Capacity and Facilities

MGS4700 Operations Management

Lecture 6

 

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2

Lecture Outline

Capacity PlanningFacility Layout

Basic LayoutsDesigning Process LayoutsDesigning Service LayoutsDesigning Product LayoutsHybrid Layouts

Facility LocationLocation Analysis Techniques

 

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Capacity

Maximum capability to produceCapacity planning

establishes overall level of productive resources for a firm

3 basic strategies for timing of capacity expansion in relation to steady growth in demand (lead, lag, and average)

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Capacity Expansion Strategies

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Capacity (cont.)

Capacity increase depends onvolume and certainty of anticipated demandstrategic objectivescosts of expansion and operation

Best operating level% of capacity utilization that minimizes unit costs

Capacity cushion% of capacity held in reserve for unexpected occurrences

5  

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Economies of Scale

it costs less per unit to produce high levels of output

fixed costs can be spread over a larger number of unitsproduction or operating costs do not increase linearly with output levelsquantity discounts are available for material purchasesoperating efficiency increases as workers gain experience

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7

Best Operating Level for a Hotel

 

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8

Facility Layout

Facility layout refers to the arrangement of machines, departments, workstations, storage areas, and common areas within an existing or proposed facility.

 

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9

Benefits of An Effective Layout

Overall, improved effectiveness and efficiency of the operations system

Higher utilization of space, equipment, and laborImproved flow of information, materials, and workLower material handling costs and/or redundant movementReduced bottlenecks, cycle time, and service timeHigher product and service qualityMore convenience to the customerImproved employee morale and working conditionsEtc.

 

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10

BASIC LAYOUTS

Process layoutsgroup similar activities together into departments or work centers according to process or function they perform

Product layoutsarrange activities in line according to sequence of operations for a particular product or service

Fixed-position layoutsare used for projects in which product cannot be moved

 

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11

Process Layout in Services

Women’slingerie

Women’sdresses

Women’ssportswear

Shoes

Cosmeticsand Jewelry

Entry anddisplay area

Housewares

Children’sdepartment

Men’sdepartment

 

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12

Process Layout in Manufacturing

L

L

L

L

L

L

L

L

L

L M

M

M

M

D

D

D

D

D

D

D

D

G

G

G

G

G

G

A A AReceiving andShipping Assembly

Painting Department

Lathe DepartmentMilling

Department Drilling Department

GrindingDepartment

P

P

 

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13

A Product Layout

In

Out

 

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14

Product Layout Examples

Assembly Lines

Generator assembly line Oil refinery

 

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Product Layout in Services

1) Review application60 seconds

2) Eye Test120

seconds

3) Check file for

violations60 seconds

4) Payment

30 seconds

5) Photo

30 seconds

6) Issue the License

50 seconds

Out of State Driver License Transfer Example

 

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16

Comparison of Productand Process Layouts

Description

Type of process

Product

DemandVolumeEquipment

Sequential arrangement of activitiesContinuous, mass production, mainly assembly

Standardized, made to stock StableHighSpecial purpose

Functional grouping of activities

Intermittent, job shop, batch production, mainly fabricationVaried, made to order FluctuatingLowGeneral purpose

Product Process

 

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17

Comparison of Productand Process Layouts

WorkersInventory

Storage spaceMaterial handlingAislesSchedulingLayout decisionGoal

Advantage

Limited skillsLow in-process, high finished goodsSmallFixed path (conveyor)NarrowPart of balancingLine balancingEqualize work at each stationEfficiency

Varied skillsHigh in-process, low finished goodsLargeVariable path (forklift)WideDynamicMachine locationMinimize material handling costFlexibility

Product Process

 

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Fixed-Position Layouts

Typical of projects in which product produced is too fragile, bulky, or heavy to moveEquipment, workers, materials, other resources brought to the siteLow equipment utilizationHighly skilled laborOften low fixed costTypically high variable costs

 

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Designing Process Layouts

Goal: minimize material handling costsBlock Diagramming

minimize nonadjacent loads used when quantitative data is available

Relationship Diagrammingbased on location preference between areasused when quantitative data is not available

 

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Designing Product Layouts

ObjectiveBalance the assembly line

Line Balancing Problemhow to organize work elements (smallest possible jobs or tasks) such that each workstation has the same work load/time for processing a unit

 

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A Balanced Line

Every operation step in the process has the same cycle time

1) Review application

60 seconds

2) Eye Test

60 seconds

3) Check file for violations

60 seconds

4) Payment

60 seconds

5) Photo

60 seconds

6) Issue the License

60 seconds

In summary:If each workstation on the assembly line takes the same amount of time to perform the work elements that have been assigned, then products will move smoothly from workstation to workstation with no need for a product to wait or a worker to be idle.

 

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22

An Unbalanced Line

What’s the problem here?

