FACILITY LOCATION &

LAYOUT
INDUSTRIAL PLANT & SAFETY
Alessandro Chiaraviglio

Introduction to location
Plant location or the facilities location problem is an
important strategic level decision-making for an
organization. One of the key features of a conversion
process (manufacturing system) is the efficiency with
which the products (services) are transferred to the
customers.
The selection of location is a key-decision as large
investment is made in building plant and machinery. It is
not advisable or not possible to change the location very
often; so an improper location of plant may lead to waste
of all the investments made in building and machinery,
equipment.
Before a location for a plant is selected, long range
forecasts should be made anticipating future needs of
the company.
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Location choice for new

organizations
Cost economies are always important while selecting a location for the
first time, but should keep in mind the cost of long-term business
objectives.
1. Identification of region: long-term considerations about marketing,
technology, internal organizational strengths and weaknesses, regionspecific resources and business environment, legal-governmental
environment, social environment and geographical environment
suggest a suitable region for locating the operations facility.
2. Choice of a site within a region: Once the suitable region is
identified, the next step is choosing the best site from an available set.
Evaluation of alternative sites for their tangible and intangible costs will
resolve facilities-location problem.
3. Dimensional analysis: If all the costs were tangible and quantifiable,
the comparison and selection of a site is easy. The location with the
least cost is selected. In most of the cases intangible costs are
expressed in relative terms or in absolute terms; their relative merits
and demerits of sites can also be compared easily.
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Location choice for new

organizations
Since both tangible and intangible costs need to be considered for a
selection of a site, dimensional analysis is used.
Dimensional analysis consists in computing the relative merits (cost
ratio) for each of the cost items for two alternative sites. For each of
the ratios an appropriate weightage by means of power is given and
multiplying these weighted ratios to come up with a comprehensive
figure on the relative merit of two alternative sites
C1M, C2M, , CzM are the different costs associated with a site M on
the z different cost items.
C1N, C2N, , CzN are the different costs associated with a site N
W1, W2, W3, , Wz are the weightage given to these cost items
then relative merit of the M and site N is given by:

W1

M
1

W2

M
2

... C

WZ

M
Z

If this is > 1, site N is superior and vice-versa.

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Location choice for existing

organizations
When the demand for product increases, it will give rise to following
decisions:
a. whether to expand the existing capacity and facilities;
b. whether to look for new locations for additional facilities;
c. whether to close down existing facilities to take advantage of some
new locations.
In this case a manufacturing plant has to fit into a multi-plant
operations strategy. That is, additional plant location in the same
premises and elsewhere under following circumstances:
1. Plant manufacturing distinct products.
2. Manufacturing plant supplying to specific market area.
3. Plant divided on the basis of the process or stages in
manufacturing.
4. Plants emphasizing flexibility.

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Plants manufacturing distinct

products
Each plant services the entire market area for the organization. This
strategy is necessary where the needs of technological and resource
inputs are specialized or distinctively different for the different productlines.
For example, a high quality precision product-line should not be
located along with other product-line requiring little emphasis on
precision. It may not be proper to have too many contradictions such
as sophisticated and old equipment, highly skilled and semi-skilled
personnel, delicates processes and those that could permit rough
handlings, all under one roof and one set of managers.
The more decentralized these pairs are in terms of the management
and in terms of their physical location, the better would be the planning
and control and the utilization of the resources.
Product specialization may be necessary in a highly competitive
market. It may be necessary to exploit the special resources of a
particular geographical area.

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Manufacturing plants supplying

to a specific market area
Here, each plant manufactures almost all of the companys products.
This type of strategy is useful where market proximity consideration
dominates the resources and technology considerations.
This strategy requires great deal of coordination from the corporate
office.
An extreme example of this strategy is that of soft drinks bottling
plants.

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Plants divided on the basis of the

process
Each production process or stage of manufacturing may require
distinctively different equipment capabilities, labour skills,
technologies, and managerial policies and emphasis.
Since the products of one plant feed into the other plant, this strategy
requires much centralized coordination of the manufacturing activities
from the corporate office that are expected to understand the various
technological aspects of all the plants.

