Lecture 5 - Location and Layout(s) PDF

Location strategies  Learning outcomes At the end of the session students should be able to: Understand the strategic importance of location Identify and explain 7 major factors that affect location decisions Apply the factor-rating method Complete a locational b...

Location strategies  Learning outcomes At the end of the session students should be able to: Understand the strategic importance of location Identify and explain 7 major factors that affect location decisions Apply the factor-rating method Complete a locational break-even analysis graphically and mathematically Apply centre-of-gravity method  Strategic importance of location One of the most important strategic decisions made by companies – where to locate their operations Increasingly global in nature Companies make location decisions infrequently Location options include: – Expanding existing facility instead of moving – Maintaining current sites while adding another facility elsewhere – Closing existing facility and moving to another location The objective of location strategy is to maximise the benefit of location to the firm  Location and cost Location is a significant cost and revenue driver – often has the power to make or break a company’s business strategy Location decisions to support low-cost strategy require careful consideration Determining optimal facility location is a good investment  Location and innovation Cost is not always the most important aspect of a strategic decision Four key attributes when location strategy is based on innovation: – Presence of high-quality and specialised inputs such as scientific and technical talent – An environment that encourages investment and local rivalry – Pressure and insight gained from a sophisticated local market – Local presence of related and supporting industries  Information about plant relevant to location decision Size of the plant – Required acreage, no of sq feet of space needed for building structure, constraints that might arise as a result of special needs Product lines to be produced Process technology to be used Labour force requirements – No of workers required and particular skills needed Transportation needs – Depending on nature of product produced and req for raw materials plant - may have to be near major highways or rail lines Utilities requirements – Special needs for power, water, sewage, fossil fuels or natural gas – Plants with unusual power needs should be located in areas where energy is less expensive or near sources of hydroelectric power  Information about plant relevant to location decision Environmental issues – Government regulations may lead to fewer allowable locations if plant produces significant waste products Interaction with other plants – If plant is satellite of existing facilities – likely that management would want to locate new plant near others International considerations – Whether to locate new plant domestically or overseas is a sensitive issue Tax treatment – Important variable in location decision – Favourable tax treatment given by some countries such as Ireland, encourage new industry  Factors that affect location decisions Sequence of location decisions often begins with choosing a country in which to operate One approach to selecting a country is to identify critical success factors (CSFs) needed to achieve competitive advantage Once firm decides which country is best for its location, it focuses on a region of the chosen country and a community Final step is choosing a specific site within a community  1. Country decision Country Decision Critical Success Factors 1. Political risks, government rules, attitudes, incentives 2. Cultural and economic issues 3. Location of markets 4. Labour talent, attitudes, productivity, costs 5. Availability of supplies, communications, energy 6. Exchange rates and currency risks  2. Regional decision Region/ Community Critical Success Factors Decision 1. Corporate desires 2. Attractiveness of region 3. Labor availability, costs, attitudes MN towards unions WI 4. Costs and availability of utilities MI 5. Environmental regulations IL IN OH 6. Government incentives and fiscal policies 7. Proximity to raw materials and customers 8. Land/construction costs  3. Site decision Site Decision Critical Success Factors 1. Site size and cost 2. Air, rail, highway, and waterway systems 3. Zoning restrictions 4. Proximity of services/ supplies needed 5. Environmental impact issues  Factors affecting location decisions Major factors affect the location decision – labour productivity, foreign exchange, culture, proximity to markets, suppliers and competitors Labour productivity – Management may be tempted to