Improving Facility Layout Of An Automotive Industry Accounting Essay

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Facility layout design is a strategic issue and has a significant and lasting impact on the efficiency of a manufacturing system. An ideal facility layout provides the optimum relationship among output, floor area and manufacturing process. Facility layout facilitates the production process, minimizes material handling time and cost, and allows flexibility of operations makes optimum use of the building, promotes effective utilization of manpower. It is also important because it affects supervision and control, use of space and expansion possibilities.

This paper presents a case study for improvement in layout in an automobile component manufacturing company. The company has process layout in which similar machines are put together in a department. The first visit to the company revealed a variety of problems due to its improper layout. For improvement in layout Graph Theory is used with the framework of systematic layout planning methodology. The cost analysis shows a saving of about 62.4% per year in material handling cost by this method. The proposed layout however requires lot of changes in the existing layout. Seeing the constraints of time in implementation one case is developed along with cost analysis which is most affecting area of material handling in the plant and can save huge money of the organization and management can implement this case in less time without effecting the other department.

The current work has only practical data of material handling cost, but for cost analysis needs some other cost such as equipment cost, wages, salaries, inventory carrying cost and operating cost. These costs are not providing by the management, that's why analysis excluded these costs.

KEY WORDS: Graph Theory, effective manpower, cost reduction, facility enhance and smooth functioning.

BASIC OPERATION OF MANUFACTURING

RAW MATERIAL

DIE CASTING

FINISH DIE CASTING STORE

BROACHING

DRILLING

REAMING

TAPPING

MILLING

QUALITY INSPECTION

DISPATCH

The company produces die casting components for automobile locks. Raw material is purchased from outside. The raw material goes through different processes to produce final product. Figure 1 shows material flow chart for die casting components production.

Figure 1: Flow chart for die casting component

EXISTING LAYOUT OF THE COMPANY

The company has process layout in which similar machines are put together in a department.

S.NO.

LEGEND NAME

Raw material store

Die casting

Finish die casting store

Broaching

Drilling

Reaming

Tapping

Milling

Finish quality store & packaging

Tool & maintenance

Administrative block

Free space

Figure 2: Existing Layout of the Company

MATERIAL FLOW IN THE EXISTING LAYOUT

Most of component produced in the company follow the same path though the departments. The flow of material is shown in figure 3

Figure 3: Material flow in the existing layout

Legend

In ward flow of material

Out ward flow of material

PROBLEM DESCRIPTION

The first inspection of the company exposed various problems due to its unorganized layout. These problems are as follows:

Excess flow of material between departments.

Excess production time.

Excess work in process.

Improper department location

The present study aims:

To investigate existing layout.

To propose enhanced layout and several feasible alternatives for the management to select optimum from them.

ANALYSIS OF EXISTING LAYOUT

In this section the existing layout is studied in detail to facilitate improvement. As a first step the areas of the different departments were calculated. Table 1 shows planer areas (in sq. ft) for different departments. These areas are kept same in the future analysis.

Table 1: Planer area of the different departments

Department No.

Department Name

Length * width

(in ft)

Total Area

Square ft

Raw material store

25*9

225

Die casting

100*55 +(82*65)

10830

Finish die casting store

30*64

1920

Broaching

24*14

336

Drilling

30*24

720

Reaming

12*24

280

Tapping

19*24

456

Milling

9*24

216

Finish quality store & packaging

26*24 + (25*16) +(17*25)

1449

Tool & maintenance

84*15 + (9*65)

1845

Administrative block

54*25

1350

1

2

3

4

5

6

7

8

1

222

2

264

3

314

4

52

5

46

6

41

7

39

8

9

To

FROMIn order to facilitate future analysis a block plan is prepared for the existing layout. The block plan is show in figure 4. The numbering of the departments is kept same as shown earlier in figure 3. Departments 10 and 11 are the departments in which no material flow takes place (shown shaded in figure 4).

