MGT 214 OPERATIONS MANAGEMENT

CHAPTER 06

Layout Decisions

Prepared by: Ms. Dalal Bamufleh

YANBU UNIVERSITY COLLEGE

Management Science Department

© Yanbu University College

© Yanbu University College

1

MCDONALD’S LOOK FOR COMPETITIVE ADVANTAGE THROUGH LAYOUT

Slide 2

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MCDONALD’S LOOK FOR COMPETITIVE ADVANTAGE THROUGH LAYOUT

Indoor seating (1950s)

Drive-through window (1970s)

Adding breakfast to the menu (1980s)

Adding play areas (late 1980s)

Redesign of the kitchens (1990s)

Self-service kiosk (2004)

21st Century look: 3 dining sections

Slide 3

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MCDONALD’S LOOK FOR COMPETITIVE ADVANTAGE THROUGH LAYOUT

Three separate dining areas

Linger zone with comfortable chairs and Wi-Fi connections

Grab and go zone with tall counters and with bar stools.

Flexible zone for kids and families with colorful and movable furniture

Facility layout is a source of competitive advantage (CSF)

Slide 4

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Strategic Importance of Layout Decisions

The objective of layout strategy is to develop an effective and efficient layout that will meet the firm’s competitive needs and requirements.

An effective layout can help an organization achieve a strategy that support differentiation, low cost or response.

Slide 5

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Strategic Importance of Layout Decisions

Layout Design Considerations:

Higher utilization of space, equipment, and people

Improved flow of information, materials, or people

Improved employee morale and safer working conditions

Improved customer/client interaction

Flexibility

Layout designs needs to be viewed as dynamic

Slide 6

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Types of Layout

Office layout

Retail layout

Warehouse layout

Fixed-position layout

Process-oriented layout

Work-cell layout

Product-oriented layout

Slide 7

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Good layouts requires determining the following:

Material handling equipment

Capacity and space requirements

Environment and aesthetics

Flows of information

Cost of moving between various work areas

Slide 8

Types of Layout

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Office Layout

Requires the grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information

Movement of information is main distinction

Typically in state of flux due to frequent technological changes

Electronic data and paper work

Relationship chart

Slide 9

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Office Layout

Some of the universal layout considerations: working conditions, teamwork, authority …etc

Private or open cubicles?

Slide 10

Open Cubicles

Private Cubicles

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Office Layout

Private office

Low or high file cabinets

Slide 11

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Office Layout

Same entrance, rest room, lockers and cafeteria for all employees?

Two major trends:

Technology such as cell phone, iPods, faxes, Internet, and laptop computers increase layout flexibility.

Modern firms create dynamic needs for space and services.

Slide 12

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Retail Layout

Objective is to maximize profitability per square foot of floor space

Sales and profitability vary directly with customer exposure

OM try to expose customers to as many products as possible

 rate of exposure,  sales and  return on investment

How to change exposure?

Slide 13

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Retail Layout

Five Helpful Ideas for Supermarket Layout:

Locate high-draw items around the periphery of the store

Use prominent locations for high-impulse and high-margin items

Distribute power items to both sides of an aisle and disperse them to increase viewing of other items

Use end-aisle locations

Convey mission of store through careful positioning of lead-off department

Slide 14

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Retail Layout

Category Management

Slotting fees: Manufacturers pay fees to retailers to get the retailers to display (slot) their product

Contributing factors:

Limited shelf space

Massive new products

Limit small firms ability to expand

Slide 15

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Retail Layout

Servicescapes:

Ambient conditions - background characteristics such as lighting, sound, smell, and temperature

Spatial layout and functionality - which involve, aisle characteristics (width, direction, shelf spacing...etc.) , and product grouping

Signs, symbols, and artifacts - characteristics of building design that carry social significance e.g.: Wal-Mart greeter at the door, Disneyland's entrance

Slide 16

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Slide 17

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Warehousing and Storage Layouts

Objective is to optimize trade-offs between handling costs and costs associated with warehouse space

Maximize the utilization of the total “cube” of the warehouse – utilize its full volume while maintaining low material handling costs

Slide 18

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Warehousing and Storage Layouts

Material Handling Costs:

All costs associated with the transaction

Incoming transport

Storage

Finding and moving material

Outgoing transport of the materials to be warehoused

Equipment, people, material, supervision, insurance, and depreciation

Minimize damage and spoilage

Slide 19

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Warehousing and Storage Layouts

Automated Storage and Retrieval Systems (ASRSs) can significantly improve warehouse productivity

Slide 20

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Warehousing and Storage Layouts

An important component of warehouse layout is the relationship between the receiving/ unloading area and the shipping/ loading area.

