Bài giảng môn Quản trị kinh doanh - Chapter 16: Facilities: making location and layout decisions

Chapter 16Facilities:Making Location and Layout Decisions1Learning ObjectivesDescribe the impact facility decisions have on profitability and value.Identify common decision criteria for business location decisions.Explain why geographic information systems (GISs) benefit location decision making.Use multifactor rating as a decision-making tool.Perform the calculations necessary to use the center-of-gravity method.Compute the breakeven point when comparing alternative locations.Describe the strengths and weaknesses of process-oriented, product-oriented, and cellular layouts.Utilize the cut-and-dry method and systematic layout planning for a process-oriented layout.Determine the theoretical minimum number of work centers and balance a line in a product-oriented layout.2Strategic Importance of FacilitiesFacility Decision Criteria Checklist.3Facility location is important only if the location of other resources is important.If location of workforce, inventory, and capacity isn’t important, the facility can be anywhereTrue of information-oriented servicesThe larger the facility, the more it costs to maintain it (power bills, tax bills...)Facility location decisions are more subjective than other resource decisions. Strategic Importance of Facilities4Businesses tend to locate facilities near inputs when:Raw materials are costly to transportNeeded skilled labor is scarce, found in certain placesHigh-volume manufacturers with products that are relatively inexpensive to ship tend to base location on lower labor costs (for example, clothing manufacturers)Near markets/customers when:Products are expensive to transport (bricks, beverages)Choose to be close to customer to provide better service (response time, dependability, flexibility...)Other factors are considered, such as quality of life, climate, nearness to a large city, potential for expansion.Facility Location Decisions:Locating a New Business5Relocation decisions are made for several reasons.Financial reasonsAvailability of inputs has changedLost or can no longer afford a leaseMay need to relocate to same geographic area to avoid losing employees or customers.For businesses that rely on foot or automobile traffic patterns, relocation can drastically affect demandSometimes acceptable nearby facilities are not available and construction is not an option, making relocation a problemFacility Location Decisions:Relocating an Existing Business6Expand current facility, or build a new, bigger one.Compare costs of expanding to costs of buildingConsider opportunities lost because of old facility limitationsNew technologies more easily integrated into a new buildingKeep current facility and build a new oneSupervision and control issues when management needs to be two places at onceCan lead to competitive advantages such as opening up new marketsFacility Location Decisions:Choosing a Location for Business Expansion7Locating in another country to do business there.Entering a foreign market can be expensive and risky.Unfamiliarity with cultural differences, workforce differences, and differences in politics and regulationEconomy, market and workforce state may change in unexpected ways in a short period of timeLocating in another country for competitive advantage.Tax advantages, lower labor or materials costs.Advantages must be weighed against potential disadvantages such as transportation costs, decrease in skill of labor force, uncertain political climateLocation Decision-Making Criteria:International Issues8Location Decision Criteria ChecklistLevels at which criteria are an issue.Location Decision-Making Criteria:Domestic Location Decisions9Location Decision Criteria:Workforce Capabilities: Productivity/skill of the workforce has a huge impact on value createdLabor Costs: May or may not be a priority, depending on labor-intensiveness of products or services.Business Services: Ability to outsource functions like payroll, maintenance, transportation, and information technologyQuality of Life: Nice climate, good community, etc. are important factors for employeesMarket Access: For many businesses, how good the site is, as far as potential to attract customers, is the most important decisionTransportation Access: Are there nearby airports, ports, highways, and railways?Location Decision-Making Criteria:Domestic Location Decisions10Location Decision Criteria (continued):Education System: Workers want good schools for their children, and workers may need to be further trainedRegulatory and Tax Climate: Both important from a cost standpointUtilities: Some businesses consume electricity and natural gas heavily.Incentives: Offered by states and communities to attract businesses (tax breaks, interest-free loans, etc.)Site Availability: Availability and cost of sites for the facilityLocation Decision-Making Criteria:Domestic Location Decisions11Geographic Information Systems (GISs)A merge of mapping and data base systems so that the criteria that a business considers important can be sorted and mappedHighwaysSchoolsPopulation centersCertain customers, etc.GISs are helpful in the search for potential sites.Location Decision-Making Criteria:Geographic Information Systems12Tools for location decisions:Multifactor ratingCenter-of-gravity methodDecision trees (covered in chapter 2)Breakeven analysisLocation Decision-Making Techniques13Multifactor rating is a subjective process, but it does increase objectivity.Step-by-Step: Multifactor RatingIdentify alternatives from which to selectIdentify factors important for the decision being madeDetermine a weight for each factor, making sure the weights sum to 1For each alternative, give each factor a score from 1 to 100Multiply each factor score by the factor’s weightFor each alternative, sum up the weighted scores to compute a total scoreCompare scores for the alternativesLocation Decision-Making Techniques:Multifactor Rating14Example 16.1:Opening a tanning salon and looking for a preexisting building to modify by constructing 12 tanning booths.Six factors identified and weighted according to importance (weightings sum to 1)Exhibit 16.3 Factors and Importance WeightingsLocation Decision-Making Techniques:Multifactor Rating Example15Four possible locationsEach scored from 1 to 100 for each factorExhibit 16.4 Factor Scores for Each LocationLocation Decision-Making Techniques:Multifactor Rating Example16Factor scores multiplied by the factor weightWeighted factor scores addedAlternative with the highest total score wins.Exhibit 16.5 Factor Scores for Each LocationLocation Decision-Making Techniques:Multifactor Rating Example17Expected number of jobs 142, use Site 2Exhibit 16.7 Cost Curves for Location BreakevenLocation Decision-Making Techniques:Breakeven Example18The most value is created by skilled, highly creative workers.Business are locating where engineers, scientists, technology workers, etc. want to live. Quality of life is a more important factorTends to be in cities with internet infrastructure, low crime, low taxesBusiness Location Trends19Process-oriented layouts are characterized by functional departments.Sequence of operations in a process is flexibleProducts or customers move between departments.Goal of process-oriented layout design is minimization of movement between departments. Departments that interact most should be close together. The ‘cut-and-try’ approachSystematic layout planning (SLP)Software optimizationFacility Layouts:Process-Oriented Layouts20Cut-and-try approachFirst matrix is of frequency of interaction between departmentsSecond matrix is of the distances between departmentsThird matrix, the total-distance matrix, is the product of the first twoAttempt to minimize total distance by changing the layout.Facility Layouts:Process-Oriented Layouts21Example 16.3:The diagram is a proposed layout for a printing business:Exhibit 16.9 Proposed Layout for a Printing BusinessFacility Layouts:Cut-and-Try Example22Example 16.3:Trips Matrix: Print jobs move between departments at the following frequenciesExhibit 16.10 Trips Matrix for Printing BusinessFacility Layouts:Cut-and-Try Example23Example 16.3:Distance Matrix: Distances between the departmentsExhibit 16.11 Distance Matrix for Proposed LayoutFacility Layouts:Cut-and-Try Example24Example 16.3:Total distance matrix: Total distance obtained by multiplying values in Trips matrix and distance matrix Exhibit 16.12 Total Distance Matrix for Proposed LayoutMinimize total distanceFacility Layouts:Cut-and-Try Example25Example 16.3:What happens to total distance if Paper Storage and Design switch places, Printing and Customer Service switch places?Exhibit 16.13 Improved LayoutFacility Layouts:Cut-and-Try Example26Example 16.3:Total distance is reduced by almost 37% under the improved layout.Exhibit 16.14 Total Distance Matrix for Improved LayoutFacility Layouts:Cut-and-Try Example27Systematic Layout Planning (SLP) assigns a ‘closeness desirability’ rating to relationships between departments.Relationships are rated A, E, I, O, U, or XAbsolutely necessary (A)Especially important (E)Important (I)OK (O)Unimportant (U)Shouldn’t be close (X)Ratings illustrated by lines connecting departmentsFacility Layouts:Process-Oriented Layouts28Example 16.4:Desirability matrix has been developed for a printing businessExhibit 16.15 Closeness Desirability MatrixFacility Layouts:SLP Example29Example 16.4:First step – move the departments with most important relationships closer together:Starting PointImprovementFacility Layouts:SLP Example30Example 16.5:Continue the trial and error process until the layout is satisfactory:Second Iteration of ImprovementFacility Layouts:SLP Example31Product-Oriented layouts take the form of assembly or production lines in manufacturing.Meant for high volume productionLittle flexibilityA simple production line with processing times:Exhibit 16.19 Production LineFacility Layouts:Product-Oriented Layouts32A bottleneck is a constraint in a production system. Bottlenecks determine the utilization rate of the system.Cycle time is the frequency of products emerging completed from a product-oriented layout. A system’s cycle time can’t be any faster than the bottleneck.Balance delay is the lost resource utilization resulting from differences in processing time between a work center and the bottleneck.Production lead time is the amount of time a product spends in the system, start to finish. It is equal to cycle time multiplied by the number of workstations.The utilization rate for an entire system can be calculated by adding processing times at each work station and diving by production lead time.Facility Layouts:Product-Oriented Layouts33If a bottleneck can be made to work faster, the utilization rate of the whole system increases.In the system below, some of the work has been shifted from workstation D (the bottleneck) to C, speeding workstation D up by 0.3 minutes. The cycle time has gone from 2.5 to 2.2 minutes. Utilization has gone from 81.3% to 92.4%Reducing balance delay this way is called line balancing.Exhibit 16.20 Production Line Improved (in minutes)Facility Layouts:Product-Oriented Layouts34Identify the tasks, work elements, and precedence relationships by using a precedence chart.Determine the cycle time (C) necessary to satisfy output requirements. This is accomplished using the following equation:Determine the theoretical minimum number of workstations (Nmin) by using the equation Nmin = T/C (T is total amount of work done)Assign the tasks to workstationsEvaluate the utilization of the lineC = Production Time Available per DayUnits of Output Required per DayFacility Layouts:Step-by-Step: Line Balancing35Example 16.5:A deck furniture manufacturer wants to balance a line for a table. Production consists of the work elements in the tableProduction equals 120 tables per day.Exhibit 16.21 Assembly Work Elements for Deck TableFacility Layouts:Line Balancing Example36Example 16.5:Precedence relationships are presented below:Exhibit 16.22 Deck Table Precedence RelationshipsFacility Layouts:Line Balancing Example37Facility Layouts:Line Balancing ExampleExhibit 15.27 Diagram of Deck Table Assembly ProcessDeck Table Assembly Process38Example 16.5:Compute the cycle time:There are 480 minutes in an 8-hour workday, required production is 120 units per day. Required cycle time C = 480/120 = 4 minutesCompute the theoretical minimum number of workstations:Nmin = T/CT = 0.5+0.6+0.3...+1.8 = 19.6 minutesNmin = 19.6/4 = 4.9 (round up to 5 workstations)Facility Layouts:Line Balancing Example39Example 15.6:Assign tasks to workstations, making sure that precedence relationships are satisfied. Exhibit 16.24 First Iteration at Grouping Work Elements at WorkstationsFacility Layouts:Line Balancing Example40Example 16.5:The final production line:Overall utilization is 18.5/20 = 92.5%It’s hard to balance a line perfectly. The smaller the work elements, the easier it is to get close to perfect balanceExhibit 16.25 New Production LineFacility Layouts:Line Balancing Example41Cellular layouts area compromise between product-oriented and process-oriented layouts.A family of products is produced in a “cell”Less material transport costs than process-oriented layoutsMore flexibility than product-oriented layoutsObjectives of service layout may be very similar to manufacturing, but in some cases they are not.Consider retailers. Their objective is not to get customers in and out as efficiently as possibleObjective is to expose customer to more products and increase chance of purchaseHigh-frequency products (Milk, bread...) are often deliberately placed at the back of the store so customers are forced to walk past other productsFacility Layouts:Cellular Layouts and Service Layouts42