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7-1. Long-term capacity planning is a strategic decision that establishes a firm’s overall level of resources. Capacity decisions affect product lead times, customer responsiveness, operating costs, and a firm’s ability to compete. Inadequate capacity can lose customers and limit growth. Excess capacity can drain a company’s resources and prevent investments in more lucrative ventures.
7-2. Three strategies for expanding capacity: 1) Capacity lead strategy. Capacity is expanded in anticipation of demand growth. This is an aggressive strategy. 2) Average capacity strategy. This is a moderate strategy where capacity is expanded to coincide with average expected demand. 3) Capacity lag strategy. This conservative strategy has capacity increasing after an increase in demand has been documented. Incremental expansion is less risky than one-step expansion, but more costly. An attractive alternative to expanding capacity is outsourcing.
7.3 Economies of scale occur when it costs less per unit to produce or operate at high levels of output. This holds true when fixed costs can be spread over a larger number of units and production/operating costs do not increase linearly with output levels. A diseconomy of scale occurs when higher levels of output cost more per unit to produce.
7.4 Student answers will vary. Students show explore how capacity is measured at their school/business and what factors influence the acquisition and allocation of resources.
7-5 Student answers will vary. Lighting, size of desks, fixed or adjustable seating, tiered tows, size of blackboard, multimedia equipment, windows, etc. are all factors that affect learning. Classrooms with immobile desks facing forward imply that the class will be taught in a lecture format.
7-6 The answers to this question will differ based on location and age of the facility. Students should provide a simple sketch of each layout, describe the process of filling a customer’s order, and time how long it takes to be served in each establishment. In general, McDonald’s has multiple servers and multiple lines, Burger King has one line that breaks off into multiple servers, and Taco Bell has one line and one server. Burger King is more efficient but the line seems longer than McDonald’s multiple lines. Burger King’s back office operations are clearly separated, and Taco Bell’s preparation facilities are minimal since the food arrives precooked.
7-7 Facilities can be “laid out” to meet the following objectives: minimize material handling costs, utilize space efficiently, utilize labor efficiently, eliminate bottlenecks, facilitate communication and interaction (between workers, between workers and their supervisors, or between workers and customers), reduce manufacturing cycle time or customer service time, eliminate wasted or redundant movement, facilitate the entry, exit and placement of material, products, or people, incorporate safety and security measures, promote product and service quality, encourage proper maintenance activities, provide a visual control of operations or activities, and provide flexibility to adapt to changing conditions. Efficiency is affected by the time spent moving from place to place, the proximity of resources, and the ease of work and supervision.
7-8 Easy access – multiple entrances and exits; safety & security – lights at night, one entry point to flights in airport, rooms with keyed entry; flexibility – rooms with movable partitions; eliminate bottlenecks - assembly lines in general; use space efficiently – IKEA shelves from floor to ceiling; facilitate communication – tiered, curved auditorium where the speaker can see the audience.
7-9 A product layout is a sequential arrangement of machines (usually in a line) used to mass produce standardized products for a stable high-volume market. The equipment is special purpose, the workers have
limited skills, work-in-process inventory is low, and material moves along a fixed path (like a conveyor). Product layouts are known for their efficiency. In contrast, a process layout is a functional grouping of machines (usually known as a job shop) used to produce batches of varied products with fluctuating demand and low volume. The equipment is general purpose, the workers have more versatile skills, work-in-process inventory is high, and material moves along a variable path (e.g., with a forklift). Process layouts are known for their flexibility.
7-10 In ship production, the ship stays in one place and workers, materials, and other resources are brought to that location. In personal services like massages or manicures, the customer stays in one location for the duration of the service.
7-11 (a) process, (b) fixed-position (c) product, (d) primarily process
7-12 Fixed-layouts have the lowest fixed costs, but the highest variable costs. Product layouts have the highest fixed costs, but the lowest variable costs. Process layouts are in-between.
7-13. Block diagramming and relationship diagramming are both used to design process layouts. The difference occurs in the type of input data that is allowed. Block diagramming uses quantitative data, while relationship diagramming uses non-quantitative data.
7-14. Service layouts often have different objectives (e.g., maximizing profit per unit of display space), the appearance of the layout is important, and customers or information are tracked, rather than products. Examples will vary.
7-15. Line balancing attempts to equalize the amount of work at each station, eliminate bottlenecks, and minimize the number of stations. Several heuristic approaches are available for line balancing, including (1) ranked positional weight, (2) longest operation time, (3) shortest operation time, (4) most number of following tasks, and (5) least number of following tasks. Elements are assigned to work stations according to the rankings of the particular heuristic used until the cycle time is reached or until all tasks have been assigned.
7-16. Group technology groups parts into families according to similar shapes or processing requirements. Once the families of parts have been determined, the factory can be arranged into “cells” with each cell dedicated to producing a family of parts; thus, the name, cellular layout. Parts are grouped into families and the machines necessary to produce each family are placed into the appropriate cell. Production flow analysis (PFA) is a popular method for determining product families. Large, immovable machines or machines that are used in several cells are located as near as possible to their point of use. Workers in cellular manufacturing may be required to produce many different parts or products, operate several dissimilar machines (so they must be multi-functional) and follow a prescribed worker path through the cell.
