Chapter 6 MIS 373 Basic Operations Management Learning Objectives After this lecture students will be able to Compare the four basic processing types Describe product layouts and their main advantages and ID: 515694
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Slide1
Process Selection and Facility Layout
Chapter 6
MIS 373: Basic Operations ManagementSlide2
Learning Objectives
After this lecture, students will be able to
Compare the four basic processing types
Describe
product
layouts and their main advantages and disadvantagesDescribe process layouts and their main advantages and disadvantagesDevelop simple product layoutsDevelop simple process layouts
MIS 373: Basic Operations Management
2Slide3
Process Selection
Process selectionDeciding on the way production of goods or services will be organized
Occurs when:Planning of new products or servicesTechnological changes in product or equipment
Competitive pressure
MIS 373: Basic Operations Management
3Slide4
Process Selection and System Design
MIS 373: Basic Operations Management
Forecasting
(demand
)
Product and
Service
Design
Technological
Change
Capacity
Planning
Process
Selection
Facilities and
Equipment
Layout
Work
Design
4Slide5
Process Strategy
Key aspects
of process strategy:Capital Intensity
The mix of equipment and labor that will be used by the organization
Process flexibility
The degree to which the system can be adjusted to changes in processing requirements due to such factors asProduct and service design changesVolume changesChanges in technologyMIS 373: Basic Operations Management5Slide6
New
Process Strategy
HBR 12/6/12
Three Examples of New Process Strategy
There are three fundamental ways that companies can improve their processes in the coming decade:
expand
the scope of work managed by a company to include customers, suppliers, and partners;
Shift to
global, virtual, cross-organizational teams
of specialized entities that are knitted together to serve
customers
To
keep such a multiparty system from degenerating into chaos, virtual process teams must have aligned goals and support systems.
target
the increasing amount of knowledge work; and
Big data analytics
Crowdsourcing, e.g.,
innocentive.com
,
TopCoder.com
&
Heritage
Health
Prize
HBR : Using the Crowd as an Innovation Partnerreduce
cycle times to durations previously considered impossibleAgile processesManagers must speed the flow of information so that decisions can be made faster at all levels, from top to bottom.Slide7
Process Selection
Process choice is demand driven:
Variety: How much?Equipment
flexibility: To
what degree?
Volume: Expected output?Process TypesMIS 373: Basic Operations Management7Slide8
Process Selection
Process choice is
demand driven:
Variety
How
much?Equipment flexibilityTo what degree?VolumeExpected output?
Process Types
Job
shop
Small scale
e.g., doctor, tailor
Batch
Moderate volume
e.g., bakery
Repetitive/assembly line
High volumes of standardized goods or services
e.g., automobiles
Continuous
Very high volumes of non-discrete goodse.g., petroleum products
MIS 373: Basic Operations Management8Slide9
Types of Processing
MIS 373: Basic Operations Management
Job Shop
Batch
Repetitive/
Assembly
Continuous
Description
Customized
goods or
services
Semi-
standardized
goods or
services
Standardized
goods or
services
Highly standardized
goods
or services
Advantages
Able to handle
a
wide variety
of work
Flexibility; easy
to add or change products or services
Low
unit cost, high volume, efficient
Very
efficient, very high volume
Disadvantages
Slow, high cost
per unit,
complex
planning and
scheduling
Moderate cost
per unit,
moderate
scheduling
complexity
Low flexibility,
high cost of downtime
Very rigid, lack of
variety, costly
to change, very high cost of downtime
9Slide10
Product-Process Matrix
The diagonal represents the “ideal” match
Hybrid process are possible (e.g., job-shop & batch)
Process choice may change as products goes through its life-cycles
MIS 373: Basic Operations Management
Volume
Flexibility/Variety
Out of pocket costs
Opportunity costs
10Slide11
Process Choice Effects
Project
: used for work that is none routine with a unique set of objective to be accomplished in a limited time
frame, e.g.,
launching a new
product, publishing a bookMIS 373: Basic Operations Management
Activity/
Function
Projects
Job Shop
Batch
Repetitive
Continuous
Cost estimation
Simple to complex
Difficult
Somewhat routine
Routine
Routine
Cost per unit
Very high
High
Moderate
Low
Low
Equipment
used
Varied
General purpose
General purpose
Special purpose
Special purpose
Fixed costs
Varied
Low
Moderate
High
Very high
Variable costs
High
High
Moderate
Low
Very low
Labor skills
Low to high
High
Moderate
Low
Low to high
Marketing
Promote
capabilities
Promote
capabilities
Promote
capabilities; semi-standardized goods and services
Promote
standardized goods and services
Promote
standardized goods and services
Scheduling
Complex, subject
to change
Complex
Moderately complex
Routine
Routine
11Slide12
Product and Service Profiling
Product or service
profilingLinking key product or service
