IntroductionIntroductionIntroductionIntroductionReferences1 S C Sharma Plant Layout and Material1. S.C. Sharma, Plant Layout and Material

Handling.

2. Richard L. Francis, Facility Layout and Location.y y

3. Chandrashekar Hiregoudar, etal. Facility Planning

and Layout Design.

4. Dr-Ing. Daniel Kitaw, Industrial Management and

Engineering Economy.

OUTLINEOUTLINE Company profile

Definitions

Plant Location

o Site Selectiono Site Selection

o Theories of Industrial Location

o Location Economics

o Selecting Plant in Urban/Rural Areas

o Site Selection Process

OUTLINE-cont’dOUTLINE-cont’d

Objective of a good plant

Principles of plant layout

Basic types of plant layout Basic types of plant layout

Plant Layout at Belayab Enterprise Plant Layout at Belayab Enterprise

The head quarter and showroom is located at Nefas SilkLafto Sub City, Addis Ababa.

The Enterprise has well established maintenance workshop. The Enterprise has well established maintenance workshop. The car assembly launches production of different types

of vehicles. ZHENGZHOU NISSAN PICK UP DOUBLE CAB 4WD ZHENGZHOU NISSAN, PICK UP DOUBLE CAB, 4WD FOTON - Mini Dump Truck FOTON - Heavy Duty Tractor Unit FOTON Heavy Duty Dump Truck FOTON - Heavy Duty Dump Truck FOTON - Light Duty Truck Forlan Van

l FOTON Water Sprinkler, etc.

Plant Layout at Belayab Enterprise Plant Layout at Belayab Enterprise

Spare part store• Products are not arranged properlyg p p y• No detailed inventory of stored items and locations.

Plant Layout at Belayab Enterprise Plant Layout at Belayab Enterprise

Show Room• Not shown from the outside.

P kParking Area• Not enough to serve customers

Assembly AreaPlant Layout at Belayab Enterprise Plant Layout at Belayab Enterprise

Assembly Area• Tools and equipment are not available in the area.• Parts can be damaged due to environmental causes.Parts can be damaged due to environmental causes.

Painting Area• Don’t have proper area and equipment.p p q p

Plant Layout at Belayab Enterprise Plant Layout at Belayab Enterprise

Tool Room and Engine house

Plant Layout at Belayab Enterprise Plant Layout at Belayab Enterprise

Waste and Scraps are not properly managedp p p y m g

Definitions Definitions

A plant is a place

Where men, materials, money, equipment,

machinery, etc. are brought together for

manufacturing productsmanufacturing products.

CONT’D CONT’D

Plant location means deciding a suitable

location, area, place, etc. where the plant or

f t ill t t f ti ifactory will start functioning.

CONT’D CONT’D

Plant layout means the disposition of the

various facilities (equipments, materials,

t ) d i f th l tmanpower, etc.) and services of the plant

within the area of the site selected.

CONT’DCONT’D

Problems of layout develop when needed:

• To start a new product,p

• To change the product design,

• To reduce the cost;

And when

• The market demand changes,m m g ,

• The plant, the product, the building become obsolete,

• Accidents occur frequently,Accidents occur frequently,

• The working environment is poor.

Plant LocationPlant Location

Choice of general area or region.

Choice of site within the area selected.

CONT’D CONT’D

Location decision is based on the organizations long-

term strategies such as technological marketingterm strategies such as technological, marketing,

resource availability and financial strategies.

Plant location is important because:

• Location influences plant layout facilities needed• Location influences plant layout facilities needed.

• Location influences capital investment and operating

costs.

CONT’D CONT’D

Need for location decision: When a new facility to be established When a new facility to be established.

Expansion of existing facility.

To establish additional facilities in new territories due to To establish additional facilities in new territories due togrowing volume of business.

When original advantage of the plant have been out weighed When original advantage of the plant have been out weigheddue to new development.

When new economics social legal or political factors suggest When new economics, social, legal or political factors suggesta change of location of the existing facility.

