Fundamentals of Management, 8th ed

product–service mix

How many and what

kinds of products or

services (or both) to

offer

capacity

The amount of

products, services, or

both that can be

produced by an

organization

facilities

The physical

locations where

products or services

are created, stored,

and distributed

location

The physical

positioning or

geographic site of

facilities

462

Part 5: Controlling

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Layout

The choice of physical configuration, or the

layout

, of facilities is closely

related to other operations decisions. The three entirely different layout alternatives

shown in Figure 15.1 help demonstrate the importance of the layout decision. A

product layout

is appropriate when large quantities of a single product are needed. It

makes sense to custom-design a straight-line flow of work for a product when a specific

task is performed at each workstation as each unit flows past. Most assembly lines use

this format. For example, Hewlett-Packard’s personal computer factories use a product

layout.

Process layouts

are used in operations settings that create or process a variety of

products. Auto repair shops and health-care clinics are good examples. Each car and

each person is a separate “product.” The needs of each incoming job are diagnosed as

it enters the operations system, and the job is routed through the unique sequence of

workstations needed to create the desired finished product. In a process layout, each

type of conversion task is centralized in a single workstation or department. All welding

is done in one designated shop location, and any car that requires welding is moved to

All incoming

jobs and 

materials