requirements
to process
capabilitiesKey dimensions relate toRange of products or services that can be processedExpected order sizes
Expected frequency of schedule changes
MIS 373: Basic Operations Management
12Slide13
Discussion
Work with
a partner
and match the following products or services with the best process
Ice-cream manufacturer
Automatic carwash
Steel
Books
Airlines
Surgery
Movie theater
Sugar
Beer
Flour
Job-shop
Repetitive
Continuous
Batch
Products/Services
Processes
Tips: Think in terms of those key dimensions:
Range of products or services that can be processed
Expected order sizes
Expected frequency of schedule
changesSlide14
Technology
Technological InnovationThe discovery and development of new or improved products, services, or processes for producing or providing
themTechnologyThe application of scientific discoveries to the development and improvement of products and services and/or the processes that produce or provide them
Process technology
includes methods, procedures, and equipment used to produce goods and provide services
.RFID, online banking, 3D printing, …MIS 373: Basic Operations Management14Slide15
Facilities Layout
LayoutThe configuration of departments, work centers, and equipment, with particular emphasis on movement of work (customers or materials) through the system
Facilities layout decisions arise when:Designing new facilities
Re-designing existing facilities
The
basic objective of layout design is to facilitate a smooth flow of work, material, and information through the system. MIS 373: Basic Operations Management15Slide16
Basic Layout Types
Product layout
Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow
Process layout
Layout that can handle
varied processing requirementsFixed position layout
Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as
needed
Combination
layouts
MIS 373: Basic Operations Management
16Slide17
Product Layouts
Product layout
Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flowHow?
MIS 373: Basic Operations Management
Used for Repetitive Processing
Repetitive or Continuous
Raw materials
or customer
Finished item
Station
2
Station
3
Station
4
Material
and/or labor
Material
and/or labor
Material
and/or labor
Material
and/or labor
Station
1
17Slide18
Product Layouts
Although product layouts often follow a straight line, a straight line is not always
the best, and layouts may take an L, O, S, or
U
shape. Why
?L:O:S:U: more compact, increased communication facilitating team work, minimize the material handlingMIS 373: Basic Operations Management
18
Image source: mdcegypt.comSlide19
Non-repetitive Processing: Process Layouts
Process layoutsLayouts that can handle varied processing requirements
MIS 373: Basic Operations Management
Used for Intermittent processing
Job Shop or Batch
Dept. A
Dept. B
Dept. D
Dept. C
Dept. F
Dept. E
19Slide20
Product Layouts
Advantages
High rate of outputLow unit costLabor specializationLow material handling cost per unit
High utilization of labor and equipment
Established routing and scheduling
Routine accounting, purchasing, and inventory controlDisadvantagesCreates dull, repetitive jobsPoorly skilled workers may not maintain equipment or quality of output
Fairly inflexible to changes in volume or product or process design
Highly susceptible to shutdowns
Preventive maintenance, capacity for quick repair and spare-parts inventories are necessary expenses
Individual incentive plans are impractical
MIS 373: Basic Operations Management
20Slide21
Process Layouts
Advantages
Can handle a variety of processing requirementsNot particularly vulnerable to equipment failuresGeneral-purpose equipment is often less costly and easier and less costly to maintain
It is possible to use individual incentive
systems
DisadvantagesIn-process inventories can be highRouting and scheduling pose continual challengesEquipment utilization rates are lowMaterial handling is slow and less efficientComplicates supervisionSpecial attention necessary for each product or customerAccounting, inventory control, and purchasing are more
complex
MIS 373: Basic Operations Management
21Slide22
Fixed Position Layouts
Fixed Position Layout
Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as neededE.g., farming, firefighting, road building, home building, remodeling and repair, and drilling for oil
MIS 373: Basic Operations Management
22Slide23
Combination Layouts
Some operational environments use a combination of the three basic layout types:
HospitalsSupermarketShipyardsSome
organizations are moving away from process layouts in an effort to capture the benefits of product layouts
MIS 373: Basic Operations Management
23Slide24
Line Balancing
Line balancing
The process of assigning tasks to workstations in such a way that the workstations have
approximately equal time
requirements
Goal:Obtain task grouping that represent approximately equal time requirements since this minimizes idle time along the line and results in a high utilization of equipment and laborWhy is line balancing important?It allows us to use labor and equipment more efficiently.