Station 1 Station 2 Station 3

5 min/unit 8 min/unit 3 min/unit

1 2 3 4 5 6

Work element

 

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Line Balancing

Line balancing tries to equalize the amount of work at each workstationTwo constraints in line balancing:

Precedence requirementsCycle time restrictions

 

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Precedence Requirement

Precedence requirements are physical restrictions on the order in which operations are performed.

Work Element Precedence Time (Seconds)A Review application --- 60B Eye test A 120C Check file for violations B 60D Payment C 30E Photo D 30F Issue the license E 50

 

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Cycle Time Restrictions

Cycle timeMaximum amount of time a product is allowed to spend at each station

Desired cycle time

Production time availableDesired units of output

Cd =

Desired cycle time depends on demand requirement

In order to achieve the production requirement (quota),Actual cycle time ≤ Desired cycle time

 

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Cycle Time Example

Cd = production time available

desired units of output

Cd = (8 hours x 60 minutes / hour)

(120 units)

Cd = = 4 minutes480120

 

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Cycle Time vs. Flow Time

Cycle time = max time spent at any station Flow time = time to complete all stations

1 2 3

4 minutes 4 minutes 4 minutes

Flow time = 4 + 4 + 4 = 12 minutesCycle time = max (4, 4, 4) = 4 minutes

 

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Line Balancing

Performance Measures

∑j

i = 1ti

nCaE =

∑j

i = 1ti

CdN =

EfficiencyMinimum number of workstations

whereti = completion time for element ij = number of work elements

n = actual number of workstationsCa = actual cycle timeCd = desired cycle time

 

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Line Balancing Procedure

1. Draw and label a precedence diagram2. Calculate desired cycle time required for the line3. Calculate theoretical minimum number of

workstations4. Group elements into workstations, recognizing

cycle time and precedence constraints5. Calculate efficiency of the line6. Determine if the theoretical minimum number of

workstations or an acceptable efficiency level has been reached. If not, go back to step 4.

 

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Line Balancing

Example (Problem 7-18)

The Speedy Pizza Palace is revamping its order-processing and pizza-making procedures. The demand for pizzas is 120 per night (5:00 p.m. to 1:00 a.m.). In order to deliver fresh pizza fast, six elements must be completed.

Work Element Precedence Time (Minutes)A Receive order --- 2B Shape dough A 1C Prepare toppings A 2D Assemble pizza B,C 3E Bake pizza D 3F Deliver pizza E 3

 

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Step 1: Draw and label a precedence diagram

A

B

C

D E F

2

1

2

3 3 3

Work Element Precedence TimeA Receive order --- 2B Shape dough A 1C Prepare toppings A 2D Assemble pizza B,C 3E Bake pizza D 3F Deliver pizza E 3

 

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Step 2: Calculate the desired cycle time required for the line

Production time availableDesired units of output

Cd =

Desired cycle time

Desired units of output =

Production time available =

120 per night

8 hours X 60= 480 minutes

Cd = 480/120= 4 minutes

 

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Step 3: Calculate the theoretical minimum number of workstations

d

j

ii

C

tN

∑== 1

The theoretic minimum number of workstations

ti = completion time for element ij = number of work elements

Cd = desired cycle time

45.34

144

3332121 →==+++++

==∑=

d

j

ii

C

tN

 

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Step 4: Group elements into workstations

Recognize there are cycle time and precedence constraints.

A

B

C

D E F

2

1

2

3 3 3

Actual cycle time = Actual number of workstations =

4 minutes4

 

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Step 5: Calculate the efficiency of the line

a

j

ii

Cn

tE

∑== 1Efficiency of the line:

ti = completion time for element ij = number of work elementsn = actual number of workstations

Ca = actual cycle time

%5.871614

443332121 ==

×+++++

==∑=

a

j

ii

Cn

tE

 

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Step 6: Check if performance measure(s) are satisfactory or not

Actual number of workstations = 4

Efficiency of the line = 87.5%

Theoretic number of workstations = 4

 

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Which Performance Measure to Use?

Number of Workstations or Efficiency?

Ideally we would like to have the minimum number of workstations and also the highest efficiency.

If there is inconsistency between these two measures, generally go with the minimum number of workstations.

 

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Number of Workstations or Efficiency?

Example

A

B

C

D E F

2

1

2

3 3 3

Actual cycle time = Actual number of workstations =

3 minutes5

%3.931514

353332121 ==

∗+++++

==∑=

a

j

ii

Cn

tEEfficiency:

 

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39

In-Class Exercise

Problem 7-17 (p. 283)

The TLB Yogurt Company must be able to make 600 party cakes in a 40 hour week. Use the following information to draw and label a precedence diagram, compute cycle time, compute the theoretical minimum number of workstations, balance the assembly line, and calculate its efficiency.Task Precedence Time (mins)A -- 1B A 2C B 2D A, E 4E -- 3F C, D 4

 

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Hybrid Layouts

Cellular layoutsgroup dissimilar machines into work centers (called cells) that process families of parts with similar shapes or processing requirements

Flexible manufacturing systemautomated machining and material handling systems which can produce an enormous variety of items

Mixed-model assembly lineprocesses more than one product model in one line

 

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Cellular Layout

Combines the flexibility of a process layout and the efficiency of a product layout.Within one cell, layout of machines resembles a small assembly line. The layout between cells is a process layout.Cells are arranged in relation to each other so as to minimize material movement.

