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Facilities%20Location,%20Layout%20and%20Planning

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Title: Class 5 Author: Supply Chain Research Institute Last modified by: Joe Created Date: 5/17/1999 7:24:34 PM Document presentation format: On-screen Show (4:3) – PowerPoint PPT presentation

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Title: Facilities%20Location,%20Layout%20and%20Planning


1
  • Facilities Location, Layout and Planning

2
FACILITY PLANNING
  • The placement of facility customers, suppliers,
    other links in the supply chain
  • Resources
  • Strategy 99cents Only example
  • Access to customers
  • Government impacts

3
Objectives of Facility Layout
  • Minimize material handling costs
  • Utilize space efficiently
  • Utilize labor efficiently
  • Eliminate bottlenecks
  • Facilitate communication and interaction between
    workers, between workers and their supervisors,
    or between workers and customers
  • Reduce manufacturing cycle time or customer
    service time

4
Objectives of Facility Layout
  • Eliminate waste or redundant movement
  • Facilitate the entry, exit, and placement of
    material, products, or people
  • Incorporate safety and security measures
  • Promote product and service quality
  • Encourage proper maintenance activities
  • Provide a visual control of operations or
    activities
  • Provide flexibility to adapt to changing
    conditions
  • Increase capacity

5
Questions on Layout Planning
  • How should the facility be laid out?
  • Does my layout cause unnecessary movement/excess
    travel time?
  • Does my work flow in a logical manner?
  • Does size dictate layout or does layout/product
    flow dictate the size?

6
Basic Types of Layouts
  • Process Layout
  • Machines grouped by process they perform
  • Product Layout
  • Linear arrangement of workstations to produce a
    specific product
  • Fixed Position Layout
  • Used in projects where the product cannot be moved

7
Manufacturing Process Layout
8
Manufacturing Process Layout
9
Manufacturing Process Layout
10
A Product Layout
11
Fixed-Position Layouts
  • Typical of projects
  • Equipment, workers, materials, other resources
    brought to the site
  • Highly skilled labor
  • Often low fixed
  • Typically high variable costs

12
Designing Process Layouts
  • Minimize material handling costs
  • Block Diagramming
  • Minimize nonadjacent loads
  • Use when quantitative data is available
  • Relationship Diagramming
  • Based on location preference between areas
  • Use when quantitative data is not available

13
Block Diagramming
  • Create load summary chart
  • Calculate composite (two way) movements
  • Develop trial layouts minimizing number of
    nonadjacent loads
  • Example

14
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15
Relationship Diagramming(Murthers Grid)
  • Used when quantitative data is not available
  • Muthers grid displays preferences
  • Denote location preferences with weighted lines

16
Relationship Diagramming Example
17
Relationship Diagramming Example
  • A Absolutely necessary
  • E Especially important
  • I Important
  • O Okay
  • U Unimportant
  • X Undesirable

18
Relationship Diagramming Example
  • 1 Absolutely necessary
  • 2 Especially important
  • 3 Important
  • 4 Okay
  • 5 Unimportant
  • 6 Undesirable

19
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20
  • Facility Location Models

21
Types Of Facilities
  • Heavy manufacturing
  • Auto plants, steel mills, chemical plants
  • Light industry
  • Small components mfg, assembly
  • Warehouse distribution centers
  • Retail service

22
Factors in Heavy Manufacturing Location
  • Construction costs
  • Land costs
  • Raw material and finished goods shipment modes
  • Proximity to raw materials
  • Utilities
  • Labor availability

23
Factors in Light Industry Location
  • Construction costs
  • Land costs
  • Easily accessible geographic region
  • Education training capabilities

24
Factors in Warehouse Location
  • Transportation costs
  • Proximity to markets (Customers)

25
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26
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27
Service Location Considerations
  • Labor
  • Cost of Living
  • Real Estate
  • Construction
  • Government Incentives
  • Examples Amoco, Mass St, Tattoo Parlors,
    Walgreens

