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Facility Planning for a Gas Manufacturing PlantCHUI WING CHEONGHong Kong Oxygen

CHU LAP KEUNGDept. of Industrial and Manufacturing Systems EngineeringHong Kong University

Abstract

IntroductionFacility planning isa branch of industrial engineering that

cletermines the best plant location and designs the facilities forthe production of products and/or services. The choice of theplant location depends on a number of factors such as the rapidgrowth of the company. the availability of cheap land andlabour. placement with respect to customers and suppliers. andthe legal manoeuvrability that is available in that place (especiallyin the. developing countries). On the othrr hand, the facilityaspects includes designing the building (the building itself. andother utilities like gas. water. power. heat and sewage), thelayout of the plant and the material hand ling system whichprovideshe links between various activities in the olant.

Facility planning is typically multi-faceted, eclectic andcomplex. It draws upon. the expertise and experience fromvarious departments within the organisation. There are twomajor problems associated with facility planning. The firstconcerns the project management aspect: coordinating such anactivity and motivating the people w ith various backgroundsMill not be entirely S traightforward. Another is that facilityplanning only occurs infrequently. People will generally belacking in experience in tackling the problems in finding thenew site. designing the plant, move-in and fine tuning. Also,facility planning is domain Specific. Some mathematical modelshave been proposed in tackling the plant location and layoutproblems [FMA 92]. Such an operations research approach fallsshort of providing a complete Solution, which requires acombination of quantitative. qualitative and managementtechniques.

On the more Specific issue of designing the plant layout andmaterial handling system, more concrete methodologies havebeen established. Generally, it depends on experience encodedas checklists and cook-book procedures. In any case, the facilitydesigner must develop a thorough understanding in the products,the processes, the required production volume and seasonalfluctuations, and the relationships between the various activitiesin the factory,In the authors opinion, benchmarking will be appropriateand effective in tackling the facility planning problems. Thatmeans, by having a number of successful cases, useful

comparisons can be made between these cases and the onenquestion, baed on a number of viewpoints and criteria.Unfortunately. such a COrpus of knowledge established by thelocal research .and industrial communities is not sufficient.

It is not the aim of this paper to establish a benchmark assuch: this is a major undertaking itself. This paper is about thefacility planning of a gases production plant in Hong Kong,highlighting the typical issues in plant relocation. and somegeneral approaches that can be applied (the systematic plantlayout methodology and computer-aided layout planning). Thiscase is interesting because the company in question is HongKong Oxygen ( HKO ), a large company by Hong Kong's standard.The steps taken in its approach are therefore carefully plannedand worked out. Another reason for the cornpany to he meticulousis because of the need to deal with its products which are verydangerous by. nature such a case study, in facility planning willbe useful in due course to fur-ther the knowledge in this area writha view on establishing a benchmark.Reasons of Relocation

HKO has been operating in its exihting site in Tseung KwanO since early. 1960's The area is about 10.000 square metres. Bythat time. Tseung Kwan o WaS a very ru ral area and transportationwas via sea route only. Initially, there were only two productionplants: the Hydrogen gas and Dissolved acetylene gas plants.More plants were later built and it now has Nitrous oxide plant,Carbon dioxide plant. Air separation unit, medical and industrialgas filling facilities

Under the town plannin, g scheme adcanced by the HongKong Government. Tseung Kwam O is going to be developedinto a residential area. Land reclamation has started in late 1980'sand those affected factories. mainly ship building and shiprepairing. har.e then closed. In early 1991, the South East NewTerritories Development Office of the government approachedHKO to discuss its proposal to gazette reclamation work in frontof HKO. This proposal could. in theory, cut off HKO's marineaccess and therefore cause both explicit and implicit impacts tothe company.(i) HKO required sea water access for barges, tugs and vessels.These were for cylinder transportation, liquid producttransportation. and huge plant equipment transportation. An

adequately safe manoeuvring space had to be allowed forsuch.(ii) HKO used mainly sea water cooling system. There would bea high chance that the cooling water intake consisting to amaterial extent o f water just discharged at the outlet. Thiswould increase the temperature and endanger the process.Provision against short circuiting due to reduced Watermovements in the area had to be provided.(iii)Acceptable arrangements would have to be made to preventthe waterway ceasing to be navigable due to silting Up orimproper uSe for mooting or anchorage, and also to preventthe water becoming Unusable as cooling water due to floatingdetritus or other pollution that was more likely to occur in awaterway with little flow.

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Facility Planning for a Gas Manufacturing PlantI(iv)HKO did not wish to see that after the town development wascompleted, public complaints about the existence o f HKOfactory would force HKO to move out of the present site.