 

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Cellular Layouts

1. Identify families of parts with similar flow paths2.Group machines into cells based on part

families3.Arrange cells so material movement is

minimized4.Locate large shared machines at point of use

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Parts Families

A family of similar parts

A family of related grocery items

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Original Process Layout

CA B Raw materials

Assembly

1

2

3

4

5

6 7

8

9

10

11

12

 

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Revised Cellular Layout

3

6

9

Assembly

12

4

8 10

5

7

11

12

A B CRaw materials

Cell 1 Cell 2 Cell 3

 

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Key:

S = SawL = LatheHM = Horizontal milling machineVM = Vertical milling machineG = Grinder

Paths of three workers moving within cell

Material movement

In OutWorker 1

Worker 2

Worker 3

Direction of part movement within cell

S

L

HM

VM

G

VM

L

Final inspection

Finished part

A Manufacturing Cell with Worker PathsSource: J.T. Black, “Cellular Manufacturing Systems Reduce Setup Time, Make Small Lot Production Economical.” Industrial Engineering (November 1983).

 

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Advantages and Disadvantages of Cellular Layouts

AdvantagesReduced material handling and transit timeReduced setup timeReduced work-in- process inventoryBetter use of human resourcesEasier to controlEasier to automate

DisadvantagesInadequate part familiesPoorly balanced cellsExpanded training and scheduling of workersIncreased capital investment

 

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Flexible Manufacturing Systems (FMS)

CNC (computer numerical controlled) are machines that are controlled by computer software.FMS: CNC machines + automated material handling system (e.g., conveyors, AGV, robots)FMS can produce an enormous variety of items

Parts

Finishedgoods

Computercontrolroom Terminal

CNC

CNC

Pallet

Automatic tool changer

 

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Mixed Model Assembly Lines

Produce multiple models in any order on one assembly lineIssues in mixed model lines

Line balancingU-shaped lineFlexible workforceModel sequencing

 

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Balancing U-Shaped Lines

A B C

D E

Precedence diagram:

Cycle time = 12 min

A,B C,D E

(a) Balanced for a straight line

9 min 12 min 3 min

Efficiency = = = .6666 = 66.7 %2436

243(12)

12 min 12 min

C,D

A,B

E

(b) Balanced for a U-shaped line

Efficiency = = = 100 %2424

242(12)

50  

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Facility Location: Factors affecting locationHeavy Manufacturing

Land and Construction costsRaw material & finished goods shipment modesProximity to raw materials, utilities, and labor

Light IndustryTransportation costs – accessible geographic regionProximity to marketsLand costs

Retail & ServiceProximity to customers -- Location is everything

 

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Location Analysis Techniques

Location factor rating

Center-of-gravity

Load Distance

 

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Locate facility at center of geographic areaIt considers the existing facilities, the distance between them, and the weights (or volumes) of goods to be shippedThis methodology involves formulas used to compute the coordinates of the two-dimensional point on a grid-map

Center-of-Gravity Technique

 

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Grid-Map Coordinates

where,x, y = coordinates of new facility

at center of gravityxi, yi = coordinates of existing

facility iWi = annual weight shipped from

facility i

∑n

Wii = 1

∑ xiWii = 1

n

x =

∑n

Wii = 1

∑ yiWii = 1

n

y =

x1 x2 x3 x

y2

y

y1

y3

1 (x1, y1), W1

2 (x2, y2), W2

3 (x3, y3), W3

 

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Center-of-Gravity Technique:

ExampleI-77 I-85 Airport

x 14 20 30y 30 8 14W 17,000 12,000 9,000

y35

25

30

20

15

10

5

0 x3525 302015105

I-85

I-77

Airport

(17k)

(12k)

(9k)

Miles

Mile

s

 

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Center-of-Gravity Technique:

Example

x = = = 19.68n∑ Wi

i = 1

∑ xiWii = 1

n

∑n

Wii = 1

∑ yiWii = 1

n

y = = = 19.26(30)(17000) + (8)(12000) + (14)(9000)

17000 + 12000 + 9000

(14)(17000) + (20)(12000) + (30)(9000)

17000 + 12000 + 9000

 

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Center-of-Gravity Technique:

ExampleI-77 I-85 Airport

x 14 20 30y 30 8 14W 17,000 12,000 9,000

y35

25

30

20

15

10

5

0 x3525 302015105

I-85

I-77

Airport

(17k)

(12k)

(9k)

Miles

Mile

s

Center of gravity (19.68, 19.26)

 

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