CONT’D CONT’D

Plant location plays a major role in the design

of a production system as it determine the

cost of:cost of:

Getting suitable raw materials;

Processing raw material to finished goods; and

Finished products distribution to customers Finished products distribution to customers.

Site Selection Site Selection

The problem of the selection of a factory or a

plant can be solved in the following two stages:

a) The General Location of the Planta) The General Location of the Plant

b) The Selection of a Particular site.

CONT’D CONT’D

a) General Location of the plant Availability of Raw Materials Availability of Water

l b l f l Proximity to Markets

Transport Facility

Availability of Efficient and

Availability of Capital

Social and RecreationalFacilities Availability of Efficient and

Cheap Labour

Availability of Power and Fuel

Business and CommercialFacilities

Climatic and AtmosphericConditions

Existence of relatedIndustries

Other factors …f

CONT’D CONT’D

b) Specific Site Selection Community Attitudey

Community Facilities

Topographyp g p y

Transportation Facilities

Waste Disposalp

Ecology and Pollution

Size of Land

Supporting Industries

Theories of Industrial LocationTheories of Industrial Location All are emphasize on the search for suitable location which offers the greatest

difference between total costs and total revenue.

Some important theories on industrial location are:p

Theory of Maximum Profit Location

Location Analogue Model

The Interdependence Theory of Location The Interdependence Theory of Location

Theory of Least-Cost Location

Linear Programming Techniques

Weber’s Theory of Location

Theory of Location by Sargent

Theory of Location by Predohl and others

Theory of Location by Losch and Walter Israd

CONT’D CONT’D Theory of Maximum Profit Location

Location of manufacturing establishment depends up on L f m uf u g m p up

the firms cost of production at alternative locations in the

m k t A L hmarket area. – Argus Losch

Suggested a mathematical model which considers total

cost, total revenues, the sales radius and the maximizing

net mill price. Considers variations in income betweennet m ll pr ce. ons ders var at ons n ncome between

alternative locations.-Green hut

CONT’D CONT’D

The Interdependence Theory of Location

Plant location should be based on the ability of a site Plant location should be based on the ability of a site

to control the largest market area. – Fettler and

Hotelling

Assumed that the cost of procuring raw materials

and processing are equal at all locations.p g q

L P h

CONT’D CONT’D Linear Programming Techniques

Provides a means of finding optimum solution to practical problems.

It b d i it ti h it i i d t i i It can be used in a situation where it is required to maximize orminimize some quantity which is a function of a set of variables,subjected to certain rules or constraints.j

Used for solving plant location problem such as:

a) The location of single firm.

b) Inter regional commodity flows and the allocation ofproduction.

c) The dual and location rent.

d) Transportation of incoming and distribution of final products.

Location Economics Location Economics

For evaluation of economical location following factors should be

considered:

) R la) Raw material procurement

b) Proximity to market

c) Availability of labour

d) Availability of powerFixed cost 

e) Availability of finance

f) Miscellaneous considerations (donations, subsidies, taxes and non-

f b l l b d d l linterference by government or local bodies, war and political

effects and other facilities or bottlenecks)

CONT’D CONT’D

The principle of industrial plant location is

that the sum of manufacturing andthat the sum of manufacturing and

distributing cost should be at minimum for

the best location.

) f l d k h l

CONT’D CONT’D a) Factors for locating an undertaking near the raw material

size:

Wh n s f m t i ls is th nt llin f t• When source of raw materials is the controlling factor,

• When materials are bulky and of relatively low price,

Wh n m t i ls sm ll nd f hi h nit p i• When materials are small and of high unit price,

• When raw materials are greatly reduced in bulk duringthe process of manufacturingthe process of manufacturing,

• When raw materials are perishable and process makesthem less perishable.them less perishable.

CONT’D CONT’D

b) Factors for locating an industry near tomarket:market:

• When the size or bulk of the product isp

more,

• Render it more fragile,

More susception about the spoilage• More susception about the spoilage.