To avoid fairness issues that arise when one workstation must work harder than another.Input
Tasks sequencing (precedence diagram)
Tasks time
Operating time
MIS 373: Basic Operations Management
24Slide25
Precedence Diagram
Precedence diagram
A diagram that shows elemental tasks and their precedence requirementsMIS 373: Basic Operations Management
Task
Duration (min)
Immediate predecessor
a
Select
material
0.1
-
b
Make petals
1.0
a
c
Select rhinestones
0.7
-
d
Glue rhinestones
0.5
b, c
e
Package
0.2
d
25Slide26
Cycle Time
Cycle timeThe maximum time allowed at each workstation to complete its set of tasks on a unit
Minimum Cycle Time = longest task time = 1.0 minMaximum Cycle time = Σt = sum of task time = 2.5 min
MIS 373: Basic Operations Management
26Slide27
Output rate of a line
Cycle time also establishes the output rate of a line
MIS 373: Basic Operations Management
Cycle time
=
Operating time per day
Desired
output rate
Output rate
=
Operating time per day
Cycle time
27Slide28
How Many Workstations are Needed?
The required number of workstations is a function of:Desired output rate
The ability to combine tasks into a workstation(theoretical) Minimum number of stations
MIS 373: Basic Operations Management
N
min
=
∑
t
Cycle time
where
N
min
= theoretical minimum number of stations
∑
t
=
sum of task times
28Slide29
How Many Workstations are Needed?
The required number of workstations is a function of:Desired output rate
The ability to combine tasks into a workstation(theoretical) Minimum number of stations
MIS 373: Basic Operations Management
N
min
=
∑
t
Cycle time
where
N
min
= theoretical minimum number of stations
∑
t
=
sum of task times
29
Q: Why this is a theoretical value?
A: There are often scraps or idle times.
Example:
4 tasks, each require 6
hours to finish
A station can handle 8 hours amount of tasks a day.
You will need 4 stations to complete all tasks, instead of 3.
N
min
= (6+6+6+6) / 8 = 3Slide30
Designing
Product Layouts
Some Heuristic (Intuitive, may not result in optimal solution) Rules:
Assign tasks in order of
most following tasks
Count the number of tasks that followAssign tasks in order of greatest positional weight.
Positional weight is the sum of each task’s time and the times of all following tasks.
