Ppt related to layout strategies in operations

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Copyright © 2017 Pearson Education, Inc.
Layout Strategies
PowerPoint presentation to accompany
Heizer, Render, Munson
Operations Management, Twelfth Edition
Principles of Operations Management, Tenth Edition
PowerPoint slides by Jeff Heyl
9

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Outline
► Global Company Profile:
McDonald's
► The Strategic Importance of Layout
Decisions
► Types of Layout
► Office Layout
► Retail Layout
► Warehousing and Storage Layouts

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Outline - Continued
► Fixed-Position Layout
► Process-Oriented Layout
► Work Cells
► Repetitive and Product-
Oriented Layout

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Innovations at McDonald's
► Indoor seating (1950s)
► Drive-through window (1970s)
► Adding breakfast to the menu (1980s)
► Adding play areas (late 1980s)
► Redesign of the kitchens (1990s)
► Self-service kiosk (2004)
► Now three separate dining sections

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Innovations at McDonald's
► Indoor seating (1950s)
► Drive-through window (1970s)
► Adding breakfast to the menu (1980s)
► Adding play areas (late 1980s)
► Redesign of the kitchens (1990s)
► Self-service kiosk (2004)
► Now three separate dining sections
Six out of the
seven are
layout
decisions!

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McDonald's New Layout
▶ Seventh major innovation
▶ Redesigning all 30,000 outlets around the
world
▶ Three separate dining areas
▶ Linger zone with comfortable chairs and Wi-Fi
connections
▶ Grab and go zone with tall counters
▶ Flexible zone for kids and families
▶ Facility layout is a source of competitive
advantage

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Learning Objectives
When you complete this chapter you
should be able to:
9.1 Discuss important issues in office layout
9.2 Define the objectives of retail layout
9.3 Discuss modern warehouse management
and terms such as ASRS, cross-docking,
and random stocking
9.4 Identify when fixed-position layouts are
appropriate

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When you complete this chapter you
should be able to:
Learning Objectives
9.5 Explain how to achieve a good process-
oriented facility layout
9.6 Define work cell and the requirements of a
work cell
9.7 Define product-oriented layout
9.8 Explain how to balance production flow in
a repetitive or product-oriented facility

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Strategic Importance of
Layout Decisions
The objective of layout strategy
is to develop an effective and
efficient layout that will meet the
firm’s competitive requirements

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Layout Design
Considerations
► Higher utilization of space, equipment, and
people
► Improved flow of information, materials, or
people
► Improved employee morale and safer
working conditions
► Improved customer/client interaction
► Flexibility

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Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout

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Types of Layout
1. Office layout: Positions workers, their
equipment, and spaces/offices to
provide for movement of information
2. Retail layout: Allocates display space
and responds to customer behavior
3. Warehouse layout: Addresses trade-
offs between space and material
handling

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Types of Layout
4. Fixed-position layout: Addresses the
layout requirements of large, bulky
projects such as ships and buildings
5. Process-oriented layout: Deals with
low-volume, high-variety production
(also called job shop or intermittent
production)

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Types of Layout
6. Work cell layout: Arranges machinery
and equipment to focus on production
of a single product or group of related
products
7. Product-oriented layout: Seeks the
best personnel and machine
utilizations in repetitive or continuous
production

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Layout Strategies
TABLE 9.1 Layout Strategies
OBJECTIVES EXAMPLES
Office Locate workers requiring
frequent contact close to one
another
Allstate Insurance
Microsoft Corp.
Retail Expose customer to high-
margin items
Kroger’s Supermarket
Walgreen’s
Bloomingdale’s
Warehouse
(storage)
Balance low-cost storage with
low-cost material handling
Federal-Mogul’s warehouse
The Gap’s distribution center
Project (fixed
position)
Move material to the limited
storage areas around the site
Ingall Ship Building Corp.
Trump Plaza
Pittsburgh Airport

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Layout Strategies
TABLE 9.1 Layout Strategies
OBJECTIVES EXAMPLES
Job Shop
(process
oriented)
Manage varied material flow for
each product
Arnold Palmer Hospital
Hard Rock Cafe
Olive Garden
Work Cell
(product
families)
Identify a product family, build
teams, cross-train team
members
Hallmark Cards
Wheeled Coach Ambulances
Repetitive/
Continuous
(product
oriented)
Equalize the task time at each
workstation
Sony’s TV assembly line
Toyota Scion

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Good Layouts Consider
► Material handling equipment
► Capacity and space requirements
► Environment and aesthetics
► Flows of information
► Cost of moving between various work
areas