select a location because of an area’s low wage but wage rates are not the only cost – Lower productivity may increase total cost – So management should be interested in the combination of production and wage rate  Labour productivity example If Quality Coils pays $70 a day with 60 units produced per day in Connecticut, it will spend less on labour than at a Mexican plant that pays $25 per day with production of 20 units per day Labor cost per day = Cost per unit Productivity (units per day) Case1: Connecticut plant Case 2: Mexico plant $70 $25 = $1.17 per unit 60 units = $1.25 per unit 20 units Employees with poor training, poor education or poor work habits may not be a good buy even at low wages Also employees who cannot or will not always reach their places of work are not much good to organisation – even at low wages  Factors affecting location decisions Exchange rates and currency risks – Unfavourable exchange rates may negate any savings – Can have a significant impact on cost structure – Companies can also take advantage of favourable exchange rate by relocating or exporting to a foreign country Costs – Can divide location costs into tangible and intangible – Tangible - easily measured costs such as utilities, labour, materials, taxes, transportation of raw materials and finished goods and site construction cost – Intangible - less easy to quantify and include education, public transportation, community, quality-of-life, government – Location decisions based on costs alone can create difficult ethical situations  Factors affecting location decisions Political risk, values, and culture – Workers values may differ from country to country, region to region and small town to city Worker attitudes towards turnover, unions, absenteeism are all relevant factors Unionisation – a motivating factor for a firm considering expanding an existing facility, as opposed to one considering building a new facility, is the potential for eliminating union influence in the new facility – a fresh labour force may be more difficult to organise – One of the greatest challenges in global operations is dealing with another country’s culture – Globally cultures have different attitudes towards punctuality, legal, and ethical issues such as bribery  Factors affecting location decisions Proximity to markets – For some firms, extremely important to locate near customers – For manufacturing firms – useful to be close to customers when transporting finished goods is expensive or difficult (bulky, heavy or fragile) – JIT systems make suppliers want to locate near users Proximity to suppliers and resources – Firms locate near raw materials and suppliers - perishable goods, high transportation costs, bulky products  Factors affecting location decisions Proximity to competitors – Called clustering – Often occurs when a major resource is found in that region such as natural, information, venture capital, talent – Found in both manufacturing and service industries Quality of life in the region – Choosing a site that may be attractive to employees may help in recruiting key personnel – especially true in high- tech industries that must compete for workers with particular skills  Clustering of companies Industry Locations Reason for clustering Wine making Napa Valley (US) Natural resources of Bordeaux region land and climate (France) Software firms Silicon Valley, Talent resources of Boston, Bangalore bright graduates in (India) scientific/technical areas, venture capitalists nearby Race car Huntington/North Critical mass of talent builders Hampton region and information (England)  Clustering of companies Industry Locations Reason for clustering Theme parks Orlando, Florida A hot spot for (Disney World, entertainment, warm Universal weather, tourists, and Studios) inexpensive labour Electronics firms Northern Mexico NAFTA, duty free export to US Fast food chains Sites within 1 mile of Stimulate food sales, (Wendy’s, each other high traffic flows McDonald’s, Burger King, and Pizza Hut)  Methods of evaluating location alternatives Some methods are used for solving location problems – Factor-rating method – Locational break-even analysis – Centre-of-Gravity method  1. Factor-rating method Six steps in the method – Develop a list of relevant factors called critical success factors – Assign a weight to each factor – Develop a scale for each factor – Score each location for each factor – Multiply score by weights for each factor for each location – Recommend the location with the highest point score When decision is sensitive to minor changes, further analysis of the weighting and points assigned may be appropriate  Example: Factor-rating method Five Flags over Florida, a US chain