Lecture 6. Capacity and Facilities. Lecture Outline. Capacity. Maximum capability to produce Capacity planning

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1 MGS4700 Operations Management Capacity and Facilities ecture 6 ecture Outline Capacity Planning Facility ayout Basic ayouts Designing Process ayouts Designing Service ayouts Designing Product ayouts Hybrid ayouts Facility ocation ocation Analysis Techniques 2 Capacity Maximum capability to produce Capacity planning establishes overall level of productive resources for a firm 3 basic strategies for timing of capacity expansion in relation to steady growth in demand (lead, lag, and average) 3

2 Capacity Expansion Strategies 4 Capacity (cont.) Capacity increase depends on volume and certainty of anticipated demand strategic objectives costs of expansion and operation Best operating level % of capacity utilization that minimizes unit costs Capacity cushion % of capacity held in reserve for unexpected occurrences 5 Economies of Scale it costs less per unit to produce high levels of output fixed costs can be spread over a larger number of units production or operating costs do not increase linearly with output levels quantity discounts are available for material purchases operating efficiency increases as workers gain experience 6

3 Best Operating evel for a Hotel 7 Facility ayout Facility layout refers to the arrangement of machines, departments, workstations, storage areas, and common areas within an existing or proposed facility. 8 Benefits of An Effective ayout Overall, improved effectiveness and efficiency of the operations system Higher utilization of space, equipment, and labor Improved flow of information, materials, and work ower material handling costs and/or redundant movement Reduced bottlenecks, cycle time, and service time Higher product and service quality More convenience to the customer Improved employee morale and working conditions Etc. 9

4 BASIC AYOUTS Process layouts group similar activities together into departments or work centers according to process or function they perform Product layouts arrange activities in line according to sequence of operations for a particular product or service Fixed-position layouts are used for projects in which product cannot be moved 10 Process ayout in Services Women s lingerie Shoes Housewares Women s dresses Cosmetics and Jewelry Children s department Women s sportswear Entry and display area Men s department 11 Process ayout in Manufacturing athe Department Milling Department M M Drilling Department D D D D M M D D D D G G G P G G Grinding Department Receiving and Shipping G P Painting Department A A A Assembly 12

5 A Product ayout In Out 13 Product ayout Examples Assembly ines Generator assembly line Oil refinery 14 Product ayout in Services Out of State Driver icense Transfer Example 1) Review application 60 seconds 2) Eye Test 120 seconds 3) Check file for violations 60 seconds 4) Payment 30 seconds 5) Photo 30 seconds 6) Issue the icense 50 seconds 15

6 Comparison of Product and Process ayouts Description Type of process Product Demand Volume Equipment Product Sequential arrangement of activities Continuous, mass production, mainly assembly Standardized, made to stock Stable High Special purpose Process Functional grouping of activities Intermittent, job shop, batch production, mainly fabrication Varied, made to order Fluctuating ow General purpose 16 Workers Inventory Comparison of Product and Process ayouts Storage space Material handling Aisles Scheduling ayout decision Goal Advantage Product imited skills ow in-process, high finished goods Small Fixed path (conveyor) Narrow Part of balancing ine balancing Equalize work at each station Efficiency Process Varied skills High in-process, low finished goods arge Variable path (forklift) Wide Dynamic Machine location Minimize material handling cost Flexibility 17 Fixed-Position ayouts Typical of projects in which product produced is too fragile, bulky, or heavy to move Equipment, workers, materials, other resources brought to the site ow equipment utilization Highly skilled labor Often low fixed cost Typically high variable costs 18

7 Designing Process ayouts Goal: minimize material handling costs Block Diagramming minimize nonadjacent loads used when quantitative data is available Relationship Diagramming based on location preference between areas used when quantitative data is not available 19 Designing Product ayouts Objective Balance the assembly line ine Balancing Problem how to organize work elements (smallest possible jobs or tasks) such that each workstation has the same work load/time for processing a unit 20 A Balanced ine Every operation step in the process has the same cycle time 1) Review application 60 seconds 2) Eye Test 60 seconds 3) Check file for violations 60 seconds 4) Payment 60 seconds 5) Photo 60 seconds 6) Issue the icense 60 seconds In summary: If each workstation on the assembly line takes the same amount of time to perform the work elements that have been assigned, then products will move smoothly from workstation to workstation with no need for a product to wait or a worker to be idle. 21

