Facility Layout

Facility Layout
• A facility is an entity that facilitates the performance of any job.

• It may be a machine tool, a work center, a manufacturing cell, a machine shop,

a department, a warehouse, etc.

• A facility layout is an arrangement of everything needed for production of

goods or delivery of services.

• It means planning for the locations of all machines, utilities, employee

workstations, customer service areas, material storage area, aisles, rest rooms,
lunchrooms, internal walls, offices and computer rooms.

• Concerned about flow patterns of materials and people around, into and within
buildings.

• The layout design generally depends on the products variety and the production
volumes.
Analysis of Facility Location Alternatives

• Break-even Analysis Method – For existing locations

• Gravity Location Method – For choosing new locations

• Factor Rating Method

Break-even Analysis

• Objective – select a location which maximize profit.

• Economic analysis - only revenues and costs are considered.

• Costs - fixed costs and variable costs.

A generalized methodology for locational break-even analysis:

1. Determine all relevant costs for each of the locations.

2. Classify the costs for each location into annual fixed costs (FC) and

variable cost per unit (VC).

3. Plot the total costs associated with each location on a single chart of

annual cost versus annual volume.

4. Select the location with the lowest total annual cost (TC) at the

expected production volume.

 Facility Location Problem – 1
For manufacturing a product, potential factory sites have the cost structures shown

below. Find the most economical location for an expected volume of 2000 units per

year. Also, find all possible break-even points.

 Facility Location Problem – 2
A company is producing a product at three different locations. Find the most

economical location for an expected volume of 2000 units per year. Also, find all

possible break-even points.

Gravity Location Method

• Objective - locate the single new facility such that the total material

handling cost minimized.

In the gravity problem, the above type of distance is considered. Let

𝑎𝑖 = x-coordinate of the 𝑖 𝑡ℎ existing facility

𝑏𝑖 = y-coordinate of the 𝑖 𝑡ℎ existing facility

𝑥 ∗ = x-coordinate of the new facility

𝑦 ∗ = y-coordinate of the new facility

𝑤𝑖 = weight associated with the existing facility i.

(quantum of materials moved between the new facility and the

existing facility i)

m = total number of existing facilities

Facility Location Problem – 3
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Factor Rating Method

• Both qualitative and quantitative inputs

• Evaluates alternatives based on comparison after establishing a composite

value for each alternative.

• Factor Rating consists of six steps:

1. Determine relevant factors.

2. Assign a weight to each factor, with all weights totaling 1.

3. Determine common scale for all factors, usually 0 to 100.

4. Score each alternative.

5. Adjust score using weights (multiply factor weight by score factor);

add up scores for each alternative.

6. The alternative with the highest score is considered the best option.
Critical Success Score Adjusted Score
Factor Weight
Factor Site A Site B Site A Site B
Labor
0.25 70 60 ? ?
Availability
Raw Material 0.39 50 60 ? ?
Tax Structure 0.21 85 80 ? ?
Education &
0.15 75 70 ? ?
Health Facilities
Total 1 - - ? ?
Critical Success Score Adjusted Score
Factor Weight
Factor Site A Site B Site A Site B
Labor
0.25 70 60 0.25*70 0.25*60
Availability
Raw Material 0.39 50 60 0.39*50 0.39*60
Tax Structure 0.21 85 80 0.21*85 0.21*80
Education &
0.15 75 70 0.15*75 0.15*70
Health Facilities
Total 1 - - ? ?
Factors Influencing the Selection of Facility
Location
• Availability of Raw Materials
• Proximity to Market
• Infrastructural Facilities
• Government Policy
• Availability of Manpower
• Local Laws, Regulations and Taxation
• Ecological and Environmental Factors
• Competition
• Incentives, Land costs, Subsidies for Backward Areas
• Climatic Conditions
• Political Conditions.
Need for selecting a suitable location
• When starting a new factory.
• In case of existing factory.
Reasons for Replacement of Existing Facilities to
New Locations
• Changes in location of demand
• Changes in availability of materials
• Changes in availability of transport
• Changes in the cost and/ or supply of labor
• Changes in regulations and law
• Changes in availability of raw materials
• Changes in policy of industries to relocate on which the firm is dependent
 Steps in Facility Location Study