of 10 family-oriented theme parks, has decided to expand overseas by opening its first park in Europe. It wishes to select between France and Denmark. Critical Scores Success (out of 100) Weighted Scores Factor Weight France Denmark France Denmark Labor availability and attitude.25 70 60 (.25)(70) = 17.5 (.25)(60) = 15.0 People-to- car ratio.05 50 60 (.05)(50) = 2.5 (.05)(60) = 3.0 Per capita income.10 85 80 (.10)(85) = 8.5 (.10)(80) = 8.0 Tax structure.39 75 70 (.39)(75) = 29.3 (.39)(70) = 27.3 Education and health.21 60 70 (.21)(60) = 12.6 (.21)(70) = 14.7 Totals 1.00 70.4 68.0  Factor-rating example Changing the points or weights for those factors which there is some doubt, we can analyse the sensitivity of the decision If weight for ‘tax structure’ drops to 0.2 and weight for education and health increases to 0.4, what is the new result? You should verify that Denmark will now be chosen Denmark = 68.0; France = 67.5 Note: Numbers used can be subjective and the model’s results are not exact even though this is a quantitative approach  Exercise: Factor-rating method A clothing chain is considering two different locations for a new retail outlet. The organization has identified the four factors listed in the following table as the basis for evaluation, and has assigned weights as shown on the right side of this table. The manager has rated each location on each factor, on a 100- point basis (higher scores are better), as shown in the right-hand table. a. Calculate the composite score for each alternative location. b. Which site should be chosen? c. Are you concerned about the sensitivity and subjectivity of this solution? Comment. Factor Factor Description Weight Barclay Chester Average community 75 70 1 income.40 Community growth 60 80 2 potential.25 45 90 Availability of public 80 60 3 transportation.15 4 Labor cost.20  2. Locational break-even analysis Method of cost-volume analysis used to make an economic comparison of location alternatives By identifying fixed and variable costs and graphing them for each location, can determine which one provides lowest cost Can be done mathematically or graphically Graphical approach has the advantage of providing a range of volume for which each location is preferable Three steps in the method – Determine fixed and variable costs for each location – Plot the cost for each location (costs on vertical axis and annual volume on horizontal axis) – Select location with lowest total cost for expected production volume  Example: Locational break-even analysis John Bonds, owner of Carolina Ignition Manufacturing, needs to expand his capacity. He is considering 3 locations (below) for a new plant. The company wishes to find the most economical location for an expected volume of 2,000 units per year. Fixed and variable costs for the sites are below. Selling price = $120 Expected volume = 2,000 units Fixed Variable Total City Cost Cost Cost Atlantic City $30,000 $75 $180,000 New York City $60,000 $45 $150,000 Chicago $110,000 $25 $160,000 Total Cost = Fixed Cost + (Variable Cost x Volume)  Example: Locational break-even analysis Solving mathematically Determine FC and VC For each location, plot the fixed costs (volume =0) and total cost (fixed + variable) Atlantic : TC = $30,000 + $75(2,000) = $180,000 NYC : TC = $60,000 + $45(2,000) = $150,000 Chicago : TC = $110,000 + $25(2,000) = $160,000 Select location with lowest cost NYC has lowest cost with expected volume of 2,000 units Total revenue – total cost = expected profit $120(2,000) – 150,000 = $90,000 per year  Example: Locational break-even analysis Solving graphically Will show the range of volume for which each location is preferable Calculate crossover points – i.e. the volume at which one option becomes more expensive than another Need to find V, so set cost of one = cost of the other and solve for V Crossover points for Atlantic and NYC: 30,000 + 75(V) = 60,000 + 45(V) 30(V) = 30,000 V=1,000 Crossover points for NYC and Chicago: 60,000 + 45(V) = 110,000 + 25(V) 20(V) = 50,000 V = 2,500  Example: Locational break-even analysis For V < 1,000 – Atlantic city preferred; V >2,500 – Chicago preferred; V between 1,000 and 2,500 – NYC preferred – hence for given volume of 2,000 NYC chosen – $180,000 – – $160,000 – $150,000 – – c urve st $130,000 – c a go co i – Ch Annual cost $110,000 – urve – c o st – C c Y $80,000 – N – n tic ve $60,000 – tla ur – A st c – co Atlantic Chicago $30,000 – NYC lowest cost lowest lowest – cost cost $10,000 – | | | | | | | – 0 500 1,000 1,500 2,000 2,500 3,000 Volume  Exercise: Locational break-even A manufacturing company is considering three expansion options. The first is to do nothing (Option A). The next is to leave