28
Global Location Factors
  • Government stability
  • Government regulations
  • Political and economic systems
  • Economic stability and growth
  • Exchange rates
  • Culture
  • Climate
  • Export import regulations, duties and tariffs
  • Raw material availability
  • Number and proximity of suppliers
  • Transportation and distribution system
  • Labor cost and education
  • Available technology
  • Commercial travel
  • Technical expertise
  • Cross-border trade regulations
  • Group trade agreements

29
Regional Location Factors
  • Community government
  • Local business regulations
  • Government services
  • Business climate
  • Community services
  • Taxes
  • Availability of sites
  • Financial Services
  • Community inducements
  • Proximity of suppliers
  • Education system

30
Site Location Factors
  • Customer base
  • Construction/ leasing cost
  • Land cost
  • Site size
  • Transportation
  • Utilities
  • Zoning restrictions
  • Traffic
  • Safety/security
  • Competition
  • Area business climate
  • Income level

31
Location Incentives
  • Tax credits Wal-Mart in Wyandotte
  • Relaxed government regulation
  • Job training
  • Infrastructure improvement
  • Money

32
Center-of-Gravity Technique
  • Locate facility at center of geographic area
  • Based on weight and distance traveled
  • Establish grid-map of area
  • Identify coordinates and weights shipped for
    each location

33
Facility Summary
  • Why is it important?
  • Location analysis
  • Location Criteria global, local, regional -
    education
  • Location and Strategy
  • Location and Customers
  • Layout planning

34
Project Managementand Operations
35
  • Project Management

First Essay on Project Management 1697 An
Essay Upon Projects 1959 HBR Article The
Project Manager Air Force Manual 1964
36
Project Management
In todays global marketplace, complexity and
speed are certainties. In such an environment, a
good axiom for project management is, Do It, Do
It Right, Do It Right Now. Creating clear
direction, efficiency, timely response, and
quality outcomes requires project managers who
are agile -- adept at change. The associated
disciplinary areas are clearly spelled out in the
following PMI definition.Project management is
the application of knowledge, skills, tools, and
techniques to a broad range of activities in
order to meet the requirements of a particular
project. Project management is comprised of five
Project Management Process Groups Initiating
Processes, Planning Processes, Executing
Processes, Monitoring and Controlling Processes,
and Closing Processes.
Source Project Management Institute -
http//www.pmi.org/info/PP_AboutProfessionOverview
.asp?nav0501
37
Elements of Project Management
  • Project team
  • Individuals from different departments within
    company
  • Matrix organization
  • Team structure with members from different
    functional areas depending on skills needed
  • Project manager - Leader of project team
  • Project Charter high level description of what
    is to be accomplished in a project and delegates
    authority to project manager to implement actions
    to complete project

38
Project Planning
  • Statement of work
  • Written description of goals, work time frame
    of project
  • Activities require labor, resources time
  • Precedence relationship shows sequential
    relationship of project activities

39
Elements of Project Planning
  • Define project objective(s)
  • Identify activities
  • Establish precedence relationships
  • Make time estimates
  • Determine project completion time
  • Compare project schedule objectives
  • Determine resource requirements to meet objective

40
Work Breakdown Structure
  • Hierarchical organization of work to be done on a
    project
  • Project broken down into modules
  • Modules subdivided into subcomponents,
    activities, and tasks
  • Identifies individual tasks, workloads, and
    resource requirements

41
Project Control
  • All activities identified and included
  • Completed in proper sequence
  • Resource needs identified
  • Schedule adjusted
  • Maintain schedule and budget
  • Complete on time

42
A Gantt Chart
Around since 1914
  • Popular tool for project scheduling
  • Graph with bar for representing the time for each
    task
  • Provides visual display of project schedule
  • Also shows slack for activities
  • Amount of time activity can be delayed without
    delaying project

43
Gantt Charts
  • Gantt described two principles for his charts
  • measure activities by the amount of time needed
    to complete them
  • the space on the chart can be used the represent
    the amount of the activity that should have been
    done in that time.