Slide 21

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Warehousing and Storage Layouts

1. Cross-Docking

Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse

Reduces distribution, inventory and facility costs

Requires tight scheduling and accurate product identification e.g. bar code

Slide 22

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Warehousing and Storage Layouts

2. Random Stocking

Typically requires automatic identification systems (AISs) and effective information systems

Random assignment of stocking locations allows more efficient use of space

Key tasks:

Maintain list of open locations

Maintain accurate records of existing inventory and its locations

Sequence items to minimize travel, and pick time

Combine picking orders to reduce picking time

Assign classes of items to particular areas

 facility utilization,  labor cost, but requires very accurate records

Slide 23

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Warehousing and Storage Layouts

3. Customizing

Value-added activities performed at the warehouse

Assembly of components

Loading software

Repairs

Customized labeling and packaging

Slide 24

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Fixed-Position Layout

Project remains in one place and workers and equipment come to site

E.g.: ship, highway, bridge, house, operation room

Complicating factors

Limited space at site

Different materials required at different stages of the project

Volume of materials needed is dynamic

Slide 25

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Fixed-Position Layout

Alternative Strategy

As much of the project as possible is completed off-site in a product-oriented facility

This can significantly improve efficiency but is only possible when multiple similar units need to be created

Slide 26

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Work Cells

Reorganizes people and machines into groups to focus on single products or product groups

Volume must justify cells

Group technology identifies products that have similar characteristics for particular cells

Cells can be reconfigured as designs or volume changes

Slide 27

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Work Cells

Improving Layouts Using Work Cells

Slide 28

Current layout - workers in small closed areas. Cannot increase output without a third worker and third set of equipment.

Improved layout - cross-trained workers can assist each other. May be able to add a third worker as additional output is needed.

U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection

+

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Work Cells

Improving Layouts Using Work Cells

Slide 29

Current layout - straight lines make it hard to balance tasks because work may not be divided evenly

Improved layout - in U shape, workers have better access. Four cross-trained workers were reduced.

U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection

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Process-Oriented Layout

Low volume,  high variety

Like machines and equipment are grouped together

Efficient when making products with different requirements, or when handling different needs of customers

Each product requires different sequence of operations

E.g.: ER Process

Slide 30

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Process-Oriented Layout

Slide 31

Surgery

Radiology

ER triage room

ER Beds

Pharmacy

Emergency room admissions

Billing/exit

Laboratories

Patient A - broken leg

Patient B - erratic heart pacemaker

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Process-Oriented Layout

Advantages:

Flexibility

Capability of handling a wide variety of products or services

Disadvantages:

General-purpose use of equipment  labor skills and cost,  required level of training and experience

Orders take more time to move through the system because of difficult scheduling, changing setup, and unique material handling

Slide 32

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Process-Oriented Layout

Arrange departments/ work centers so as to minimize the costs of material handling

Material handling cost in this approach depend on:

Number of loads (or people) moving between centers

Distance-related cost of moving loads (or people) between centers

Slide 33

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Process-Oriented Layout

Designing process- oriented layout steps:

Construct a “from-to matrix”

Determine the space requirements

Develop an initial schematic diagram

Determine the cost of this layout

Try to improve the layout

Prepare a detailed plan

Slide 34

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Process-Oriented Layout

Slide 35

Department Assembly Painting Machine Receiving Shipping Testing

(1) (2) Shop (3) (4) (5) (6)

Assembly (1)

Painting (2)

Machine Shop (3)

Receiving (4)

Shipping (5)

Testing (6)

Department Assembly Painting Machine Receiving Shipping Testing

(1) (2) Shop (3) (4) (5) (6)