If HKO were to remain in this site. the company had to facethe above impacts. It was very difficult to measure the importanceor the extent of the above impacts. Also. it was not all dearat that time whether the volume of business would increase ordecrease in the future. There is also a number of problemsassociated with relocating the plant, e.g. the uncertainties due tothe change in technologies and the impact on labour relationsif the new site location was significantly away from TseungKwan O. Finally. the management decided to go ahead due tothe following reasons:(i) better safety could be achieved in the new plant:(ii) considerable profit could be derived by n-developing theexisting piece of land into a residental and commercial area.Choice of Plant Location

HKO entered into deep discussion with the TerritoryDevelopment Department of the government to see the viablelocation for the new plant. HKO understood that the governmentpreferred to have this kind of chemical processing plant to belocated inside an industrial estate, or in some rural areas likeCastle Peak. It then approached the Hong Kong Industrial EstateCorporation (HKIEC) to see the possibility of relocating the plantto one of their in dustrial estates. From HKEIC, HKO recognisedthe following facts:(i) All the sites in the Tai Po industrial estate were occupied.(ii) Suitable sites were available in the Yuen Long industrial

estate.(iii)There was going to be a third industrial estate. the TseungKwan O industrial estate. which was under reclamation. The

land would be available in 1995.(iv)To select a site in Castle Peak, HKO would need to entersubstantial negotiation with the government.HKO already had a second factory in the Tai PO industrialestate in 1991, which consisted of a Carbon dioxide plant and anAir separation plant. The remaining area. however, was notlarge enough for accommodating all the facilities currently inTseung Kwan O. HKO therefore needed to decide betweenYuen Long, (new) Tseung Kwan O and Castle Peak as its futurenew site. There were several factors to consider but thetransportation costs stood out as the most important.

Transportation CostsFor the three candidate sites, the costs of production (material

and labour) are essentially the same. The only major diference isdue to the cost of delivery of the products, which include gascylinders and bulk liquids. The gas cylinders are delivered fromthe new site to the five areas including Kowloon, Hong Kong, NewTerritories (West), Outlying Islands and to the Tai PO plant. Forbulk liquid delivery, the cryogenic liquids (oxygen ant. nitrogen)will be delivered from the Tai PO plant to the new plant.Since the transportation cost is a significant consideration forchoosing the new site, reliable data is required to allow itscalculation. For the delivery of gas cylinders, the cost of deliveringN cylinders from site A to site B equals to C x N, where C is thecost for delivering one cylinder. The values of C and N areobtained from the Distribution Department of HKO. To compare

the viability of each candidate site, the total delivery costs fromeach site to the five areas are calculated and compared. Basedon the the data. it is found that (new) Tseung Kwan O givesthe lowest total delivery cost for gas cylinders.For the delivery of bulk liquids. the relative unit costs fromTai PO to the three cand idate sites are calculated. Also, reliabledata is obtained from the Distribution Department. Again, thecost from Tai PO to (new) Tseung Kwan O is the lowest.

Other LimitationsCylinder transport across barbour. Compressed gas cylindersare classified as Dangerous Goods (DG). There are restrictionsin transporting cylinders across the harbour. Trucks are notallowed to enter crass harbour tunnels. Ferry service for DGtrucks is restricted to one trip per day and moreover, advancehooking is required. Therefore, HKO requires essentially a sitewith sea front access so that cylinder delivery to Hong Kong side

and outlying islands can he made through barges.Retail customers. There are some retail customers who comedirectly to the factory f or cylinders. This has to be consideredduring the selection of new plant site. Too remote an area willcreate difficulties for these customers.Supply. of abours There will bound to be labour turnoverwhenever there is plant relocation. but the extent will heavily bedependent on n-here the new site is. This is particularly aproblem for HKO. HKO handles a lot of dangerous goods andthe labour force requires longer periods of training than for otherindustries If the company loses a large number of labour afterrelocation. production will be seriously affected. Such a situationis the last thing the company would like to encounter. To thesame extent. the new location cannot be at a too remote areawhere recruitment of new work force is difficult.

