Unit 2: Facility location, layout & capacity planning
Production and Operations Management notes · PTU syllabus (BBAGE 301-18)
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Unit summary
Where a plant is located, how it is laid out and how much it can produce shape its cost and efficiency for years. This unit covers facility location factors and techniques, layout objectives and types, capacity planning, and the concepts of production planning and control.
After this unit you can
- Explain the factors and techniques of location analysis
- Compare process, product, fixed-position and cellular layouts
- Explain capacity planning concepts and factors
- Explain the functions of production planning and control
PTU syllabus topics
- Importance and factors in location analysis
- location analysis techniques
- facility layout objectives and basic types
- capacity planning concepts and factors
- production planning and control concepts
Process layout
Similar machines grouped together
Job and batch production
Product layout
Machines in the sequence of operations
Mass production
Fixed-position layout
Product stays, resources move
Ships, aircraft, buildings
Cellular layout
Cells of machines for product families
Group technology
Topic 1
Facility location
Location decisions are long-term and costly to reverse.
Market proximity
Closeness to customers
Raw materials
Closeness to suppliers
Labour
Availability and cost of skilled workers
Infrastructure
Transport, power, water, communication
Government policy
Incentives, SEZs, taxes
Community and climate
Attitude, living conditions
Location analysis techniques: factor rating method (score and weight each factor), break-even (locational cost-volume) analysis, centre of gravity method (minimises distribution cost) and the transportation model.
Topic 2
Facility layout
Layout is the arrangement of machines, departments, workstations and storage within a facility. Objectives: smooth material flow, minimum handling, efficient use of space, safety, flexibility and worker comfort.
Process (functional)
Similar machines grouped together
Job and batch production, hospitals
Product (line)
Machines in the sequence of operations
Mass production, assembly lines
Fixed-position
Product stays; workers and machines move
Ships, aircraft, buildings
Cellular (group technology)
Cells of machines for families of parts
Medium-volume, varied parts
Topic 3
Capacity planning
Capacity is the maximum output a facility can produce in a period. Design capacity is the ideal maximum; effective capacity allows for maintenance and other allowances; actual output is what is achieved.
Utilisation
Actual output / design capacity × 100
Efficiency
Actual output / effective capacity × 100
Factors: forecast demand, product design, technology, labour skills, maintenance and supply chain. Strategies: lead (add capacity ahead of demand), lag (after demand rises) and match (in small steps).
Topic 4
Production planning and control (PPC)
PPC plans what to produce, when and how, and controls production to meet the plan.
- 1Routing
Path and sequence of operations
- 2Scheduling
When each job starts and finishes
- 3Loading
Assign work to machines
- 4Dispatching
Release orders to start work
- 5Follow-up (expediting)
Check progress and remove delays
Key terms
- Factor rating method
- Scoring locations against weighted factors
- Product layout
- Machines arranged in the sequence of operations
- Effective capacity
- Maximum realistic output after allowances
- Routing
- Deciding the path of production
- Dispatching
- Releasing work orders to begin production
Quick revision
- Location: market, materials, labour, infrastructure, policy.
- Layouts: process, product, fixed-position, cellular.
- Utilisation = actual / design; efficiency = actual / effective.
- PPC: routing, scheduling, loading, dispatching, follow-up.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.List four factors affecting plant location.
- Q2.What is the factor rating method?
- Q3.Differentiate between process and product layout.
- Q4.Define capacity utilisation.
- Q5.List the functions of PPC.
Long-answer questions
- Q1.Explain the factors and techniques of facility location.
- Q2.Explain the types of layout with their merits and demerits.
- Q3.Explain capacity planning and its strategies.
- Q4.Explain the functions of production planning and control.
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