3

1

2

10

2

4

5

6

7

8

9

11

Figure 4: Block plan of existing layout

The material flow is assumed to be rectilinear. The rectilinear and centroid to centroid distance between different departments was measured and shown in table 2. Department 10 and 11 are not shown in table 2 due to no material flow from -to - these departments.

The total distance traveled by the material in the existing layout

= 222+264+314+52+46+41+39+90

= 1068 ft

To determine the flow of material between different departments the

Table 2: Distance between departments

production data for financial year 2010-2011 was considered. The monthly production in each of the departments is given in Table 3

Month

Raw material store

Die casting

Finish die casting store

Broaching

Milling

Reaming

Tapping

Drilling

April

438.984

328.288

326.637

250.765

249.345

249.123

248.299

246.465

May

556.005

547.493

546.628

540.262

539.647

538.857

538.231

537.978

Jun

501.079

498.765

498.241

487.548

487.142

486.812

486.123

487.986

July

411.833

406.028

404.893

404.271

403.921

403.382

402.842

402.521

August

480.153

470.260

460.837

459.956

459.521

459.195

458.953

458.645

September

595.238

464.957

462.638

462.254

461.356

461.124

460.963

460.689

October

215.433

198.848

197.621

197.290

196.900

196.421

196.094

195.986

November

267.012

240.168

240.008

239.698

239.401

239.198

238.762

238.590

December

1107.189

783.362

780.462

780.390

779.746

779.433

779.398

779.278

January

475.719

470.621

465.832

465.642

465.023

464.956

464.875

464.683

February

465.891

450.871

450.354

450.134

449.782

449.748

449.701

449.598

March

397.534

396.132

395.897

395.605

395.588

395.528

395.300

395.287

Total Production (in tonne)

5912.074

5255.793

5230.048

5133.815

5127.372

5123.777

5119.541

5117.706

Table 3: Yearly production in the departments

1

2

3

4

5

6

7

8

9

1

5912.07

2

5255.79

3

5230.04

4

5133.81

5

5127.37

6

5123.77

7

5119.54

8

5117.70

9

The material flow between different departments is shown in table 4. As can be seen the flow reduces with the progression of production. This is due to rejections of material at different stages of production. The reverse flows due to rejections however are not considered in the analysis. Department 10 and 11are not show in table 4 due to no material flow to/ from these departments.

Table 4: From- to chart showing material flow

Determining unit cost of material flow

For analysis, the unit cost of material flow is required. But this is not available with the company. So this cost is calculated indirectly as below

Assume total manufacturing cost Rs. 35000 per tonne as given by company and material handling cost is 20 to 30% of the total manufacturing cost per tonne. For analysis taking 25% material handling cost then material handling cost is 8750 per tonne.

Unit material handling cost

=

= Rs/tone/ft

= 8.19 Rs/tone/ft

The unit material handling cost Rs 8.19 is calculated for one tonne material for one ft distance traveled. The unit material handling cost is considered to be fixed in future analysis. The total material handling cost for the existing layout can be calculated by

Total material handling cost between department =

Where

n is the number of departments.

i = 1, 2… n and j = 1, 2… n are the indices for departments.

Cij is the material handling cost for a unit material for a unit distance between departments i and j.

fij is the material flow from department i to j determined from yearly production targets.

dij is the rectilinear distance between centroids of departments i and j

Material handling cost analysis

S.No.

Department

(From - to)

fij

dij

Cij

Material handling cost in years

fij* dij* Cij

1-2

5912.074

222

8.19

10749215

2-3

5255.793

264

8.19

11363865

3-4

5230.048

314

8.19

13449905

4-5

5133.815

52

8.19

2186389

5-6

5127.372

46

8.19

1931686

6-7

5123.777

41

8.19

1720513

7-8

5119.541

39

8.19

1635233

8-9

5117.706

90

8.19

3772261

Total material handling cost

46809067

Table 5: Material handling cost analysis

NEW LAYOUT DESIGN BY GRAPH THEORY

As shown from the previous calculation, the material handling cost for existing layout is too high. This needs to be reduced by making changes in the existing layout. As seen in the literature review there is a variety of tools and techniques used for the purpose. But due to its simplicity the graph theory for improvements in the existing layout is used. The details of the graph theory are given below.

