6.

Processes
Selection and
Layout
Operations Management
Dr. Ron Lembke

Process Flow Structures

Job Shop - low standardization, every
order is a different product, new design
Batch Shop - Stable line of products,
produced in batches
Assembly Line - Discrete parts moving
from workstation to workstation
Continuous Flow - Undifferentiated flow
of product (beer, paper, etc.)

Process Strategy
Variety
High

Medium

project
Workcenter Manufacturing
Cell
Assembly
Line Continuous
Process

Low
Low

Medium

High

Volume

Process Strategy
Variety
High

Process Focus
(job shops)
Repetitive (cars,
motorcycles)

Medium

Product Focus
(steel, glass)
Low
Low

Medium

High

Volume

Process Focus (Job Shop)

Low volume, high variety, do it all

Job shop environment (e.g. Kinkos)
High amount of flexibility
Each job is different
Relatively high cost per unit
Very high flexibility

Process Selection /
Evolution

Products tend to move through the four stages

over life cycle.
Unit costs decrease as standardization increases,
and production increases.
Flexibility decreases as volume, standardization
increase

Designing the System

How do we decide where to put things?

Layout Types

Project or Fixed-position layout

Process-oriented layout
Product-oriented layout
Office layout
Warehouse layout
Retail/service layout

Project or Fixed-Position
Design is for stationary project
Workers & equipment come to site
Complicating factors

Limited space at site

Changing material needs

Examples

Ship building
Highway construction

Process-Oriented Layout
Design places departments with large flows of
material or people together
Dept. areas have similar processes

e.g., All x-ray machines in same area

Used with process-focused processes

Examples

Hospitals
Machine shops

Process-Oriented Layout
Floor Plan
Table Saws

Office

1995
Corel Corp.

Drill Presses
Tool Room

1995 Corel Corp.

Process Layout
+ Allows specialization - focus on one skill
+ Allows economies of scale - worker can watch
several machines at once
+ High level of product flexibility
-- Encourages large lot sizes
-- Difficult to incorporate into JIT
-- Makes cross-training difficult

Product-Oriented Layout
Facility organized around product
Design minimizes line imbalance

Delay between work stations

Types: Fabrication line; assembly line

Examples

Auto assembly line

Brewery
Paper manufacturing.

Cellular Layout (Work

Cells)
Special case of process-oriented layout
Consists of different machines brought together to
make a product
May be temporary or permanent
Example: Assembly line set up to produce 3000
identical parts in a
job shop

Work Cell Floor Plan

Saws

Tool Room

Drills

Work Cell

Office

Work Cell Advantages

Reduces:
Inventory
Floor space
Direct labor
costs

Increases:
Equipment
utilization
Employee
participation
Quality

Work Cell Layout

+
+
+
---

Facilitates cross-training
Can easily adjust production volumes
Easy to incorporate into JIT
Requires higher volumes to justify
May require more capital for equipment

Process-Oriented
Example
You work in facilities engineering. You
want to find the cost of this layout. The
cost of moving 1 load between adjacent
dept. is $1. The cost between
nonadjacent dept. is $2.
Dept. 1
Dept. 4

Dept. 2
Dept. 5

Dept. 3
Dept. 6

40 ft.

60 ft.

There are 6! or 720 possibilities! Clearly,

we cant look at them all.

From-to-Matrix
1
1
2
Dept.

2
50

Department
3
4

5
6

100

20

30

50

10

20

100

50

3
4

Number of Trips

Schematic Diagram &

Cost
100
Dept. Dept. Cost

50

20
50

10

20
50
4

30

100
5

1
1
1
4
4
4
2
2
3

3
2
6
2
3
5
5
3
6

Total Cost

$
$
$
$
$
$
$
$
$

200
50
40
50
40
50
10
30
100

$570

Schematic Diagram &

Cost
30
2

50

Dept. Dept. Cost

100

10

50

20

20
4

50

100
6

1
1
1
4
4
4
2
2
3

2
3
6
2
3
5
5
3
6

Total Cost

$
$
$
$
$
$
$
$
$

50
100
20
50
40
50
10
60
100

$480

Line Balancing
Situation: Assembly-line production.
Many tasks must be performed, and the sequence
is flexible
Parts at each station same time
Tasks take different amounts of time
How to give everyone enough, but not too much
work for the limited time.