MIS 373: Basic Operations Management
30Slide31
Example: Assembly
Line BalancingArrange tasks (shown in the figure)
into three workstationsAssume the cycle time of each workstation is 1.2 min.Assign
tasks in order of
the most number of
followersBreak tie using greatest positional weightMIS 373: Basic Operations Management
31Slide32
Assign tasks in order of the most number of followers
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
a, c
2
3
Start with CT (1.2 min. in this example)
32Slide33
Assign tasks in order of the most number of followers
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
a, c
a
1.1
2
3
33Slide34
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
a, c
c, b
a
1.1
2
3
34Slide35
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
a, c
c, b
a
b
1.1
0.1
2
3
Break tie using greatest positional weight
35Slide36
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
0.1
a, c
c, b
c
a
b
1.1
0.1
2
3
36Slide37
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
0.1
2
3
37
Can’t assign c to this workstation because the workstation doesn’t have enough time (0.1) to complete c (0.7). Slide38
MIS 373: Basic Operations Management
Start with CT (1.2 min. in this example)
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
0.1
2
1.2
c
c
0.5
3
38Slide39
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
0.1
2
1.2
0.5
c
d
c
d
0.5
0
0
3
39Slide40
MIS 373: Basic Operations Management
Start with CT (1.2 min. in this example)
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
0.1
2
1.2
0.5
c
d
c
d
0.5
0
0.0
3
1.2
e
e
1
1.0
40Slide41
MIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
0.1
2
1.2
0.5
c
d
c
d
0.5
0
0.0
3
1.2
e
e
1
1.0
Idle time per
cycle
=0.1+0.0+1.0=1.1
41Slide42
Layout
MIS 373: Basic Operations Management
a & b
(0.1+1.0)
c & d
(0.7+0.5)
e
(0.2)
Task
Duration (min)
Immediate predecessor
a
Select
material
0.1
-
b
Make petals
1.0
a
c
Select rhinestones
0.7
-
d
Glue rhinestones
0.5
b, c
e
Package
0.2
d
42Slide43
Measuring Effectiveness
Balance delay (percentage of idle time)
Percentage of idle time of a line
Efficiency
Percentage of busy time of a line
MIS 373: Basic Operations Management
Balance Delay
=
Idle time per cycle
× 100%
N
actual
×
Cycle time
where
N
actual
= actual number of stations
Efficiency
= 100% − Balance Delay
43Slide44
Example:
Measuring
EffectivenessMIS 373: Basic Operations Management
Workstation
Time
Remaining
Eligible
Assign
Task
Revised
Time
Remaining
Station
Idle Time
1
1.2
1.1
0.1
a, c
c, b
c
a
b
-
1.1
0.1
0.1
2
1.2
0.5
c
d
c
d
0.5
0
0.0
3
1.2
e
e
1.0
1.0
Efficiency =
100% – 30.55% = 69.45%
Percentage of
idle time = [(
0.1 + 0 + 1.0
)
÷ (3 ×
1.2
)] ×
100%
= 30.55%
44Slide45
Exercise Problems
(Textbook page 267) Using
the information contained in the table shown, do each of the following
:
Draw
a precedence diagram.
Assuming
an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day.
Determine
the minimum number of workstations required.
Assign
tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.
Compute the resulting percent idle time and efficiency of the systemSlide46
Exercise Solution
1. Draw
a precedence diagramSlide47
Exercise Solution
2. Assuming
an eight-hour workday
, compute the cycle time needed to obtain an output of
400 units per day
Cycle time
=
Operating time per day
=
480 minutes per day
= 1.2 minutes per cycle
Desired
output rate
400 units per daySlide48
Exercise Solution
3. Determine
the minimum number of workstations required
N
min
=
∑
t
=
Cycle time
where
N
min
= theoretical minimum number of stations
∑
t
=
sum of task times
=
3.17
stations ( round
to 4)
3.8 minutes per
unit
1.2 minutes
per cycle time per stationSlide49
Exercise Solution
4. Assign
tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first. Slide50
Exercise Solution
5. Compute the resulting percent idle time and efficiency of the system
Percent idle time
=
Idle time per cycle
=
1.0 min.
× 100%
N
actual
× Cycle time
4
× 1.2 min.
=
20.83%Slide51
Designing
Process Layouts
The main issue in designing process layouts concerns the relative placement of the departments
Measuring effectiveness
key objectives in designing process layouts are to minimize:
transportation costdistancetimeMIS 373: Basic Operations Management51Slide52
Information Requirements
In designing process layouts, the following information is required:
A list of work stations (departments) to be arranged and their dimensions
A projection of future work flows between the pairs of work centers
The distance between locations - and the cost per unit of distance to move loads between
themThe amount of money to be invested in the layoutA list of any special considerationsThe location of key utilities, access and exit points, etc.
