FUNDAMENTALS OF PRODUCTION AND OPERATIONS MANAGEMENT (FPOM)

Unit-3: Layout of Facilities

The problem of layout of facilities is much less related to the organization’s long-term
strategies than that of facilities location. Moreover, in the former, the areas and boundaries
for the physical facilities (which are to be laid out) are specified to a large extent and the
problem mainly relates to the physical arrangement of the areas needed for the operation.
The problems of layout are fundamental to every type of undertaking and the adequacy of
the layout affects the efficiency of subsequent operations.
One of the main characteristics in laying out work-areas is the ease in the flow of work. The
flow of work may take place through the movement of (a) materials (as in a factory), (b)
people (as in a hospital where patients, nurses, doctors and others move from one
department or room to another), or (c) information (through the movement of papers and
people as in an administrative office).
Facilities layout begins with facilities location and continues through three further levels:
(a) the layout of departments within the site,
(b) the layout of items within the departments,
(c) the layout of individual areas.
A general definition of facilities layout is ‘the arrangement of physical facilities to provide
efficient operation’.

Objectives of Facilities Layout:

(1) Reducing the cost of materials handling and movement.
(2) Better turnover by reducing the congestion and delays and addition of value of inputs.
(3) Utilisation of space, facilities and labour.
Basic Types of Facilities Layout:
A. Manufacture:
(1) Layout by process or Functional layout:
In a process or functional layout all operations of a similar nature are grouped together in the
same department or part of the factory. For example, separate areas may be allocated for
drilling operations, milling, grinding, fitting and so on.
Layout by process is appropriate where small quantities of a large range of products are to be
manufactured, perhaps the best example being jobbing production. Process layouts normally

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operate with a comparatively high level of work in progress. The nature of the layout permits
flexibility in production.
(2) Layout by product:
Layout by product is appropriate for the production of a small range of products in very large
quantities. Ideally, only one (range of) standardized product is involved and production should
be continuous, as in mass production industries such as the motor industry. Facilities are
arrangement according to the needs of the product and in the same sequence as the
operations necessary for manufacture. Sufficient and stable demand, regular supply of the
right quantities of raw materials and components are absolutely essential. Under this layout
minimum floor space is required, work in progress is minimized, requirements for handling
materials are small and machine utilisation is high.
(3) Layout by fixed position:
In the two previous layout systems the product moves while production equipments remain
stationary. In this case, the reverse applies. In the extreme case, e.g. civil engineering, neither
the partly completed nor the finished product moves. Alternatively, as in ship building, the
product remains stationary only until it is completed.
(4) Group Layout:
Process, product and fixed position layouts are the traditional forms in manufacturing
industry. Another type of configuration, mainly used in batch production, is known as group
or family layout. In effect, group layout is a hybrid form used as a means to achieve some of
the benefits of layout by product (e.g. low work in progress, low space requirement) in the
batch manufacture of products. Given a sufficiently large group of sufficiently similar items it
is practical to arrange in one area those facilities required for their production, and in this way
a ‘product type’ layout is formed. Group layouts differ from layouts by product, therefore, in
that they are utilized for the manufacture of similar (but not the same) items required for the
batch manufacture of final products.
B. Supply and Service:
Similar configurations can be identified in supply and service systems. In supply the principal
flows and movements resemble those of manufacturing systems, since goods are again
involved. In service systems the principal flows may involve persons, often customers. In a
warehouse, for example, a functional layout may be employed in which particular areas are
utilized for the storage of particular product lines or goods. In service systems such as

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hospitals, the process or functional layout is often found since particular wards and particular
parts of the hospital are devoted to particular types of activity. In certain medical facilities the
layout by product may be utilized. For example, in certain cases a series of fairly elaborate
medical tests are made on patients as part of a diagnosis procedure. Layout by fixed position
can also be employed in particular in the service sector, where facilities might be brought to
a customer, e.g. in the case of a road accident, medical facilities would be brought to the
injured patient, etc.
So, the three traditional layouts and the group layout may exist in supply and service
organisations.
C. Transport:
The essential feature of transport systems is movement. In many such systems the principal
facilities employed are mobile. In the fixed facilities of a transport system, it is possible to
identify at least two of the three traditional configurations, namely, layout by process and
layout by product. As with manufacture, supply and service, movement and physical flows
may again be seen to be the principal criteria in establishing the layout.

Facilities Layout Procedures:

Let us propose the establishment of a new set of facilities in one location. It is assumed that
the precise nature of the goods or service to be provided from the facilities and the demand
for them are either known or may be determined by appropriate market research. Given this
information, the required capacity and hence the number and nature of facilities can be
determined.
Nature of facilities = f (nature of goods or services; demand)
In addition to the principal facilities required, other equipments will be needed, hence
additional space must be provided. Storage space will be required, depending upon such
factors as fluctuations in demand for goods or services and the supply of raw materials.
Departments such as personnel, etc. must be accommodated.
Space required = f (nature of facilities; nature of additional facilities required)
Plant layout planning procedure, therefore, involves consideration of the following stages:
1. Demand: Normally, an operation will be established to meet an existing demand. In case
of building a new factory to increase the output of an existing product, then the extent of
demand and the nature of the product will be known. In case of building a new warehouse