8 An Unbalanced ine Station 1 Station 2 Station Work 5 min/unit 8 min/unit 3 min/unit element What s the problem here? 22 ine Balancing ine balancing tries to equalize the amount of work at each workstation Two constraints in line balancing: Precedence requirements Cycle time restrictions 23 Precedence Requirement Precedence requirements are physical restrictions on the order in which operations are performed. Work Element Precedence Time (Seconds) A Review application B Eye test A 120 C Check file for violations B 60 D Payment C 30 E Photo D 30 F Issue the license E 50 24

9 Cycle Time Restrictions Cycle time Maximum amount of time a product is allowed to spend at each station Desired cycle time Desired cycle time depends on demand requirement C d = Production time available Desired units of output In order to achieve the production requirement (quota), Actual cycle time Desired cycle time 25 Cycle Time Example C d = production time available desired units of output C d = (8 hours x 60 minutes / hour) (120 units) C d = = 4 minutes 26 Cycle Time vs. Flow Time Cycle time = max time spent at any station Flow time = time to complete all stations minutes 4 minutes 4 minutes Flow time = = 12 minutes Cycle time = max (4, 4, 4) = 4 minutes 27

10 ine Balancing Performance Measures Efficiency E = j i = 1 nc a t i Minimum number of workstations N = j i = 1 C d t i where t i = completion time for element i j = number of work elements n = actual number of workstations C a = actual cycle time C d = desired cycle time 28 ine Balancing Procedure 1. Draw and label a precedence diagram 2. Calculate desired cycle time required for the line 3. Calculate theoretical minimum number of workstations 4. Group elements into workstations, recognizing cycle time and precedence constraints 5. Calculate efficiency of the line 6. Determine if the theoretical minimum number of workstations or an acceptable efficiency level has been reached. If not, go back to step ine Balancing Example (Problem 7-18) The Speedy Pizza Palace is revamping its orderprocessing and pizza-making procedures. The demand for pizzas is 120 per night (5:00 p.m. to 1:00 a.m.). In order to deliver fresh pizza fast, six elements must be completed. Work Element Precedence Time (Minutes) A Receive order B Shape dough A 1 C Prepare toppings A 2 D Assemble pizza B,C 3 E Bake pizza D 3 F Deliver pizza E 3 30

11 Step 1: Draw and label a precedence diagram 2 A 1 B C D E F Work Element Precedence Time A Receive order B Shape dough A 1 C Prepare toppings A 2 D Assemble pizza B,C 3 E Bake pizza D 3 F Deliver pizza E 3 31 Step 2: Calculate the desired cycle time required for the line C d = Desired cycle time Production time available Desired units of output Desired units of output = 120 per night Production time available = 8 hours X 60= 480 minutes C d = 480/120= 4 minutes 32 N Step 3: Calculate the theoretical minimum number of workstations The theoretic minimum number of workstations = j i = 1 C j d t i t i = completion time for element i j = number of work elements C d = desired cycle time t i i= N = 1 = = = C 4 4 d 33

12 Step 4: Group elements into workstations Recognize there are cycle time and precedence constraints. 2 A 1 B C D E F Actual cycle time = 4 minutes Actual number of workstations = 4 34 Step 5: Calculate the efficiency of the line Efficiency of the line: E j i i= = 1 nc t i = completion time for element i j = number of work elements n = actual number of workstations C a = actual cycle time t E = nc j = = i i= 1 = a t a 87.5% 35 Step 6: Check if performance measure(s) are satisfactory or not Actual number of workstations = 4 Efficiency of the line = 87.5% Theoretic number of workstations = 4 36

13 Which Performance Measure to Use? Number of Workstations or Efficiency? Ideally we would like to have the minimum number of workstations and also the highest efficiency. If there is inconsistency between these two measures, generally go with the minimum number of workstations. 37 Number of Workstations or Efficiency? Example 1 2 A B D E F C 2 Actual cycle time = 3 minutes Actual number of workstations = 5 Efficiency: t E = nc j = = i i= 1 = a 93.3% 38 In-Class Exercise Problem 7-17 (p. 283) The TB Yogurt Company must be able to make 600 party cakes in a 40 hour week. Use the following information to draw and label a precedence diagram, compute cycle time, compute the theoretical minimum number of workstations, balance the assembly line, and calculate its efficiency. Task Precedence Time (mins) A -- 1 B A 2 C B 2 D A, E 4 E -- 3 F C, D 4 39