Gantt charts were employed on major
infrastructure projects including the Hoover Dam
and Interstate highway system and still are an
important tool in project management.
44
A Gantt Chart
Figure 6.2
45
CPM/PERT
  • Critical Path Method (CPM)
  • DuPont Remington-Rand (1956)
  • Deterministic task times
  • Project Eval. Review Technique (PERT)
  • US Navy, Lockheed
  • Multiple task time estimates

46
PERT/CPM
Program Evaluation and Review Technique (PERT)
developed in conjunction with the development of
the Polaris missile program for submarines
developed by the US Navy with Lockheed as the
lead contractor Critical Path Method (CPM)
developed through a joint venture between the
DuPont Corporation and the Remington Rand
Corporation the original purpose was to monitor
and evaluate plant maintenance management
projects.
47
Project Network for a House
Figure 6.4
48
Critical Path
  • A path is a sequence of connected activities
    running from start to end node in network
  • The critical path is the path with the longest
    duration in the network
  • Project cannot be completed in less than the
    time of the critical path

49
The Critical Path
  • A 1-2-3-4-6-73 2 0 3 1 9 months
  • B 1-2-3-4-5-6-73 2 0 1 1 1 8 months
  • C 1-2-4-6-73 1 3 1 8 months
  • D 1-2-4-5-6-73 1 1 1 1 7 months

50
The Critical Path
Activity Start Times
Figure 6.6
51
Project Crashing
  • Crashing is reducing project time by expending
    additional resources
  • Crash time is an amount of time an activity is
    reduced
  • Crash cost is the cost of reducing the activity
    time
  • Goal is to reduce project duration at minimum cost

52
Time-Cost Relationship
  • Crashing costs increase as project duration
    decreases
  • Indirect costs increase as project duration
    increases
  • Reduce project length as long as crashing costs
    are less than indirect costs

53
Life Cycle Management
  • Long term view of projects to guide decision
    making solutions that provide life time success
    vice short term
  • Acquisition development production
    introduction sustainment disposal
  • Links system costs to big picture better use of
    resources minimize total cost of ownership

54
  • Capacity and Aggregate Planning

55
Capacity Outputs Examples
56
The goal of capacity planning decisions
  1. The capacity of the firm to produce the service
    or good
  2. The processes for providing the service or making
    the good
  3. The layout or arrangement of the work space
  4. The design of work processes to enhance
    productivity

57
Capacity
  • The max output that an organization be capable of
    producing
  • Measure a single facility
  • Design vs. Effective capacity
  • Capacity Utilization design vs. efficient
    utilization
  • For systems have more than one facility and flows
    of product
  • System capacity and bottleneck
  • Improve system capacity

58
Determinants of Effective Capacity
  • Facilities
  • Human considerations
  • Adding people
  • Increasing employee motivation
  • Operations
  • Improving operating rate of a machine
  • Improving quality of raw materials and components
  • External forces
  • Safety regulations

59
Capacity Utilization
  • Measures how much of the available capacity is
    actually being used
  • Always lt1(percentage of usage)
  • Higher the better
  • Denominator
  • If effective capacity used efficient utilization
  • If design capacity used design utilization

60
Aggregate Planning
  • The process of planning the quantity and timing
    of output over the intermediate range (3-18
    months) by adjusting production rate, employment,
    inventory
  • Master Production Schedule formalizes the
    production plan and translates it into specific
    end item requirements over the short to
    intermediate horizon

61
Capacity Planning
  • The process of determining the amount of capacity
    required to produce in the future. May be at the
    aggregate or product line level
  • Master Production Schedule - anticipated build
    schedule
  • Time horizon must exceed lead times for materials

62
Capacity Planning
  • Look at lead times, queue times, set up times,
    run times, wait times, move times
  • Resource availability
  • Material and capacity - should be in synch
  • driven by dispatch list - listing of
    manufacturing orders in priority sequence - ties
    to layout planning
  • load profiles - capacity of each section

