weight of column j, j = 1, ..., n:
(1)
Step 2: If all Wjs are in ascending order from
left to right go to Step 3. Else,
rearrange columns so that Wjs are in
ascending order.
Step 3: For each row i compute total weight of
row i:
(2)
247
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
Step 4: If all Wis are in descending order from
top to bottom, go to Step 5. Else,
rearrange rows so that Wis are in
ascending order.
Step 5: If all Wjs are in ascending order from
left to right, and all Wis are in
descending order from top to bottom,
stop. The clusters of ones form the
desired clusters. Else go to Step 1.
Of numerous methods available in literature
described previously, King’s algorithm (King,
1980) was identified to be the best one for the
purpose of forming focused cells. The original
algorithm by King is described above. Notice
that multiplying by increasing powers of 2
have the effect of moving ls towards the right
and towards the bottom of the matrix, hence
providing clustering of parts with similar
processes.
It soon became clear that the algorithm is
inappropriate for the size of the configuration
change being contemplated. 21054 was too
 Reconfiguring a manufacturing system for strategic advantage Logistics Information Management
Ashok Kumar and Jaideep Motwani Volume 11 · Number 4 · 1998 · 244–256

Table I Work center information

Work Standard Set up Minimum YTD YTD

Codea center hrs/100 rate order usage usage/51
1.187 0.00 100 50 0.980
0.069 0.00 100 184 3.608
0.198 23.12 100 184 3.608
0.278 43.02 100 184 3.608
0.851 0.00 100 184 3.608
0.071 0.00 100 194 3.804
0.222 23.12 100 194 3.804
0.278 43.02 100 194 3.804
0.942 0.00 100 194 3.804
0.326 0.00 100 256 5.020
0.439 0.00 100 256 5.020
0.400 0.00 100 256 5.020
0.350 0.00 100 256 5.020
0.370 51.47 100 256 5.020
0.400 56.55 100 256 5.020
0.430 51.51 100 256 5.020
0.326 0.00 100 264 5.176
0.439 0.00 100 264 5.176
0.400 0.00 100 264 5.176
0.350 0.00 100 264 5.176
0.370 51.47 100 264 5.176
0.400 56.55 100 264 5.176
0.430 51.51 100 264 5.176
0.326 0.00 100 1,369 26.843
0.439 0.00 100 1,369 26.843
0.400 0.00 100 1,369 26.843
0.350 0.00 100 1,369 26.843
0.370 57.47 100 1,369 26.843
0.400 56.55 100 1,369 26.843
0.430 51.51 100 1,369 26.843
0.326 0.00 100 239 4.686
0.439 0.00 100 239 4.686
0.431 0.00 100 239 4.686
0.297 0.00 100 239 4.686
0.331 51.47 100 239 4.686
0.426 56.55 100 239 4.686
0.535 51.51 100 239 4.686
0.480 0.00 100 1,684 33.020
0.439 0.00 100 1,684 33.020
0.431 0.00 100 1,684 33.020
0.297 0.00 100 1,684 33.020
0.331 51.47 100 1,684 33.020
0.426 56.55 100 1,684 33.020
0.535 51.51 100 1,684 33.020
0.326 0.00 100 58 1.137
0.439 0.00 100 58 1.137
0.431 0.00 100 58 1.137
0.297 0.00 100 58 1.137