Assembly (1) 50 100 0 0 20

Painting (2) 30 50 10 0

Machine Shop (3) 20 0 100

Receiving (4) 50 0

Shipping (5) 0

Testing (6)

Number of loads per week

Example 1:

Page: 385

1. Construct a “from-to matrix”

© Yanbu University College

Process-Oriented Layout

2. Determine the space requirements

Slide 36

Area 1 Area 2 Area 3

Area 4 Area 5 Area 6

60’

40’

Receiving Shipping Testing

Department Department Department

(4) (5) (6)

Assembly Painting Machine Shop

Department Department Department

(1) (2) (3)

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Process-Oriented Layout

Slide 37

3. Develop an initial schematic diagram

100

50

20

50

50

20

10

100

30

Machine Shop (3)

Testing

(6)

Shipping

(5)

Receiving

(4)

Assembly

(1)

Painting

(2)

© Yanbu University College

Process-Oriented Layout

Slide 38

4. Determine the cost of this layout

X= Number of loads

C= Cost for moving load

The cost of moving adjacent department is estimated to be $1, and 2$ for nonadjacent departments.

Cost = ∑ ∑ Xij Cij

n

i = 1

n

j = 1

Cost = $50 + $200 + $40

(1 and 2) (1 and 3) (1 and 6)

+ $30 + $50 + $10

(2 and 3) (2 and 4) (2 and 5)

+ $40 + $100 + $50

(3 and 4) (3 and 6) (4 and 5)

= $570

© Yanbu University College

Process-Oriented Layout

Slide 39

5. Try to improve the layout

30

50

20

50

10

20

50

100

100

Machine Shop (3)

Testing

(6)

Shipping

(5)

Receiving

(4)

Painting

(2)

Assembly

(1)

Cost = 50 + (30X2) + 10 + 50 + 100 + 20 + 100 + (20X2) +50

= $ 480

© Yanbu University College

Process-Oriented Layout

Slide 40

6. Prepare a detailed plan

Area 1 Area 2 Area 3

Area 4 Area 5 Area 6

60’

40’

Receiving Shipping Testing

Department Department Department

(4) (5) (6)

Painting Assembly Machine Shop

Department Department Department

(1) (2) (3)

© Yanbu University College

Repetitive and Product-Oriented Layout

 High volume,  low variety products

Repetitive production and continuous production use product layout.

Two types of layout: Fabrication line and Assembly line.

Fabrication line

Builds components on a series of machines

Machine-paced

Require mechanical or engineering changes to balance

Slide 41

© Yanbu University College

Repetitive and Product-Oriented Layout

Assembly line

Puts fabricated parts together at a series of workstations

Paced by work tasks

Balanced by moving tasks

Both types of lines must be balanced so that the time to perform the work at each station is the same

Slide 42

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Slide 43

END OF LECTURE

© Yanbu University College

SP15

Project #2

Hangman Game

Uploads: Due by 9:00am

Paperwork: Due by 9:00 am – Drop off at Burke 154 or the School of Engineering office, Burke 242

Objective: Write an interactive program that plays the game Hangman. Use the random integer function to randomly select the word to guess out of the file provided. The player must guess the letters belonging to the word. The program should terminate when either all letters have been guessed correctly (player wins) or a specified number of incorrect guesses have been made (computer wins). Use a solution array to keep track of the solution so far. Initialize the array to a string of ‘*’. Each time a letter in the word is guessed, replace the corresponding ‘*’ with that letter.

1. Each part of the program should be its own function. Such as recording the guess, keeping track of the solution, etc. (Hint: A menu might be a good way to do this.)

2. Also – display on the screen what letters of the alphabet you have used so far and where you are in the solution.

3. 6 incorrect guesses will be allowed.

4. Use the data file of 80 words on Angel to randomly select a word to solve.

5. The data file name and location MUST BE: P:\Private\wordlist.txt. If you change this or do not go to this location, your program will be graded as not running.

6. No global variables.

What are you turning in?

1. A printout of your original source code.

2. A printout of you playing the game at least twice. Once with a win and one time with a lost.

3. All project files should have your Penn State ID in the name. For example, P2mrf11.cpp.

4. Upload all of your files to the drop box on Angel BEFORE the deadline.

5. If you neglect to either upload your file or turn in your paperwork, you will get a zero for the assignment .

6. At this time, this project will be worth 10% of the project grade. Project 1 will be recorded as 15%. Class grades will be evaluated after these projects are graded. The instructor will post any changes on Angel for the class.