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Plants emphasizing flexibility

This requires much coordination between plants to meet the changing
needs and at the same time ensure efficient use of the facilities and
resources.
Frequent changes in the long-term strategy in order to improve be
efficiently temporarily, are not healthy for the organization.
In any facility location problem the central question is: Is this a location
at which the company can remain competitive for a long time?

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Factors influencing plant location

Location conditions are hard to measure. Tangible cost
based factors such as wages and products costs can be
quantified precisely into what makes locations better to
compare.
On the other hand non-tangible features, which refer to
such characteristics as reliability, availability and security,
can only be measured along an ordinal or even nominal
scale. To sum this up non-tangible features are very
important for business location decisions.

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Factors influencing plant location

Following are the general factors required for location of
plant in case of all types of organisations.
CONTROLLABLE
1. Proximity to markets
2. Supply of materials
3. Transportation facilities
4. Infrastructure availability
5. Labour and wages
6. External economies
7. Capital.

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UNCONTROLLABLE
8. Government policy
9. Climate conditions
10. Supporting industries
and services
11. Community and labour
attitudes
12. Community
Infrastructure.
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Weighted Factor Rating Method

The process of selecting a new facility location involves a
series of following steps:
1. Identify the important location factors.
2. Assign a weight to each factor according to its relative
importance
3. Assign each location according to the merits of the
location for each factor.
4. Calculate the rating for each location by multiplying
factor assigned to each location with basic weight.
5. Find the sum of product calculated for each factor and
select best location having highest total score.
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Weighted factor rating method

Let us assume that a new medical facility, Health-care, is to be located
in Turin. The location factors, weights, and scores (1 = poor, 5 =
excellent) for two potential sites are shown in the following table

The weighted score for this particular site is calculated by multiplying

each factors weight by its score and adding the results:
Weighted score location 1 = 25 3 + 25 4 + 25 3 + 15 1 + 10 5 =
= 75 + 100 + 75 + 15 + 50 = 315
Weighted score location 2 = 25 5 + 25 3 + 25 3 + 15 2 + 10 3 =
= 125 + 75 + 75 + 30 + 30 = 335
Location 2 is the best site based on total weighted scores.
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Center of gravity method

Centre of gravity is based primarily on cost considerations. This
method can be used to assist managers in balancing cost and service
objectives. The centre of gravity method takes into account the
locations of plants and markets, the volume of goods moved, and
transportation costs in arriving at the best location for a single
intermediate warehouse.
The centre of gravity is defined to be the location that minimizes the
weighted distance between the warehouse and its supply and
distribution points, where the distance is weighted by the number of
tones supplied or consumed.
The centre of gravity is determined by the formula:
C
C

y=

i ,x

W
i ,y

Cy = y coordinate of COG

Cx = x coordinate of COG
Di,x / Di,y = x, y coordinate of location i

Wi = weight of location i

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Center of gravity method

N

Zone N

Zone N

(x,y)

(x,y)

tonn

tonn

Lx

Ly

Next we find Cx and Cy:

Cx = 453.5/68 = 6.67
Cy = 205.5/68 = 3.02
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Introduction to layout
Plant layout refers to the physical arrangement of
production facilities.
It is the configuration of departments, work centres and
equipment in the conversion process.
It is a floor plan of the physical facilities, which are used in
production.
According to Moore Plant layout is a plan of an optimum
arrangement of facilities including personnel, operating
equipment, storage space, material handling equipment
and all other supporting services along with the design of
best structure to contain all these facilities.
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Objectives of plant layout

The primary goal of the plant layout is to maximise the profit by
arrangement of all the plant facilities to the best advantage of total
manufacturing of the product.
The objectives of plant layout are:
7. Flexibility of manufacturing
1. Streamline the flow of
operations and arrangements.
materials through the plant.
8. Provide for employee
2. Facilitate the manufacturing
convenience, safety and comfort.
process.
9. Minimize investment in
3. Maintain high turnover of inequipment.
process inventory.
10. Minimize overall production
4. Minimize materials handling
time.
and cost.
11. Maintain flexibility of
5. Effective utilization of men,
arrangement and operation.
equipment and space.
12. Facilitate the organizational
6. Make effective utilization of
structure.
cubic space.
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Principles of plant layout

