Facility Location and Layout

Facility Location and
Layout
1. Concept of Facility Location
 Facility location may be defined as a place where the facility will be set up for
producing goods or services. The need for location selection may arise under any of
the following conditions:
a. When a business is newly started.
b. When the existing business unit has outgrown its original facilities and expansion
is not possible; hence a new location has to be found.
c. When the volume of business or the extent of market

necessitates th establishment of branches.
d. When the lease expires and the landlord does not renew the lease.
e. Other social or economic reasons.

Need for Facility Location Planning
 Facility location planning is also required for providing a cost benefit to the
organisation.
 The location planning should help in reducing the transportation cost for the
organisation. This ultimately helps in decreasing the cost of production and

generating cost advantage for the organisation.
 It is also needed to identify proximity to the sources of raw materials and
transportation facilities.
 A facility should ideally be located at a place where raw materials are available.
This is necessary for maintaining continuity in the production process.

Factors Affecting Facility Location Decisions
 While selecting a facility location, an organisation should consider various factors
that may have significant impact on its performance. These factors are explained
below:
 Availability of power
 Transportation
 Suitability of climate
 Government policy
 Competition between states
 Availability of labour
Factors Affecting Facility Location Decisions
 amenities for workers
 Existence of complementary and competing industries
 Finance and research amenities
 Availability of water and fire-fighting facilities

Procedures and Techniques for Selecting Facility Location
 An organisation follows certain steps to make a correct location choice. These
steps are:
Decide on the criteria for evaluating location alternatives
Identify important factors
Develop location
alternatives Evaluate the
alternatives
Make a decision and select the

location
 Following are some main techniques used in making location decisions:
 Location rating factor technique: In this technique, first of all an organisation
needs to identify the factors that influence its location decision. Next, each
factor is provided a weight between ‘0’ to ‘1’ according to the level of
importance, where ‘0’ denotes least important and ‘1’ denotes most important.
 Centre-of-gravity technique: This technique emphasises on transportation cost
in the determination of facility location. Transportation cost mainly depends

on distance, weight of merchandise and the time required for transportation.
Centre-of-gravity maps various supplier locations on a Cartesian plane and
suggests a central facility location with respect to the locations of suppliers.
 Transportation technique: In simple words, the transportation technique
evaluates multiple transportation routes of shipping goods from multiple

origins to multiple destinations and finds or develops the least cost route. The
technique is often used in determining facility locations for evaluating
transportation costs of routes by selecting different facility locations. In the
transportation technique, multiple facility locations fits are identified and
their relative transportation costs are calculated. Finally, the location that is
related to the lowest cost routes is selected.
1. Concept of Facility Layout
 Facility layout may be defined as the arrangement of machinery, equipment, and
other amenities in a facility, which should ensure a smooth movement of

materials.
 According to Moore, facility layout is the plan of or the act of planning an optimum
arrangement of facilities, including personnel, operating equipment, storage

space, material handling equipment, and all other supporting services along with
the design of the best structure to contain these facilities.
Objectives of an Effective Facility Layout
Minimum Material Handling
Elimination of Bottlenecks
Shorter Production Cycles
Reduction in Production Delays
Improved Quality Control
Efficient Utilisation of Labour
Improved Employee Morale

Types of Facility Layouts
Process Layout
Product Layout
Fixed Position Layout
Cellular Manufacturing Layout
Combination or Hybrid Layout

 Process layout: Process layout, also called functional layout or batch production
layout, is characterised by the grouping together of similar machines, based upon
their operational characteristics.
 Product layout: In product layout, also called straight line layout, machinery is
arranged in one line as per the sequence of production operations. Materials are
fed into the first machine and finished products come out of the last machine.
 Fixed position layout: This type of facility layout is used to assemble products that
are too large, heavy or fragile to move to a location for completion. In the fixed
position layout, machinery, men, as well as other pieces of material, are brought to
the location where the product is to be assembled.
 Cellular manufacturing layout: In Cellular Manufacturing (CM) layout, machines
are grouped into cells, which function somewhat like a product layout in a larger
shop or a process layout. Each cell in the CM layout is formed to produce a single
part family, that is, a few parts with common characteristics.
 Combination or hybrid layout: It is difficult to use the principles of product layout,
process layout, or fixed location layout in facilities that involve fabrication of parts
and assembly. Fabrication tends to employ the process layout, while assembly
areas often employ the product layout.
Factors Affecting a Facility Layout
Materials
Product
Type of Industry Management Policies
Machinery
Management Policies
Prerequisites for Developing a Facility Layout
 Developing process charts: A process chart is the graphical representation of
production activities performed by an organisation. Process charts facilitate a
systematic analysis and demonstration of the entire production process. These
charts are further classified into two categories, namely operation process chart
and flow process chart.
 Making process flow diagrams: A process flow diagram represents the movement of
materials on a floor layout. These diagrams help an organisation in avoiding