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Office Layout
► Grouping of workers, their equipment,
and spaces to provide comfort, safety,
and movement of information
► Movement of information is main
distinction
► Typically in state of flux due to
frequent technological changes

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Relationship Chart
Figure 9.1

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Office Layout
► Three physical and social aspects
► Proximity
► Privacy
► Permission
► Two major trends
► Information technology
► Dynamic needs for space and services

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Retail Layout
▶ Objective is to maximize profitability
per square foot of floor space
▶ Sales and profitability vary directly
with customer exposure

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Five Helpful Ideas for Supermarket
Layout
1. Locate high-draw items around the periphery of
the store
2. Use prominent locations for high-impulse and
high-margin items
3. Distribute power items to both sides of an aisle
and disperse them to increase viewing of other
items
4. Use end-aisle locations
5. Convey mission of store through careful
positioning of lead-off department

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Store Layout
Figure 9.2

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Slotting
▶ Manufacturers pay slotting fees to
retailers to get the retailers to display
(slot) their product
▶ Contributing factors
▶ Limited shelf space
▶ An increasing number of new products
▶ Better information about sales through
POS data collection
▶ Closer control of inventory

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Servicescapes
1. Ambient conditions - background
characteristics such as lighting, sound,
smell, and temperature
2. Spatial layout and functionality - which
involve customer
circulation path planning,
aisle characteristics, and
product grouping
3. Signs, symbols, and
artifacts - characteristics
of building design that
carry social significance

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Warehouse and Storage Layouts
▶ Objective is to find the optimum trade-
offs between handling costs and
costs associated with warehouse
space
▶ Maximize the total "cube" of the
warehouse – utilize its full volume
while maintaining low material
handling costs

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Warehousing and Storage
Layouts
► All costs associated with the transaction
► Incoming transport
► Storage
► Finding and moving material
► Outgoing transport
► Equipment, people, material, supervision,
insurance, depreciation
► Minimize damage and spoilage
Material Handling Costs

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Warehousing and Storage Layouts
▶ Warehouse density tends to vary inversely
with the number of different items stored
▶ Automated Storage and Retrieval Systems
(ASRSs) can
significantly improve
warehouse productivity
▶ Dock location is a key
design element

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Cross-Docking
▶ Materials are moved directly from receiving to
shipping and are not placed in storage in the
warehouse
▶ Requires tight
scheduling and
accurate shipments,
bar code or RFID
identification used for
advanced shipment
notification as
materials are unloaded

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Random Stocking
► Typically requires automatic identification
systems (AISs) and effective information
systems
► Allows more efficient use of space
► Key tasks
1. Maintain list of “open” locations
2. Maintain accurate records
3. Sequence items to minimize travel, “pick” time
4. Combine picking orders
5. Assign classes of items to particular areas

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Customizing
▶ Value-added activities performed at the
warehouse
▶ Enable low cost and rapid response
strategies
▶ Assembly of components
▶ Loading software
▶ Repairs
▶ Customized labeling and packaging

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Fixed-Position Layout
▶ Product remains in one place
▶ Workers and equipment come to site
▶ Complicating factors
▶ Limited space at site
▶ Different materials
required at different
stages of the project
▶ Volume of materials
needed is dynamic

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Alternative Strategy
▶ As much of the project as possible is
completed off-site in a product-oriented
facility
▶ This can
significantly
improve
efficiency but
is only possible
when multiple
similar units need to be created

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Process-Oriented Layout
▶ Like machines and equipment are
grouped together
▶ Flexible and capable of handling a
wide variety of products or services
▶ Scheduling can be difficult and setup,
material handling, and labor costs can
be high

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Surgery
Radiology
ER triage room
ER Beds Pharmacy
Emergency room admissions
Billing/exit
Laboratories
Patient A - broken leg
Patient B - erratic heart
pacemaker
Figure 9.3

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▶ Arrange work centers so as to minimize
the costs of material handling
▶ Basic cost elements are
▶ Number of loads (or people) moving
between centers
▶ Distance loads (or people) move between
centers

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where n = total number of work centers
or departments
i, j = individual departments
Xij = number of loads moved
from
department i to department j
Cij = cost to move a load
between
department i and department j

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Process Layout Example
1. Construct a "from-to matrix"
2. Determine the space requirements
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. Try to improve the layout
6. Prepare a detailed plan
Arrange six departments in a factory to
minimize the material handling costs. Each
department is 20 x 20 feet and the building
is 60 feet long and 40 feet wide.

