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Facility location

Facility location, also known as location analysis or k center problem, is a branch of operations research and computational geometry concerning itself with mathematical modeling and solution of problems concerning optimal placement of facilities in order to minimize transportation costs, avoid placing hazardous materials near housing, outperform competitors' facilities, etc. Although originated from location problems, the study also applies to data clustering, which in turn is related to unsupervised learning, classification, databases, spatial range-searching, data-mining etc.

Facility Location decisions are typically long-term and are crucial in terms of a firm's profitability and success. In the last two decades, due to the opening of economies, the end of cold war and communism, reduced trade barriers, the proliferation of trade agreements, and advances in communication technology, markets have become global and the number of multinational firms has increased tremendously. Globalization of markets and businesses has necessitated the locations of manufacturing plants and distribution centers globally, in order to obtain advantages of customer proximity and low labor costs, reduction in transportation and distribution time and costs, and other benefits


When you complete this chapter you should be able to:

  1. Discuss important issues in office layout
  2. Define the objectives of retail layout
  3. Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking
  4. Identify when fixed-position layouts are appropriate
  5. Explain how to achieve a good process-oriented facility layout
  6. Define work cell and the requirements of a work cell
  7. Define product-oriented layout
  8. Explain how to balance production flow in a repetitive or product-oriented facility 

Product Layout

A product layout groups different workstations together according to the products they work on. Workstations in a product layout can quickly transfer small batches of semi-finished goods directly to the next station in a production line. Product layouts can be ideal for smaller manufacturing businesses with lower volume than their large corporate competitors. As a business's manufacturing output grows, however, it is wise to at least consider implementing a process layout.
In a product layout for a garment manufacturer, for example, stations for sewing cloth, sewing on buttons, inspecting seams, wrapping finished garments and boxing them up would all be located within close proximity for an individual clothing item, allowing individual garments to pass from one station to another quickly.

Process Layout

A process layout groups workstations together according to the activities being performed, regardless of which products each workstation is working on. Workstations produce higher volumes of output at a time before sending semi-finished goods in bulk to the next area, which may be located as close as the other end of a building or as far as another facility on the other side of the globe.
Continuing the garment manufacturing example, a process layout would group multiple sewing stations together for different clothing items in one area, then locate inspection, wrapping and packaging stations for different items together in different areas.


Process layouts are designed to increase economies of scale, allowing individual processes to function more efficiently by pooling resources. Because of this, process layouts can be ideal for businesses that produce large volumes of product each day. Process layouts provide additional cost advantages in human resources, as employees can more easily specialize in a specific work process and learn from coworkers and supervisors performing the same jobs.
Product layouts have the advantage of keeping specific production jobs relatively contained. This can be ideal when building manufactured homes and other high-dollar, low-volume goods that require a good deal of communication between workers at different stations.


Process layouts can be less effective when dealing with individual custom orders, as custom information has to be sent along the production line along with the semi-finished materials.
Product layouts deployed on a large scale can require more space than process layouts, since tools and equipment cannot be shared as easily between workers performing the same tasks on different products. This lack of redundancy in production areas can also increase total expenses for equipment, since each redundant station needs a full set of equipment and tools to perform the work independently.

 capacity planning

 In information technology, capacity planning is the science and art of estimating the space, computer hardware, software and connection infrastructure resources that will be needed over some future period of time. A typical capacity concern of many enterprises is whether resources will be in place to handle an increasing number of requests as the number of users or interactions increase. The aim of the capacity planner is to plan so well that new capacity is added just in time to meet the anticipated need but not so early that resources go unused for a long period. The successful capacity planner is one that makes the trade-offs between the present and the future that overall prove to be the most cost-efficient.
The capacity planner, using business plans and forecasts, tries to imagine what the future needs will be. Analytical modeling tools can help the planner get answers to "What if" scenarios so that a range of possibilities can be explored. The capacity planner is especially receptive to products that are seen to be scalable and also stable and predictable in terms of support and upgrades over the life of the product. As new technologies emerge and business strategies and forecasts change, capacity planners must revisit their plans.

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