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7C h a p t e r

FACILITY LOCATION, CAPACITY AND LAYOUT

Chapter Outline

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7-1

• Locating Manufacturing Facilities

• Locating Service Operations• Capacity Decisions• Facility Layout

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7C h a p t e r

FACILITY LOCATION, CAPACITY AND LAYOUT

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7-2

Chapter Objectives

• Identify the various factors that must be considered in selecting a location for a manufacturing or service operation.

• Introduce a framework for evaluating alternative site locations.

• Present alternative strategies for increasing capacity.

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7C h a p t e r

FACILITY LOCATION, CAPACITY AND LAYOUT

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7-3

Chapter Objectives continued

• Identify the different types of facility layouts in manufacturing and service operations.

• Define the steps required in balancing an assembly line.

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Locating Manufacturing Facilities(Qualitative Factors)

• Local Infrastructure• Worker Education and Skills• Product Content

Requirements• Political/Economic Stability

7-4

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Locating Manufacturing Facilities(Quantitative Factors)

• Labor Costs• Distribution Costs• Facility Costs• Exchange Rates

7-5

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Plant Location Methods

• Quantitative:· Center of gravity

method• Qualitative:

· factor-rating systems

7-6

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EXHIBIT 7.6 Comparing Capacity and Demand in a Service Operation D

eman

d

Time

Maximum capacity

Optimal capacity

Customers turned away

Poor service

Idle capacity

7-7

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EXHIBIT 7.7 Economies of Scale

Ave

rage

uni

t cos

t

Volume (units)

Economies of scale

Diseconomies of scaleA

B

C

D

VA VB VC VD

7-8

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EXHIBIT 7.8A Proactive Capacity Strategy

Volume(units)

Time

DemandPlant Capacity

Excess/idle capacity

7-9

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EXHIBIT 7.8B Neutral Capacity Strategy

Volume(units)

Time

Demand

Plant Capacity

7-10

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EXHIBIT 7.8C Reactive Capacity Strategy

Volume(units)

Time

Demand

Plant Capacity

Unfilled demand

7-11

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Types of Facility Layouts

• Process layout• Product layout• Group technology

layout • Fixed-position layout

7-12

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Process Layout

Assembly Painting Plating

MachiningWelding

7-13

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Product Layout

Product A

Product B

Product C

Step 1

Step 1

Step 1

Step 2

Step 2

Step 2

Step 3

Step 3

Step 3

Step 4

Step 4

Step 4

7-14

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EXHIBIT 7. 17 Precedence Graph for Model J Wagon

A

E

D

CB

G

F

H

I

J K

12

12

911

45

50

15

12

12

8 9

7-15