CONT’D CONT’D

c) Factors related to the economy of labour:

• The ratio of labour cost to the total• The ratio of labour cost to the totalmanufacturing cost,

• Possibility of reduction in labour cost byusing better method or better quality ofusing better method or better quality oflabour,

• The type of labour required.

CONT’D CONT’D

d) Economy and availability of power

) Oth m j f t th t infl n s ise) Other major factor that influences is

availability of financey

f) Miscellaneous considerations

Location Alternatives Location Alternatives Various costs and other considerations have been listed below as

regards to locations 1 and 2. Its required to determine the over all best

location

Total Cost-1= 8,219,500 BirrTotal Cost-2= 8,432,000 BirrTotal Cost-1= 8,219,500 BirrTotal Cost-2= 8,432,000 Birr

location.

Costs ofLocation-1(Birr)

Location-2(Birr)

a) Land 1,100,000 1,000,000

Costs ofLocation-1(Birr)

Location-2(Birr)

h) Raw Material and th li

1,450,000 1,400,000)

b) Building 3,500,000 3,800,000

c) Water 9,500 12,000

other suppliesi) Taxes 400,000 300,000

j) Community Facilities

Good Excellent d) Power 500,000 800,000

e) Labour 600,000 500,000

f) Freight

Facilitiesk) Community

attitudeAlright Encouraging

l) Housing facilities Very good Goodf) F g• In-coming• Out-going

230,000310,000

220,000300,000

g) Fuel 120,000 100,000

) g f y g

m) Cost of Living High Normal

n) Community Size Small Medium

F th F ll i D t l t th t d t l ti f

Location AlternativesLocation Alternatives From the Following Data select the most advantageous location for

setting a plant for making Aluminum Extrusion Plant

C fLebuBi

AkakiBi i

SulultaBi i f

LebuB

AkakiB

SulultaB Costs of Birr

in mlnBirr in mln

Birr in mln

a) Total initial investment 9 9 9

Costs of Birr in mln

Birr in mln

Birr in mln

f) Wage and Salaries 0.35 0.3 0.5

Total Sales Total Expense X 100b) Total

expected sales for the period

4.5 5 4.5g) Other

expenses 0.4 0.3 0.4

h) Community attitude Good Excellent Alright

R.O.R = Total Sales- Total Expense X 100Total Investment

R O R for Lebu = 17 2% pc) Distribution

expense 0.4 0.4 0.6

d) Raw materialxp ns 1.5 1.0 2.0

attitude g

i) Employeehousing facilities

Alright Alright Poor

R.O.R for Lebu = 17.2%

R.O.R for Akaki = 30%expense

e) Power and Water supply expenses

0.3 0.3 0.5

TotalExpense 2.95 2.3 4R.O.R for Sululta = 5.6%

Economic Factors Economic Factors

a) Product - Nature, Volume, value.

b) Production process – continuous intermittentb) Production process – continuous, intermittent.

c) Manufacturing machinery

d) Services – Electricity, Water, Sewerage, steam, air.

Ad tSelecting the plant site in city(Urban site)Selecting the plant site in city(Urban site)

Advantages• A city is very well connected by rails, roads and air.

• It provides a good market also.

• Right labour force is available.

P d W t i il il bl• Power and Water is easily available.

• It has good hospitals, marketing centers, Schools, Banks, etc.

• The factory can be setup in an existing available buildingsThe factory can be setup in an existing available buildings.

• Workers training classes and many other educational facilities can be cites.