the current plant open and also open a new larger plant (Option B). Finally they could close the existing plant and open the new, larger one (Option C). Given the VC and FC from the table below calculate the range for which each option minimizes cost. Option FC ($) VC ($/unit) A 50000 2 B 100000 1 C 60000 1.4  3. Centre-of-Gravity Method A mathematical technique used for finding the location of a distribution center that minimises distribution costs Takes into account – location of markets; volume of goods shipped to those markets and shipping costs in finding best location for a distribution centre Assumes cost is directly proportional to both distance and volume shipped First step is to place locations on a coordinate grid – Grid origin and scale are arbitrary; relative distances are correctly represented – Can be done easily by placing a grid over an ordinary map Calculate X and Y coordinates for ‘center of gravity’ – Assumes cost is directly proportional to distance and volume shipped  Centre-of-Gravity Method Coordinates for the location of the new facility are computed using the following formulas: ∑d i ixQi ∑d iyQi i x - coordinate = y - coordinate = ∑Q i i ∑Q i i where dix = x-coordinate of location i diy = y-coordinate of location i Qi = Quantity of goods moved to or from location i Objective is to determine a central location for a new facility  Example: Centre-of-gravity Quinn's Discount Dept Stores, a chain of 4 Target-type outlets, has store locations in Chicago, Pittsburgh, New York and Atlanta. They are currently being supplied out of an old and inadequate warehouse in Pittsburgh, the site of the chain’s first store. The firm wants to find some ‘central’ location in which to build a new warehouse. Quinn’s will apply the centre-of-gravity method. It gathers data on demand rates at each outlet (see below). Current store locations are shown in figure. Number of Containers Store Location Shipped per Month Chicago (30, 120) 2,000 Pittsburgh (90, 110) 1,000 New York (130, 130) 1,000 Atlanta (60, 40) 2,000  Center-of-Gravity Method North-South New York (130, 130) Chicago (30, 120) 120 – Pittsburgh (90, 110) 90 – 60 – 30 – Atlanta (60, 40) | | | | | | – East-West 30 60 90 120 150 Arbitrary origin  Center-of-Gravity Method Use equations to find x and y coordinates: (30)(2000) + (90)(1000) + (130)(1000) + (60)(2000) x-coordinate = 2000 + 1000 + 1000 + 2000 = 66.7 (120)(2000) + (110)(1000) + (130)(1000) + (40)(2000) y-coordinate = 2000 + 1000 + 1000 + 2000 = 93.3  Center-of-Gravity Method Overlay a US map on this, the location is near central Ohio North-South New York (130, 130) Chicago (30, 120) 120 – Pittsburgh (90, 110) 90 – + Center of gravity (66.7, 93.3) 60 – 30 – Atlanta (60, 40) | | | | | | – East-West 30 60 90 120 150 Arbitrary origin  Exercise: COG method A school district is considering where in town to house its central office (The office must also be located at an existing school for cost reasons). If there are five schools in the district, with locations and size given in the following table, use the COG method to determine at which school the central office should be placed to minimize the average distance between the office and students. Size Location X,Y (Enrollment) A 5,5 2500 B 0,5 1000 C 0,0 10000 D 5,0 4500 E 2,1 7500  Service location strategies Focus in manufacturing location analysis is on minimising cost, focus in service is on maximising revenue – For service, location has more impact on revenue than cost – Location focus for service is on determining volume of business and revenue 8 major components of volume and revenue for service firms: 1. Purchasing power of customer-drawing area 2. Service and image compatibility with demographics of the customer-drawing area 3. Competition in the area 4. Quality of the competition 5. Uniqueness of the firm’s and competitors’ locations 6. Physical qualities of facilities and neighboring businesses 7. Operating policies of the firm 8. Quality of management  Location strategies – services v. goods Service/Retail/Professional Location Goods-Producing Location Revenue Focus Cost Focus Volume/revenue Tangible costs Drawing area; purchasing power Transportation cost of raw Competition; advertising/pricing material Shipment cost of finished goods Physical quality Energy and utility cost; labor; Parking/access; security/lighting; raw material; taxes, and so on appearance/image Intangible and future costs Cost determinants Attitude toward union Rent Quality of life Management caliber Education expenditures by state Operations policies (hours, wage Quality of state and local rates) government  Location strategies – services v. goods Service/Retail/Professional Location Goods-Producing