Major Issues in Managing the PlantRelocation ProjectGreat care has to be taken over the planning of the relocationprocess. Inadequate preparation of the movement process andof the running-in of the new plant can unnecessarily delayexploitation of the full potential of the investment. Cash flowsand profitability n-ill suffer. Managing projects of this scale, thenumber of detailed studies and tasks involved has to be legion.The most important ones, among many others, include projectscheduling, budget consideration, land acquisition, the futureuse of the existing site, the set-up of the project team, new officelocation: and the codes of practice established for fire protectionand safe handling of gases. The followings are just a few that

deserves more discussion.Process plants. The plants consist of hydrogen, dissolvedacetylene. nitrous oxide, compressed air, carbon dioxide, airseparation. and cylinder filling. For each plant, detailed study isconducted to investigate its present state, the effect of relocationon it and the actions that will be taken. Take the hydrogen plantas an example. Its production unit has been used for over thirtyyears and it is the right time to upgrade its technology to expandits capacity to cope with the expanding market. However,relocation of the existing production unit requires at least tenworking days The company cannot afford such a long shutdownperiod because the market demand is high but the buffer stockis relatively low.

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Facility Planning for a Gas Manufacturing PlantSafety One of the HKO's overriding task is to ensure safeoperation of its plants. Its dealing with numerous dangerousgoods and processes cannot fail to make this point more succinct.For the existing plaints. HKO has already followed a number ofstandards and codes of practice from the Industrial CasesCommittee of Australia. thte National Fire Protection Association

of USA and the British Compressed Gases Association. Now. toadopt new techniques and deal with newly developed situations.a number of safety studies are also made which include theHazard operability (HAZOP ) studies. the environmental impactassessment (EIA), and the quantitatively risk assessment (QRM).Facility Design and Systematic LayoutPlanning

The next stage in facility planning comes the design of thefacility which consists of designing the structural design of thefactory, layout design and design of the material handling systemThis paper mainly deals with the plant layout aspect which seeksto obtain an optimum arrangement of the gas plant includingproduction, office and other non-produc tive activities Also, inthe gas plant which concerns with continuous production flowand steady demand. the materials handling issues will not bediscussed in great detail here.A major step in designing the gas plant is to determine itsphysical layout. A very popular approach called the systematiclayout planning. or SLP, has been developed by Muther [MUT73]. SLP is an effective and general plant layout designmethodology. As such, it has a broad application areas includingmanufacturing and office activities. SLP consists mainly of threephases, namely analysis, search and evaluation. Before the SLPproper. the essential data have to be collected. which includeP(roduct). Q(uantity). R(outing). S(ervice) and T(ime).The first phase of SLP studies the various relationships betweenthe activities (or departments). Essentially, there are two majortypes of relationship of concern. These include the flowrelationship and the activity relationship. The stucy of flowrelationship is particularly important for systems with significantmaterial flow between activities, e.g. storage. processes andwarehouse. Design effort should be made to minimise andsimplify the flow so that the transportation costs will be reducedand production control will be facilitated. There are severaltechniques for analysing and representing the flow of thesesystems. The appropriate method chosen depends on a studyof the production variety and quantity (P-Q analysis). Flowrelationship can be measured directly and is thereforequantitatively in nature.The activity relationship, on the other hand, has a qualitativenature and represents the various interactions amongst theactivities. Examples of such interactions include organisation,control, and potential hazards if two activities are close to oneanother. The study of activity relationships is crucial ''or facilitieshaving little flow but significant communication and organisationalinterrelations [TOM 84] The tool for measuring the activityrelationships IS he activity chart. Each entry in the chart consistsof a closeness rating and the reason of assigning that value. Thealphabets A, E, I, O, U and X are used for the closeness rating.An A rating suggests that it is absolutely desirable for twoactivities to be located next to one another. On the other hand,a U rating least significance, E, I, and O are intermediate values.In addition, an X rating denotes absolutely undesirable forcloseness.

Altough both the flow and non-flow relationships areidentified independently, there are situations where they can beused together. These two types of relationships maybe combinedto form a final activity relationship diagram. The purpose o f sucha diagram is o depict spatially the relationships of the activities.It has nodes a the activities and links connecting those nodesas the closeness ratings. However the combination of thesequantitative and qualitative values is a difficult problem from adecision theory viewpoint. Common sense must be resorted toresolve impractical con figurations. The activity relationshipdiagram is further enriched by the space requirements of theactivities to form the space relationship diagram

Block plan Based on the space relationship diagram, ablock plan describi ng the acro layout of the plant can beformed. This is essentially a search process which can be donemanuatlly or by means of some computer programs. Whenseveral block plan have been generated. they are comparedagainst a sefe of criteria(e.g. economy of cylinder transport andsafety) and the "best'' one is selected.Computer Aided Layout Planning

