Chapter 12 – Obtaining and Laying Out Operating Facilities
12–16
CHAPTER OUTLINE AND TEACHING NOTES
1. Must be designed or selected to
Produce the desired product at the
lowest practical cost.
2. There are five steps in this process:
a. Determine the product to be sold
B. Determine Product to Be Produced. Fa-
cilities should be planned for the future to
avoid early major changes. Five year pro-
jections are normal.
C. Identify Operations and Activities to Be
Performed
1. Purchasing material and parts.
D. Step 3: Determine Space Requirements
1. Space is required for:
Chapter 12 – Obtaining and Laying Out Operating Facilities
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CHAPTER OUTLINE AND TEACHING NOTES
c. Carts, trucks, inventory, displays.
d. Personal facilities, maintenance,
cleaning, and other services.
REAL WORLD EXAMPLE 12.7
Chad Summerlin and his partner started an air filter dis-
E. How Telecommuting Affects Physical
Facilities Needs
Learning Objective 6.
Explain the emerging role of telecommuting in small firms.
1. TELECOMMUTING is the use of
modern communication media, such
as telephones, fax machines, com-
REAL WORLD EXAMPLE 12.8
Rita Seeley’s home-based business is an example of how
information and communication technology have changed the
meaning of “location.”
3. Many of these workers are satisfied
F. Decide on the Best Layout
Chapter 12 – Obtaining and Laying Out Operating Facilities
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CHAPTER OUTLINE AND TEACHING NOTES
1. Examine each operation to ensure
easy performance of the work, with
as little wasted motion as possible.
Items to be used should be located
close to hand.
a. Is there enough room if a line
2. Types of layout
a. A production layout means the
facilities are designed according
REAL WORLD EXAMPLE 12.9
Burger King uses process layout to deliver the Whopper to
customers.
b. A PROCESS LAYOUT groups
the facilities doing the same type
of work.
(1) The process layout requires
Chapter 12 – Obtaining and Laying Out Operating Facilities
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CHAPTER OUTLINE AND TEACHING NOTES
(3) It also permits more efficient
scheduling of equipment and
3. Determining the general layout
a. Next determine the general lay-
out by grouping together ma-
4. Determining the final layout in detail
a. The final layout must be planned
in detail, examining each opera-
tion to assure easy performance
of the work.
(1) Space for movement is
important.
REAL WORLD EXAMPLE 12.10
Grocery store aisles are designed to deal with two carts.
REAL WORLD EXAMPLE 12.11
Chapter 12 – Obtaining and Laying Out Operating Facilities
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CHAPTER OUTLINE AND TEACHING NOTES
The Gloucester, Virginia, ServiStar Hardware Store in-
creased sales by 33% by installing bright lights and chrome
gridwork to appeal to women buyers.
b. Layout is also important for those
working at home:
(1) Design your workplace with
you at the center.
G. Implementing Your Plans
1. First, test your layout plans to see if
they are sound.
2. Construction of a new building requires
VI. HOW TO IMPROVE OPERATIONS
Learning Objective 7.
Discuss some ways of improving operations.
A. Products and methods of operation are
Chapter 12 – Obtaining and Laying Out Operating Facilities
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CHAPTER OUTLINE AND TEACHING NOTES
1. State the Problem.
a. State the problem, not a symptom.
2. Collect and Record Information.
a. What, how, where, who, why, and
3. Develop and Analyze Alternatives.(In
Work Performance.)
a. Who performs the activity, what is
it, and where is it being done?
4. Select, Install, and Follow up on New
Methods; as best suits your goals.
VII. SETTING AND USING PERFORMANCE
STANDARDS
Learning Objective 8.
Chapter 12 – Obtaining and Laying Out Operating Facilities
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CHAPTER OUTLINE AND TEACHING NOTES
Explain how to set and use performance standards.
A. One difficult problem for small businesses
is measuring the performance of employ-
ees.
1. There are few precise tools for estab-
B. Performance standards can be set up by:
1. Estimates by people experienced in
the work.
Chapter 12 – Obtaining and Laying Out Operating Facilities
12–23
LEARNING OBJECTIVES REVISITED
1. Explain what an operating system is and how it functions.
● An operating system consists of the inputs, processes, and outputs of a business.
● Operations, or production, is converting inputs into outputs for customers.
2. Discuss how to determine the right location for a small business.
● General factors affecting all businesses are:
○ Access to capable, well-trained work force.