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 to supply a particular area with existing items again something about the expected demand
will be known. Otherwise, we will rely on market research to establish the following:
 Specifications of the goods/services
 Selling price
 Demand for each good/service
 Expected fluctuations in demand.
This information will help in the determination of the capacity required.
2. Capacity: The determination of capacity requires not only the estimation of steady state
or average demand levels but also decisions upon how best to deal with demand level
fluctuations. The accommodation of demand fluctuations may necessitate the provision of
storage space, over capacity, etc.; thus, detailed capacity planning is essential before
facilities layout planning begins.
3. Work Methods and Standards: Work study data should exist or be generated for each
operation required in the manufacture and supply of goods and/or provision of services.
Method study establishes the sequence of operations to be performed and the types of
equipment to be used. Given standard work methods, work measurement will be used to
establish operation times. Such information, which is a prerequisite for all operations
planning, will be of relevance in determining the configuration of facilities.
4. Resource Requirements: Given an estimate of the required capacity in terms of output
and work standards, it will be possible to calculate resource requirements both in terms of
labour and equipment. Some allowances must be made for breakdowns, holidays,
stoppages, etc.
5. Handling and Movement: Whilst, in many cases, the layout planning procedures will seek
to minimize movement, distance or time, and/or handling cost, some knowledge of the
nature of the movement and the manner in which it is to be achieved, i.e. the nature of
any handling equipment, will be essential in planning the layout. The equipment required
to provide movement and handling will itself require space both for operation and
maintenance, repair, etc.
6. Space Requirements:
In addition to the space necessary to accommodate the machinery and materials required
in the operation, allowances must be made for the movement of personnel, for service
and repair, etc.

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7. Other Factors Affecting Layout: Normally additional, often obscure, factors affect layout. For
example, the removal, reprocessing, or use of scrap and waste materials; the characteristics
of the materials used, e.g. stability, value, etc.; noise; safety legislation; customer areas;
anticipated developments and the necessity for change may all be important.
Planning the Layout:
New Layouts:
Visual aids play an important part in layout planning. Some form of scale representation is
invariably used, e.g. scale drawing, templates, three-dimensional models, etc. String diagrams
are a familiar method of showing movement, coloured chord being attached to diagrams or
models to indicate the paths taken by different products.
If attempt is made to develop analytical methods of layout planning, we must determine
precisely what our objective shall be, e.g. maximise facilities utilisation or minimize
movement, congestion, etc. Undoubtedly, the lowest common denominator of all layouts,
whether in manufacturing, supply, service or transport, is the need for movement. In most
situations there will be some need for movement, and the type of equipment used, the
distance travelled and the time involved will affect the total cost.
It is reasonable, therefore, to adopt as our primary objective the minimization of the total
movement cost for items or people, and as our main criterion the total distance moved.
Cross and Relationship Chart:
The pattern and extent of movement which is known to take place, or expected to exist, is
often summarized on some form of chart, which can then be used to assist in layout planning.
The cross chart shown in the figure below indicates the pattern and amount of movement of
items between 10 departments in a small factory. In the case of a new layout the routing will
have been obtained from routing instructions, e.g. flow process charts, and the quantities
from production requirements. The figures in the matrix are the number of items or loads
which in a given period of time must move from department ‘i’ to department ‘j’. In the case
of the existing layouts this information may be obtained by actual sampling of the activity
taking place within the factory.
It may be noted that the row and column totals are not necessarily equal. Where some of the
items are consumed, or assembled during production, row totals may be less than column
totals. For example, in this particular case 12 items were sent from the receiving department
directly to the assembly department, i.e. a total of 24 items were sent to assembly. However,

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only 12 items left assembly for the test department, since the two groups of 12 had been
assembled in pairs.

To Receiving Stores Planning Milling Turning Assembly Test Paint Pack Dispatch TOTAL
From (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Receiving
15 12 8 5 40
(1)
Stores
10 5 15
(2)
Planning
10 10
(3)
Milling
(4)
5 7 3 15
Turning
5 5
(5)
Assembly
12 12
(6)
Test
12 8 20
(7)
Paint
(8)
12 8 20
Pack
20 20
(9)
Dispatch
(10)

TOTAL 15 10 15 5 24 20 20 20 28

Fig. Cross Chart showing the nature and extent of the movement of items amongst
departments over a given period of time

Fig. Relationship Chart (derived partly from the Cross Chart)

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Closeness Reason
A: Essential 1: Movement-materials
E: Very Important 2: Movement-personnel
I: Important 3: Nature of site
O: Ordinary Close 4: Contamination noise

