Design of distributed layouts

Abstract

Distributed layouts are layouts where multiple copies of the same department type may exist and may be placed in non-adjoining locations. In this paper, we present a procedure for the design of distributed layouts in settings with multiple periods where product demand and product mix may vary from period to period and where a relayout may be undertaken at the beginning of each period. Our objective is to design layouts for each period that balance relayout costs between periods with material flow efficiency in each period. We present a multi-period model for jointly determining layout and flow allocation and offer exact and heuristic solution procedures. We use our solution procedures to examine the value of distributed layouts for varying assumptions about system parameters and to draw several managerial insights. In particular, we show that distributed layouts are most valuable when demand variability is high or product variety is low. We also show that department duplication (e.g., through the disaggregation of existing functional departments) exhibits strong diminishing returns, with most of the benefits of a fully distributed layout realized with relatively few duplicates of each department type.