Graded on:

·

· Good programming

· Neat & readable code

· Comments

· Logic

· Calculations

· Meaningful variables

· Output – results & format

· Input – prompting & use

· Functions

· Arrays

· Data files

· Does it work?

· Other

Reference: Problem Solving, Abstract and Design Using C++ by Friedman & Koffman.

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Assignment II Cover Sheet

MANAGEMENT SCIENCE DEPARTMENT

STUDENTS DETAILS

Student Name

1. Sithy Zubaidah Habib

Student ID

12129009

2. Arwa Abdulkareem Alalwni

12120051

INSTRUCTION FOR SUBMISSION OF HARD COPY (PRINT) ASSIGNMENTS

1. Read and sign your cover sheet.

2. Attach this sheet to the front of your assignment.

3. Your assignment should be submitted to the relevant lecturer.

ASSIGNMENET DETAILS

Program Name

BS in Management Information Systems

BS in Business Management

BS in Accounting

Course Code

MGT 214

Course Name

Operations Management

Assignment/Project

Assignment 2

Lecturer’s Name

Ms. Dalal Bamufleh

Due Date

December 11, 2014

Date submitted

REQUEST FOR EXTENSION

All work must be submitted by the due date. An application to extend the due date on the basis of special consideration must be authorized by the course lecturer.

Extension granted until (date)

N/A

Lecturer’s Signature

Remarks:

Cheating and assisting to cheat are offences under the Yanbu University College’s policy.

STUDENTS’ STATEMENT

We have read and understood the information provided on this assignment cover sheet and in the college’s policy relating to cheating and assisting to cheat, collaboration and plagiarism. I certify that the attached work is entirely my own except where work quoted is duly acknowledged in the text; that I have not worked with another person or persons except where specifically permitted by the lecturer, and that this work has not been submitted for assessment by myself or any other person in any other time. I have retained a copy of my work.

Students’ Signatures

Date

Mark/Grade

Assessed by & Date

Nike is a well known successful manufacturer of sport wear. They have implemented many strategies in order to make themselves successful. One of these strategies is through their store layout. Nike, Tokyo store is a good example that shows how their store layout helps in achieving the success as will be explained below.

First, we will focus on the architecture of the building. Shown below is a picture of Nike’s store in Tokyo.

NIKE HARAJUKU by Wonderwall NIKE HARAJUKU by Wonderwall, Tokyo

By having full glass windows, it shows people the inside of the store which attracts and enhances customers to enter the store. They even take advantage of manipulating the lighting and turned it into a piece of art as it adds visual effects to the building. They put their logo on the side of the building to no affect the overall look of the front of the building. In this way, the building looks professional from the side and attractive from the front.

NIKE HARAJUKU by Wonderwall 03 NIKE HARAJUKU by Wonderwall, Tokyo

As we enter the building, you feel an immediate sense of comfort and coziness due to inside lightings which is neither too bright nor too dark. In addition, they use extra light to focus on exposing their products to customers.

Nike understands that attracting customers will generate more investment or sales for them. Therefore, they designed their stores in order to make it as attractive as possible.

Lines attached on the floor gives an athletic feeling to the customers.

The aisles are wide enough to make the customers feel comfortable to walk and browse.

NIKE HARAJUKU by Wonderwall 08 NIKE HARAJUKU by Wonderwall, Tokyo

The customer service desk is in the centre of the store, making them near customers whenever help is needed.

Benches are available to help customers try on different shoes easily. These benches are also located in front of customer service desk so customers can get help easily whenever it is needed.

NIKE HARAJUKU by Wonderwall 11 NIKE HARAJUKU by Wonderwall, Tokyo

NIKE HARAJUKU by Wonderwall 12 NIKE HARAJUKU by Wonderwall, Tokyo

NIKE HARAJUKU by Wonderwall 13 NIKE HARAJUKU by Wonderwall, Tokyo

They have wide stairs making it suitable for customers to walk up and down the stairs without bumping into each other. They also painted white lines on both ends of the stairs making it appear wider. They designed their stairs with side glass so that customers are exposed to all products available in all shelves as they walk up the stairs. The side glass also matches up with the architecture of the whole building. They also hung up shoes above the stairs in order to complete the whole design.