Location Techniques Techniques Regression models to determine Transportation method importance of various factors Factor-rating method Factor-rating method Locational break-even analysis Traffic counts Crossover charts Demographic analysis of drawing area Purchasing power analysis of area Center-of-gravity method Geographic information systems Layout strategies  Learning outcomes At the end of the session students should be able to: Understand the strategic importance of layout decisions Understand the different types of layout Explain how to achieve a good process-oriented facility layout Define product-oriented layout Explain how to balance production flow in a repetitive or product-oriented facility  Facility and plant layout Facility layout - refers to the size and shape of a facility as well as the relative locations and shapes of the functional areas (e.g., departments), equipment, workstations, storage spaces, aisles, and common areas (e.g., restrooms, cafeteria) Plant layout – used synonymously with facility layout – focus is on production plants Way in which machinery, equipment and materials are arranged determines the layout - often determined at beginning of operations Facility layout planning and design - concerned with problems of: – Laying out a new facility – Making changes in an existing facility  Strategic importance of layout decisions One of the decisions that determine the long-run efficiency of operations Layout has numerous strategic implications Effective layout can help org. achieve a strategy that supports differentiation, low cost or response The objective of layout strategy is to develop an efficient and effective layout that will meet a firm’s competitive requirements  Strategic importance of layout decisions They require substantial investments of both money and effort They involve long-term commitments, which make mistakes difficult to overcome They have a significant impact on the cost and efficiency of short-term operations  Why the need for layout decision? Inefficient operations (e.g., high cost, bottlenecks) Accidents or safety hazards Changes in the design of products or services The introduction of new products or services Changes in the volume of output or mix of outputs Changes in methods or equipment Changes in environmental or other legal requirements Moral problems (e.g., lack of face-to-face contact) A new process or method becomes available A new facility is to be built, or an outdated one is to be remodeled The volume of business changes Existing products or services may be redesigned, changing operations at a facility  Layout design considerations Layout design must consider how to achieve: Logical work flow and minimum travel distances Higher (efficient) utilisation of space, equipment and people Improved flow of information, materials and people Improved employee morale and safer working conditions Flexibility to meet changing future requirements Advancing the operational mission of the facility Improved customer/client interaction  Determinants of good layout Good layout should consider the following: Material handling equipment – Must decide about equipment to be used, including conveyors, cranes, automated storage and retrieval systems etc. Capacity and space requirements Environment and aesthetics – Layout concerns often require decisions about windows, height of partitions to facilitate air flow, reduce noise, provide privacy Flows of information – Communication must be facilitated by layout – requires decisions about proximity , open spaces versus private offices etc. Cost of moving between various work areas – May be unique considerations related to moving materials or to the importance of having certain areas next to each other Types of production plant layouts 3 basic types of plant layouts: Process layout Product layout Fixed-position layout  Important factors in plant layout Two important factors by which to distinguish types of production are: – Production quantity (Q) – Production variety (P) Q = production quantity - number of units of a given part or product that the facility produces – Low production - 1 to 100 units – Medium production - 100 to 10,000 units – High production - 10,000 to millions of units P = product variety - number of different product designs or types made in the plant – Different products – different shapes, sizes, styles, perform different functions different markets, different components Boundaries not fixed and may shift depending on industry and product type P - Q relationship in plant layout Inverse correlation between Q & P – low product quantity, high product variety and vice versa Relationship shown in figure Certain layouts suited to certain