Suppose we want to arrange the 4 departments within a production facility to min

Question

Suppose we want to arrange the 4 departments within a production facility to minimize the total interdepartmental material handling cost.

All departments have the same space requirement, 20 feet by 20 feet. The production facility is 40 feet by 40 feet. Materials are transported in a standard-size crate. The transportation cost is $1 per crate between adjacent departments. Only horizontal and vertical moves are allowed in this case. Therefore, for a layout as following, it would cost $2 per crate to transport from Department 1 to Department 4.

Department 1

Department 2

Department 3

Department 4

The table below summarizes the interdepartmental flows we need to manage. For example, a total of 50 crates need to be transported between Department 1 and Department 2. And a total of 75 crates need to be transported between Department 1 and Department 3.

Pair of Departments

Number of crates

1-2

50

1-3

75

1-4

30

2-3

40

2-4

0

3-4

60

Now consider the following process layout:

Department 1

Department 4

Department 2

Department 3

For each pair of departments listed in the table that summarizes the material flows, how much does it cost to transport the required amount of material? For each pair of departments, please provide at least one step of calculation and the correct answer for full credit

Department 1

Department 2

Department 3

Department 4

Explanation / Answer

For Old Process layout, the transportation costs are obtained as follows:

Pair of Departments

Number of crates

Cost per crate

Transportation Cost

1-2

50

$1

$50

1-3

75

$1

$75

1-4

30

$2

$60

2-3

40

$2

$80

2-4

0

$1

$0

3-4

60

$1

$60

Total Transportation Cost for old Layout

$325

For New Process layout, the transportation costs are obtained as follows:

Pair of Departments

Number of crates

Cost per crate

Transportation cost

1-2

50

$1

$50

1-3

75

$2

$150

1-4

30

$1

$30

2-3

40

$1

$40

2-4

0

$2

$0

3-4

60

$1

$60

Total Transportation Cost

$330

Transportation cost between 1-3 = Transportation Cost per crate between 1 and 3 x number of crates transported

Transportation cost between 1-3 = $2 x 75 = $150

Total transportation = $330

Pair of Departments

Number of crates

Cost per crate

Transportation Cost

1-2

50

$1

$50

1-3

75

$1

$75

1-4

30

$2

$60

2-3

40

$2

$80

2-4

0

$1

$0

3-4

60

$1

$60

Total Transportation Cost for old Layout

$325

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