Relative location of Facilities problem

Decision to Organize Facilities by Process:

To obtain reasonable utilization of personal and equipment in process focused flow situations, we assemble the skills and machines for performing a given function in one place and then route the items being processed to the appropriate functional centers. If we tried to specialize according to the processing requirements of each type of order in production line fashion, we would have to duplicate many kinds of expensive skills and equipment. The equipment utilization would probably be very low. Thus, the need for flexibility and reasonable equipment utilization suggests a functional layout.

Other advantages of the functional design become apparent when it is compared with the continuous flow or production line concept. The jobs that result from a process focused organization are likely to be broader in scope and require more job knowledge. Workers are expert in some field of work, whether it is heat treating, medical laboratory work, structural design, or city welfare. Even though the functional mode implies a degree of specialization, it is specialization within a generic field of activity, and the variety within that field can be considerable. Pride in workmanship has been traditional in this form of organization of work by trades, crafts, and relatively broad specialties. Job satisfaction criteria seem easier to meet in these situations than when specialization results in highly repetitive activities and, if other factors are equal, could tip the balance in favor of a process focus and a functional layout of facilities.

Given a decision to organize physical facilities functionally, the major problem of a physical layout nature is to determine the location of each of the processing areas relative to all the other processing areas. This is called the relative location of facilities problem, and it has received a great deal of research attention.

In a machine shop, should the lathe department be located adjacent to the mill department? In a hospital, should the emergency room be located adjacent to intensive care? In an engineering office, should product support be located adjacent to electrical design? In municipal offices, should the welfare and health department offices be adjacent to each other? The locations will depend on the need for one pair of facilities to be adjacent (or close) to each other relative to the need for other pairs of facilities to be adjacent or close to each other. We must allocate locations based on the relative gains and losses for the alternatives and seek to minimize some measure of the cost of having facilities nonadjacent.


We are attempting to measure the interdepartmental interactions required by the nature of the system. How much business is carried on between departments, and how do we measure it? In manufacturing systems, material must be handled from department to department; in offices, people walk between locations to do business and communicate; and in hospitals, patients must be moved and nurses and other personnel must walk from one location to another. Table below shows summarizes the criteria for four systems:

Generic System

1. Manufacturing
2. Hospital
3. Medical clinic
4. Offices


1. Interdepartmental material handling cost
2. Cost of personnel walking between departments
3. Walking time of Patients between departments
4. Cost of personnel walking between areas and equipment or face to face contacts between individuals.

By their very nature, functional layouts have no fixed path of work flow. We must aggregate for all paths and seek a combination of relative locations that optimizes the criterion. Although this location combination may be poor for some paths through the system, in the aggregate it will be the best arrangement of locations.

Complexity of the relative location problem:

Figure above show, in schematic form, 6 process areas arranged on a grid. If any of the 6 departments can be located in any of the 6 alternative locations, there are 6 x 12 = 720 possible arrangements, of which 90 are different in terms of their effects on the cost of interdepartmental transactions. For this trivial problem, we could consider enumerating all the different location combinations, comparing aggregate costs, and selecting the combination with the minimum cost. However, the number of combinations to evaluate increases rapidly as we increase the number of departments. For just 9 departments on a 3 x 3 grid, we have more than 45,000 combinations. For 20 departments arranged on a 4 x 5 grid we have 608 x 1015 combinations. Therefore, we must work out enumeration as a practical approach.