combination of Q & P Will discuss layouts and how these correlate with Q and P  1. Process layout Layout in which equipment is arranged according to function Also termed functional layout Capable of handling low volume, high variety production in which like machines are grouped together Traditional way to support differentiation strategy – most efficient when making products with different requirements (or when handling customers) Different parts or products are processed through different operations in batches – Each batch follows its own routing No common work flow followed by all work units Product or small order produced by moving it from one dept to another in the sequence required for that product Material handling activity is significant  Process-oriented layout Milling Lathe Drilling  Process-oriented layout Each product or part undergoes a different sequence of operations Grinding Forging Lathes Painting Welding Drills Milling Office machines Foundry  Process layout Advantages Flexibility in equipment and labour assignment Good for handling the manufacture of parts in small batches, or job lots, and for the production of a wide variety of parts in different sizes and forms Disadvantages Low efficiency - reduced production rates because of need to frequently change over equipment setups (general-purpose use of equipment) Orders take more time to move through system because of difficult scheduling, changing setups for a wide variety of orders and considerable material handling WIP inventories are higher because of imbalances in the production process High labour-skill needs (because of the use of general purpose equipment) – increases required level of training and experience and high WIP increases capital investment 2. Repetitive and Product-oriented layout Product-oriented layouts – organised around products or families of similar high-volume, low variety products Work stations – designed to specialise in a task – reduce cycle time High efficiency and low product cost relative to other layouts Significant investment Layout designed for one product not readily adapted to different product Obsolescence – equipment and arrangement when product demand runs out  Repetitive and Product-oriented layout Assumptions or preconditions: – Volume is adequate for high equipment utilization – Product demand is stable enough to justify high investment in specialized equipment – The product is standardized or approaching a phase of its life cycle that justifies investment in specialized equipment – Supplies of raw material and components are adequate and of uniform quality to ensure that they will work with the specialized equipment  Product-oriented layouts Fabrication line – Builds components (tyres or metal parts for a refrigerator) on a series of machines – Machine-paced – Require mechanical or engineering changes to balance Assembly line – Puts fabricated parts together at a series of workstations – Paced by work tasks – Balanced by moving tasks Both types of lines are repetitive processes must be ‘balanced’ so that the time to perform the work at each station is the same to prevent bottlenecks developing – Time spent to perform work on one machine must equal or ‘balance’ time spent to perform work on next machine in fabrication line – Goal is to create smooth, continuous flow along assembly line with minimum idle time at each workstation  Product layout for assembled product Typical assembly line – car assembly, soft drink bottling  Advantages and disadvantages Advantages – Low variable cost per unit – associated with high-volume (high utilisation of equipment), standard products – Low material handling costs (limited use of forklifts) – Reduced work-in-process inventories – Easier training and supervision than process layout – Rapid throughput (the use of special purpose equipment can make the overall process more efficient) Disadvantages – High volume is required – to justify large investment – Work stoppage at any point ties up the whole operation – Lack of flexibility in handling a variety of products or production rates  Assembly-line balancing Objective is to minimise the imbalance between machines or personnel while meeting required output rate – Technique to group tasks among workstations so that the number of workstations required on a production line is minimised – Involves finding a feasible line balance i.e. an assignment of each task to a station such that the precedence constraints and other restrictions are fulfilled Line balancing – assignment of work to stations in a line so as to achieve desired output rate with smallest number of workstations – Aims to achieve the same or close to same working times at each station – Line