1. Principle of integration: A good layout is one that integrates men,
materials, machines and supporting services and others in order to get
the optimum utilization of resources and maximum effectiveness.
2. Principle of minimum distance: This principle is concerned with the
minimum travel (or movement) of man and materials. The facilities
should be arranged such that, the total distance travelled by the men
and materials should be minimum and as far as possible straight line
movement should be preferred.
3. Principle of cubic space utilization: The good layout is one that
utilize both horizontal and vertical space. It is not only enough if only
the floor space is utilized optimally but the third dimension, i.e., the
height is also to be utilized effectively.

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Principles of plant layout

4. Principle of flow: A good layout is one that makes the materials to
move in forward direction towards the completion stage, i.e., there
should not be any backtracking.
5. Principle of maximum flexibility: The good layout is one that can be
altered without much cost and time, i.e., future requirements should be
taken into account while designing the present layout.
6. Principle of safety, security and satisfaction: A good layout is one
that gives due consideration to workers safety and satisfaction and
safeguards the plant and machinery against fire, theft, etc.
7. Principle of minimum handling: A good layout is one that reduces
the material handling to the minimum.

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Classification of plant layout

Layouts can be classified into the following five categories:
1. Process layout
2. Product layout
3. Combination layout
4. Fixed position layout
5. Group layout

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Process layout
In process layout the arrangement of facilities are grouped together
according to their functions. All machines performing similar type of
operations are grouped at one location in the process layout e.g., all
lathes, milling machines, etc. are grouped in the shop will be clustered
in like groups.
Process layout is recommended for batch production.
The flow paths of material through the facilities from one functional
area to another vary from product to product. Usually the paths are
long and there will be possibility of backtracking.
Process layout is normally used when the production volume is not
sufficient to justify a product layout. Typically, job shops employ
process layouts due to the variety of products manufactured and their
low production volumes.

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Process layout
Advantages
In process layout machines are better
utilized and fewer machines are
required.
Flexibility of equipment and personnel
is possible in process layout.
Lower investment on account of
comparatively less number of
machines and lower cost of general
purpose machines.
Higher utilization of production
facilities.
A high degree of flexibility with regards
to work distribution to machineries and
workers.
The diversity of tasks and variety of
job makes the job challenging and
interesting.
Supervisors will become highly
knowledgeable about the functions
under their department.

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Limitations
Backtracking and long movements
may occur in the handling of materials
thus, reducing material handling
efficiency.
Material handling cannot be
mechanized which adds to cost.
Process time is prolonged which
reduce the inventory turnover and
increases the inprocess inventory.
Lowered productivity due to number of
set-ups.
Throughput (time gap between in and
out in the process) time is longer.
Space and capital are tied up by workin-process.

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Product layout
In this type of layout, machines and auxiliary services are located
according to the processing sequence of the product. If the volume of
production of one or more products is large, the facilities can be
arranged to achieve efficient flow of materials and lower cost per unit.
Special purpose machines are used which perform the required
function quickly and reliably.
The product layout is selected when the volume of production of a
product is high such that a separate production line to manufacture it
can be justified.
In a strict product layout, machines are not shared by different
products. Therefore, the production volume must be sufficient to
achieve satisfactory utilization of the equipment.

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Product layout
Advantages
The flow of product will be smooth and
logical in flow lines.
In-process inventory is less.
Throughput time is less.
Minimum material handling cost.
Simplified production, planning and
control systems are possible.
Less space is occupied by work transit
and for temporary storage.
Reduced material handling cost due to
mechanized handling systems and
straight flow.
Perfect line balancing which eliminates
bottlenecks and idle capacity.
Manufacturing cycle is short due to
uninterrupted flow of materials.
Small amount of work-in-process
inventory.
Unskilled workers can learn and
manage the production.