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Department Assembly Painting Machine Receiving Shipping Testing
(1) (2) Shop (3) (4) (5) (6)
Assembly (1)
Painting (2)
Machine Shop (3)
Receiving (4)
Shipping (5)
Testing (6)
Number of loads per week
50 100 0 0 20
30 50 10 0
20 0 100
50 0
0
Figure 9.4

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Area A Area B Area C
Area D Area E Area F
60'
40'
Receiving Shipping Testing
Department Department Department
(4) (5) (6)
Figure 9.5
Assembly Painting Machine Shop
(1) (2) (3)

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Interdepartmental Flow Graph Figure 9.6
100
50
20
50
50
20
10
100
30 Machine
Shop (3)
Testing
(6)
Shipping
(5)
Receiving
(4)
Assembly
(1)
Painting
(2)

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Cost = $50 + $200 + $40
(1 and 2) (1 and 3) (1 and 6)
+ $30 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)
+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $570

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Revised Interdepartmental Flow Graph
Figure 9.7
30
50
20
50
10
20
50 100
100 Machine
Shop (3)
Testing
(6)
Shipping
(5)
Receiving
(4)
Painting
(2)
Assembly
(1)

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Cost = $50 + $100 + $20
(1 and 2) (1 and 3) (1 and 6)
+ $60 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)
+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $480

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Area A Area B Area C
Area D Area E Area F
60'
40'
Receiving Shipping Testing
(4) (5) (6)
Figure 9.8
Painting Assembly Machine Shop
(2) (1) (3)

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Computer Software
▶ Graphical approach only works for small
problems
▶ Computer programs are available to solve
bigger problems
► CRAFT
► ALDEP
► CORELAP
► Factory Flow
► Proplanner

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Computer Software
▶ Proplanner flow path calculator
▶ Generate material flow diagrams
▶ Calculate material handling distances,
times, costs
▶ Color-coded flow lines
▶ Helps identify excessive material handling

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▶ Proplanner flow path calculator
▶ Generate material flow diagrams
▶ Calculate material handling distances,
times, costs
▶ Color-coded flow lines
▶ Helps identify excessive material
handling
Computer Software

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Computer Software
▶ Three dimensional visualization software
allows managers to view possible layouts
and assess process, material
handling,
efficiency,
and safety
issues

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Work Cells
▶ Reorganizes people and machines
into groups to focus on single
products or product groups
▶ Group technology identifies products
that have similar characteristics for
particular cells
▶ Volume must justify cells
▶ Cells can be reconfigured as designs
or volume changes

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Advantages of Work Cells
1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished goods
inventories
4. Reduced direct labor cost
5. Heightened sense of employee
participation
6. Increased equipment and machinery
utilization
7. Reduced investment in machinery and
equipment

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Requirements of Work Cells
▶ Identification of families of products
▶ A high level of training, flexibility and
empowerment of employees
▶ Being self-contained, with its own
equipment and resources
▶ Test (poka-yoke) at each station in
the cell

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Improving Layouts Using
Work Cells
Current layout - workers in
small closed areas.
Improved layout - cross-trained
workers can assist each other. May
be able to add a third worker as
additional output is needed.
Figure 9.9 (a)
Material

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Improving Layouts Using
Work Cells
Current layout - straight lines
make it hard to balance tasks
because work may not be
divided evenly
Improved layout - in U shape,
workers have better access.
Four cross-trained workers
were reduced to three.
Figure 9.9 (b)
U-shaped line may reduce employee movement
and space requirements while enhancing
communication, reducing the number of workers,
and facilitating inspection

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Staffing and Balancing Work
Cells
Determine the number
of operators required
Workers required =
Total operation time required
Takt time
Determine the takt time
Takt time =
Total work time available
Units required to
satisfy customer demand

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Staffing Work Cells Example
600 mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance
chart total operation
time = 140 seconds
Standard
time
required
Operations
Assemble Paint Test Label Pack for
shipment
60
50
40
30
20
10
0
Figure 9.10

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Staffing Work Cells Example
600 mirrors per day required
Mirror production scheduled for 8 hours per day
From a work balance
chart total operation
time = 140 seconds
Takt time = (8 hrs x 60 mins) / 600 units
= .8 min = 48 seconds
Workers required =
Total operation time required
Takt time
= 140 / 48 = 2.92

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Work Balance Charts
▶ Used for evaluating operation times in
work cells
▶ Can help identify bottleneck
operations
▶ Flexible, cross-trained employees can
help address labor bottlenecks
▶ Machine bottlenecks may require
other approaches