They designed their shelves in different ways as shown below.

NIKE HARAJUKU by Wonderwall 15 NIKE HARAJUKU by Wonderwall, Tokyo

Some shelves are designed/made in a circle shape. They are even made with different materials such as glass, wood, etc. There are even shelves attached to windows attracting customers from the inside as well as from the outside.

NIKE HARAJUKU by Wonderwall 16 NIKE HARAJUKU by Wonderwall, Tokyo

As it is known, they follow mass customization process; they have a section named “Customize Your Own” with different colors and models of shoes. Here customers are able to modify their shoes according to their preference or likes.

In a part of their store, Nike has a mysterious entrance named “BOOTROOM” that attracts customers to see what it leads to. As they enter, they face a spiral staircase that opens up to a whole new category of their store. Nike not only sell shoes, but they also sell sportswear limited to famous teams.

NIKE HARAJUKU by Wonderwall 18 NIKE HARAJUKU by Wonderwall, Tokyo

As the customers reach the top of the stairs, they are surrounded with mannequins of famous players exposed with excessive lighting from the top and bottom focused on these mannequins.

NIKE HARAJUKU by Wonderwall 20 NIKE HARAJUKU by Wonderwall, Tokyo

As shown in the picture below, they designed a whole wall by using famous athletes to promote their products. Every player is used in promoting a certain type or model of product. This is done by having sections devoted to each player with products surrounding them. NIKE HARAJUKU by Wonderwall 22 NIKE HARAJUKU by Wonderwall, Tokyo

As mentioned before, they add sports spirit everywhere. As a result, they attached a green carpet on the borders of the floor that looks like grass from the sports field. This brings out the sports spirit even more as customers feel like they are actually in the field.

NIKE HARAJUKU by Wonderwall 21 NIKE HARAJUKU by Wonderwall, Tokyo

As we mentioned in this floor, Nike also sells sportswear, so they placed little cabinets to show these folded T-shirts from different teams. These folded T-shirts are shown from the side of the cupboard and from the top. This is so that the customers can view it from different places of the store. Just like other products, they define themselves in these T-shirts by attaching their logo. NIKE HARAJUKU by Wonderwall 23 NIKE HARAJUKU by Wonderwall, Tokyo

They designed these cabinets in front of a wide attractive paint that’s surronded by a wooden wall and exposed by extra light. That attrcative paint is NIKE’s Flag Ship that are shown in a bright color that can’t be easily forgetten in customer’s memories.

Finally, Nike conveys their mission using their layout in a very unique and artistic design as shown below.

By now, we learnt that Nike puts their value in each and every product as well as their building. They also use shoes as a main part of their design such as, background of their mission, the centerpiece of the stairs, background of their computer’s screens, and as a showpiece on windows for outside customers.

References: All photos are taken from the website below, and analyzed by the students.

http://retaildesignblog.net/2011/06/13/nike-harajuku-by-wonderwall-tokyo/

Page 2 of 15

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Assignment Cover Sheet

MANAGEMENT SCIENCE DEPARTMENT

STUDENT DETAILS

Student Name

1.

Student ID

2.

3.

INSTRUCTION FOR SUBMISSION OF HARD COPY (PRINT) ASSIGNMENTS

1. Read and sign your cover sheet.

2. Attach this sheet to the front of your assignment.

3. Your assignment should be submitted to the relevant lecturer.

ASSIGNMENET DETAILS

Program Name

BS in Management Information Systems

BS in Business Management

BS in Accounting

Course Code

MGT 214

Course Name

Operations Management

Assignment/Project

Assignment 2

Lecturer’s Name

Ms. Dalal Bamufleh

Due Date

30/ April / 2014

Date submitted

REQUEST FOR EXTENSION

All work must be submitted by the due date. An application to extend the due date on the basis of special consideration must be authorized by the course lecturer.

Cheating and assisting to cheat are offences under the Yanbu University College’s policy.