• Services of experts and specialist are easily available.p p y

• Many other small industries are existing

• Security

CONT’DCONT’D

Disadvantages• Land available for the building is limited in areag

• Cost of land and building construction is high

• Expansion of the industry is seldom possible• Expansion of the industry is seldom possible

• Local taxes, etc … are high

b l h h• Labour salaries are high

Selecting the plant site in a small town (Rural area)Selecting the plant site in a small town (Rural area)

Advantages

• Plenty of land is available for building construction

and expansion purposesp p p

• Land is cheap

• Cheap labour force

• Government gives incentivesGovernment gives incentives

• Less tax and restriction

CONT’DCONT’D

DisadvantagesSkill d l b i t il bl• Skilled labour is not available

• Rail, road and air links may not be there at all or

may not be adequate

Power is not available• Power is not available

Site Selection ProcessSite Selection Process

The following procedures are recommended:

1. Formulate the problem1. Formulate the problem

2. Analyze the problem

3. Search for alternative solutions

4 Evaluate the design alternatives4. Evaluate the design alternatives

5. Select the preferred design

6. Specify the solution

OBJECTIVES OF A GOOD PLANTOBJECTIVES OF A GOOD PLANT

• Ensure effective space utilization,• Minimize the cost of material handling (internalMinimize the cost of material handling (internal

transports),• Foresee future developments of the plant accordingForesee future developments of the plant according

to a rational master plan,• Improve workers convenience as well as safety and• Improve workers convenience as well as safety and

create job satisfaction, and• Avoid unnecessary capital investment• Avoid unnecessary capital investment.

PRODUCT DESIGN CHANGE

NEW PRODUCT

MARKET DEMAND

H NGE

OBSOLETE FACILITIES

POOR WORKER EN R

MARKET RELOCATION

COST REDUCTION

Development stimulating layout problem

CHANGE CHANGE ENVIR.

BUILD NEW PLANT

MOVE TO EXISTING

PLANT

REARRANGE EXISTING LAYOUT

MINOR CHANGES

Classes of layout problemCause and result occur frequentlyCause and result occur less frequentlyCause and result occur occasionallyCause and result occur very seldom

PRINCIPLES OF A GOOD PLANT LAYOUTPRINCIPLES OF A GOOD PLANT LAYOUT

• Overall integration of factorsMi i t• Minimum movement

• Uni-directional• Effective use of available space

M i i ibilit• Maximum visibility• Maximum accessibility

TYPES OF LAYOUTTYPES OF LAYOUT

• From the point of view of plant layout, we canl if b i i i hclassify business or units into three

categories:g

1. Manufacturing units

2. Traders

3 Service Establishments3. Service Establishments

CONT’DCONT’D

Manufacturing unitsIn case of manufacturing unit plant layout may be ofIn case of manufacturing unit, plant layout may be offour types:

a) Product or line layout

b) Process or functional layoutb) Process or functional layout

c) Fixed position or location layout

d) Combined or group layout

CONT’DCONT’D

Product or line layout• In this type of layout, only one product or one

type of product is produced in a given areatype of product is produced in a given area.

• The product must be standardized andmanufactured in large quantities in order tojustify the product layoutjustify the product layout.

CONT’DCONT’D

• The raw material moves veryfast from one workstation toother stations with a minimumwork in progress storage andwork in progress storage andmaterial handling.

Paper millPaper mill

bamboos are fed into the machine d d at one end and paper comes out

at the other end.

CONT’DCONT’D

The grouping of machines should be done keeping in mind the

following general principles:

a) All the machine tools or other items of equipments must be

placed at the point demanded by the sequence of operations

b) There should no points where one line crossed another line.

c) Materials may be fed where they are required for assemblyc) Materials may be fed where they are required for assembly

but not necessarily at one point.

d) All the operations including assembly testing packing must bed) All the operations including assembly, testing, packing must be

included in the line

CONT’DCONT’D

Mill Grind InspectProduct A Department

1 32 4 5 76Press Heat treat Paint Pack

Mat

erials

d Go

od

ore

1 32 4 5 76Grind Drill Inspect

P k

Raw

M

Finish

eSt

o

Cast Mill Paint PackProduct B Department

CONT’DCONT’D

• Specialized equipment

• High capital intensity & wide use of automation

• Processing rates are fasterg

• Material handling costs are lower

• Less space required for inventories

• Less volume or design flexibilitym g f y

f h d f d l

CONT’DCONT’D

Some of the advantages of product layout are:• lower total material handling cost,• lower total production time,• less work in process,• greater incentive for groups of workers to raise level

of performance,• less floor area required per unit of production and• greater simplicity of production control, fewer

l d d d d lcontrol records needed and lower accounting cost.