Product-Oriented Layout
Operations

Belt
Conveyor

Precedence Diagram
Draw precedence graph
(times in seconds)

A
20

E
C

10

F
3

15

H
12

12

Cycle Time
The more units you want to produce per hour,
the less time a part can spend at each
station.
Cycle time = time spent at each spot

CT =

Production Time in each day

Required output per day (in units)

C = 800 min / 32 = 25 min
800 min = 13:20

Number of Workstations
Given required cycle time, find out the theoretical
minimum number of stations

Nt =

Sum of task times (T)

Cycle Time (C)

Nt = 97 / 25 = 3.88 = 4 (must round up)

Assignments
Assign tasks by choosing tasks:
with largest number of following tasks
OR by longest time to complete

Break ties by using the other rule

Number of Following
Tasks
Nodes # after
C 6
D 5
A 4
B,E,F 3
G,H 2
I 1

Choose C first, then, if possible,

add D to it, then A, if possible.

Precedence Diagram
Draw precedence graph
(times in seconds)

A
20

E
C

10

F
3

15

H
12

12

Number of Following
Tasks
Nodes #
after
A 4
B,E,F 3
G,H 2
I 1

A could not be added to first

station, so a new station must
be
created with A.
B, E, F all have 3 stations after,
so use tiebreaker rule: time.
B=5
E=8
F=3
Use E, then B, then F.

Precedence Diagram
E cannot be added to A, but E can be added to C&D.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
Next priority B can be added to A.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
Next priority B can be added to A.
Next priority F cant be added to either.

A
20

E
C

10

F
3

15

H
12

12

Number of Following
Tasks
Nodes #
after
G,H 2
I 1

G and H tie on number coming

after.
G takes 15, H is 12, so G goes
first.

Precedence Diagram
G can be added to F.
H cannot be added.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
I is next, and can be added to H, but J cannot be
added also.

A
20

E
C

10

F
3

15

H
12

12

Calculate Efficiency
We know that at least 4 workstations will be
needed. We needed 5.

Efficiencyt =

Sum of task times (T)

Actual # WS * Cycle Time

= 97 / ( 5 * 25 ) = 0.776
We are paying for 125 minutes of work, where it
only takes 97.

Precedence Diagram
Try choosing longest activities first.
A is first, then G, which cant be added to A.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
H and I both take 12, but H has more coming after it,
then add I.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
D is next, followed by E, so we combine them, but we
could have combined E&G. Well try that later.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
J is next, all alone, followed by C and B.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
F is last. We end up with 6 workstations.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
Go back and try combining G and E instead of D and
E.

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
J is next, all alone. C is added to D, and B is added
to A.

A
20

E
C

10

F
3

15

H
12

12

Can we do better?

A
20

E
C

10

F
3

15

H
12

12

Precedence Diagram
F can be added to C&D. Five WS again.

A
20

E
C

10

F
3

15

H
12

12

Reduced CT
Efficiency = 97/100 = 0.97. Much better.
If we set CT = 20, we can produce 3 units per
hour.
Goal of 32 units can be produced in 20 * 32 = 640
minutes.
Significant savings over original 800 minutes.

Can we do better?
If we have to use 5 stations, we can get a solution
with CT = 20.

A
20

E
C

10

F
3

15

H
12

12

Calculate Efficiency
With 5 WS at CT = 20

Efficiencyt =

Sum of task times (T)

Actual # WS * Cycle Time

= 97 / ( 5 * 20 ) = 0.97
We are paying for 100 minutes of work, where it
only takes 97.

Output and Labor Costs

With 20 min CT, and 800 minute
workday
Output = 800 min / 20 min/unit = 40
Dont need to work 800 min
Goal 25 units: 25 * 20 = 500 min/day
5 workers * 500 min = 2,500 labor
min.
We were trying to achieve
4 stations * 800 min = 3,200 labor min.
Significant labor cost savings

Handling Long Tasks

Long tasks make it hard to get efficient
combinations.
Consider splitting tasks, if physically possible.
If not:
Parallel workstations
use skilled (faster) worker to speed up

Warehouse Layout
Design balances space
(cube) utilization & handling
cost
Similar to process layout

Items moved between dock

& various storage areas

Optimum layout depends on

Variety of items
stored
No. items picked
1995 Corel Corp.

