Final answer:
A process layout is where similar activities are grouped together by function, most effective for different products requiring various processes. This contrasts with a product layout where assembly follows a fixed path.
Step-by-step explanation:
The type of layout which features departments or other functional groupings in which similar activities are performed in close proximity is known as a process layout. This layout is designed to handle a variety of processing requirements. It is most effective when different products or services are being produced, which typically requires different work processes.
In a process layout, machinery and equipment are grouped by function. For example, all lathes are in one area of the factory, all milling machines in another, and so on. It contrasts with a product layout, which is designed for the assembly of products that follow a fixed path through the production process. This can be seen in places like automobile assembly lines where products move from station to station in a fixed sequence.
In a process layout, each department has a specific function that contributes to the overall process, much like how in the analogy of Grand Central Station, there is high organization with people and objects moving according to a system that crosses boundaries and maintains a flow.