Note:
a = Suppressed for confidentiality

248
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
large a number for any computer. At this
point, the team modified the algorithm –
redesigned the weights so that the exponen-
tiality of weights was converted into linearity.
Thus all weights were set at row no. * 10,000
or column no. * 10,000. This affects steps 1 to
4 of the original algorithm (see the modified
algorithm no. 1 below). In our experiment,
the value of X was set at 4.
The modified King’s algorithm # 1
Step 1: For each column j, compute total
weight of the column j, j = 1, ..., n:
(3)
Step 2: If all Wjs are in ascending order from
left to right go to Step 3. Else,
rearrange columns so that Wjs are in
ascending order.
Step 3: For each row i, compute total weight
of row i:
(4)
Step 4: If all Wis are in descending order from
top to bottom, go to Step 5. Else,
rearrange rows so that Wis are in
ascending order.
This allowed the cells to be made; however,
the resolution between successive iterations
was not adequate and the process was taking
too long. At this point King’s algorithm was
modified one more time, to part linearize and
part exponentialize, to get the “best of both
worlds” – speed as well as resolution between
successive iterations of the algorithm. The
difference in the original and the modified
algorithm is the following: instead of the
weights growing exponentially from left to
right and top to bottom, they grow linearly.
This slows down the formation of the clusters
a little bit, but allows for the opportunity of
making the clusters when the matrix is big.
With an exponential growth of weights as
proposed by King, the cluster formation
becomes impossible, even for the problems of
decent practical size. The modified algorithm
no. 2 shows the effect on steps 1 to 4.
The modified King’s algorithm no. 2
Step 1: For each column j, compute total
weight of column j, j = 1, ..., n:
249
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
(5)
(6)
Step 2: If all Wjs are in ascending order from
left to right go to Step 3. Else,
rearrange columns so that Wjs are in
ascending order.
Step 3: For each row i, compute total weight
of row i:
(7)
(8)
Step 4: If all Wis are in descending order from
top to bottom, go to Step 5. Else,
rearrange rows so that Wis are in
ascending order.
One of the 16 pages of the final clusters devel-
oped is placed in Figure 2. A quick review of
the clustered data laid out with remarkable
clarity many opportunities of cell formation.
The machines and parts included in the first
cell can be seen in Table II. The data were
beginning to look like information. Based on
the output scan, the team developed three
alternate plans for reconfiguration of the
existing plant. These were presented to the
CEO, shop superintendent, and many other
personnel who would be impacted by the
change. A significant brainstorming ensued
and finally a plan that involved formation of
five cells was adopted.
Loading and capacity analysis
Next, the issue of capacity planning for these
1,054 parts was addressed. All members of
the team were quite apprehensive about the
ability of cells to accommodate the total load
that was normally processed on these
machines. Load for each machine (in each of
the five cells) was computed by taking into
account the weekly usage, part processing
times, and setup times. To the team’s sur-
prise, the loading on all machines including
the one that would process the largest group
of parts was far less than 40 hours per week!
The team attributed this to low-medium
volume of production and gross inefficiencies
prevalent in the current system. However,
idling could be politically the “third rail” and
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
Figure 2 Clusters of part families
no one wanted this to be an issue later. The
shop superintendent who was apprised of the
concern doled out the following pearls of
wisdom:
It is not surprising. First, we have deliberately
built a 50 percent idling in all plants that pro-
duce at low-medium volume so that setup
people will have vacant machines without
disturbing the flow of production. Yes, this is
expensive, but keeps our indirect down. Also ...
the machine is going to be idle whether it is
inside the cell or at some godforsaken location. I
would rather have it in the idle cell so that I feel
guilty about it and try getting some more work
for it.
That clinched one of the most difficult issues
that the team had to deal with.
250
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
Implementation of the proposed
configuration
It was decided to begin the implementation
through a pilot cell. The cell with the highest
total hours was selected so that the substantial
cost savings would provide the excitement
and motivation to get the top management
committed. The cellular layout for this cell
included the following:
• Work centers. Shear, Deburr, Notcher and
Small brake press.
• Routing 1. Shear → Deburr → Νotcher →
Small brake press.
• Routing 2. Shear → Notcher → Small brake
press.
 Reconfiguring a manufacturing system for strategic advantage Logistics Information Management
Ashok Kumar and Jaideep Motwani Volume 11 · Number 4 · 1998 · 244–256