balancing –performed when line is initially set up or whenever there is a change in product design and for new product introduction  Assembly-line balancing Begins by separating work into work elements (smallest units of work that can be performed independently) Then get time standards for each element – Set in advance by IE or time and motion specialist Identify precedence relationships (sequence in which various tasks must be performed) Steps after precedence diagram: 1. Determine cycle time 2. Calculate theoretical minimum number of workstations 3. Balance the line by assigning specific tasks to workstations  Example: Assembly-line balancing Boeing wants to develop a precedence diagram for an electrostatic wing component that requires a total assembly time of 66 mins. Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — This means that B 11 A tasks B and E C 5 B cannot be done until D 4 B task A has been E 12 A completed F 3 C, D G 7 F H 11 E I 3 G, H Total time 66  Example: Assembly-line balancing Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E 5 I 3 G, H C Total time 66 10 11 3 7 A B F G 4 Helps structure an assembly line and 3 workstations, and makes it easier to D 12 11 I visualise the sequence of tasks E H  Example: Assembly-line balancing After precedence diagram, process involves 3 steps: Step 1 – take units required (demand or production rate) per day and divide it into productive time available per day (in mins or secs) – Gives cycle time – maximum time allowed at each workstation if production rate is to be achieved – It is the actual time to accomplish a task or process step Production time available Cycle time = per day Units required per day  Example: Assembly-line balancing Step 2 – calculate the theoretical minimum (TM) number of workstations – Total task duration time (time it takes to make product) divided by cycle time – Round up fractions to next higher whole number Theoretical n minimum ∑ Time for task i number of i=1 workstations = Cycle time n = number of assembly tasks  Example: Assembly-line balancing Step 3 – balance line by assigning specific tasks to each workstation – Formal procedure for doing this: – Identify master list of tasks – Eliminate those that have been assigned – Eliminate those whose precedence relationship has not been satisfied – Eliminate those for which inadequate time is available at workstation – Use one of the line balancing ‘heuristics’ or rule of thumb method for problem solving - longest task time, most following tasks, ranked positional weight, shortest task time, least following tasks  Line-balancing heuristics Longest task (operation) time – from available tasks, choose task with the largest (longest) time Most following tasks – from available tasks , choose task with largest number of following tasks Ranked positional weight – from available task choose task for which sum of the times for each following task is longest Shortest task (operation) time - from available tasks, choose task with shortest task time Least number of following tasks – from available tasks, choose task with least number of subsequent tasks Test several of these ‘heuristics’ to see which generates the ‘best’ solution – the smallest number of workstations and highest efficiency Remember that these heuristics do not guarantee optimal solution  Example (contd.): Line balancing On the basis of the precedence diagram and activity times given, Boeing determines that there are 480 productive mins of work available per day. Furthermore, the production schedule requires that 40 units of the wing components be completed as output from the assembly line each day. It now wants to group the tasks into workstations. Computing cycle time and no of workstations needed Production time Minimum ∑n Time for task i available per day number of = i = 1 Cycle time = Units required per workstation Cycle time day s or theoretical = 66 / 12 = 480 / 40 minimum = 5.5 or 6 stations (TM) for the = 12 minutes per unit no of stations  Example: Line balancing Assign tasks to workstations using line balancing heuristics – in this case most following tasks Activities with most following tasks moved into workstations to use as much available cycle time of 12 mins as possible First workstation consumes 10mins and has idle time of 2 mins Station 2 5 C 10 11 3 7 A B F G 4 3 D Station 3 Station 3 I 12 11 Station 1 Station 6 6 Station E H Station 4 Station 5  Example: Line balancing Reasonably well-balanced line 2nd workstation uses 11mins; 3rd – full 12 mins; 4th – groups 3 small tasks and balances perfectly at 12mins; 5th – 1 min of idle time; 6th – tasks G and I – 2 mins of idle time per cycle Total idle time = 6 mins per cycle = nc - ∑t (n= no of workstations; c = cycle time and ∑t = total time for assembly) = 6*12 – 66= 6 Station 2 5 C 10 11 3 7 A B F G 4 3 D Station 3 Station 3 I 12 11 Station 6 6 Station Station 1 E H Station 4 Station 5  Determining line efficiency Efficiency = ∑ Task times (Actual number of workstations) x (Largest cycle time) = 66 minutes / (6 stations) x (12 minutes) = 91.7% Opening a 7th workstation – efficiency = 66/7*12 = 78.6% – Reduction in efficiency Op managers can compare different levels of efficiency for various numbers of workstations Determine the sensitivity of the line to changes in production rate and workstation assignments The Assembly Line Balancing Concept It is impossible to assign tasks to all work stations so as to get exact work time each station per cycle Therefore, a perfectly balanced assembly line does not exist !  Exercise 1 Rita Gibson Appliances wants to establish an assembly line to manufacture its new product, the Mini-me Microwave Oven. The goal is to produce five ovens per hour. The tasks, task times and immediate predecessors for producing 1 oven are as follows: What is the theoretical minimum for the smallest number of workstations that Gibson can achieve in this assembly line? Graph the assembly line and assign workers to workstations. Can you assign them with the theoretical minimum? What is the efficiency of your assignment? Performance Time Task Must Follow Task (in minutes) This Task A 10 — B 12 A C 8 A, B D 6 B, C E 6 C F 6 D,E  Exercise 2 Develop a solution for the following line balancing problem, allowing a cycle time of 5 minutes. a. Draw the precedence diagram for the set of tasks. b. Calculate the theoretical minimum number of workstations. c. Balance this line using the longest task time heuristic. d. What tasks are assigned to which stations? e. Does the solution have the minimum number of stations? Explain. f. How much idle time is there, summed over all workstations? g. What is the efficiency of this line? Task Time Task Work Task (seconds) Predecessor(s) A 70 - B 60 A C 120 B D 60 - E 240 C, D F 100 A G 190 E, F  Exercise 3 Green Grass, Inc., a manufacture of lawn mower, is designing an assembly line to produce a new fertilizer spreader, the Big Broadcaster. The information in Table 1 gives the production process. Table 1 Work Element Description Time (Sec) Immediate Predecessor (s) A Bolt leg frame to hopper 40 None B Insert impeller shaft 30 A C Attach axle 50 A D Attach agitator 40 B E Attach drive wheel 6 B F Attach free Wheel 25 C G Mount lower post 15 C H Attach controls 20 D, E I Mount nameplate 18 F, G  Example 3 (contd.) Green grass’s plant manager has just received marketing’s latest forecasts of Big Broadcaster sales for next year. She wants its production line to be designed to make 2,400 spreaders per week for at least the next 3 months. The plant will operate 40 hours per week. 1. Construct a precedence diagram for the Big Broadcaster 2. What should be the line’s cycle time? 3. What is smallest number of workstations for this cycle time? 4. Suppose that she finds a solution that requires 5 work stations…what would be the line’s efficiency? 5. Find a line balancing solution using the most following tasks rule 6. Calculate the efficiency of the line [from (4)]  3. Fixed-position layout Layout in which product remains in one location during fabrication, and workers and equipment are brought to the product Reason for keeping product in one location: – Product is big and heavy – Difficult to transport inside facility – Easier to move equipment to product than product to equipment – Examples: ships, buildings and highways Suited to low Q and high product P Typical work – large proportion of assembly operations – Much manual labor due to high assembly content and low product quantities – Equipment is portable or mobile Factors that complicate this type of layout: – Limited space at virtually all sites – Different materials required at different stages of the project – Volume of materials needed is dynamic (sometimes you need a lot, sometimes a little) Fixed-position layout  Alternative strategy Because problems with fixed-position layouts are so difficult to solve on-site, an alternative strategy is to complete as much of the project as possible off-site in a product-oriented facility – Used in ship building – many modules are assembled on an assembly-line (product-oriented facility) – Also home builders are moving from fixed-position to more product oriented – houses are built on site but majority of the components such as doors, fixtures, stairs etc. are built as modules offsite This can significantly improve efficiency but is only possible when multiple similar units need to be created