63
the capacity decisions
  • When to add capacity
  • How much capacity to add
  • Where to add capacity
  • What type of capacity to add
  • When to reduce capacity

64
Capacity Planning
  • Rough Cut Capacity Planning - process of
    converting the master production schedule into
    requirements for key resources
  • capacity requirements plan - time-phased display
    of present and future capacity required on all
    resources based on planned and released orders

65
Capacity Planning
  • Capacity Requirements Planning (CRP) - process of
    determining in detail the amount of labor and
    machine resources required to meet production
    plan
  • RCCP may indicate sufficient capacity but the CRP
    may indicate insufficient capacity during
    specific time periods

66
Theory of Constraints
  • Every system has a bottle neck
  • capacity of the system is constrained by the
    capacity of the bottle neck
  • increasing capacity at other than bottle neck
    operations does not increase the overall capacity
    of the system

67
Theory of Constraints
  • What needs to be changed
  • What to change to
  • How to make the change happen

68
Theory of Constraints
  • Identify the constraint
  • Subordinate
  • Inertia
  • Walk the process again
  • inertia of change can create new bottle necks

69
Capacity Planning
  • Establishes overall level of productive resources
  • Affects lead time responsiveness, cost
    competitiveness
  • Determines when and how much to increase capacity

70
Capacity Expansion
  • Volume certainty of anticipated demand
  • Strategic objectives for growth
  • Costs of expansion operation
  • Incremental or one-step expansion

71
Sales and Operations Planning (SOP)
  • Brings together all plans for business
  • performed at least once a month
  • Internal and external

72
Adjusting Capacity to Meet Demand
  1. Producing at a constant rate and using inventory
    to absorb fluctuations in demand (level
    production)
  2. Hiring and firing workers to match demand (chase
    demand)
  3. Maintaining resources for high demand levels
  4. Increase or decrease working hours (overtime and
    undertime)
  5. Subcontracting work to other firms
  6. Using part-time workers
  7. Providing the service or product at a later time
    period (backordering)

73
Demand Management
  • Shift demand into other periods
  • Incentives, sales promotions, advertising
    campaigns
  • Offer product or services with countercyclical
    demand patterns
  • Partnering with suppliers to reduce information
    distortion along the supply chain

74
Remedies for Underloads
  1. Acquire more work
  2. Pull work ahead that is scheduled for later time
    periods
  3. Reduce normal capacity

75
Remedies for Overloads
  1. Eliminate unnecessary requirements
  2. Reroute jobs to alternative machines or work
    centers
  3. Split lots between two or more machines
  4. Increase normal capacity
  5. Subcontract
  6. Increase the efficiency of the operation
  7. Push work back to later time periods
  8. Revise master schedule

76
Scheduling as part of the Planning Process
77
Scheduling
  • Scheduling is the last step in the planning
    process?
  • It is one of the most challenging areas of
    operations management.
  • Scheduling presents many day-to-day problems for
    operations managers because of
  • Changes in customer orders
  • Equipment breakdowns
  • Late deliveries from suppliers
  • A myriad of other disruptions

78
Objectives in Scheduling
  • Meet customer due dates
  • Minimize job lateness
  • Minimize response time
  • Minimize completion time
  • Minimize time in the system
  • Minimize overtime
  • Maximize machine or labor utilization
  • Minimize idle time
  • Minimize work-in-process inventory
  • Efficiency

79
Sequencing Rules
  • FCFS - first-come, first-served
  • LCFS - last come, first served
  • DDATE - earliest due date
  • CUSTPR - highest customer priority
  • SETUP - similar required setups
  • SLACK - smallest slack
  • CR - critical ratio
  • SPT - shortest processing time
  • LPT - longest processing time

80
Critical Ratio Rule
Ties scheduling to Gantt Chart or PERT/CPM
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