GRAPH THEORY

The basic idea of graphs was introduced in 18th century by the great Swiss mathematician Leonhard Euler. He used graphs to solve the famous Konigsberg bridge problem. In the graph theory approach, relationships (flows) among facilities can be represented by a (relationship) graph in which vertices denote facilities and edges denote existence of flows or relationships between facilities. A requirement for existence of a block layout satisfying the relationships represented by a graph is that the graph be planar. A graph is planar if it can be drawn in the plane and each edge intersects no other edges and passes through no other vertices.

A typical graph theoretic heuristic for the layout problem consists of the following steps:

Step I:

Firstly construct an activity relationship chart (REL chart). This can be done in consultation with the production manager and workers.

Step II:

In this step the REL chart is converted into the relationship diagram. For this, convert the rating in the form of line and take those departments first, which have "A" rating and then take other departments which have "E" rating. Follow same steps, until all the pairs of departments and ratings are not satisfied. In the graph theory, relationship diagram is also called as activity relationship graph.

Step III:

In this step develop a dual graph from the planer graph. There are two types of region in the graph, one is bounded and another is unbounded, the unbounded outside region is called exterior and the region defined by a graph are referred to as faces. The unbounded outside region is also called exterior face. To construct the dual of a planer graph, place a dual node in each phase of the planer graph whenever two faces share an arc in their common boundary join the nodes of the corresponding faces by an edge. The edge for the dual graph is shown with dashed line and faces of dual graph shows the departments.

Step IV:

The dual graph gives only the relation between relative locations of the departments. Finally, convert the dual graph into the block layout with the help of REL chart and try to satisfy maximum closeness rating.

The above steps are implemented to the case as follows:

Step I: Construct an Activity Relationship Chart

Activity relationship chart give the information about the closeness between the departments, in activity chart or REL chart all pairs of relationships are evaluated and closeness rating (A, E, I, O, U, and X) is assigned to each pair. Closeness ratings represent an ordered preference for "closeness". Specifically an "A" rating and "X" rating are considered to be most important ranking and a layout must satisfied the "A" and "X" ratings. An E rating is the second ranked and most, if not all "E" rating should be satisfied by layout. An "I" rating is ranked third and they should be satisfied by the layout without sacrificing "A", "X" and "E" ratings. "O" rating is ranked fourth and they should be satisfied by the layout without sacrificing "A", "X", "E" and "I" rating. "U" rating is neutral rating and hence they can be ignored while designing the layout. With the help of production manager, REL chart was constructed which is shown in table 5.6

Table 6: Activity relationship chart

Step II: Construct Activity Relationship Diagram:

The purpose of the activity relationship diagram is to especially depict the relationship of the activities. In the relationship graph, vertices denote facilities and edges denote existence of flows or relationships between facilities. It is also called the planer graph. The planer graph for REL chart is given in figure 5

1

2

3

4

5

6

7

8

9

10

11

1

A

U

U

U

U

U

U

U

U

U

2

O

U

U

U

U

U

U

E

U

3

A

U

U

U

U

U

U

U

4

E

I

O

O

U

O

U

5

E

I

O

U

O

U

6

E

I

U

O

U

7

E

I

O

U

8

I

O

U

9

U

O

10

U

11

Figure 5: Relationship Diagram

Step III: Dual Graph:

Construction of a dual graph is very important step in a layout design, in this step convert the relationship diagram into dual graph. Dual graph for relationship diagram is shown in figure 6.