14 Hybrid ayouts Cellular layouts group dissimilar machines into work centers (called cells) that process families of parts with similar shapes or processing requirements Flexible manufacturing system automated machining and material handling systems which can produce an enormous variety of items Mixed-model assembly line processes more than one product model in one line 40 Cellular ayout Combines the flexibility of a process layout and the efficiency of a product layout. Within one cell, layout of machines resembles a small assembly line. The layout between cells is a process layout. Cells are arranged in relation to each other so as to minimize material movement. 41 Cellular ayouts 1. Identify families of parts with similar flow paths 2.Group machines into cells based on part families 3.Arrange cells so material movement is minimized 4. ocate large shared machines at point of use 42

15 Parts Families A family of similar parts A family of related grocery items 43 Original Process ayout Assembly A B C Raw materials 44 Revised Cellular ayout Assembly Cell 1 Cell 2 6 Cell A B C Raw materials 45

16 A Manufacturing Cell with Worker Paths Source: J.T. Black, Cellular Manufacturing Systems Reduce Setup Time, Make Small ot Production Economical. Industrial Engineering (November 1983). Direction of part movement within cell HM VM Worker 3 VM Paths of three workers moving within cell Material movement Worker 2 G Key: S = Saw = athe HM = Horizontal milling machine VM = Vertical milling machine G = Grinder S In Worker 1 Final inspection Finished part Out 46 Advantages and Disadvantages of Cellular ayouts Advantages Reduced material handling and transit time Reduced setup time Reduced work-in- process inventory Better use of human resources Easier to control Easier to automate Disadvantages Inadequate part families Poorly balanced cells Expanded training and scheduling of workers Increased capital investment 47 Flexible Manufacturing Systems (FMS) Computer control room Automatic tool changer CNC CNC Pallet Parts Terminal Finished goods CNC (computer numerical controlled) are machines that are controlled by computer software. FMS: CNC machines + automated material handling system (e.g., conveyors, AGV, robots) FMS can produce an enormous variety of items 48

17 Mixed Model Assembly ines Produce multiple models in any order on one assembly line Issues in mixed model lines ine balancing U-shaped line Flexible workforce Model sequencing 49 Balancing U-Shaped ines Precedence diagram: A B C Cycle time = 12 min D E (a) Balanced for a straight line (b) Balanced for a U-shaped line A,B C,D E A,B 9 min 12 min 3 min Efficiency = = =.6666 = 66.7 % 3(12) 36 C,D Efficiency = = = 100 % 2(12) 24 E 12 min 12 min 50 Facility ocation: Factors affecting location Heavy Manufacturing and and Construction costs Raw material & finished goods shipment modes Proximity to raw materials, utilities, and labor ight Industry Transportation costs accessible geographic region Proximity to markets and costs Retail & Service Proximity to customers -- ocation is everything 51

18 ocation Analysis Techniques ocation factor rating Center-of-gravity oad Distance 52 Center-of-Gravity Technique ocate facility at center of geographic area It considers the existing facilities, the distance between them, and the weights (or volumes) of goods to be shipped This methodology involves formulas used to compute the coordinates of the twodimensional point on a grid-map 53 Grid-Map Coordinates y y 2 y 1 y 3 1 (x 1, y 1 ), W 1 2 (x 2, y 2 ), W 2 3 (x 3, y 3 ), W 3 x = n x i W i i = 1 n i = 1 W i y = n y i W i i = 1 n i = 1 W i where, x, y = coordinates of new facility at center of gravity x i, y i = coordinates of existing facility i W i = annual weight shipped from facility i x 1 x 2 x 3 x 54

19 Center-of-Gravity Technique: Example y I-77 (17k) I-77 I-85 Airport x y W 17,000 12,000 9, Miles I-85 (12k) Airport (9k) x Miles 55 Center-of-Gravity Technique: Example n x i W i i = 1 (14)(17000) + (20)(12000) + (30)(9000) x = = = n W i i = 1 n y i W i i = 1 (30)(17000) + (8)(12000) + (14)(9000) y = = = n W i i = 1 56 Miles y Center-of-Gravity Technique: Example I-77 (17k) Center of gravity (19.68, 19.26) I-85 (12k) Airport (9k) x Miles I-77 I-85 Airport x y W 17,000 12,000 9,000 57

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