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Limitations
A breakdown of one machine in a
product line may cause stoppages of
machines in the downstream of the
line.
A change in product design may
require major alterations in the layout.
The line output is decided by the
bottleneck machine.
Comparatively high investment in
equipments is required.
Lack of flexibility. A change in product
may require the facility modification.

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Combination layout
A combination of process and product layouts combines the
advantages of both types of layouts.
A combination layout is possible where an item is being made in
different types and sizes. Here machinery is arranged in a process
layout but the process grouping is then arranged in a sequence
to manufacture various types and sizes of products. It is to be noted
that the sequence of operations remains same with the variety of
products and sizes.

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Fixed position layout

This is also called the project type of layout. In this type of layout, the
material, or major components remain in a fixed location and tools,
machinery, men and other materials are brought to this location. This
type of layout is suitable when one or a few pieces of identical heavy
products are to be manufactured and when the assembly consists of
large number of heavy parts, the cost of transportation of these parts is
very high.
Advantages
Helps in job enlargement and
upgrades the skills of the
operators.
The workers identify themselves
with a product in which they take
interest and pride in doing the job.
Greater flexibility with this type of
layout.
Layout capital investment is lower.
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Group (cellular) layout

There is a trend now to bring an element of flexibility into
manufacturing system as regards to variation in batch sizes and
sequence of operations.
A grouping of equipment for performing a sequence of operations on
family of similar components or products has become all the important.
Group Technology (GT) is the analysis and comparisons of items to
group them into families with similar characteristics. GT can be used to
develop a hybrid between pure process layout and pure flow line
(product) layout.
This technique is very useful for companies that produce variety of
parts in small batches to enable them to take advantage and
economics of flow line layout.
The application of group technology involves two basic steps; first step
is to determine component families or groups. The second step in
applying group technology is to arrange the plants equipment used to
process a particular family of components.

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Group (cellular) layout

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Group (cellular) layout

This represents small plants within
the plants. The group technology
reduces production planning time
for jobs. It reduces the set-up time.
The basic aim of a group
technology layout is to identify
families of components that
require similar of satisfying all the
requirements of the machines are
grouped into cells. Each cell is
capable of satisfying all the
requirements of the component
family assigned to it.

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Design of plant layout

Each plant layout is characterized by its effectiveness, expressed in
terms of cost.
The effectiveness of different layouts is calculated as

Fij Dij Cij

Where:
Fij is the flow in loads between work centre i and work centre j
Dij is the distance between work centre i and work centre j
Cij is cost per distance travelled between work centre i and work
centre j
In a product layout flows of material are fixed at the design stage as
the type of transport so the only variable is the distance between a
work center and the next. Maximum effectiveness is achieved by
minimizing the distances.
The case of process layout, as we shall see, it is much more complex.
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Design of a product layout

In product layout, equipment or departments are dedicated to a
particular product line, duplicate equipment is employed to avoid
backtracking, and a straight-line flow of material movement is
achievable. Adopting a product layout makes sense when the batch
size of a given product or part is large relative to the number of
different products or parts produced.
Assembly lines are a special case of product layout. In a general
sense, the term assembly line refers to progressive assembly linked by
some material-handling device. The usual assumption is that some
form of pacing is present and the allowable processing time is
equivalent for all workstations.
Within this broad definition, there are important differences among line
types. A few of these are material handling devices (belt or roller
conveyor, overhead crane); line configuration (U-shape, straight,
branching); pacing (mechanical, human); product mix (one product or
multiple products); workstation characteristics (workers may sit, stand,
walk with the line, or ride the line); and length of the line (few or many
workers).
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Line balancing
The most common assembly-line is a moving conveyor that passes a
series of workstations in a uniform time interval called the workstation
cycle time (which is also the time between successive units coming off
the end of the line). At each workstation, work is performed on a
product either by adding parts or by completing assembly operations.
The work performed at each station is made up of many bits of work,
termed tasks, elements, and work units.
The total work to be performed at a workstation is equal to the sum of
the tasks assigned to that workstation.
The line-balancing problem is one of assigning all tasks to a series of
workstations so that each workstation has no more than can be done
in the workstation cycle time, and so that the unassigned (idle) time
across all workstations is minimized.
The problem is complicated by the relationships among tasks imposed
by product design and process technologies.