3. Describe the important factors involved in choosing a retail site.
● The most important factors are the type of business and the type of location.
Chapter 12 – Obtaining and Laying Out Operating Facilities
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4. Describe the most important factors involved in choosing a manufacturing site.
● The most important factors are nearness to customers and vendors, and availability and cost
5. Identify the steps in planning the layout of physical facilities and show how to implement
them.
● Determine product to be produced.
6. Explain the emerging role of telecommuting in small firms.
7. Discuss some ways of improving operations.
● Step 1: State the problem.
8. Explain how to set and use performance standards.
● There are few precise tools for establishing standards against which to measure perfor-
Chapter 12 – Obtaining and Laying Out Operating Facilities
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● The standards should allow for the time needed to do the work at normal speed, plus time
for unavoidable delays.
KEY TERMS USED IN THIS CHAPTER
Anchor stores are those that generate heavy traffic in a shopping center; the typical shopping center has
two.
Convenience goods are products that customers buy often, routinely, quickly, and in any store that carries
them.
Outputs are the products produced and the satisfactions to employees and the public.
A process layout groups the facilities doing the same type of work.
Processes convert these inputs into products customers want.
Producers convert materials to products in considerable volume for others to sell to ultimate consumers.
A product layout has the facilities laid out according to the sequence of operations to be performed.
Retailers sell goods to the ultimate consumer.
Chapter 12 – Obtaining and Laying Out Operating Facilities
NOTES FOR DISCUSSION QUESTIONS
1. What are some characteristics of an operating system? What are some of the inputs into an oper-
ating system? What are some of the outputs resulting from the operating processes?
Operating systems have the following elements: (1) a system for changing form, place, or time;
2. Explain some of the more important general factors affecting location choice.
Some of the general factors affecting location choice are:
(1) Access to capable, well-trained work force.
3. Explain the two most important factors in choosing a retail site.
The most important factors are type of store and type of location.
Type of store. Customers view products they buy in different ways. Convenience goods stores
need a high flow of customers and want to be convenient to a large population. Shopping goods are
4. Explain the two most important factors in locating a manufacturing plant.
The location is usually selected to serve customers properly at the lowest practical cost. Nearness
Chapter 12 – Obtaining and Laying Out Operating Facilities
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5. Explain the steps involved in planning facilities.
The steps in planning facilities include:
(1) Determining the product to be sold and the volume in which it is to be produced
6. Explain the three different types of layout.
Product layout has the facilities laid out according to the sequence of operations to be performed.
Minimum backtracking, storage, movement, and space are required. Also, this layout fosters fast move-
7. What are some objectives of layout planning?
The layout should be designed to allow space for movement, provide for utilities, be safe, provide
8. Explain the four steps involved in improving operations.
The steps in improving operations are:
9. Which of the two cafeteria layouts in Figure 12.5 do you think would be more effective? Why?
o This has been referred to in the answer to question 6. In part A, the product layout
Chapter 12 – Obtaining and Laying Out Operating Facilities
10. Do you remember your movements during course registration the last time? What improvements
could you make in the process?
Registration is an experience common to all students—the reason for suggesting it. Virtually eve-
11. What is telecommuting, and why is it growing in importance for small firms?
The changing nature of production, operations, and service activities is also changing where peo-
NOTES FOR CASE QUESTIONS
CASE 12.1: Telecommuting in the Rockies
1. Do you think this type of arrangement and location would be beneficial to a small business? Ex-
plain.
This type of business eliminates one troublesome decision for small businesses—where to locate.
2. Do you think your productivity—in this situation and location—would be increased, be reduced,
or stay the same? Explain.
CASE 12.2: Nell Hill’s: An Adventure in Shopping
1. Evaluate the approach used by Mary Carol Garrity in developing and opening her store.
Chapter 12 – Obtaining and Laying Out Operating Facilities
12–29
2. Do you agree with the statement that “The success of Nell Hill’s is part of a trend among upmar–
ket shoppers?” Explain.
To an extent this is probably true. In order to be able to travel to Atchison to buy Garrity’s prod-
3. What is your reaction to Garrity’s qWplan to “open as many as four additional stores in
Atchison, each with a different name and theme?”
Atchison is a relatively small town. There could be some question as to whether four new stores
BONUS EXERCISE
12.1 Discussion Starter: Crisis Management
This exercise explores management reaction to rapid, unexpected change. Divide the class into
groups of 5-6. Each group will act as a management team for a company faced with a crisis. Have the