7-17 Cellular layouts resemble product layouts “within” the cells and process layouts ‘between” the cells. The objective of this combination of basic layouts is to obtain the efficiency of a product layout with the
flexibility of a process layout. Cellular layouts reduce material handling, transit time, setup time and workin-process inventory, make better use of human resources, and are easier to control and automate than traditional layouts. However, cellular layouts aren’t for everyone. Part families may be inadequate to form meaningful cells, the cells can become poorly balanced, workers need extra training, and increased capital investment may be required.
7-18 A flexible manufacturing system (FMS) consists of programmable equipment connected by an automated material handling system and controlled by a central computer. In cellular layouts, parts are assigned to families based on similar flow paths. Thus, the routing of parts through a manufacturing cell follows the arrangement of machines within the cell (i.e., the product layout concept). The routing of parts in an FMS is highly variable, often referred to as “random” like a job shop or process layout. Processing and material movement are also more automated.
7-19. Mixed-model assembly lines process more than one model of a product on the same assembly line. This causes line balancing to be based on average processing times across models, adds the decision of model sequencing to the scheduling process, and requires workers to rotate among work stations.
7-20 Student responses will vary.
7-21 See the virtual tours section of the text webpage.
7-22. Real tours are great! Consider using the facility assessment worksheets created by Eugene Goodson and modified here from his article in the May 2002 issue of Harvard Business Review. It works best if a group of students meets directly after the tour to fill it out.
7-1.
There are multiple solutions to this problem where nonadjacent loads equal zero. For example, departments 1 and 5 could be switched in the layout shown above and the layout score would remain the same. Similarly, departments 2, 1, and 3 could be on the bottom rungs of the layout, and 4 and 5 could be on the top.
d Desired cycle time,C10 = a Actual cycle time,C9 =
(
) Efficiency23/310.8519or85.19% ==
(
) DailyOutput860/953.33 ==
If volunteers are plentiful, set the cycle time to the maximum task time.
b. Leadtime3015105101080 =+++++=
Desired output50 cases =
Working hours40 =
Desired cycle time(4060)5048 minutes ==
c.
d.
Actual cycle time45minutes = Efficiency80(245).8889 == or 88.89%
There are multiple solutions to this problem.
Working hours8 = Desired cycle time(860)1603 minutes ==
Efficiency14(54).7 == or 70% Efficiency = 14/(5 x 3) = 93.33%
Efficiency increases, but five people would need to work each night.
Alternative solution: A, BC, D, E, F
Demand15 cases = Days working75 = Desired cycle time75155 days ==
(other groupings are possible)
Four students should be assigned to each group.
The students can complete a case every five days after the first case has been completed. The first case will be completed on day 17. That leaves 58 days to finish the remainder of the cases. At 5 days per case, only 11 more cases can be completed, for a total of 12 cases per semester.
No, 15 cases cannot be completed in a semester. 7-20.
b. Demand125 units = Working hours40 =
Cycle time(4060)12519.2 == or 19 minutes
Min # work stations61193.2 == or 4 workstations
c. Actual cycle time17minutes =
Efficiency61(417).8971 == or 89.71%
Alternative groupings: ABC, DFG, EHI, JK ABC, DEF, GHI, JK 7-21.
Efficiency7.2(42.4).75 == or 75%
Note: I and K cannot be grouped together without J, thus the theoretical minimum no. of work stations cannot be reached. There are multiple ways to group elements into work stations for this problem.
Quota = 80 claims
Working hours = 8
Desired cycle time = (8 x 60) / 80 = 6 minutes
There are several ways to balance this line. Output and efficiency vary depending on how the elements are arranged.
Option 1:
Actual cycle time6 minutes =
Efficiency15(36).8333 == or 83.3%
Output(860)680 claims ==
Option 2:
Actual cycle time13minutes =
Efficiency51(413).9808 == or 98.08% 8-hr output(860)1336.92 beds ==
There are alternative groupings that will meet the cycle time, but the solution shown above is the most efficient and productive.
Alternative solution:
a. Demand300units = Working hours35 = Desired cycle time(3560)3007 minutes ==
b. Min # work stations2673.714 == or 4 workstations Efficiency26(47).9286 == or 92.86%
Alternative solutions:
ABF, DG, C, EH
AD, BE, FC, GH
c. Desired cycle time9 minutes = Min # work stations2692.888 == or 3 workstations
==
Efficiency46(412).9583 or 95.83%
Output(860)1240 units ==
Alternate solutions: ABCD, EF, GJ, HIK; AF, BCE, DGJ, HIK; ADF, EBC, GH, IJK
7-25.
Hint: Highlight the table, click on Data from the top menu, then Sort in descending order by the processes with the most X’s. Revise the table by rearranging the order of jobs and processes.
Matrix Sorted: (answers will vary; this was sorted by 1 then 6 then 15)
Final Matrix: (reorganized and re-grouped)
Cell 1: Processes 1, 2, 3, 7, 9, 12, 14 Jobs A, C, D, G, I, M
Cell 2: Processes 5, 10, 15, 16 Jobs H, K, N, O
Cell 3: Processes 4, 6, 8, 11, 13 Jobs B, E, F, J, L, P, Q 7-27.
