Notes on Facility Planning & Management

1. Facilities Planning
( Introduction)
Module 1
08.801: Facilities Planning & Management

2. Facility Planning
 Definition and Objectives
 Engineering Design Process
 Important Factors to Evaluate Facility Plans
 Evaluation of Alternative Facility Plans
- Pairwise Comparison Technique - Factor Analysis Technique
- Prioritization Matrix
 Material Handling Checklist
 Principles of Material Handling
 Objectives of Facility Layout
 Traditional Facility Layout Procedures
- Naddler’s Ideal System Approach - Immer’s Basic Steps
- Apple’s Plant Layout Procedure - Reed’s Plant Layout Procedure
- Muther’s Systematic Layout Planning
 Information Gathering
- Information about Product - Information about Process
- Information about Schedule

3. Definition of Facility Planning
Facility Planning determines how an activity’s tangible fixed
assets best support achieving the activity’s objectives.
Examples:
a. In manufacturing, the objective is to support production.
b. In an airport, the objective is to support the passenger airplane
interface.
c. In a hospital, the objective is to provide medical care to patients.

4. Facility
 Facilities can be broadly defined as buildings where
people, material, and machines come together for a
stated purpose – typically to make a tangible product
or provide a service.
 The facility must be properly managed to achieve its
stated purpose while satisfying several objectives.
 Such objectives include producing a product or
producing a service
 at lower cost,
 at higher quality,
 or using the least amount of resources

5. Hierarchy of Facility Planning
Location: is the placement of a facility with respect to customers, suppliers,
and other facilities with which it interfaces.
Structure: consists of the building and services (e.g., gas, water, power, heat,
light, air, sewage).
Layout: consists of all equipment, machinery, and furnishings within the
structure.
Handling System: consists of the mechanism by which all interactions required by
the layout are satisfied (e.g., materials, personnel, information, and
equipment handling systems).
Facility
Planning
Structural
Design
Facility
Location
Facility
Design
Layout
Design
Handling
System Design

6. Strategic Facilities Planning Issues
1. Number, location, and sizes of warehouses and/or distribution centers.
2. Centralized versus decentralized storage supplies, raw materials, work-in-
process, and finished goods for single- and multi-building sites, as well as
single- and multi-site companies.
3. Acquisition of existing facilities versus design of model factories and
distribution centers of the future.
4. Flexibility required because of market and technological uncertainties.
5. Interface between storage and manufacturing.
6. Level of vertical integration, including "subcontract versus manufacture"
decisions.
7. Control systems, including materials control and equipment control.
8. Movement of materials between buildings, between sites.
9. Changes in customers' and suppliers' technology as well as firm's own
manufacturing technology and materials handling, storage, and control
technology.
10. Design-to-cost goals for facilities.

7. Facility Planning Objectives
1. Support the organization's mission through improved material
handling, materials control, and good housekeeping.
2. Effectively utilize people, equipment, space, and energy.
3. Minimize capital investment.
4. Be flexible and promote ease of maintenance.
5. Provide for employee safety and job satisfaction.

8. Engineering Design Process
 Typically, design problems do not have well-defined, unique,
optimum solutions. We are interested in obtaining a satisfactory
solution.
 General Procedure for Solving Engineering Design Problems
1. Formulate the problem.
2. Analyze the problem.
3. Search for alternative solutions.
4. Evaluate the design alternatives.
5. Select the preferred design.
6. Implement the design.

9. Application of the Engineering Design
Process to Facility Planning
1. Define (or redefine) the objective of the facility:
Specify quantitatively the products to be produced or service to be provided.
2. Specify the primary and support activities to be performed in accomplishing the
objective:
Requirements for primary activities include operations, equipment, personnel,
and material flows.
3. Determine the interrelationships among all activities:
Both qualitative and quantitative relationships should be defined.
4. Determine the space requirements for all activities:
These are determined considering the equipment, materials, and personnel
requirements.
5. Generate alternative facility plans:
Including alternative facility locations and alternative designs for the facility

