Facility Design and Planning
EBM025A05.2025-2026.1
Master Supply Chain Management &
Technology and Operations Management
Inhoudsopgave
Week 1 – Lecture 1: Design Requirements ........................................................................................................ 2
Week 1 – Lecture 2: Design requirements & logic ............................................................................................. 8
Week 2 – Lecture 1: Advanced Linear Programming ....................................................................................... 12
Week 2 – Lecture 2: Facility Layout ................................................................................................................. 21
Week 3 – Lecture 1: Facility layout (part 2) ..................................................................................................... 33
Week 3 – Lecture 2: Facility Layout (part 3) .................................................................................................... 37
Week 4 – Lecture 1: Facility layout (part 4) ..................................................................................................... 41
Week 4 – Lecture 2: Warehouse design (part 1).............................................................................................. 44
Week 5 – Lecture 1: Warehouse design (part 2).............................................................................................. 48
Week 6 – Lecture 1 & 2: Warehouse operations ............................................................................................. 51
,Week 1 – Lecture 1: Design Requirements
Defined
Facilities planning:
- Determine how an activity’s tangible fixed assets best
support achieving the activity’s objective
- Examples:
o Factories
o Warehouses
o Hospitals
o Airports
Objectives matter
Cost, profit, efficiency, customer satisfaction, response speed,
inventory turns, utilization, return on investment, payback period,
human factors, and sustainability.
Factors impacting strategic facilities plan
- Number, location, size of warehouses
- Centralized or decentralized storage of material
- Reuse existing or build new facilities
- Required flexibility with respect to market and technology
- Interface between storage and manufacturing
- Level of vertical integration
So facility design depends on supply chain design
Question 1.1
Name a number of aspects (general aspects at the company level) that may limit the scope of the
facilities planning process for a factory.
3.2 Flow systems
Material flow system: How to move products, materials, information inside a facility
- Concerns a conceptualization of the process organization.
- For example:
o Is the product going to the workers, or vice versa.
o Do you only have one product, so that you can design the process specifically for it?
o Or do you need a system that can be used for many different activities?
It’s about flow
- The conceptual outline for a facility design is mostly about the flow in the facility.
- How do products (information/people) move though the facility to accommodate the various
objectives?
o Total throughput
o Cycle time
o Responsiveness
o Error rates
o Cost
- For flow design we are more or less assuming we know e.g. which machines to use or that
the choice has limited impact
2
,Choices to make
- Process selection
o Deciding on the way production of goods or services will be organized
- Major factors
o Process strategy
o Customer order decoupling point ( = push-pull boundary)
o Layout of facilities
o Capacity planning, performance requirements
o Equipment choice
- Process strategy had long-term effect on:
o Efficiency and production flexibility
o Costs and quality
Process strategies
- Process-oriented strategy
o also called: job shop, functional layout, intermittent, and in the book: process layout
- Product-oriented strategy
o wo forms: Repetitive and Continuous
o Also called: Assembly line (repetitive only), production line, and in the book: product
layout
o See also section 8.2: Transfer lines
- Other & intermediate forms
o Batch processing
o Mass customization
o Fixed-position layout
o Retail layout
o Office layout
o Warehouse layout
Fixed location strategy
If demand is low and the product is difficult to move; the product does not move. For example,
aircrafts and ships.
