S 6-12Facility & Locations Layout

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FACILITY LOCATIONS &LAYOUT

Prof. BiranchiPrasad Panda

KSOM, KIIT

University


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DISCUSSIONConcept

Need for Suitable Location

Factors affecting Plant/Facility Location

Location Theories

Location Models

Locational Economics

Plant Lay Out

Classification of layout

Design of Product Layout

Design of Process Layout

Service Layout


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CONCEPTPlant/Facility Location - Where a plant or facility is to

be located ?

Facility Layout - What provisions are required and in

which order ?

These are important strategic-level decisions

Selecting a location or layout is a key-decision

Involves large investment

Difficult to change, once selected

Prerequisite

Long range forecasting

Companys expansion plan and policy

Diversification plan for product


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LOCATION

I. When an organization starts (comes intoexistence,1st time)

Has the direct bearing on financial, employment, distribution

patterns etc.

By closing its old/cost-inefficient operations unit

I. When an existing organization

expands/diversifies/ decentralizes/ shuts-down

..

Relocation involves stoppage of production, cost of shifting etc.


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for 1st time operation or new

organizationsConsider the long-term business/organizational

objectives

Identification of region for locating the operations facility

Along with the considerations marketing, technology, org strengths

& weaknesses, regional resources, business environment, legal-gov

environment, society, geography

Choice of a site within the region

Along with the org strategies for their tangible and intangible costs

Dimensional (quantitative) analysis to select a location

with least cost

By quantifying all the tangible and intangible costs


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Contd.

For example, the relative merits of

two sites:

C1M, C2M+, C3M, . , CzM

Costs associated with site-M on z different cost

elements

C1N, C2N, C3N, . , CzN

Costs associated with site-N on z different cost

elementsThen relative merit of M and N is given by

(C1M/ C1N)W1 x (C1M/ C1N) W2 (CZM/CZN) WZ


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LOCATION CHOICE

expansion/diversification/..

Consider the multi-plant operation strategy additional plants

in the same premises or elsewhere

Manufacturing distinct products

When the resources/ inputs are specialized for different competitive

product-lines

Manufacturing for a specific market area When proximity factor dominates the resources factors

Division of plant on the basis of stage-wise processes

When parts are manufactured in different plants

Emphasis on flexibility


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LOCATION CHOICE

for global operations

Consider the reasons and reaches

Virtual Proximity

With the advance telecommunication technologies

Virtual Factory

With the advance telecom and information

technologies, operating the factory in foreign and

remote locations

Contd.


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Contd.

Tangible reasons

To reach the customer

To avail tax benefits

To avail low-cost/abundant labor, raw material, energy,

water etc.

To avail tariff benefits of mfg. there, instead of exporting

Intangible reasons

For customer service accessibility, personal touch,

better understanding the needs


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FACTORS INFLUENCING(Tangible/Intangible/Strategic)

PLANT / FACILITY LOCATIONGeneral

factors

Controllablefactors

Proximity to markets

Supply of materials

Transportation

facilities

Infrastructure

availability

Labor and wages External economics

Uncontrollable

factors

Government policy

Climatic conditions

Supporting

industries

Community

attitudes

Communityinfrastructure

Specific

factors

For Mfg.

Organizations

Dominant competitive

factors

Secondary factors

For Service

Organization

Dominant competitive

factors

Secondary factors


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FACTORS Contd.

General factors

Controllable factors Proximity to markets for concentrated buyers, for

delicate/susceptible/low-self-life products, for products demanding after-

sales-service, in-time/low-cost supply of goods and service to the

customers, if raw materials are ubiquitous

Supply of materials raw material in right

quality/quantity/time/price/place, transportation at a lower cost,

proximity to source for processing weight-loosing materials

Transportation facilities timely supply of raw materials (to company)

and finished goods (to customers), import/export duties

Infrastructure availability power, water, waste-disposal/treatment,

(air)port/railway

Labor and wages adequate number/skill, prospective community,

productive, conveyance, prevailing wage pattern, cost of living,


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FACTORS Contd.

Specific factors for Serv. Org.

Dominant factors Proximity to customers after sales service, customer contact

Transportation costs & proximity to markets for

warehousing/distribution, inventory, delivery time, sales promotion

Location of competitors competitors location, their reaction to cosnew location, advantage of cluster

Secondary factors level of retail activity, residential density, traffic

flow, site visibility, shoppers impulse, strategies for target market

segment


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LOCATION THEORIESfor finding an optimal (min. cost) location

Alfred Webers Theory of Location of Industries (1909):

Distance travelled by raw/intermediate/finished product materials

Labor movement for transportation and work

Agglomeration (or concentration) of labor; investment in schools and

hospitals; supporting companies for construction, plant and machine

erection, financial services etc.

Degglommeration (loosening of over concentration) of inappropriate

industries, labor, capital, land; diversification; flat processes.