Location studies are usually made in two phases namely:

• General territory selection phase

• Site/community selection phase

A typical team for studying locations for a large project might involve:

• Economists

• Accountants

• Geographers

• Town planners

• Lawyers

• Marketing experts

• Politicians

• Executives

• Industrial engineers

• Defense analysts

• Ecologists etc.
Territory Selection
For the general territory selection, the influencing factors are:
• Availability of Raw Materials
• Proximity to Market
• Infrastructural Facilities
• Government Policy
• Availability of Manpower
• Local Laws, Regulations and Taxation
• Ecological and Environmental Factors
• Competition
• Incentives, Land costs, Subsidies for Backward Areas
• Climatic Conditions
• Political Conditions.
Site/Community Selection
After selecting the general territory, next we need to select exact site/community
for the facility:

• Community Facilities

– Quality of life – depends on facilities like schools, medical services,

police and fire stations, cultural, social and recreation opportunities,
housing, good streets and good communication and transportation
facilities

• Community Attitudes

– In case of polluting industries, community attitude will not be favorable.

– Law and order situation, companies have been forced to relocate their
units.
• Waste Disposal Facilities

• Ecology and Pollution

• Site Size:

– Enough for proposed plant

– Parking and access facilities

– Future expansion

• Topography

– Soil structure and drainage must be suitable

• Transportation Facilities

– Accessibility by road and rail preferably.

– The dependability and character of the available transport carriers,

– Frequency of service
• Supporting Industries and Services

– Tool rooms

– Plant services

• Land Costs

– Non-recurring
Features of City Locations
– Availability of adequate supply of labor force,

– High proportion of skilled employees.

– Rapid public transportation and contact with suppliers and customers.

– Small plant site or multi floor operation.

– Processes heavily dependent on city facilities and utilities.

– Good communication facilities

– Good banking and health care delivery systems.

Features of a Suburban Locations
– Large plant site close to transportation or population center.

– Free from some common city building zoning (industrial areas) and
other restrictions.

– Freedom from higher parking and other city taxes etc.

– Labor force required resides close to plant.

– Community close to, but not in, large population center.

– Plant expansion easier than in the city.

Features of Rural Locations
– Large plant site required for either present demands or expansion.

– Large volume of relatively clean water.

– Lower property taxes, away from Urban Land Ceiling Act restrictions.

– Balanced growth and development of a developing or underdeveloped area.

– Unskilled labor force required.

• Large-scale industries - rural areas - regional development

• Medium scale industries - preferably in the suburban/semi-urban areas

• Small-scale Industries - urban areas - already available infrastructural

facilities.

• People, with money and means would try to locate the units in the city

itself.
 Types of Layouts
• Process Layout
• Product Layout
• Group layout (Combination layout)
• Fixed position layout
Process Layout
• Similar machines and services are located together.

• Example:- All drills located in one area of the plant.

• Used when the production volume is not sufficient to justify a product

layout.

• Typically, job shops employ process layouts due to:

– Variety of products manufactured and

– Low production volumes.

Process Layout - Advantages
• Machines are better utilized; fewer machines are required.

• High degree of flexibility in terms of task allocation to machines exists.

• Comparatively low investment in machines is required.

• The diversity of tasks offers a more interesting and satisfying occupation

for the operator
Process Layout - Limitations
• Material handling cost will be high.

• Production planning and control systems are more involved.

• Throughput time is longer.

• Large amounts of in-process inventory.

• Space and capital are tied up by work in process.

• Higher grades of skill are required

Product Layout
• Machines and auxiliary services are located according to the processing
sequence of the product.

• Used when the volume of production of a product is high such that a

separate production line to manufacture it can be justified.

• In a strict product layout, machines are not shared by different products.

Product Layout - Advantages
• The flow of product will be smooth and logical in flow lines.

• In-process inventory is less.

• Throughput time is less.

• Material handling cost is minimum.

• Operators need not be skilled.

• Simple production planning and control systems are possible.