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Focused Work Center and
Focused Factory
▶ Focused Work Center
▶ Identify a large family of similar products
that have a large and stable demand
▶ Moves production from a general-purpose,
process-oriented facility to a large work cell
▶ Focused Factory
▶ A focused work cell in a separate facility
▶ May be focused by product line, layout,
quality, new product introduction, flexibility,
or other requirements

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Repetitive and Product-
Oriented Layout
1. Volume is adequate for high equipment utilization
2. Product demand is stable enough to justify high
investment in specialized equipment
3. Product is standardized or approaching a phase of
life cycle that justifies investment
4. Supplies of raw materials and components are
adequate and of uniform quality
Organized around products or families of
similar high-volume, low-variety products

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Product-Oriented Layouts
► Fabrication line
► Builds components 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

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► Fabrication line
► Builds components 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
must be balanced
so that the time to
perform the work at
each station is the
same

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1. Low variable cost per unit
2. Low material handling costs
3. Reduced work-in-process inventories
4. Easier training and supervision
5. Rapid throughput
Advantages
1. High volume is required
2. Work stoppage at any point ties up the whole
operation
3. Lack of flexibility in product or production rates
Disadvantages

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McDonald's Assembly Line
Figure 9.11

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Assembly-Line Balancing
▶ Objective is to minimize the imbalance
between machines or personnel while
meeting required output
▶ Starts with the precedence relationships
▶ Determine cycle time
▶ Calculate theoretical
minimum number of
workstations
▶ Balance the line by
assigning specific
tasks to workstations

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TABLE 9.2 Precedence Data for Wing Component
TASK
ASSEMBLY TIME
(MINUTES)
TASK MUST FOLLOW
TASK LISTED BELOW
A 10 –
B 11 A
C 5 B
D 4 B
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65
Wing Component Example
This means that
tasks B and E
cannot be done
until task A has
been completed

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TABLE 9.2
Precedence Data for Wing
Component
TASK
ASSEMBLY TIME
(MINUTES)
TASK MUST
FOLLOW TASK
LISTED BELOW
A 10 –
B 11 A
C 5 B
D 4 B
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65
I
G
F
C
D
H
B
E
A
10
11
11
5
4
3
7
11 3
Figure 9.12
480 available mins
per day
40 units required

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480 available mins
per day
40 units required
TABLE 9.2
Component
TASK
ASSEMBLY TIME
(MINUTES)
TASK MUST
FOLLOW TASK
LISTED BELOW
A 10 –
B 11 A
C 5 B
D 4 B
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65
I
G
F
C
D
H
B
E
A
10
11
11
5
4
3
7
11 3
Figure 9.12
Cycle time =
Production time available
per day
Units required per day
= 480 / 40
= 12 minutes per unit
Minimum number
of workstations
= 65 / 12
= 5.42, or 6 stations

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TABLE 9.3
Layout Heuristics That May Be Used to Assign Tasks
to Workstations in Assembly-Line Balancing
1. Longest task time From the available tasks, choose the
task with the largest (longest) task time
2. Most following tasks From the available tasks, choose the
task with the largest number of following
tasks
3. Ranked positional
weight
From the available tasks, choose the
task for which the sum of following task
times is the longest
4. Shortest task time From the available tasks, choose the
task with the shortest task time
5. Least number of
following tasks
From the available tasks, choose the
task with the least number of subsequent
tasks

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Station
1
Station
2
Station 3
Station 4
Station
3
Station
5
Station 6
Station 6
I
G
F
H
C
D
B
E
A
10 11
11
5
4
3 7
11
3
Figure 9.13
480 available mins
per day
40 units required
Cycle time = 12 mins
Minimum
workstations = 5.42 or 6

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TABLE 9.2
Component
TASK
ASSEMBLY TIME
(MINUTES)
TASK MUST
FOLLOW TASK
LISTED BELOW
A 10 –
B 11 A
C 5 B
D 4 B
E 11 A
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65
I
G
F
C
D
H
B
E
A
10
11
11
5
4
3
7
11 3
Figure 9.12
480 available mins
per day
40 units required
Cycle time = 12 mins
Minimum
workstations = 5.42 or 6
Efficiency =
∑ Task times
(Actual number of workstations) x (Largest cycle time)
= 65 minutes / ((6 stations) x (12 minutes))
= 90.3%
Idle Time = ((6 stations) × (12 minutes)) – 65 minutes = 7 minutes

9 - 72
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher.
Printed in the United States of America.

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