Some models to identify an ideal location

Factor rating method

Weighted factor rating method Load-distance method


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METHOD

The process of selecting a new

facility locationIdentify the important location factors

Rate the factors according to their relative importance

(higher the rating, more the prominence)

Assign each location

Calculate the rating by multiplying the assigned factor tothe basic factor

Find the sum of product for each factor

Select the best location having highest total score

l


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Example Lets assume that a new medical facility, health care, is to belocated in Delhi. The location factors, factor rating and scoresfor two potential sites are shown in the following table. Whichis the best location based on factor rating method?

Sl.No.

LocationFactor

FactorRatin

g

Location -I Location -II

RatingTotal RatingTotal

1 Facility

utilization

8 3 24 5 40

2 Total patientper month

5 4 20 3 15

3 Average time

per emergencytri

6 4 24 5 30


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WEIGHTED FACTOR RATING METHODBoth qualitative and quantitative factors are assigned weights to

select the best choice

Example Lets assume that a new medical facility, healthcare, is to be located in Delhi. The location factors,weights and scores (1= poor, , 5=excellent) for

two potential sites are shown in the following table.What is the weighted score for these sites? Whichis the best location?

Sl.No.

Location Factor Weight Location -I Location -II

Rating Total Rating Total

1 Facility utilization 25 3 75 5 125

2 Total patient per month 25 4 100 3 75

3 Average time peremergency trip

25 3 75 3 75

4 Land and construction costs 15 1 15 2 30

5 Employee preferences 10 5 50 3 30

Total: 315 335


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Location models: LOAD-DISTANCE METHODA mathematical model (calculated in terms of distance/time/cost ofmovement)

Based on proximity factors (min. movement of weighted loads into or out

of the facility)

Example The new health-care facility is targeted to serve seven censustracts in Delhi. The table given below shows the coordinates for the centre of

each census tract, along with the projected populations, measured inthousands. Customers will travel from the seven census tract centers to thenew facility when they need health-care. Two locations being considered forthe new facility are at (5.5, 4.5) and (7, 2) which are the centers of censustracts C and F. Details of seven census tract centers, coordinate distancesalong with the population for each centre are given below. If we use thepopulation as the loads and use rectilinear distance, which location is better in

terms of its total load-distance score?Sl. CensusTract

(X, Y) Population Location (5.5, 4.5) Location (7, 2)

Distance(dx+dy)

Load-distance

Distance(dx+dy)

Load-distance

1 A (2.5, 4.5) 2 3+0=3 6 4.5+2.5=7 14

2 B (2.5, 2.5) 5 3+2=5 25 4.5+0.5=5 25

3 C (5.5, 4.5) 10 0 0 1.5+2.5=4 40

4 D (5,2) 7 0.5+2.5 =3 21 2+0=2 14

5 E (8,5) 10 2.5+0.5=3 30 1+3=4 40

6 F (7,2) 20 1.5+2.5=4 80 0+0=0 0


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CENTRE OF GRAVITY

METHOD Balancing cost and service objectives Takes care of market, volume of transportation, warehousing

etc.

Minimizes the weighted distance between the warehouseand its supply/distribution/sales points.Sl. Census

Tract(X, Y) Population X component of CG Y Component of CG

1 A (2.5, 4.5) 2 2.5x2=5 4.5x2=9

2 B (2.5, 2.5) 5 2.5x5=12.5 2.5x5=12.5

3 C (5.5, 4.5) 10 5.5x10=55 4.5x10=45

4 D (5,2) 7 5x7=35 2x7=14

5 E (8,5) 10 8x10=80 5x10=50

6 F (7,2) 20 7x20=140 2x20=40

7 G (9, 2.5) 14 9x14=126 2.5x14=35

Total: 68 Total: 453.50 Total: 205.50

Overall x-com onent:

6.67 Overall y-com onent:

3.02


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BREAK-EVEN

ANALYSIS Locates a site where total revenue equalstotal cost At break-even point, there is no loss, no

profit

BEA for each location can makeeconomic comparison, identifying for arange of production volume.

At BEP,BEQ = fixed cost / contribution per unit

= fixed cost / (selling price variable cost perunit)

= F / (S - V) units

Fixed costLoss

Variable

cost

Sales

Rev

enue

Profit

Margin ofSafety

BEP

Rs.

No.

Example


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Example Company ABC has a demand of 1,30,000 units of a new product.

Three potential locations X, Y and Z have the cost structures shownbelow. Identify the locations for selected volume of production.

Location X Location Y Location Z

Fixed Costs (Rs.) 1,50,000 3,50,000 9,50,000

Variable Costs (Rs.) 10 8 6

Solution

Solve for the cross-over between X and Y locations10x + 1,50,000 = 8x + 3,50,000

Or 2x = 2,00,000

Or x = 1,00,000 units

Similarly for the cross-over between Y and Zlocations

8x + 3,50,000 = 6x + 9,50,000

XY

Z

2,00,000

3,00,000

1,00,000 Volu

me

Cost

5,00,000

10,00,00

0

15,0

0,000

20,00,00

0

LOCATIONAL


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LOCATIONALECONOMICS

A location is ideal/economic at aleast cost of:

Production

Distribution

Land

Building

Equipment

Labor

Material

with better

Factors X Y Z

1. Total initialinvestment

2. Total expected sales3. Distribution expenses4. Raw material

expenses

5. Power and watersupply expenses6. Wages and salaries7. Other expenses8. Community attitude9. Employee housing


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es gn osystemsDefining the system elements

Defining the interrelationship between the

elements

Selection of elements

P d ti ( )


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Production (process)System Design Process planning

place, people, m/c tools, time cost estimation

Process selection

continuous, batch, job

Process sequence

product, process, job Process technology

manual, automatic, semiautomatic

Process flow design

product, material, people, information, utilities, etc.