U: Undesirable 5: Scrap swarf control

X: No

The movement pattern shown in the cross chart is associated with a process-type layout.
Absence of any figures below the diagonal means that none of the items backtracks between
departments, but the scatter above the diagonal indicates a varied movement pattern
characteristic of the production of several products. Some of the items follow a path through
from department 1 to department 10, but judging from this data alone, a ‘product layout’
seems impractical.
Cross charts are a means of collecting and presenting information from which preferable
departmental relationships can be obtained. This information can then be summarized on a
relationship chart. For example, the relationship chart shown in the figure is partly derived
from the previous cross chart. Most of the preferable relationships between departments 1
to 10 result from a desire to minimize the materials movement given on the cross chart. The
relationships between departments 11 to 15 and between these and the other departments
have been obtained from elsewhere.
Sequence Analysis:
Customer Area
Dept.
A B C D E
(m2)
1 4 2 2 2 3 450
2 4 4 5 4 300
3 2 150
4 7 5 5 7 300
5 6 6 6 400
6 8 9 7 250 A B C D E
7 9 9 10 300 50 100 200 150 50
8 9 150 Fig. B. Load (per period time)
9 10 10 10 10 300
10 600
Fig. A. Operation Sequences

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 To 1 2 3 4 5 6 7 8 9 10
From
1 450 50 50
2 350 150
3 50
4 300 100
5 450
6 150 100 200
7 200 50
8 100
9 500
10

Fig. C. Load Movement Summary

Fig. A summarizes the routing necessary for the servicing of five types of customer, i.e. type
A must pass through departments 1, 4, 7, 9 and 10 in that order, type B through departments
1, 2, 4, 5, 6, 8, 9 and 10. Total demand in terms of the units of each type of customer to be
moved are given in fig. B.
Fig. B is derived from the previous two figures and is a summary of the load and movement
data. For example, in a given period of time, 450-unit loads must move from dept. 1 to dept.
2, i.e. the customers moving from dept. 1 to 2 are, from fig. A, B, C and D, for which the unit
loads per period are 100, 200 and 150 respectively, i.e. a total of 450.
Given this information it is now possible to start planning the layout. By representing each
department by a circle, and assuming each department to be of equal area, an initial
diagrammatic solution can be obtained by arranging the circles in the form of a grid, following
the logic of the pattern indicated by fig. C. Connecting lines and figures indicate the extent of
the interdepartmental movement (fig. D).

1 2 4 7 9 10

5 8
3 6

Fig. D. Initial Solution

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The initial diagrammatic solution can be simplified and the layout modified until the best
solution is achieved. This can then be changed into an actual layout by substituting the
required departmental areas for the circles in the departmental representation (Fig. F).

1 10
3

2 4 7 9

5 6 8

Fig. E Final Solution

3 1 10

Fig. F Actual Layout

2 4 7 9

5 6 8

Though our primary objective is to minimize the total movement cost, we also require a
procedure which has the ability to accommodate:
(a) Different floor areas for departments
(b) The wide variety of flow patterns amongst departments
(c) Different costs of handling
(d) The fact that certain departments may need to remain in a given position
(e) The fact that, in certain circumstances, certain departments must bear a given
relationship to one another
(f) Utilisation of more than one floor.
Computer Programmes:
Several computer programmes have been developed from time to time for the purpose of
efficient and effective layout of facilities. The most popular of them are CRAFT, CORELAP and
ALDEP.

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 In 1963 a computer programme called CRAFT (Computerized Relative Allocation of
Facilities Technique) was first published. It was developed in order to satisfy many of the
requirements listed above and takes as its objectives the minimization of total materials
handling costs. The programme works in the following manner:
(a) An initial layout is given along with the problem.
(b) The load summary i.e. the to and fro movement frequencies between the various pairs
of departments is also supplied. The interdepartmental pairwise costs per unit
distance are also given.
(c) With (a) and (b) as the inputs, CRAFT now interchanges a pair of departments which
have
(i) Either a common border, or
(ii) The same area requirement.
This is done by interchanging the centroid locations of the departments rather than
an actual physical change. CRAFT considers centroid to centroid rectilinear distances
for the cost computations.
(d) Having done this interchange of centroids it calculates the total costs for the modified
layout.
(e) All possible pairwise interchanges are done and costs computed as in (c) and (d).
(f) The least cost interchange is then accepted.
(g) This interchange, i.e. the interchange in step (f), is now done physically. i.e. by
physically interchanging the areas. This may change the actual centroid locations and
inter-centroid distances and therefore the total cost. This is the real cost.
(h) CRAFT now applies the pairwise interchange to the improved layout. That is, step (c)
through (h) are repeated until no further cost reduction is possible by the pairwise
interchange of the centroids.
(i) The last layout is the solution obtained through CRAFT.
It should be noted that:
1. CRAFT does not necessarily produce an optimal solution.
2. The solution obtained by CRAFT is path-dependent. With a different initial layout, the
final solution may be different.
3. CRAFT can also do three-way exchanges between the departmental locations.

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 Read input:
1. Inter department
movement matrix
2. Movement cost matrix
3. Initial layout & restrictions

Calculate dept. centres and distance

matrix

Calculate total movement cost for

layout

Output initial layout and

cost
Output: new layout,
total cost, cost
reduction, exchanges
made iteration
number
Analyse all possible dept. exchanges. Select
exchange with largest total cost reduction

Recalculate affected
matrices
Can total
movement
cost be
reduced?
YES
Make the dept.
NO exchange

Fig.STOP

Fig. Flowchart for CRAFT Programme

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