Process-oriented strategy
Example: a local bakery
- Product range: bread, pastries, cookies etc
- Typically about 50 types of bread
- Few items sols per product
Facilities are organized around specific activities or processes
- General purpose equipment and skilled personnel
- High degree of flexibility
o Introducing a new product type
o Change of quantities produced per product type
- Typical low fixed cost; high variable costs
- Product flows may vary considerably making planning and
scheduling a challenge
→ Example of a typical process-oriented design:
https://www.youtube.com/watch?v=jYby_HczyDA
3
, Product-oriented strategy
Facilities often organized as assembly lines
- Characterized by modules with parts and
assemblies made previously
- Modules may be combined for many output
options
- Fixed costs dependent on flexibility of the facility
- Less flexibility than process-focused facilities but
more efficient
- Facilities are organized by product
- Special equipment; generally less skilled labor
- High volume but low variety of products
- Typically high fixed cost but low variable cost
- Long, continuous production runs enable efficient
processes
→ Example of a typical product-oriented design:
https://youtu.be/8bT6txm4RpA?feature=shared&t=1029
Process-oriented versus product-oriented strategy
4
EBM025A05.2025-2026.1
Master Supply Chain Management &
Technology and Operations Management
Inhoudsopgave
Week 1 – Lecture 1: Design Requirements ........................................................................................................ 2
Week 1 – Lecture 2: Design requirements & logic ............................................................................................. 8
Week 2 – Lecture 1: Advanced Linear Programming ....................................................................................... 12
Week 2 – Lecture 2: Facility Layout ................................................................................................................. 21
Week 3 – Lecture 1: Facility layout (part 2) ..................................................................................................... 33
Week 3 – Lecture 2: Facility Layout (part 3) .................................................................................................... 37
Week 4 – Lecture 1: Facility layout (part 4) ..................................................................................................... 41
Week 4 – Lecture 2: Warehouse design (part 1).............................................................................................. 44
Week 5 – Lecture 1: Warehouse design (part 2).............................................................................................. 48
Week 6 – Lecture 1 & 2: Warehouse operations ............................................................................................. 51
,Week 1 – Lecture 1: Design Requirements
Defined
Facilities planning:
- Determine how an activity’s tangible fixed assets best
support achieving the activity’s objective
- Examples:
o Factories
o Warehouses
o Hospitals
o Airports
Objectives matter
Cost, profit, efficiency, customer satisfaction, response speed,
inventory turns, utilization, return on investment, payback period,
human factors, and sustainability.
Factors impacting strategic facilities plan
- Number, location, size of warehouses
- Centralized or decentralized storage of material
- Reuse existing or build new facilities
- Required flexibility with respect to market and technology
- Interface between storage and manufacturing
- Level of vertical integration
So facility design depends on supply chain design
Question 1.1
Name a number of aspects (general aspects at the company level) that may limit the scope of the
facilities planning process for a factory.
3.2 Flow systems
Material flow system: How to move products, materials, information inside a facility
- Concerns a conceptualization of the process organization.
- For example:
o Is the product going to the workers, or vice versa.
o Do you only have one product, so that you can design the process specifically for it?
o Or do you need a system that can be used for many different activities?
It’s about flow
- The conceptual outline for a facility design is mostly about the flow in the facility.
- How do products (information/people) move though the facility to accommodate the various
objectives?
o Total throughput
o Cycle time
o Responsiveness
o Error rates
o Cost
- For flow design we are more or less assuming we know e.g. which machines to use or that
the choice has limited impact
2
,Choices to make
- Process selection
o Deciding on the way production of goods or services will be organized
- Major factors
o Process strategy
o Customer order decoupling point ( = push-pull boundary)
o Layout of facilities
o Capacity planning, performance requirements
o Equipment choice
- Process strategy had long-term effect on:
o Efficiency and production flexibility
o Costs and quality
Process strategies
- Process-oriented strategy
o also called: job shop, functional layout, intermittent, and in the book: process layout
- Product-oriented strategy
o wo forms: Repetitive and Continuous
o Also called: Assembly line (repetitive only), production line, and in the book: product
layout
o See also section 8.2: Transfer lines
- Other & intermediate forms
o Batch processing
o Mass customization
o Fixed-position layout
o Retail layout
o Office layout
o Warehouse layout
Fixed location strategy
If demand is low and the product is difficult to move; the product does not move. For example,
aircrafts and ships.
Process-oriented strategy
Example: a local bakery
- Product range: bread, pastries, cookies etc
- Typically about 50 types of bread
- Few items sols per product
Facilities are organized around specific activities or processes
- General purpose equipment and skilled personnel
- High degree of flexibility
o Introducing a new product type
o Change of quantities produced per product type
- Typical low fixed cost; high variable costs
- Product flows may vary considerably making planning and
scheduling a challenge
→ Example of a typical process-oriented design:
https://www.youtube.com/watch?v=jYby_HczyDA
3
, Product-oriented strategy
Facilities often organized as assembly lines
- Characterized by modules with parts and
assemblies made previously
- Modules may be combined for many output
options
- Fixed costs dependent on flexibility of the facility
- Less flexibility than process-focused facilities but
more efficient
- Facilities are organized by product
- Special equipment; generally less skilled labor
- High volume but low variety of products
- Typically high fixed cost but low variable cost
- Long, continuous production runs enable efficient
processes
→ Example of a typical product-oriented design:
https://youtu.be/8bT6txm4RpA?feature=shared&t=1029
Process-oriented versus product-oriented strategy
4