Figure 6: Dual graph for proposed layout

Step IV: Block Layout:

Finally for generating the block layout conversion of dual graph into block layout is being carried out. New block layout for the company by the graph theory is show in figure 7

2

1

3

4

5

6

8

9

11

10

7

Figure 7: Block diagram of proposed layout of the company

COST ANALYSIS FOR THE PROPOSED LAYOUT

For analysis of the proposed layout the number of department and the areas of the different departments are kept same as that of the existing layout, so as to make the analysis easy but shape has been changed to rectangular.

Table 7: Planer Area of the departments

The length and width of different departments along with the areas are given in Table 7

Department No.

Department Name

Length * width

Total Area

Square ft

Raw material store

75*3

225

Die casting

212.35*51

10830

Finish die casting store

80*24

1920

Broaching

24*14

336

Milling

30*24

720

Reaming

24*12

280

Tapping

24*19

456

Drilling

24*9

216

Finish quality store & packaging

63*23

1449

Tool & maintenance

61*30.2

1845

Administrative block

54*25

1350

The material flow is assumed to be rectilinear. The distances between different departments were measured. The centroid to centroid distances for different departments is show in table 8. Department 10 and 11 are not shown in table 8 due to no material flow to/ from these departments.

TO

1

2

3

4

5

6

7

8

9

1

0

120

67

114

136

157

172.5

140.5

104

2

0

103.6

56.6

40.6

61.6

77.1

78.1

113.6

From3

0

47

69

90

105.5

73.5

37

4

0

22

43

58.5

26.5

57

5

0

21

36.5

37.5

73

6

0

15.5

16.5

53

7

0

32

68.5

8

0

36.5

9

0

Table 8: From - to - chart for Distance travelled by material in proposed layout

Total distance traveled by the material flow in new layout =120+103.6+47+22+21+15.5+32+36.5

= 397.35 ft

S.No.

Department

(From - to)

fij

dij

Cij

Material handling cost in years

fij* dij* Cij

1-2

5912.074

120

8.19

5791018

2-3

5255.793

103.6

8.19

4459456

3-4

5230.048

47

8.19

2013202

4-5

5133.815

22

8.19

925010

5-6

5127.372

21

8.19

881856

6-7

5123.777

15.5

8.19

650437

7-8

5119.541

32

8.19

1341729

8-9

5117.706

36.5

8.19

1529861

Total material handling cost

17592573

Table 9: The total material handling cost for the new layout

Total material handling cost of the new layout is Rs 17592573 per year

Total saving in material handling cost =

[Material handling cost in existing layout - material handling cost in new layout]

= 46809067 - 17592573

= 29216494

Total saving in material handling cost is Rs 29216494 per year

Saving as % of original cost = = 62.4%

9. COMPARISON BETWEEN EXISTING AND PROPOSED LAYOUT

(1) On the basis of distance between different departments

The figure 8 shows the comparison between existing and proposed layout on the basis of distance between different departments. Figure 8: Comparison on the basis of distance between departments

(2) On the basis of material handling cost

The figure 9 shows the comparison on the basis of material handling cost.

Figure 9: Comparison on the basis of material handling cost.

It is seen from the above cost analysis that the proposed layout is better than the existing layout and can save huge sums of money. This however, requires lot of disturbances which may not be acceptable to the management.

10. CONCLUSION

Facility planning is the arrangement of work space which, in general term smoothes the way to access facilities that have strong interactions. The main concern with the plant facility layout planning is to reduce the cost of materials handling as poor materials handling can generate business problems. To stay competitive in today's market a company must reduce costs by planning for the future. By the use of Graph Theory we can reduce the cost of material handling up to 62.4%

11. ACKNOWLEDGMENT

The beautiful, bliss and euphoria that accompany the successful completion of any task would not be complete without the expression of appreciation of simple virtues to the people who made it possible. So with reverence, veneration honour I acknowledge all those whose guidance and encouragement has made successful in winding up this.

First and foremost, I would like to thank my research guide. His attitude towards excellence and his enthusiasm has been source of constant inspiration. I am grateful to him for all the advice, encouragement and support he has given me during the work with him.

Last but not the least I would appreciate my parents, which made me, reach this level and almighty at the top.

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