MIS 373: Basic Operations Management
52Slide53
Designing Process Layouts
Minimize Transportation Costs
Goal:Assign departments 1, 2, 3 to locations A, B, C in a way that minimizes transportation costs
.
Heuristic
:Assign departments with the greatest interdepartmental work flow first to locations that are closet to each other.MIS 373: Basic Operations Management
A
B
C
53Slide54
Example: Minimize Transportation Costs
MIS 373: Basic Operations Management
Location
From\To
A
BC
A-
20
40
B
-
30
C
-
Department
From\To
1
2
3
1
-
30
170
2-100
3-
PairWork flow1-3
1702-31001-230
Trip
A-B20
B-C30A-C
40
Distance
Work flow
A
B
C
20
40
30
Highest work flow
Closest
Place dept.
1&3
in A&B
54Slide55
Example: Minimize Transportation Costs
MIS 373: Basic Operations Management
Place departments 1&3 in A&B (2 options)
2&3 have higher work flow than 1&2 (100>30)
2&3 should be located closer than 1&2
C
closer to B than to A (30<40)
Solution:
1
3
A
B
C
3
1
A
B
C
A
B
C
20
40
30
1
3
2
30
170
100
A
B
C
Trip
A-B
20
B-C
30
A-C
40
Pair
Work flow
1-3
170
2-3
100
1-2
30
55Slide56
Closeness Ratings
Allows the considerations of multiple
qualitative criteria
Input from management
or
subjective analysisIndicates the relative importance of each combination of department pairsMIS 373: Basic Operations Management
Muther’s
grid
56Slide57
Closeness Ratings
MIS 373: Basic Operations Management
A Absolutely necessary
E
Very important
I ImportantO
Ordinary importance
U Unimportant
X Undesirable
Muther’s
grid
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X
O
A
A
U
A
A
X
E
A
O
A
U
I
X
57
Suppose this is the floor plan of your company, how would you arrange the six departments?Slide58
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X
O
A
A
U
A
A
X
E
A
O
A
U
I
X
Closeness
Ratings:
Example
MIS 373: Basic Operations Management
1. List critical departments (either
A or X):
A
1-2
1-3
2-6
3-5
4-6
5-6
X
1-4
3-6
3-4
58Slide59
Closeness Ratings: Example
MIS 373: Basic Operations Management
6-
59
2. Form a cluster of A links
(
beginning with the department that appears most frequently)
A
1-2
1-3
2-6
3-5
4-6
5-6
6
2
4
5
3. Take the remaining A links in order and add them to this cluster where possible (rearranging as necessary)
Form separate clusters for departments that do not link with the main cluster.
6
2
4
5
1
3
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X
O
A
A
U
A
A
X
E
A
O
A
U
I
XSlide60
Closeness Ratings: Example
MIS 373: Basic Operations Management
4. Graphically portray the X links
4
3
1
6
5. Adjust A
cluster as necessary.
X
1-4
3-6
3-4
6
2
4
5
1
3
(in this case, the A cluster also satisfies
the X cluster).
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X
O
A
A
U
A
A
X
E
A
O
A
U
I
X
60Slide61
Closeness Ratings: Example
MIS 373: Basic Operations Management
6
2
4
5
1
3
6. Fit
cluster into arrangement
(e.g., 2x3)
may require some trial and error.
Departments are considered close not only when they touch side to side but also when they touch corner to corner.
7. Check for possible improvements
1
2
6
3
5
4
4
3
1
6
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X
O
A
A
U
A
A
X
E
A
O
A
U
I
X
61Slide62
Key Points
Process choice is demand driven.Process type and layout are a function of expected demand volume and the degree of customization that will be needed.
Each process type and layout type has advantages and limitations that should be clearly understood when making process selection and layout decisions.Line balancing helps improving the efficiency of product layouts whereas
Muther’s
grid
helps deciding process layoutsMIS 373: Basic Operations Management62