Table II Proposed cell #1 shear, safety edger, notcher, small brake

Std hrs per 100 Min. STD Avg. wkly Avg. wkly hours Accum. wkly hrs
051 940 271 225 order code usage 051 940 271 225 Total 051 940 271 225 Total
0.65 1 97422672
0.65 1 97422682
0.65 1 97422692
0.65 1 97422702
0.65 1 97422712
0.65 1 97422722
0.65 1 97422732
0.65 1 97422742
0.22 500 9701360 22 0.05 0.05 0.05 0.05
0.27 2,000 9701361 59 0.16 0.16 0.21 0.21
0.27 100 9701362 24 0.06 0.06 0.27 0.27
0.27 500 9701363 39 0.11 0.11 0.38 0.38
0.12 0.11 400 9701114 8 0.01 0.01 0.02 0.39 0.01 0.40
0.12 0.11 700 9701115 3 0.00 0.00 0.01 0.39 0.01 0.40
0.12 0.11 1,000 9701116 0.39 0.01 0.40
0.12 0.11 500 9701117 0.39 0.01 0.40
0.2 0.13 800 9701119 0.39 0.01 0.40
0.12 0.26 25 9773037 20 0.02 0.05 0.07 0.42 0.06 0.48
0.1 0.11 25 1780004 0.42 0.06 0.48
0.11 0.17 25 1780005 2 0.00 0.00 0.01 0.00 0.00 0.42 0.06 0.48
0.11 0.15 25 1780006 16 0.02 0.02 0.04 0.02 0.03 0.42 0.06 0.53
0.12 0.18 25 1780007 0.02 0.03 0.42 0.06 0.53
0.11 0.11 20 9700203 49 0.05 0.05 0.11 0.07 0.08 0.42 0.06 0.64
0.12 0.15 20 9700205 0.07 0.08 0.42 0.06 0.64
0.11 0.15 200 9700206 14 0.02 0.02 0.04 0.09 0.10 0.42 0.06 0.67
0.13 0.18 20 9700207 98 0.12 0.18 0.30 0.21 0.28 0.42 0.06 0.97
0.16 0.29 30 97421301 3 0.00 0.01 0.01 0.22 0.29 0.42 0.06 0.99
0.16 0.29 50 97421311 9 0.01 0.03 0.04 0.23 0.32 0.42 0.06 1.03
0.16 0.18 100 97421321 15 0.02 0.03 0.05 0.26 0.34 0.42 0.06 1.08
0.16 0.15 50 97421331 7 0.01 0.01 0.02 0.27 0.35 0.42 0.06 1.10
0.15 0.15 300 97421341 114 0.17 0.17 0.34 0.44 0.53 0.42 0.06 1.44
0.16 0.15 50 97421351 5 0.01 0.01 0.02 0.45 0.53 0.42 0.06 1.46
0.19 0.29 50 97421851 2 0.00 0.01 0.01 0.45 0.54 0.42 0.06 1.47
0.19 0.29 50 97421861 3 0.01 0.01 0.01 0.46 0.55 0.42 0.06 1.48
0.19 0.18 100 97421871 78 0.15 0.14 0.29 0.60 0.69 0.42 0.06 1.77
0.18 0.15 100 97421881 1 0.00 0.00 0.00 0.60 0.69 0.42 0.06 1.77
0.18 0.15 250 97421891 46 0.08 0.07 0.15 0.69 0.76 0.42 0.06 1.92
0.19 0.15 50 97421901 8 0.01 0.01 0.03 0.70 0.77 0.42 0.06 1.95
0.16 0.11 50 9742192 12 0.02 0.01 0.03 0.72 0.79 0.42 0.06 1.98
0.17 0.15 50 9742194 98 0.17 0.15 0.32 0.89 0.93 0.42 0.06 2.30
0.18 0.15 50 9742195 51 0.09 0.08 0.17 0.98 1.01 0.42 0.06 2.47
0.18 0.18 50 9742196 10 0.02 0.02 0.04 1.00 1.03 0.42 0.06 2.51
0.15 0.11 300 9742392 86 0.13 0.10 0.23 1.13 1.12 0.42 0.06 2.73
0.15 0.12 500 9742393 80 0.12 0.10 0.22 1.25 1.22 0.42 0.06 2.95
0.15 0.15 100 9742394 17 0.03 0.03 0.05 1.28 1.25 0.42 0.06 3.01
0.15 0.15 900 9742395 371 0.57 0.56 1.13 1.85 1.81 0.42 0.06 4.13
0.15 0.18 100 9742396 29 0.04 0.05 0.10 1.89 1.85 0.42 0.06 4.23
0.15 0.11 50 9742397 14 0.02 0.02 0.04 1.91 1.83 0.42 0.06 4.27
251
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
• Routing 3. Shear → Deburr → Small brake
press.
At this point, the team proceeded to develop
the new layout (Figure 2) from the existing
layout (Figure 3).
Cost benefit analysis
The analysis for the costs and benefits of the
configuration change in the pilot cell is placed
in Table III. It will be noticed that only certain
quantifiable factors were considered for the
purpose. The cost factors primarily arose
from movement of machines to the newly
configured place. The benefits stemmed from
reduced material movement, setup reduction,
Figure 3 Existing layout (material movement = 339ft)
252
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
floor area reduction, WIP reduction and lead
time reduction. As Table III demonstrates,
the changed configuration was projected to
save $3154.48 per week or approximately
$164,000 a year from this cell alone. Indeed, a
total change for the entire 26 workstations was
estimated at $720,000 approximately. Notice-
ably, this figure does not include a significant
strategic advantage to be rendered by reduc-
tion in the manufacturing cycle time of the
panels. The industrial engineering estimates
of cycle time reductions were quite dramatic –
from eight to ten days to one to two days!
Concluding remarks
In this paper, we described a real-life experi-
ence in reconfiguring a manufacturing
 Reconfiguring a manufacturing system for strategic advantage Logistics Information Management
Ashok Kumar and Jaideep Motwani Volume 11 · Number 4 · 1998 · 244–256

