Mitigation of Risk in Facility Layout Design for Single and Multi-Period Problems

The most desirable characteristic of a facility layout is its ability to maintain its efficiency over time while coping with the uncertainty in product demand. In the traditional facility layout design method, the facility layout is governed by the flow intensity between departments, which is the product flow quantity between departments. Hence, an error in the product demand assessment can render the layout inefficient with respect to material handling costs. Most of the research integrates uncertainty in the form of probability of occurrence of different from-to charts. In an environment where the variability of each product demand is independent, the derivation of 'probabilistic from-to chart' based scenario cannot be used to address uncertainty of individual demands. This paper presents an FLP (facility layout problem) approach to deal with the uncertainty of each product demand in the design of a facility layout. Two procedures are presented: the first procedure is utilized to assess the risk associated with the layout, while the second procedure is used to develop the layout that minimizes the risk. Results from case studies have shown that the procedure produces a reduction of risk as high as 68%.