• Less space is occupied by work in transit and for temporary storage.

Product Layout - Limitations
• A breakdown of one machine in a product line may cause stoppages of
machines in the downstream of the line.

• A change in product design may require major alterations in the layout.

• The line output is decided by the bottleneck machine.

• Comparatively high investment in equipments is required.

Group layout (Combination layout)
• Combination of the product layout and process layout.

• Combines the advantages of both layout systems.

• The basic aim of a group technology layout is to identify families of

components that require similar processing on a set of machines.

• In turn, these machines are grouped into cells.

• Each cell should be capable of satisfying all the requirements of the

component family assigned to it.

• Here, the objective is to minimize the intercell movements.

Group Technology Layout - Advantages
• Group technology layout can increase:

– Component standardization and rationalization

– Reliability of estimates

– Effective machine operation

– Productivity

– Costing accuracy

– Customer service
• Group technology layout can decrease:

– Planning effort

– Paperwork

– Setting time

– Down time

– Work in progress

– Work movement

– Overall production times

– Finished part stock

– Overall cost
Group Technology Layout – Limitations
• Not be feasible for all situations.

• Cell formation is difficult when the product mix is completely dissimilar.

Fixed position layout
• Static product layout, or layout by fixed position

• Physical characteristics of the product dictate as to which type of machines

and men are to be utilized.

• Example : ship building industry

Types of Layouts
 Symptoms of Bad Layout
• Poor utilization of space

• Congestion for movement of materials and men

• Large amount of work-in-process.

• Long production cycles.

• Excessive handling of materials.

• More frequent accidents.

• Difficult to supervise and control.

• Spoilage of products during handling.

• Production line bottlenecks.

 Plant Layout– General Procedure
• Systematically collect and record the detailed information about the product, process, etc.

• Analyze the data using various techniques of analysis.

• Select the general flow pattern for the materials.

• Design the individual workstations.

• Assemble the individual layout into total layout in accordance with the general flow pattern

and the building facilities.

• Coordinate the plan with plan for handling materials.

• Complete the plant layout

• Convert the plant layout into floor plans that is to be used by the plant engineer for

installation of equipment.
 Layout Design Process
• Layout design process can be classified into manual methods and

computerized methods.

➢ Manual method - Systematic Layout Planning (SLP).

➢ Computerized methods.

• Computerized Relative Allocation of Facilities Technique (CRAFT)

• Automated Layout Design Program (ALDEP)

• Computerized Relationship Layout Planning (CORELAP)

Systematic Layout Planning
• Five key factors are considered in this layout design process.

▪ P - Product [What is to be produced]

▪ Q - Quantity [How much of each item will be produced]

▪ R- Routing [How will each item be produced]

▪ S - Services or supporting activities [What will be support services for production]

▪ T - Time [When will each item be produced].

• The SLP procedure is based directly on three fundamentals:

1. Relationships - the relative degree of closeness required among things.

2. Space - the amount, kind and shape or configuration of the things being laid out.

3. Adjustments - the arrangement of things in a realistic best fit.

 Steps Involved in SLP Procedure
1. Definition of objectives of layout.

2. Input Data

3. Flow of Materials

4. Activity Relationships

5. Flow or Activity Relationship Diagram

6. Space Determination

7. Space Relationship Diagram

8. Adjusting the Diagram

9. Evaluating and Determining the Best Layout

1. Definition of objectives of layout.
• Minimize investment in equipment.

• Minimize overall production time.

• Utilize existing space most effectively.

• Provide for employee convenience, safety and comfort.

• Maintain flexibility of arrangement and operation.

• Minimize materials-handling cost.

• Facilitate the manufacturing process.

• Facilitate the organizational structure.

2. Input Data
– The preliminary planning step of SLP is the five key input factors (P, Q,
R, S and T).

– An analysis of P and Q individually and in their relationship is

especially important.

3. Flow of Materials
– This determines the most effective process or routing by selecting the
operations and sequences that will optimally produce P and Q in the
specified time period (T).
4. Activity Relationships
– The flow of materials is a common basis for layout arrangements.

