Costs: The costs associated with a decision on plant layout are:
1. Cost of movement of materials from one work area to another.
2. Cost of space
3. Cost of production delays, if any, which are the indirect costs.
4. Cost of spoilage of materials
5. Cost of labor dissatisfaction and health risks
6. Cost of changes required, if the operational conditions change in the future. This is a long term cost.
7. Cost of customer dissatisfaction due to poor service (quality, delivery, flexibility, responsiveness cost) which may be due to poor layout.
A good layout should minimize all these cost put together. Although all these factors are important; many of them are not amendable to mathematical analysis. Most of the available mathematical models deal only with the minimization of the costs of movement of the materials within a given total space and given the space requirements of individual work areas. This has been mentioned here because the different other models are not meant to provide the final answer to the layout problem, rather, it should be understood that the various other factors have also to be incorporated while designing the final layout.
Basic Types of layout:
There are three different kinds of basic layouts, depending upon the method of production:
Process Layout to Layout by Function
This is typical of the job-shop type of production where the equipment performing similar operations is grouped together. For instance, grinding machines could be grouped together form a work area, milling machines could be grouped together, drilling machines could be grouped together, etc. Such a layout is particularly useful where the volume of manufacture is low and the variety of jobs is great (in a job-shop every customer order is unique). Here, the layout should provide tremendous flexibility in the sequence of operations because the sequence of operation for one job is different from that of another job. For this reason in all job-shop types of production work areas are grouped together.
Why is a process layout suited to a job shop type production? Job shop type production is characterized by a large variety of jobs, which are distinct from each other. If the machines performing similar operations are grouped together, the idle times of machines and operators can be better controlled and better time-shared thereby increasing machine and labor utilization.
Product Layout or Line Production:
The equipment here is laid out according to the sequence in which it is used for making the product. Product layout is usually suitable for assembling operations, for example in the automobile industry. Since a machine is assigned for each operation, the number of equipments in a Product layout is much more as compared to the Process layout. Therefore, the utilization of the equipment has to be sufficiently high to justify the higher level of capital investment necessary in a Product layout. This means, the volume of production should be large and the variety of products should be low so that there is very little time lost in setting up the machinery. However, if two types of products are to be made, it may call for two separate layouts. Doing multiple jobs on the same equipment with the same men to save time is usually not the characteristics of a Product layout. Each Line layout caters only to one product.
The principles of minimum distance moved (each operation adjacent operation) and of congruence of flow of materials and sequence of equipments, are very well satisfied in a Line layout. But, this can only be true when there is only one standard product to be made, day in and day out. If there is another type of product to be made, then the present line up of equipment may not correspond with the ‘flow’ of this new product, resulting in high costs due to excessive materials movement and excessive idle times of machinery and manpower.