Some of the disadvantages of product layout are:

CONT’DCONT’D

Some of the disadvantages of product layout are:

• High initial capital investment in special purpose

machine

• Heavy overhead charges• Heavy overhead charges

• Breakdown of one machine will hamper the whole

production process

• Lesser flexibility as specially laid out for particular• Lesser flexibility as specially laid out for particular

product.

CONT’DCONT’D

Product Layout is useful under the following conditions

• Mass production of standardized productsp p

• Simple and repetitive manufacturing process

O ti ti f diff t ss is l ss l• Operation time for different process is more or less equal

• Reasonably stable demand for the product

• Continuous supply of materials

• Minimum of inspection is required during sequence ofMinimum of inspection is required during sequence of

operations,

CONT’DCONT’D

Process or Functional Layouty• Similar equipment and similar operations are grouped

t th i th f ti l l ttogether in the process or functional layout.

• It is particularly useful where low volume is required.p y q

CONT’DCONT’D

The grouping of machines according to the process has tobe done keeping in mind the following principles

• The distance between departments should be as shortas possible for avoiding long distance movement ofp g gmaterials

• The departments should be in sequence of operations• The departments should be in sequence of operations

• The arrangement should be convenient for inspectionand supervision

CONT’DCONT’D

Tailoring, light and heavy engineering products,

made to order furniture industries.

CONT’DCONT’D

2 4 6s tore

Foundry Dept. Drilling Dept. Grinding Dept. Brazing Dept. Inspection Dept.

14

2

5

5

3

67

w mat

erial

d Go

od s

t

6531

3 872

Raw

Finish

e

Press Dept. Heat treat Dept. Painting Dept. Milling Dept. Packing Dept.

Product A

Product B

CONT’DCONT’D

Some of the Advantages of Process Layout are:• less duplication of equipment, hence lower investment cost,

fl ibili f d i• greater flexibility of production,• better and more efficient supervision,

greater incentive for individual workers to raise level of• greater incentive for individual workers to raise level ofperformance,

• better control of complicated or precision processes,better control of complicated or precision processes,• Breakdown of one machine does not result in complete work

stoppage• Change in output design and volume can be more easily adapted

to the output of variety of products

S f h Di d f P L

CONT’DCONT’D

Some of the Disadvantages of Process Layout are:

• Material handling costs are high due to backtracking

• More skilled labour is required resulting in higher cost.

• Time gap or lag in production is higher• Time gap or lag in production is higher

• Work in progress inventory is high needing greater

storage space

• More frequent inspection is needed which results in

costly supervision

CONT’DCONT’D

Process Layout is useful under the following conditions

• Products are not standardizedProducts are not standardized

• Quantity produced is small

• There are frequent changes in design and style of

productp

• Job shop type of work is done

• Machines are very expensive

Fixed Position Layout

CONT’DCONT’D

Fixed-Position Layout• In this type of layout, the material or major component

remains in a fixed location, and tools, machinery, men aswell as other pieces of material are brought to thislocation.

• Typical examples are ship building, constructionyp p p gindustries, aircraft building and bench work exercises.

• This type of layout is not frequently used in industrialThis type of layout is not frequently used in industrialenterprises.

Some of the Advantages of Fixed Position Layout are:

CONT’DCONT’D

Some of the Advantages of Fixed Position Layout are:

• It saves time and cost involved on the movement of work from

one work station to another.

• The layout is flexible as change in job design and operation

sequence can be easily incorporated.

• It is more economical when several orders in different stages of

progress are being executed simultaneously.

• Adjustments can be made to meet shortage of materials orj g

absence of workers by changing the sequence of operations.