Table III Costs and benefits analysis

Cost Savings
Item calculation calculation Rationale
Costsa
Move small
brake press $3,500 Estimate by plant eng.
Move Deburr
machine $600 Estimate by plant eng.
Project management 15 hrs x $25/hr Methods eng. estimate
Additional labor
expense $375
Total cost $4,475
Benefits
Material
movement (339.69)*2 Saved distance in feet/hour*
*0.035/60*40*9.03 = 2 (each way) *rate*
$114 per week hours/week*labor rate
Hilo moves 13*/13.5*28 = Saved hilos/week/no. of hour
$27 per week per hilo* standard labor
charge/hour
Setup reduction 57* 15/60* 28 = no. of setups reductions
$399 (estimates b y plant eng.)*
average time reduction per
setup* indirect staff rate
Floor reduction 1,042*$4.50 = $639 Savings in space/sq.ft*cost
per savings/sq.ft of operation
week (corporate guidelines)
WIP reduction 30%*68*1,054*0.23 = Percent batch size reduction*
$6,450.48 average batch size*No. of
parts *average inventory carrying cost per
week
Lead time reduction – Strategic. No appropriate
formula available
Total benefits $7,629.48 per week

Note:
a = One-time expenditures

system. Specifically, we converted a process • reduced material movement;

