Plant Location and Layout

ME 14.407
Vikrant Sharma
Mechanical Engineering Department
 Introduction
 The physical location of business facilities can have a significant impact on
the success of a company. In this unit we will briefly discuss some of the
factors that are important in locating facilities. We will also focus on
several quantitative methods for facility location.
 The selection of location is a key-decision as large investment is made in
building plant and machinery. It is not advisable or not possible to change
the location very often. So an improper location of plant may lead to
waste of all the investments made in building and machinery, equipment.
I. When starting a new organisation, i.e., location choice for the first time.
II. In case of existing organisation.
III. In case of Global Location

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Types of Facilities
 Heavy-manufacturing facilities
 large, require a lot of space, and are expensive, such as
automobile plants, steel mills, and oil refineries.
 Light-industry facilities
 smaller, cleaner plants and usually less costly, electronic
equipment and components, computer products, or assembled
products like TVs;
 Retail and service facilities
 smallest and least costly, e.g. groceries and department stores,
among many others, and such service facilities as restaurants,
banks, hotels, cleaners, clinics, and law offices

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Factors in Heavy
Manufacturing Location
• Construction costs
• Land costs
• Raw material & finished goods shipment modes
• Proximity to raw materials
• Utilities
• Means of waste disposal
• Labor availability

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Factors in Light Industry Location
 Land costs
 Transportation costs
 Proximity to markets
 depending on delivery requirements including frequency of
delivery required by customer

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 Factors in Retail Location
• Proximity to customers
• Location is everything

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Site Selection: Where to Locate
 Infrequent but important
• being “in the right place at the
right time”
 Must consider other factors,
especially financial
considerations
 Location decisions made more
often for service operations
than manufacturing facilities
 Location criteria for service
• access to customers
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 Location criteria for
manufacturing facility
• nature of labor force
• labor costs
• proximity to suppliers and markets
• distribution and transportation
costs
• energy availability and cost
• community infrastructure
• quality of life in community
• government regulations and taxes
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Location Analysis Techniques

• Location factor rating

• Center-of-gravity
• Load-distance

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Location Factor Rating
• Identify important factors
• Weight factors (0.00 - 1.00)
• Subjectively score each factor (0 - 100)
• Sum weighted scores

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 Location Factor Rating

SCORES (0 TO 100)
LOCATION FACTOR WEIGHT Site 1 Site 2 Site 3
Labor pool and climate .30 80 65 90
Proximity to suppliers .20 100 91 75
Wage rates .15 60 95 72
Community environment .15 75 80 80
Proximity to customers .10 65 90 95
Shipping modes .05 85 92 65
Air service .05 50 65 90

Weighted Score for “Labor pool and climate” for

Site 1 = (0.30)(80) = 24

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Location Factor Rating

WEIGHTED SCORES
Site 1 Site 2 Site 3
24.00 19.50 27.00
20.00 18.20 15.00
Site 3 has the
9.00 14.25 10.80
highest factor rating
11.25 12.00 12.00
6.50 9.00 9.50
4.25 4.60 3.25
2.50 3.25 4.50
77.50 80.80 82.05

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Location Factor Rating With
Excel

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 Center-of-Gravity Technique
• Locate facility at center of movement in
geographic area
• Based on weight and distance traveled;
establishes grid-map of area
• Identify coordinates and weights shipped for
each location

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 Grid-Map Coordinates
y n n
 xiWi  yiWi
2 (x2, y2), W2 i=1 i=1
y2 x= n y= n
 Wi  Wi
1 (x1, y1), W1 i=1 i=1
y1
where,
x, y = coordinates of new facility at
3 (x3, y3), W3 center of gravity
y3 xi, yi = coordinates of existing facility i
Wi = annual weight shipped from
facility i

x1 x2 x3 x

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 Center-of-Gravity Technique
y
A B C D
700
C x 200 100 250 500
600 (135) y 200 500 600 300
B
W 75 105 135 60
500 (105)
Miles

400
D
300
A (60)
200 (75)
100

0 100 200 300 400 500 600 700 x

Miles

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Center-of-Gravity Technique
n
 xiWi
i=1 (200)(75) + (100)(105) + (250)(135) + (500)(60)
x= = = 238
n 75 + 105 + 135 + 60
 Wi
i=1

n
 yiWi
i=1 (200)(75) + (500)(105) + (600)(135) + (300)(60)
y= = = 444
n 75 + 105 + 135 + 60
 Wi
i=1

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 Center-of-Gravity Technique
y
A B C D
700
C x 200 100 250 500
600 (135) y 200 500 600 300
B
W 75 105 135 60
500 (105)
Center of gravity (238, 444)
Miles