S f h Di d f Fi d P i i L

CONT’DCONT’D

Some of the Disadvantages of Fixed Position Layout are:

• Production period being very long, capital investment is

very heavy

• Very large space is required for storage of material andVery large space is required for storage of material and

equipment near the product.

A l ti ft i d t• As several operations are often carried out

simultaneously, there is possibility of confusion and

conflicts among different workgroups.

CONT’DCONT’D

Fixed Position Layout is useful under the followingconditions

• Manufacture of bulky and heavy products such aslocomotives ships boilers generators aircraftlocomotives, ships, boilers, generators, aircraftmanufacturing, etc.

• Construction of building, dams, etc.

• Hospital, the medicines, doctors and nurses aretaken to the patient (product).

Combination Layout

CONT’DCONT’DCombination Layout

• Certain manufacturing units may require all three processes

namely intermittent process (job shops), the continuous process(mass production shops) and the representative process

combined process [i.e. miscellaneous shops].

• Combination of the product and process layout or other

combination are found, in practice, e.g. for industries involving

the fabrication of parts and assembly, fabrication tends to

employ the process layout, while the assembly areas often

employ the product layout.

TRADERSTRADERS

• When two outlets carry almost same merchandise,customers usually buy in the one that is more appealing tothem.

• Thus, customers are attracted and kept by good layout, p y g yi.e. good lighting, attractive colors, good ventilation, airconditioning, modern design and arrangement and evencon t on ng, mo rn s gn an arrang m nt an nmusic.

• All of these things mean customer convenience customer• All of these things mean customer convenience, customerappeal and greater business volume.

• The customer is always impressed by serviceCONT’DCONT’D

The customer is always impressed by service,

efficiency and quality.

• There are three kinds of layouts in retail operations

todaytoday.

1. Self service or modified self service layout

2. Full service layout

3 S i l l t3. Special layouts

S i bli h h B k I M l

SERVICES CENTERS AND ESTABLISHMENTSERVICES CENTERS AND ESTABLISHMENT

• Services establishments such as Banks, Insurance, Motels,

Hotels, Restaurants, must give due attention to client

convenience, quality of service, efficiency in delivering

services and pleasing office ambience.

• In today’s environment, the clients look for ease in

approaching different departments of a serviceapproaching different departments of a service

organization and hence the layout should be designed in a

fashion which allows clients quick and convenient access tofashion, which allows clients quick and convenient access to

the facilities offered by a service establishment.

STUDY OF PLANT LAYOUT STUDY OF PLANT LAYOUT

• The solution of any size and type of plant layout

p bl ms ld b f ilit t d b sin s st m tiproblems could be facilitated by using a systematicand logical approach.

• An early pioneer in this area was Richard Muther,

developer of the Systematic Layout Planning (SLP)developer of the Systematic Layout Planning (SLP)methodology.

Th SLP d l d h l h h

CONT’DCONT’D

The SLP procedure leads the planner through

• Abstraction (Analysis): Gathering appropriatey pp pinformation and analyzing the flow of materials andthe activity relationships to form a relationshipthe activity relationships to form a relationshipdiagram.

S id ti h bi d ith th• Space considerations when combined with therelationship diagram develop the space relationshipdiagram.

S h (f ibl l ti ) Th ll l t i

CONT’DCONT’D

• Search (for possible solution): The overall layout isdesigned by combining space consideration with therelationship diagram.

• The search phase is the phase in which alternativep playouts are developed by examining the spacerelationship diagram under modifying considerationrelationship diagram under modifying considerationsuch as materials handling, storage facilities, site

diti d di b ildi t lconditions and surroundings, building types, personnelconvenience, etc., and practical limitations.

CONT’DCONT’D

• Selection: The most efficient general method of

lu tin l ut lt n ti s is t m d f tevaluating layout alternatives is termed factor

analysis. It follows the engineering concept of

breaking down the problem into its elements and

analyzing each oneanalyzing each one.