– All support services must be integrated with the layout to ensure

productive and effective activities.

– A systematic way of relating main activities is essential.

– The activity relationships diagram (REL) - indicates the relative

importance and closeness between the two activities.
Undesirable
5. Flow or Activity Relationship Diagram
– This diagram relates the various activities or departments,
geographically with their relative closeness and intensity to each other
without any regard to actual spaces required.

– Here, the use of operation symbols for activities, identification numbers

or letters for activities and number of lines is made to express the
relationship and frequency or closeness value between the two
activities.
6. Space Determination
– Determine the space or area of each piece of machinery, equipment and
service facilities required for producing the products.

– First determine the standard area needed for installing each facility,
then multiplying this by number of facilities required and finally,
adding an extra space which may be required.

– The total sum of space requirements must be balanced against space

available.
7. Space Relationship Diagram
– The area to be allowed for each activity is represented in the flow/or
activity relationship diagram, resulting in the space relationship
diagram.

– This is a rough layout plan, which is generated from REL diagram.

8. Adjusting the Diagram
– The space relationship diagram represents a theoretically ideal
arrangement and as it cannot be used.

– It is adjusted to consider:

• Material handling methods

• Storage facilities

• Site conditions

• Surroundings personnel requirements

• Utilities & auxiliaries

• Detailed activity layouts

• Practical limitations like cost, safety and employee preference.

9. Evaluating and Determining the Best Layout
– After analysis, only few layout proposal plans will remain.

– Each alternative has its own advantages and disadvantages.

– Now, it is required to select the best plan balancing advantages against

disadvantages by using factor analysis or cost comparison method.

– Factor-analysis method is most effective general method of evaluating

the alternative layouts.

– Finally, the procedure is set out for selecting the best alternative, and a
scale model or virtual reality model of the selected layout may be used
to aid visualization of the selected layout.
SLP Problems
SLP Problem – 1
A manufacturing company uses SLP
Site Details
to generate alternate layouts.

20 m
Based on given activity relationship
40 m chart, develop the following:

• Relationship diagram
Department No. Area (𝒎𝟐 )
• Space relationship diagram
1 100
• At least 3 alternative layouts
2 300

3 200

4 100

5 100
Relationship Chart Relationship Diagram
Relationship Diagram Space Relationship Diagram

Department
Area (𝒎𝟐 )
No.

1 100

2 300

3 200

4 100

5 100
Space Relationship Diagram Layout Alternative - 1

40 m
SLP Problem – 2
A production company uses SLP to
generate alternate layouts.

Based on given activity relationship

Site Details chart, develop the following:

• Relationship diagram

• Space relationship diagram

• At least 3 alternative layouts

Relationship Chart Relationship Diagram
Relationship Diagram Space Relationship Diagram

Department
Area (𝐦𝟐 )
No.
1 1000
2 125
3 125
4 350
5 500
6 75
7 575
8 200
9 500
10 1750
Space Relationship Diagram Layout Alternative - 1
 Assignment Model
• Once SLP is done, the arrangement of machines in department has to be

finalized.

• Machine location problem – Assignment Model

• The assignment model is a special case of the transportation problem in

linear programming model.

• In general, there are n resources to assign to n users and the assignments

are in such a manner that all of a resource i is assigned to a user j or none of

the resource i is assigned to j.

• This condition results in an ‘n by n’ matrix representation, the solution of

which results in each resource being assigned to one and only one user in

such a manner that the total cost of assignment is minimized.

• Cost of handling is dependent upon:

– Handling method

– Equipment and labor utilization

• Assume locations as resources and machines as users, if the number of

machines equals the number of interchangeable locations.

 Assignment Model Problem - 1
• As a facility design engineer, you have been asked to assign the locations
for four new machines in a machine shop. Four possible new locations are
to be considered with the associated costs (Rs.) given in the following
matrix C. How would you assign the new machines to the new locations so
as to minimize the total cost ?
 Assignment Model Problem - 2
• Five possible new locations and associated handling costs (in thousands)
are given in the following matrix (C). Determine the assignment of new
machines to minimize the total cost ?