MODULE 4:

FACILITY PLANNING

Facility Location Decisions:

Facility Location Decision is a Strategic decision for Manufacturing and

Service companies since location greatly affects both fixed and variable
costs as well as overall profitability of a firm.
Meaning of Facility(Plant) Location:
Facility Location is the process of determining a geographical site for a
firm's operations achieving maximum operating economy and effectiveness.
Need for Location Decisions:

1) When a business is newly started.

2) When a firm wants to expand its markets.
3) When an organization experiences growth in demand for its
products/services.
4) Some firms need to Relocate due to rising costs of inputs or distribution
of outputs or due to depletion of basic inputs such as raw materials.
5) Shift in markets may cause firms to relocate.

Nature of Location Decisions:

Location decisions for Manufacturing firms strategy is to Minimize Costs.
Location decisions for Retail and Service organizations strategy is to Maximize
Revenue.
Location decisions for Warehouse strategy is Combination of cost and speed of delivery.
In general, the objective of location strategy is to maximise the benefits of location
to the firm.
Location Decisions are generally a trade-off decision.

General Procedure for making Location Decisions:

1) Decide on criteria to use for evaluating decision alternatives.
2) Identify crucial factors such as location of raw materials/markets etc.

3) Develop location alternatives:

- Identify the general region for a location.
- Identify a small number of community alternatives.
- Identify sites among the community alternatives.
4) Evaluate each alternative and make a choice.

FACTORS AFFECTING LOCATION DECISIONS:

1) Deciding on Domestic or International location.
Choice of a country depends on factors such as:
(a) Political Stability.
(b) Export and Import Quotas.
(c) Exchange Rates.
(d) Cultural and Economic considerations.
(e) Availability of Natural Resources, Cost of Labor etc.
2) Regional Location Decision.

Depends on factors like:

(a) Availability of Raw Materials and Proximity to the
source of RM.
(b) Proximity to Markets.
(c) Proximity to Suppliers.
(d) Availability of Power.
(e) Transport Facilities.
(f) Suitability of Climate.
(g) Government Policy.
(h) Competition between States.

FACTORS AFFECTING LOCATION DECISIONS:

1) Selection of Community.
Depends on factors like:
(a) Availability of Labor.
(b) Civic Amenities for Employees.
(c) Existence of Complementary, Ancillary and Competing Industries.
(d) Finance and Research facilities.
(e) Availability of Water.
(f) Availability of Fire Fighting facilities.
(g) Local Taxes and Restrictions.
2) Selection of Exact Site.

Depends on factors like:

(a) Area of land available, soil, topography and cost of land.
(b) Disposal of Waste.
(c) Community Attitude.
Choice of Exact Site: (I) Rural Site, (ii) Urban Site, (iii) Suburban Site.
What are the Strategies used to select the Plant Location??

Types of Facilities:
Heavy-manufacturing facilities:
Large, require a lot of space, and are expensive

Light-industry facilities:
Smaller, cleaner plants and usually less costly
Retail and service facilities:
Smallest and least costly

Methods of Evaluating Location Alternatives:

1) Factor-Rating Method.
2) Point Rating Method.

3) Locational Break-even Analysis Method.

4) Qualitative Factor Analysis Method

FACILITY LAYOUT:

Refers to the configuration of departments, work-centers, equipment and machinery with

focus on the flow of materials or work through the production system.
Plant layout implies planning for location of all machines, equipments, utilities, work
stations, customer service areas, material storage areas and tool servicing areas, rest
rooms, lunch rooms, office cubicles, coffee/tea bays, computer rooms, control rooms etc.
Also planning for patterns of flow of materials and people around, into and within the
buildings.
What is Layout Planning?
Layout Planning involves decisions about the physical arrangement of economic
activity centers within a facility.
An Economic Activity Center can be anything that consumes space a person or
group of people, a machine, a work station, department, store room etc.
The location of a center has 2 dimensions : Relative location and Absolute location.
Importance of Good Plant Layout?
Efficient utilization of labor, equipment and space, Facilitating flow of materials and
information, Customer convenience and sales, Reducing hazards, Improving employee
morale, Improving communication.

LAYOUT OF DIFFERENT OPERATIONS:

Different Operations Layout

Manufacturing
Operations

Warehouse
Operations

Service
Operations

Office
Operations

MANUFACTURING OPERATIONS LAYOUT OBJECTIVE:

* Provide enough production capacity.
* Reduce materials-handling costs .
* Conform to site and building constraints .
* Allow space for production machines.
* Allow high labor, machine, and space utilization and productivity.
* Provide for volume and product flexibility.
* Provide space for rest rooms, cafeterias, and other personal-care needs of employees
.
* Provide for employee safety and health.
* Allow ease of supervision .
* Allow ease of maintenance.
* Achieve objectives with least capital investment.

WAREHOUSE OPERATIONS LAYOUT:

Warehouse can be defined as a planned space for the efficient and effective
accommodation and handling of goods and materials.
Objectives for Warehouse Operations Layout:
1) Efficient use of space.
2) Efficient Material handling.
3) Most economical storage plan.
4) Reduce damage to materials.
5) Handling resource utilization.
6) Operational Safety.
7) Maximum flexibility (in order to handle changing storage and handling
requirements).
8) Enable maintenance and good housekeeping.

SERVICE OPERATIONS LAYOUT:

Important factors to be considered by service providers are: a) An impact of
location on sales b) Customer Satisfaction.
Objectives for Service Operations Layout:
1) Customer comfort and convenience.
2) Ambience.
3) Allow attractive display of merchandise.
4) Reduce travel of personnel and customers.
5) Provide privacy in work areas.
6) Promote easy communication channels.
7) Spatial Layout and Functionality.
8) Signs and Symbols.

OFFICE OPERATIONS LAYOUT:

Office Layout refers to the determination of space requirements and the
detailed use of this space in order to provide the best practical arrangement of
furniture and equipment necessary for the execution of the work of the office.

Objectives for Office Operations Layout:

1) Increase efficiency of office work.
2) Enhances utilization of office space.
3) Facilitates supervision.
4) Good communication flow.
5) Good work environment.
6) Utilization of office equipment efficiently.
7) Flexibility in use of office space.
8) Offer security and privacy.
9) Good ambience to concentrate on work.
10) Create a good impression on clients and visitors.

PRINCIPLES OF PLANT LAYOUT:

1) Principle of Minimum Travel.
2) Principle of Sequence.
3) Principle of Usage.

4) Principle of Compactness.
5) Principle of Safety and Satisfaction.
6) Principle of Flexibility.
7) Principle of Minimum Investment.

TYPES OF PLANT LAYOUT:

1) Process Layout/Functional Layout/Job Shop Layout.
2) Product Layout/Line Processing Layout/Flow-line Layout.
3) Fixed Position Layout/Static Layout.

4) Cellular Manufacturing Layout/Group Technology Layout.

5) Combination Layout/Hybrid Layout.

FACTORS INFLUENCING LAYOUT CHANGES:

1) Inefficient operations (High cost, Bottleneck operations).

2) Accidents, Health hazard and safety concerns.

3) Changes in Product design/service design.
4) Changes in volume of output or product-mix changes.

5) Changes in processes, methods or equipments.

6) Changes in Environmental or Legal requirements.
7) Low employee morale.