10. Application of the Engineering Design
Process to Facility Planning (cont.)
6. Evaluate alternative facility plans:
Determine the important factors (see list of factors). For each candidate plan, evaluate
if and how those factors will affect the facility and its operations.
7. Select a facility plan:
Cost may not be the only major consideration.
Use the information in step 6 to determine a plan (pairwise comparison is a good
ranking procedure).
8. Implement the facility plan:
Considerable amount of planning must precede the construction of a facility or the
layout of an area.
9. Maintain and adapt the facility plan:
The facility plan must be modified as new requirements are placed, e.g., new energy
saving measures, changes in product design may require different flow pattern or
handling equipment, etc.
10.Redefine the objective of the facility:
Similar to step 1.
Changes in product design and/or quantities may require changes into the layout plan.

11. Important Factors to Evaluate Facility Plans
In developing well-thought facilities design alternatives it is important to look into issues
such as:
a) Layout characteristics
- total distance traveled
- manufacturing floor visibility
- overall aesthetics of the layout
- ease of adding future business
b) Material handling requirements
- use for the current material handling equipment
- investment requirements on new equipment
- space and people requirements

12. Important Factors to Evaluate Facility Plans
(cont.)
c) Unit load implied
- impact on WIP levels
- space requirements
- impact on material handling equipment
d) Storage strategies
- space and people requirements
- impact on material handling equipment
- human factors risks
e) Overall building impact
- estimated cost of the alternatives
- opportunities for new business

13. Pairwise Comparison Technique
It is a good ranking procedure. All combinations of two candidate plans are ranked for
each factor.
If n = number of candidate plans, and m = number of factors, the total number of
comparison is mn(n-1)/2.
It is a good procedure in testing for inconsistencies, e.g.,
A > B, B > C, and C > A.
If there are not inconsistencies and, for example, four candidate plans (A, B, C, and D),
the pairwise comparison may produce the following results:
A < B B < C C > D
A < C B > D
A > D
Next, a factor analysis technique can be used to determine the facility plan, i.e., assign
a weight to each factor, and compute the total weight for each candidate plan.

14. Factor Analysis Technique
The facility plan scoring method is a very popular, subjective-decision
making tool that is relatively easy to use. It consists of these steps:
Step 1. List all factors that are important - that have an impact on the
facility plan decision.
Step 2. Assign an appropriate weight (typically between 0 and 1) to
each factor based on the relative importance of each.
Step 3. Assign a score (typically between 0 and 100) to each facility
plan with respect to each factor identified in Step 1.
Step 4. Compute the weighted score for each factor for each facility
plan by multiplying its weight by the corresponding score.
Step 5. Compute the sum of the weighted scores for each facility plan
and choose a facility plan based on these scores.

15. Example 1
A payroll processing company has recently won several major contracts in
the Midwest region of the United States and Central Canada and wants to
open a new, large facility to serve these areas. Because customer service
is so important, the company wants to be as near its “customers” as
possible. A preliminary investigation has shown that Minneapolis,
Winnipeg, and Springfield, Illinois are the three most desirable locations,
and the payroll company has to select one of these. A subsequent
thorough investigation of each location with respect to eight important
factors generated the raw scores and weights. Using the location scoring
method, determine the best location for the new payroll processing facility.

16. Example 1 (cont.)
Weight
0.25
0.15
0.15
0.10
0.10
0.10
0.08
0.07
Factor
Proximity to customer
Land and construction prices
Wage rates
Property taxes
Business taxes
Commercial travel
Insurance costs
Office services
Minneapolis
95
60
70
70
80
80
70
90
Winnipeg
90
60
45
90
90
65
95
90
Springfield
65
90
60
70
85
75
60
80
Score
Factors and weights for three locations

17. Example 1 Solution
Factor
Proximity to customer
Land and construction prices
Wage rates
Property taxes
Business taxes
Commercial travel
Insurance costs
Office services
Sum of weighted scores
Minneapolis
23.75
9.00
10.50
7.00
8.00
8.00
5.60
6.30
78.15
Winnipeg
22.50
9.00
6.75
9.00
9.00
6.50
7.60
6.30
76.65
Springfield
16.25
13.50
9.00
7.00
8.50
7.50
4.80
5.60
72.15
Weighted Score
Weighted scores for three locations