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Line balancing

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Line balancing
The steps in balancing an assembly line are:
1. Specify the sequential relationships among tasks using a precedence
diagram.
2. Determine the required workstation cycle time, using the formula

C = (Production time per day)/(Required output per day)

3. Determine the theoretical minimum number of workstations required to
satisfy the workstation cycle time constraint using the formula

Nt = (Sum of task times)/(Cycle time)

4. Select a primary rule by which tasks are to be assigned to workstations, and
a secondary rule to break ties.
5. Assign tasks, once at a time, to the first workstation until the sum of the task
times is equal to the workstation cycle time, or no other tasks are feasible
because of time or sequence restrictions. Repeat the process for other
workstation until all tasks are assigned.
6. Evaluate the efficiency of the balance derived using the formula

E = (Sum of task times)/(Actual number of WsWs cycle time)

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Design of a process layout

For process layouts, the relative arrangement of departments and
machines is the critical factor because of the large amount of
transportation and handling involved.
Process layout design determines the best relative locations of
functional work centers. Work centers that interact frequently, with
movement of material or people, should be located close together,
whereas those that have little interaction can be spatially separated.
One approach of designing an efficient functional layout is described
below.
1. List and describe each functional work centre.
2. Obtain a drawing and description of the facility being designed.
3. Identify and estimate the amount of material and personnel flow
among work centres
4. Use structured analytical methods to obtain a good general layout.
5. Evaluate and modify the layout, incorporating details such as
machine orientation, storage area location, and equipment access.

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Design of a process layout

The first step in the layout process is to identify and describe each
work centre. The description should include the primary function of the
work centre; drilling, new accounts, or cashier; its major components,
including equipment and number of personnel; and the space required.
The description should also include any special access needs (such
as access to running water or an elevator) or restrictions (it must be in
a clean area or away from heat).
For a new facility, the spatial configuration of the work centres and the
size and shape of the facility are determined simultaneously.
Determining the locations of special structures and fixtures such as
elevators, loading docks, and bathrooms becomes part of the layout
process.
However, in many cases the facility and its characteristics are given. In
these situations, it is necessary to obtain a drawing of the facility being
designed, including shape and dimensions, locations of fixed
structures, and restrictions on activities, such as weight limits on
certain parts of a floor or foundation.

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Design of a process layout

To minimize transport times and material-handling costs, we would like
to place close together those work centers that have the greatest flow
of materials and people between them.
For manufacturing systems, material flows and transporting costs can
be estimated reasonably well using historical routings for products or
through work sampling techniques applied to workers or jobs. The
amounts and/or costs of flows among work centers are usually
presented using a flow matrix or a flow-cost matrix

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Flow & flow-cost matrix

A flow matrix is a matrix of the estimated amounts of flow between each pair of
work centers. The flow may be materials (expressed as the number of loads
transported) or people who move between centers.
Each work center corresponds to one row and one column, and the element fij
designates the amount of flow from work center (row) i to work center (column) j.
Normally, the direction of flow between work centers is not important, only the
total amount, so fij and fji can be combined and the flows represented using only
the upper right half of a matrix.
In a flow-cost matrix
for each type of flow
between each pair of
departments, i and j,
we estimate the cost
per unit per unit
distance, cij.

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Flow & flow-cost matrix

From/To
A
B
C
D
E

A
13
30
10

B
17
10
10

C
20
10

D
30
-

E
10
20
70
30

10

From/To
A
B
C
D
E

B
34

39

D
60

E
20
60
140
300

60
20

300
20

20

20

20

Loads/day
From/To
A
B
C
D
E

From/To
A
B
C
D
E

A
3
2
10
2

B
2
2
10
2

C
2
3
10
2

D
2
3
2

E
2
3
2
10

B
73

C
80

D
360
-

E
40
80
160
320

Cost/day
320

Unit cost/distance

160

40
320

80
80

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