needless material movement and rearranging facility operations.
Prerequisites for Developing a Facility Layout
 Developing machine data cards: A machine data card helps in developing equipment
layout (pieces of equipment layout in relation to everything including the persons
using them) by providing information related to power and materials handling
requirements and capacity and dimensions of different machines.
 Visualising the layout: It represents the most common technique that is deployed for
layout planning. It involves creating duplication of machines and equipment and

arranging them in two- or three-dimensional plans for determining the
effectiveness of a layout.
Process of Facility Layout Designing
Information Gathering
Production and Material Flow Analysis
Support Services
Implementation and Evaluation

Techniques for Designing a Facility Layout
 Block diagramming: The block diagram can be prepared by following the steps
given below:
1. Analyse the unit load summary that provides information about the average
number of unit loads moved between different departments of an organisation.
2. Calculate the composite movements (back-and-forth movement) of the unit load

between the departments and rank them from the highest movement to the
lowest movement.
3. Place the trial layouts, which are designed using the ranking between
departments, on a grid. This grid represents the relative distance between the
departments.
https://www.youtube.com/watch?v=8qFxmLYdftU
1. Service Facility Layouts
 The objectives of service facility layouts differ from those of manufacturing facility
layouts.
 This is because a manufacturing facility aims to make on-time delivery of products
to customers, whereas customers come to a service facility to receive services.

 Therefore, customers usually prefer a service facility that is close to them,
especially when the service delivery process requires considerable customer

contact. For example, if you are hungry, you would prefer to go to a restaurant
near you.
 Service facility layouts are often categorised under three heads, which are:
 Product layout: This type of layout is used only in cases where services are
organised in a sequence.
 Process layout: These layouts are highly common in service facilities as they
successfully deal with the varied customer processing requirements.

 Fixed position layout: In this type of service layout, materials, labour and
equipment are brought to the customer’s place. This layout is used in services
like appliance repair, landscaping, home remodelling, etc.
Types of Service Facility Layouts
 Warehouse and storage layouts: The layouts of warehouse and storage facilities are
designed by considering the frequency of order. Items that are ordered frequently
are placed near the facility entrance. However, items that are not ordered
frequently are placed at the rear of the facility. Apart from this, correlation
between two merchandises is also important while designing a layout for a
warehouse and storage facility.
 Retail layouts: A retail store layout refers to a systematic arrangement of
merchandise groups within a store. A well-planned retail store layout provides a
description of the size and location of each department of the store, fixture
locations, and traffic patterns. It also helps consumers find products of their choice
in a short time. Different retail layouts are:
 Grid layout
 Free-form layout
 Loop layout
 Spine layout
 Office layouts: Designing of office layouts is witnessing revolutionary changes as
paperwork is now replaced with different modes of electronic communications.
Today, office layouts focus more on creating an image of openness. Low-rise
partitions are preferred between departments to facilitate easy communication
among workers.

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Facility Location and

a. When a business is newly started.

c. When the volume of business or the extent of market

e. Other social or economic reasons.

organisation. This ultimately helps in decreasing the cost of production and

This is necessary for maintaining continuity in the production process.

 Competition between states

 Finance and research amenities

 Availability of water and fire-fighting facilities

Decide on the criteria for evaluating location alternatives

Identify important factors

alternatives Evaluate the

Make a decision and select the

 Location rating factor technique: In this technique, first of all an organisation

in the determination of facility location. Transportation cost mainly depends

evaluates multiple transportation routes of shipping goods from multiple

other amenities in a facility, which should ensure a smooth movement of

arrangement of facilities, including personnel, operating equipment, storage

Minimum Material Handling

Shorter Production Cycles

Reduction in Production Delays

Improved Quality Control

Efficient Utilisation of Labour

Improved Employee Morale

Fixed Position Layout

Cellular Manufacturing Layout

Combination or Hybrid Layout

Type of Industry Management Policies

materials on a floor layout. These diagrams help an organisation in avoiding

layout planning. It involves creating duplication of machines and equipment and

Production and Material Flow Analysis

Implementation and Evaluation

2. Calculate the composite movements (back-and-forth movement) of the unit load

to customers, whereas customers come to a service facility to receive services.

especially when the service delivery process requires considerable customer

successfully deal with the varied customer processing requirements.

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