The search phase of SLP should try to generate as manycandidate lay outs as possible for evaluation. By generating morealternatives, the chance of getting a good one will be better.However, typical layouts usually consist of numerous activitiesand it will be time consuming to generate the layout withou t anyaids As such. computer programs assisting this process havebeen devised. Essentially. there are two types of such programs:construction and improvement. The construc tion type generatesa layout straight from the activity relationship chart, spacerequirement and shape. Examples of the construction type oflayout program are ALDEP and CORELAP, among others. Theimprovement type. on the other hand. starts with a layout andtries to improve it by interchanging the locations of the activities.The criteria for such improvement is usually the transportationcosts. An example of the improvement program is CRAFT.Layout Design of the Gas Plant

The design o f the gas plant layout illustrates the applicationof SLP and computer aided plant layout techniques. For acomplete description of this example, please refer to Chui [CHUI94].

Data Input. For the new facility, forty one major activitiesare classified. The data for each activities are collected whichincludes the area requirement, production capacity. theequipment contained within the area, the utilities required andthe constraints imposed. The information on these constraintsis crucial to the determination of the activity relationships.Activity Relationships. In this example which does notinvolve substantial quantifiable material flow, only the activityrelationships are studied. Every pair of the activities are examinedand a closeness rating is assigned to it. When evaluating activityrelationships for N activities, there are N(N-1)/2 such evaluations.In order to reduce the amount of work, particularly during theinitial design stage. some activities having very close relationshipsare grouped together. For example, the Hydrogen productionplant (01) and Hydrogen filling & storage (07) are groupedtogether under "P lant - Hydrogen. As a result, the followingnew groups are formed:

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Facility Planning for a Gas Manufacturing PlantI

Figure 1: Activity Relationship ChartGeneration of Various Layouts forEvaluation

Having analysed the activity relationships and then obtainedthe space relationship diagram, alternative layollts can begenerated, either manually or using computer-aided layoutplanning programs. At thisstage, a number of practical limitationsmust also be considered. For example, shape and size of thesite, location of the main entrance and the sea front access ,among others. Using the space relationship dia. gram as aguideline, the space templates are modified and adjusted, andthe relative locations of the activities are shifted as necessary toaccommodate the practical limitations. Three alternative layoutsare developed and one of them is shown in Fig 2.

Figure 2 : Layout Alternative in the form of a block plan

Computer-Aided Layout Planning. In generating alternativelay-outs. the computer- program CORELAP (ComputerisedRelationship Layout Planning)is also used. Unlike other layourplanning programs CORELAP works in a deterministic manner.That means. with the same se t of data input, it always come s uPwith the same answer In order to have alternative layouts, onemay r-r-arrange the input data (e.g. interchanging the positio nsof two activities in the activity relationship chart) or to modifythe shapes of the departments slightly.

Etaluation. By using SLP and CORELAP, a number of layoutalternatives are generated The selection of he optimum layoutmeans the selection of the design that results in the mostfavourable compromise among competing criteria These criteriaare listed below. together with the relative importance ratings.Criteria RaringEconomy of cylinder handling 10Safety 8Ease of supervision 6Room for expansion 5Flow of raw material 3Overall layout 2Convenience 1

Each of the layout alternatives is rated against these criteria.Points o f 3 (high). 2 (medium) and 1 (low) are given. The layoutalternative shown in Fig 2 is the optimum one whereas thelayout generated by CORELAP scores very highly. Although themacro-level of layout design has been worked out, the derailedor micro-level design is still underway. Finally, approval mustbe obtained from management.

ConclusionFacility planning is a major undertaking that requiressubstantial resources and careful planning. HKO, having thenecessary human and financial resources, sets an example oftackling such a problem in a thorough manner. The choice ofthe location of the new plant depends on a number of factorsincluding transportation costs, environment, labour,administrative and other management decisions. It does notseem that a single mathematical model can provide the completesolution. On the issue facility design, the well known SLP isemployed to carry out the macro level design and the computer-aided layout planning program CORELAP is also used. At thisstage, the final details have yet to be finalised.

References[CHUI 94] W.C. Chui, ''Facilities P lanning: Relocation of a Gas4lanufacturing Plant'' MSc Thesis, Hong Kong University1994

[FRA 92] R.L. Francis, L.F. McGinnis Jr, J.A. White, FACILITYLAYOUT .AND LOCATION: AN ANALYTICAL APPROACH,2nd ed., Prentice Hall International 1992.[MUT 73] R . Muther, SYSTEMATIC LAYOUT PLANNING,Cahners Books 1973.[TOM 84] J..4. Tompkins & J.A. White, FACILITIES PLANNING,John Wiley & Sons 1984.

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