Work center (place) design

light, air, temp., noise, speed, vibration, safety - positional/

occupational fatigue, place (posture) of sitting, movement of body

(parts) etc.

Process personnel


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DESIGN OF

LAYOUTS

Moore: Plant layout is a plan of an

optimum arrangement of facilities

including personnel, operating

equipment, storage space, material

handling equipment and all other

supporting services along with the design

of best structure to contain all these

facilities.

Objectives of Plant


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Objectives of PlantLayout

The primary goal of the plant layout is to maximize the profit by

arrangement of all the plant facilities to the best advantage of totalmanufacturing of the product.

The objectives of plant layout are:

1. Streamline the flow of materials through the plant.

2. Facilitate the manufacturing process.

3. Maintain high turnover of in-process inventory.

4. Minimise materials handling and cost.

5. Effective utilisation of men, equipment and space.

6. Make effective utilisation of cubic space.

7. Flexibility of manufacturing operations and arrangements.

8. Provide for employee convenience, safety and comfort.


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TYPES OF


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TYPES OFLAYOUTS

Flow patterns - line/continuous, intermittent/batch,project/job

Types of LayoutsProduct layouts

Process layouts

Position layouts

Combined layouts

Shapes of layout


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PATTERNSline/continuous

intermittent/batch

project/job

O C O


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PRODUCT LAYOUT

High volume production

A dedicated set of facilities

Fixed sequence of operations

Suitable for only one type of product or its minor

modifications

(Assembly) line/continuous

M/c-1

M/c-2

M/c-3

M/c-4

M/c-5


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PROCESS LAYOUT

A small range of variety

Products/ services are repetitive

Large volume on demand, butperiodically

Identical Facilities are put togetherThey function/ process

Similar within the department/section

Intermittent/ Batch

M/c Type 1 M/c Type 2 M/c Type 3 M/c Type 4

M/c Type 5


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-LAYOUT

Limited capacity, but of general purpose

machines/equipments/facilities.

Limited people, but highly skilled

Wide variety of unique (non-repetitive)

products

Hi her de ree of customization

Job shop

Job at one place (a project)


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LAYOUTJob at one place (a project)

Resources arrive Costly/ Scarce Resources


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LAYOUTSLine layout with sub-assemblies

Combination of line and function

layout

Advantage of both types

Every cell represented by a

Group/ process/ functional layout

Suitable for flexible batch

production

High degree of standardization

Cellular layouts


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SHAPEOFLAYOUT

O-type

U or C-type

SS-type

I-type

L-type


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VERTICALLAYOUT

Use of vertical

space

Use of gravity

Ease of material

handling

ZSingle-storied Vertical

Layout

Multi-storied Vertical Layout

1st Floor

Gr.Floor

2ndFloor

ZZ

LINE BALANCING


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LINE BALANCINGAssembly-line balancing often has implications for layout.

This would occur when, for balance purposes, workstation size

or the number used would have to be physically modified.

The steps in balancing an assembly line (productlayout) are:1. Specify the sequential relationships among tasks

using a precedence diagram.

2. Determine the required workstation cycle time C,using the formula

C = Production time per day / Required output per day (in units)

3. Determine the theoretical minimum number of workstations (Nt) required to satisfythe workstation cycle time constraint using the formula

Nt = Sum of task times (T) / Cycle time (C)

4. Select a primary rule by which tasks are to be assigned to workstations, and asecondary rule to break ties.

5. Assign tasks, one at a time, to the first workstation until the sum of the task times isequal to the workstation cycle time, or no other tasks are feasible because of time or

Exampl


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pe:

F


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Earlier the efficiency was: 195/ (11task points x 50 slowest process) = 0.3545 =35.45%

DESIGN OF PROCESS LAYOUT


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DESIGN OF PROCESS LAYOUT

1. List and describe each functional work centre.2. Obtain a drawing and description of the facilitybeing designed.3. Identify and estimate the amount of materialand personnel flow among work

centers4. Use structured analytical methods to obtain a

good general layout.5. Evaluate and modify the layout, incorporating

details such as machineorientation, storage area location, and

equipment access.

Other physical facilities are:

Assignment


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AssignmentSelect a suitable location for your business.

A region

A site within the region

Do a dimensional analysis for the selection

Identify and apply a particular or a combination of

location model to finalize the location

Build a virtual factory model

List the factors influencing the location and/orlayout

General factors

Controllable

Uncontrollable

S 6-12Facility & Locations Layout

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