STUDENT’S STATEMENT

I have read and understood the information provided on this assignment cover sheet and in the college’s policy relating to cheating and assisting to cheat, collaboration and plagiarism. I certify that the attached work is entirely my own except where work quoted is duly acknowledged in the text; that I have not worked with another person or persons except where specifically permitted by the lecturer, and that this work has not been submitted for assessment by myself or any other person in any other time. I have retained a copy of my work.

Students Signature

Date

Mark/Grade

Assessed by & Date

THE COVER PAGE SHOULD CARRY THE FOLLOWING:

· Name and logo of the University College

· Program title

· Subject code and title

· Name of lecturer

· Name and ID of every member of your group (maximum THREE students in a group)

· Date of submission

THE ASSIGNMENT MUST BE:

· Submitted as a hard copy on time (late assignments will be rejected)

· Type written

· Include all Headings

· Edited for typo and grammatical errors

· Left and right alignment of 2 cm

· 1.5 spacing

· Font size - 11

· Lettering – Times New Roman

· Paragraphing – 2 spaces

OBJECTIVES:

CLO

PLO

Total marks

Marks awarded

6

AS6

30

6

IT3

(Formatting)

05

TOTAL MARK AWARDED

35

ASSIGNMENT DESCRIPTION:

Step 1. Select a company/organization to analyze its layout decisions. (E.g.: Hospital, Polyclinic, Shop, Hypermarket, Supermarket, University, Beauty salon, charitable organization …etc.) We have analyzed Hyper Panda and McDonald’s layout during layout lectures, so DON’T choose them.

Step 2. If your group decides to take photographs by yourself, you need to use the permission letter (Please refer to page 4) and write the selected company name and group member information in the correct spaces. Then, print and submit it to Ms. Dalal for signature. However, if you decide to use photographs from internet (recommended), you don’t need for permission letter.

Step 3. Analyze the layout of the selected company’s photographs in details and recommend changes that can improve the performance as an operation manager.

Step 4. Submit the assignment (hardcopy).

NOTES:

1- You need to include and analyze at least 10 photos.

2- You must write all references if any. Absence of references will be considered plagiarism. Assignment suspected of plagiarism, copying or cheating will be awarded 0 marks. No chance to re-do the assignment will be given.

RUBRICS:

Categories

90-100% (Level 4)

80 -89%

(Level 3)

70-79%

(Level 2)

60 - 69%

(Level 1)

Analytical Skills (AS6)

Demonstrates a sophisticated understanding of the topic(s) and issue(s).

Presents an insightful and thorough analysis of all issues identified and demonstrates complete command of the strategic concepts and tools studied.

Demonstrates an accomplished understanding of the topic(s) and issue(s)

Presents a thorough analysis of most issues identified and demonstrates good command of the strategic concepts and tools studied.

Demonstrates an acceptable understanding of the topic(s) and issue(s)

Presents a superficial analysis of some of the issues identified and demonstrates limited command of the strategic concepts and tools studied.

Demonstrates an inadequate understanding of the topic(s) and issue(s)

Presents an incomplete analysis of the issues identified and makes little or no connection between the issues identified and the strategic concepts studied in the reading.

Information Technology

(IT 3)

Systematic and orderly

Fairly systematic and orderly

Satisfactory in organizing

Messy and disorganized

Kingdom of Saudi Arabia

المملكة العربية السعودية

Royal Commission at Yanbu

الهيئة الملكية ينبع

University College (Women's Campus)

الكلية الجامعية-ينبع )حرم البنات(

Yanbu Al-Sinaiyah

ينبع الصناعية

Dear Sir,

With due respect, I am writing to request your permission to allow my students, whose names are listed below, to take photographs of <Write the company name here> layout. Taking photographs is for the purpose of educating students in which they will apply the concepts that they learn in real life example. It will help them to analyze the layout and recommend what can be done to improve the performance.

I would appreciate your cooperation.

Sincerely,

Ms. Dalal Bamufleh

Signature: ________________

Instructor - Department of Management Science

Yanbu University College

Tel: 04-321-0000 ext.: 1883

[email protected]

Student Name

ID

1.

2.

3.

Page 3 of 4

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