Hint: Highlight the table, click on Data from the top menu, then Sort. Sort by the processes with the most X’s.
Revise the table by rearranging the order of jobs and processes.
Rearrange Matrix
Original Layout
Revised Layout
1. Workout has different types of customers (body builders, athletes, college students, professionals, Moms, senior citizens, rehab patients, youngsters, and so forth) that require different equipment, ambience and services. Needed services include child care and children’s classes, massage and physical therapy, and nontraditional services such as boxing, pilates, and yoga. Adding a track, swimming pool or other major multiuse area would be helpful. Instead of a generic process layout, perhaps the faculty could be divided into sections to better serve each set of customers. Shared equipment could be located toward the center of the layout.
2. Most gyms follow a process layout with similar machines grouped together. Circuit training follows a product layout. Cells are sometimes created with a few pieces of cardio equipment, free weights, and generic strength equipment. Sometimes a large multi-use piece of equipment constitutes a cell.
Student-designed layouts will vary. The layout below responds to customer complaints by:
– Removing the cardio area from the main workout areas
Putting some cardio machines for warm-ups next to strength machines
– Always having some cardio machines on the first floor for customers who cannot climb stairs
Separating the low impact areas from heavy lifting.
– Including multi-use equipment, some free weights and basic strength equipment in the low impact area.
Locating power lifting, some exercise equipment and hard core machines away from the entrance and aerobics rooms
If the facility is two-tiered, always locating the least strenuous activities on the top floor so that the less experienced are looking down on the more experienced and not vice versa.
a. Yes; the maximum time to complete a task is 60 secs.
b. Desired output60 per hour = Desire cycle time1minute = or 60 seconds
The first worker would review the application and take the photo. The second worker would verify the information, checking for outstanding debt. The third worker would process the payment, attach the photo and magnetize the passport. Actual cycle time60seconds =
c. No. workers3 = Efficiency140(360).7778 == or 77.78%
This case asks you to develop a layout that is both efficient and welcoming to a student population. Customer complaints about lengthy wait times have prompted this analysis. While the open layout described in the case may be more inviting to customers and consistent with the image the company is trying to project, changes can be made to improve the customer’s experience and the efficiency of operations. Better signage, a more apparent customer flow, and better control over customer entrances and exits should be addressed in recommendations. Remember, however, that the objective of a service layout is not all about efficiency. Rather than minimize cost, service layout objectives center on maximizing revenue. So any solution should expose customers to impulse items (such as bakery items), as well as regular purchases (such as fountain drinks).
There are several ways to approach this case consistent with chapter material. The layout can be arranged as a process layout using block diagramming techniques or as a cellular layout using production flow analysis.
Process Layout. To use the process layout approach, compile the data on movements between food areas. Note the bottled drinks, fresh fruit and salads have been combined into a “refrigerated items” label. Also, be aware that the following movements may have been biased or constrained by the original layout. Nevertheless, this is a good starting point for analysis.
Following is the best schematic diagram that can be developed, resulting in a layout “score” of 11. Alternative layouts are possible.
The final layout would look something like this:
Cellular Layout. A cellular layout looks for groups or “families” of customers and identifies their flow paths. The layout is organized so that these different groups can be processed through designated areas of the layout (called cells) efficiently. To begin this analysis, the customer flow data matrix can be sorted in different ways. The first re-sort was conducted via the data sort command in Excel by bakery items, then fountain drinks, then sandwiches. Following is the re-sorted customer flow matrix.
Four general customer flows (cells) emerge.
Customer Flow 1 – Bakery items and fountain drinks, with an occasional soup or refrigerated item. Current time in the system averages 3.8 minutes.
Customer Flow 2
Bakery items, no fountain drinks, pre-made refrigerated items and some soup, or other items. Current time in the system averages 4.1 minutes.
Customer Flow 3
Made-to-order sandwiches, some soup and fountain drinks. Current time in the system averages 8.3 minutes.
Customer Flow 4
Ready-made items or quick pick-ups. Current time in the system averages 3.5 minutes.
The cellular layout would look something like this:
Sandwich line 1
Bottled drinks, fruit, salads & fresh food
Fountain Drinks
Bread
Soups Trays
Ckout
Coffee & Cookies
Bakery items
Bottled drinks
Trays
Ckout
Sandwich line 2 Entrance
Entrance
Bakery items, coffee and cookies are located next to the entrance/exit. Fountain drinks have been moved to the middle. Bread has been added to the soup area, so customers don’t have to go to the bakery section. Bottled drinks, and other refrigerated items are located in two places in the layout. Sandwiches are divided into two flows.
Alternative sorts, by refrigerated items, for example result in different customer flow patterns. Customer flows could also be categorized as made-to-order (e.g. sandwiches, grill), ready-made (e.g., refrigerated items, bakery), and customer served (e.g., fountain drinks, coffee, soup). Obviously, several different layout configurations are possible.