layout into a cellular layout. In order to deal
with the size of the conversion (1,054 parts,
26 machines) we had to modify an existing
algorithm known as King’s algorithm. The
modification involved partially linearizing the
row and column weights of the part-process
matrix when these have higher order and retail
the exponentialization when they have a lower
order. The cost benefits from the reconfigura-
tion based on the results of a single cell turned
out to be $164,000 per year. When all cells are
configured as proposed, these benefits are
projected to be in excess of $700,000 a year.
These benefits arose from the following
factors:
253
• reduced setup times;
• reduced hilo moves;
• reduced WIP costs; and
• reduced work area.
Furthermore, significant reduction in manu-
facturing cycle time was accomplished (8-10
days to 1-2 days) whose strategic value is great
in terms of market response time reduction.
There was no easy way to place a dollar value
to this strategic improvement. Also, the team
felt that the company was ready to take up
implementation of similar configuration
changes through out its several plants. The
learning experience of the team and others
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
Figure 4 Partial new layout (material movement = 69ft)
was “very valuable for us” according to the
CEO.
Finally, the last brainstorming session with
the team came to the following conclusion in
terms of what were the most significant fac-
tors for this success story:
• team approach;
• top management commitment through
open discussions with the team;
• improvisation of King’s algorithm;
• competitive pressure to improve strategic
positioning of the company; and
• the partially linearized King’s algorithm
works very efficiently and is suitable for
large-size problems involving up to 50,000
parts.
254
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
References
Askin, R.G. and Chiu, K.S. (1990), “A graph partioning
procedure for machine assignment and cell forma-
tion in group technology”, International Journal of
Production Research, Vol. 28 No. 8, pp. 1,555-72.
Askin, R.G. and Subramanian. S.P. (1987), “A cost-based
heuristic for group technology configuration”,
International Journal of Production Research, Vol. 25
No. 1, pp. 101-13.
Askin, R.G., Cresswell, S.H., Goldberg, J.B. and Vakharia,
A.J. (1991), “A hamiltonian path approach to
reordering the part-machine matrix for sellular
manufacturing”, International Journal of Production
Research, Vol. 29 No. 6, pp. 1,081-1, 100.
Boctor, F.F. (1991 ), “A linear formulation of the machine-
part cell formation problem”, International Journal
of Production Research, Vol. 29 No. 2, pp. 343-56.
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
Boe, J.W. and Cheng, C.H. (1991 ), “A close neighbor
algorithm for designing cellular manufacturing
systems”, International Journal of Production
Research, Vol. 29 No. 10, pp. 2,097-116.
Burbidge, J.L. (1971), “Production flow analysis”, Produc-
tion Engineering, Vol. 4, pp. 139-52.
Burke, L. and Kamal, S. (1995), “Neural networks and the
part family/machine group formation problem in
cellular manufacturing: a framework using fuzzy
ART”, Journal of Manufacturing Systems, Vol. 14
No. 3, pp. 148-59.
Chan, H.M. and Milner, D.A. (1982), “Direct clustering
algorithm for group formulation in cellular manufac-
turing”, Journal of Manufacturing Systems, Vol. 1
No. 1, pp. 65-74.
Chandrasekharan, M.P. and Rajagopalan, R. (1986), “An
ideal seed non-hierarchical clustering algorithm for
group technology”, International Journal of Produc-
tion Research, Vol. 11 No. 6, pp. 835-50.
Chandrasekharan, M.P. and Rajagopalan, R. (1987),
“ZODIAC – an algorithm for concurrent formation of
part-families and machine-cells”, International
Journal of Production Research, Vol. 25 No. 6,
pp. 835-50.
Cheng, C.H. (1993), “A tree search algorithm for designing
a cellular manufacturing system”, Omega, Vol. 21
No. 4, pp. 489-96.
Cheng, C.H., Kumar, A. and Motwani, J. (1995), “A compar-
ative examination of selected cellular manufacturing
clustering algorithms”, International Journal of
Operations and Production Management, Vol. 15
No. 12, pp. 86-97.
Cheng, C.H., Kusiak, A. and Boe, J. (1991), “A branch-and-
bound algorithm for solving the machine allocation
problem”, in Leondes, C.T. (Ed.), Manufacturing and
Automated Systems: Techniques and Technologies,
Academic Press, New York, NY.
Chow, W. and Hawaleshka, O. (1993), “A novel machine
grouping and knowledge-based approach for
cellular manufacturing”, European Journal of
Operational Research, Vol. 69 No. 3, pp. 357-72.
Durmusoglu, M. (1993), “Analysis of the conversion from a
job shop system to a cellular manufacturing
system”, International Journal of Production
Economics, Vol. 30 No. 31, pp. 427-36.
Ganesh, M.V. and Srinivasan, G. (1994), “A heuristic
approach for the cell formation problem”, Comput-
ers and Industrial Engineering, Vol. 26 No. 1,
pp. 193-201.
Gunasingh, R.K. and Lashkari, R.S. (1989a), “Machine
grouping problem in cellular manufacturing systems
– an integer programming approach”, International
Journal of Production Research, Vol. 27 No. 9,
pp. 1,465-73.