Warehouse Flow
Receiving

Shipping

Warehouse Layout
Try to organize storage in such a way that order pickers
can move through the product in a logical and timely
manner.

Warehouse Layout

Fastest near the front

Fastest within easy reach
Bulk storage vs. Single item picking
Serpentine vs. oval picking order
Restocking: frequency, safety stock

Cross-Docking
In-coming

Transferring
goods
from incoming
trucks at
receiving docks
to outgoing trucks
at shipping docks
Avoids placing
goods into
storage

Outgoing

1984-1994 T/Maker Co.

1995 Corel Corp.

Retail/Service Layout
Design maximizes product exposure to customers,
profitability per square foot
Decision variables

Store flow pattern

Allocation of (shelf) space to products

Types

Grid design
Free-flow design

Video

Retail/Service Layout
Grid Design
Grocery Store
Meat

Milk

Bread

Office

Carts

Checkout

Retail/Service Layout
Free-Flow Design
Apparel Store

Trans.
Counter

Feature

Display
Table

Retail Store
Flow Guidelines

Prisoner aisles make you enter

store in a particular route, and
pass by certain displays
Often contain less profitable (for
the store) brands
Decompression Zone people
walk past first rows of items
before settling into shopping
mode.

Retail Store
Flow Guidelines

Bakery, coffee shop,

restaurant spread
aromas by entrance to
stimulate taste buds
Siren song of the
Starbucks (Safeway)
Food samplers
throughout store do
same

Retail Store Flow Guidelines

Frequently purchased
items at far sides of
stores so you have to
go through entire store
(produce or meat).
Profitable sections like
produce placed where
you keep running into
them

Meat

Milk

Produce

Retail Store Flow Guidelines

Major items in middle of
aisles so you have to
walk down into middle of
aisle (Cereal, peanut
butter)
Power items on both
sides of aisle so you
have to look at both
sides

Peanut
Butter
Cereal

Retail Store
Flow Guidelines

Quality of produce
section important in
customer decisions
about which stores to
visit, so produce is often
prominently displayed
upon entrance
People like to see what
theyre looking for, not
read signs

Cereal

Peanut
Butter

produce

Retail Store
Flow Guidelines

End caps for highvisibility sale items

Large quantities of
inventory serve as
psychic stock
If there is a lot of it,
it must be on sale
Stimulates sales
1995
Corel
Corp.

Retail Store
Flow Guidelines

Eliminate crossover aisles:

less wasted floor
space,
you have to look at
more items,
the more time you
spend in the store,
the more you will
buy.

Shelf Space Planogram

Example: P&G

2 ft.

SUAVE

SUAVE

VO-5

PERT

VO-5

PERT

PERT
VO-5

VO-5

VO-5

PERT

5 facings
PERT

Computerized tool
for shelf-space
management
Generated from
stores scanner
data on sales
Often supplied by
manufacturer

Shelf Placement
Companies prefer to be at eye-level or at childreaching level
Close to leading brands or high-draw items: snack
foods next to the peanut butter or across from the
cereal:
Lots of kids visit the area

Slotting Fees
Manufacturer pays retailer to get a product
into a store
35,000 new grocery products per year
Grocery stores often stock 30,000 items
Impossible to evaluate all new products to
choose the best new ones
Slotting fees guarantee grocer profits on a
product, help balance risk of trying unknown
product.
Grocery is a narrow margin business, slotting
fees can represent a significant revenue
source.

Slotting Fees
Senate Small Business Committee held
hearings on them in 2000.
Industry refused to cooperate with
GAO.
Growers of produce (not just brand
names) now getting involved and
complaining.
Small businesses claim they cant
afford the big payments big companies
can make.
Advocates say small companies can

Perimeter Items
People follow perimeter pattern
Sale items on end everyone sees
Half of a stores profit comes from
items on the perimeter
Breakfast cereal brings in the most
dollars per square foot
Manufacturer incentives increase
profitability of soft drinks
Anchors at ends of a section: milk
and butter at opposite ends of dairy
case