Unit 7: Facility Analysis – Location and Layout Planning
This unit covers the analysis of facility layouts, given layout objectives and types. Different requirements for manufacturing and service-industry building layouts are considered. Location decisions include analyzing the link between supply-chain networks and facility locations as part of operations optimization.
Completing this unit should take you approximately 6 hours.
Upon successful completion of this unit, you will be able to:
- describe the criteria for choosing a facility location for manufacturing and service industry firms;
- compare facility location models, such as the factor rating system, linear programming, and the centroid method, using numerical criteria;
- determine which types of layout are optimal for producing a given product; and
- evaluate the output efficiency of a given facility layout.
7.1: Criteria for Location Selection
When seeking a location for production and manufacturing there are many strategic physical and human considerations. Some physical aspects can include available infrastructure, geographical location, ease of access for transporting goods and materials, environmental conditions, and expandability. In regard to personnel, the community, available labor, talent pools, and political landscape must also be factored into decision-making.
Read this article. The authors propose a location selection procedure by simulating daily production volume and supply chain failures of raw materials for producing kimchi. Given the identified failures what must service-based industries consider in location selection?
7.1.1: Factor Rating System
The factor rating system analysis begins with identifying specific criteria and then assigning weight to each factor based on importance. It is useful for evaluating one alternative in comparison to other alternatives especially for selecting a location. This evaluation can include both quantitative and qualitative inputs in its analysis.
Read this article. The study covered uses various tools to determine the best location for bus garages to operate including maintenance and repair activities. Focus on Figure 1 in the Methodology section as it visually demonstrates the analytical process.
7.1.2: Cost-Profit-Volume Analysis
Cost-profit-volume analysis, also known as a break-even analysis, uses costs, volume, and profit to calculate how much income a firm will need to earn to recoup costs and earn a profit. Fixed costs are constant. However, variable costs can be challenging to predict, which may increase uncertainty in the analysis outcome. Furthermore, assumptions in this analysis can result in unrealistic predictions and projections.
Watch this video. In it, the presenter demonstrates how to conduct a cost-profit volume analysis for selecting a location. Notice how the data sets are used to create a visual chart for three potential locations. When comparing the analyses for these locations, what does the intersection of the lines mean?
7.1.3: Linear Programming Transportation
Linear programming is often used to address problems where no exact solution is known such as in transportation and logistics. This method deals with finding optimal solutions that are described with linear equations and are not necessarily useful in finding a practical solution. Conducting this analysis helps a business understand how to minimize transportation-related problems increasing profits over time.
Read this article. The study employed a transportation model to find the minimum cost of transporting manufactured goods from factories to warehouses. As you read, think of some factors that can greatly increase transportation and logistics time.
7.1.4: The GIS/Centroid Method
The Geographical Information System (GIS) Centroid method is an analysis that represents the center or single point of a spatial unit. It identifies geographical centers or population centers in an effort to minimize total distances. For manufacturers, this is a key tool to understand their physical proximity to suppliers and buyers in an effort to minimize transportation time and distance.
Read this article. When you read the section on Centroid (geometric and population-weighted), think about the location of your local supermarket. Where is it in relation to customers, suppliers, or other partners?
7.2: Facility Layout Objectives
Once a site has been selected, designing the layout of the facility must be approached thoughtfully and strategically. Planning should be centered around the product to be manufactured, quantity, speed, and demand. Ultimately, the highest priority is ensuring that production is efficient and effective so performance goals can be achieved.
Read this chapter What are some of the most important objectives to consider when designing a layout? How can a producer mitigate layout inefficiencies?
Many factors affect how organizations locate their facilities, and these factors vary in importance in different situations.
7.2.1: Classifying Layouts
Production facilities have many moving parts; as a result, problems will surely arise. These problems can be related to machinery, human, technological, or environmental factors. Operations managers need to resolve these problems as quickly as possible to minimize disruption upstream and downstream of the production.
Watch this video. It highlights facility layout and optimization and layout types. When is it appropriate to use a mixed hybrid layout?
7.2.2: Layout Problems
The nature of a business will determine the layout most conducive to optimal operations. Since this will be a mostly permanent buildout, it is crucial to analyze and accurately predict the most efficient use of space before starting production. Other than machine placement, spacing between workstations, aisles, and placement of restrooms, breakrooms, and even offices need careful consideration to contribute to production optimization.
Read the introduction and sections 5 and 6. This article discusses a hybrid model for optimal layout planning, considering factors in plant layout design. What factors does the model not consider, and how important are these factors?
7.3: Manufacturing-Facility Layouts
A facility layout is the arrangement of everything needed to produce a good or deliver a service. Food processing in the manufacturing sector has unique challenges because of the raw input materials and a defined shelf life output. Production processes are a major concern, as are personal hygiene and food contamination.
Read this article. The topic focuses on the most efficient and effective layout model for food production. Can you identify one advantage of modifying an existing layout to increase efficiency?
Read this article. The paper seeks to compare performance of three layouts. Do you agree or disagree with the findings of the research?
Assembly lines are meant to be a cost-efficient way to manufacture an item through standardization. Balancing the assembly line allows for low-volume, made-to-order production up to high-volume, mass-produced items. Essentially, balancing the assembly consists of allocating or reallocating tasks to a workstation to minimize downtime or constraints.
Read this article. The article proposes balancing production lines to attenuate capacity restrictions and increase balancing efficiency. Pay particular attention to section 2.2 on assembly line balancing.
Study Guide: Unit 7
We recommend reviewing this Study Guide before taking the Unit 7 Assessment.
Unit 7 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.