Gunasingh, R.K. and Lashkari, R.S. (1989b), “The cell
formation problem in cellular manufacturing
systems: a sequential modelling approach”, Com-
puters and Industrial Engineering, Vol. 16,
pp. 469-76.
Hayes, R.H. and Wheelwright, S. (1979), “Link manufactur-
ing process and product life cycles”, Harvard
Business Review, January-February, pp. 133-40.
255
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
Kaparth, S. and Suresh, N.C. (1992), “Machine-component
cell formulation in group technology: a neural
network approach”, International Journal of
Production Research, Vol. 30 No. 6, pp. 1,353-67.
Khator, S.K. and Irani, S.A. (1987), “Cell formation in group
technology: a new approach”, Computers and
Industrial Engineering, Vol. 12 No. 2, pp. 131-42.
King, J.R. (1980), “Machine-component grouping in
production flow analysis: an approach using the
rank order clustering algorithm”, International
Journal of Production Research, Vol. 18 No. 2,
pp. 213-32.
Kusiak, A. (1991), “Branching algorithms for solving the
group technology problem”, Journal of Manufactur-
ing Systems, Vol. 10 No. 4, pp. 332-43.
Kusiak, A. and Cheng, C.H. (1990), “A branch-and-bound
algorithm for solving the group technology prob-
lem”, Annals of Operations Research, Vol. 26 pp.
415-31.
Kusiak, A. and Chung, Y.K. (1991), “GT/ART: using neural
networks to form machine cells.” Manufacturing
Review, Vol. 4 No. 4, pp. 293-301.
Kusiak, A., Boe, J. and Cheng, C.H. (1993), “Designing
cellular manufacturing systems: branch and bound
and A* approaches”, IIE Transactions, Vol. 25 No. 4,
pp. 46-56.
Kusiak, A., Vannelli, A. and Kumar, R.K. (1986), “Clustering
analysis: models and algorithms”, Cybernetics,
Vol. 15 No. 2, pp. 139-54.
McAuley, A. (1972), “Machine grouping for efficient
production”, Production Engineering, Vol. 2, pp. 53-7.
McCormick, W.T., Schweitzer, P.J. and White, T.W. (1972),
“Problem decomposition and data organization by
clustering technique”, Operations Research, Vol. 20,
pp. 992-1,009.
Massay, L., Udoka, S., Silvanus, J. and Nbenjamin, C.
(1995), “A simulator-based approached to cellular
manufacturing system design”, Computers and
Industrial Engineering, Vol. 29 No. 1-4, pp. 327-31.
Offodile, O.F. (1993), “Assignment model formulation of
the machine cell formation problem in cellular
manufacturing”, International Journal of Operations
and Production Management, Vol. 13 No. 10,
pp. 49-59.
Rajamani, D., Singh, N. and Aneja, Y. (1992), “Selection of
parts and machines for cellularization: a mathemati-
cal programming approach”, European Journal of
Operational Research, Vol. 62 No. 1, pp. 47-54.
Rajgopalan, R. and Batra, J.L. (1975), “Design for cellular
production systems: a graph theoretic approach”,
International Journal of Production Research,
Vol. 13, pp. 567-79.
Seifoddini, H. and Wolfe, P.P. (1986), “Application of the
similarity coefficient method in group technology”,
lIE Transactions, Vol. 18 No. 3, pp. 271-7.
Shafer, S.M. and Bradford (1995), “Efficient measurement
of alternative machine component grouping solu-
tions via data envelopment analysis”, IEEE Transac-
tions on Engineering Management, Vol. 42 No. 2,
pp. 159-66.
 Reconfiguring a manufacturing system for strategic advantage
Ashok Kumar and Jaideep Motwani
Shafer, S.M., Kern, G.M. and Wei, J.C. (1992), “A mathe-
matical programming approach for dealing with
exceptional elements in cellular manufacturing”,
International Journal of Production Research, Vol. 30
No. 5, pp. 1,029-36.
Shargal, M., Shekhar, S. and Irani, S. (1995), “Evaluation of
search algorithms and clustering efficiency mea-
sures for machine-part matrix clustering”, IIE
Transactions, Vol. 27 No. 1, pp. 43-59.
Skinner, W. (1969), “Manufacturing – missing link in corpo-
rate strategy”, Harvard Business Review, May-June,
pp. 136-45.
Skinner, W. (1974), “The focused factory”, Harvard Business
Review, May-June, pp. 113-21.
Slagle, J.L., Chang, C.L. and Heller, S.R. (1975), “A cluster-
ing and data reorganization algorithm”, IEEE
Transactions on Systems, Man, and Cybernetics,
Vol. SMC-5 No. 2, pp. 125-8.
Tam, K.Y. (1990), “An operation sequence based similarity
coefficient for part families formations”, Journal of
Manufacturing Systems, Vol. 9 No. 1, pp. 55-68.
256
Logistics Information Management
Volume 11 · Number 4 · 1998 · 244–256
Vannelli, A. and Ravi Kumar, K. (1986), “A method for
finding minimal bottleneck cells for grouping
partmachine families”, International Journal of
Production Research, Vol. 24 No. 2, pp. 387-400.
Venugopal, V. and Narendran, T.T. (1992), “Cell forma-
tion in manufacturing systems through simulated
annealiing: an experimental evaluation”, Euro-
pean Journal of Operational Research, Vol. 63,
pp. 409-22.
Waghodekar, P.H. and Sahu, S. (1984), “Machine-compo-
nent cell formation in group techology: MACE”,
International Journal of Production Research, Vol. 22
No. 6, pp. 937-48.
Wei, J.C. and Gaither, N. (1990), “An optimal model for cell
formation decisions”, Decision Sciences, Vol. 21
No. 2, pp. 416-33.
Zhu, Z., Heady, R. and Reiner, S. (1995), “An efficient zero-
one formulation of the cell formation problem”,
Computers and Industrial Engineering, Vol. 28 No. 4,
pp. 911-16.