400
D
300
A (60)
200 (75)
100

0 100 200 300 400 500 600 700 x

Miles

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Center-of-Gravity With Excel

Formula for
x coordinate

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Load-Distance Technique
 Compute (Load x Distance) for each site
 Choose site with lowest (Load x Distance)
 Distance can be actual or straight-line

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Load-Distance Calculations
n
LD =  ld i i
i=1
where,
LD = load-distance value
li = load expressed as a weight, number of trips or units
being shipped from proposed site and location i
di = distance between proposed site and location i
di = (xi - x)2 + (yi - y)2
where,
(x,y) = coordinates of proposed site
(xi , yi) = coordinates of existing facility

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 Load-Distance

Potential Sites Suppliers

Site X Y A B C D
1 360 180 X 200 100 250 500
2 420 450 Y 200 500 600 300
3 250 400 Wt 75 105 135 60

Compute distance from each site to each supplier

Site 1 dA = (xA - x1)2 + (yA - y1)2 = (200-360)2 + (200-180)2 = 161.2

dB = (xB - x1)2 + (yB - y1)2 = (100-360)2 + (500-180)2 = 412.3

dC = 434.2 dD = 184.4

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 Load-Distance

Site 2 dA = 333 dB = 323.9 dC = 226.7 dD = 170

Site 3 dA = 206.2 dB = 180.3 dC = 200 dD = 269.3

Compute load-distance
n
LD =  ld i i
i=1
Site 1 = (75)(161.2) + (105)(412.3) + (135)(434.2) + (60)(434.4) = 125,063
Site 2 = (75)(333) + (105)(323.9) + (135)(226.7) + (60)(170) = 99,789
Site 3 = (75)(206.2) + (105)(180.3) + (135)(200) + (60)(269.3) = 77,555*

* Choose site 3

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Load-Distance With Excel

=B7*C11+C7*C12+D7*C13+E7*C14

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 Plant Layout
 Plant layout refers to the physical arrangement of production facilities. It
is the configuration of departments, work centres and equipment in the
conversion process. It is a floor plan of the physical facilities, which are
used in production.
 The objectives of plant layout are:
 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

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  Layouts can be classified into the following five
categories:
1. Process layout
2. Product layout
3. Combination layout
4. Fixed position layout
5. Group layout

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Designing Process Layouts
 Goal: minimize material handling costs
 Block Diagramming
 minimize nonadjacent loads
 use when quantitative data is available
 Relationship Diagramming
 based on location preference between areas
 use when quantitative data is not available

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Block Diagramming
 Unit load
• quantity in which
material is normally
moved
 Nonadjacent load
• distance farther than the
next block
 Steps
• create load summary chart
• calculate composite (two way)
movements
• develop trial layouts minimizing
number of nonadjacent loads

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 Block Diagramming: Example
Load Summary Chart
FROM/TO DEPARTMENT
1 2 3
Department 1 2 3 4 5
1 — 100 50
2 — 200 50
4 5 3 60 — 40 50
4 100 — 60
5 50 —

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Block Diagramming: Example

Nonadjacent Loads
2 3 200 loads
110+40=150
2 4 150 loads
1 3 110 loads 110
1 2 100 loads
4 5 60 loads 100 200
1 2 3
3 5 50 loads
2 5 50 loads 150 50 50

3 4 40 loads 60
4 5
1 4 0 loads
1 5 0 loads Grid 1
40

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Block Diagramming: Example
Nonadjacent Loads: 0
2 3 200 loads
2 4 150 loads
1 3 110 loads
1 2 100 loads
100 150
4 5 60 loads 1 2 4
3 5 50 loads 200 50 40 60
2 5 50 loads 110
50
3 4 40 loads 3 5
1 4 0 loads
1 5 0 loads Grid 2

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Block Diagramming: Example
 Block Diagram
 type of schematic layout diagram; includes space requirements
(a) Initial block diagram (b) Final block diagram

1 4
1 2 4 2

3 5 3 5

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Block Diagramming With Excel

Input load summary Try different layout

chart and trial layout configurations

Excel will calculate

composite movements
and nonadjacent loads

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 Relationship Diagramming
 Schematic diagram that uses
weighted lines to denote
location preference
 Muther’s grid
format for displaying manager
preferences for department
locations

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Relationship Diagramming
A Absolutely necessary
E Especially important
I Important
O Okay
Production
U Unimportant
O
X Undesirable
Offices A
U I
Stockroom O E
A X A
Shipping and
receiving U U
U O
Locker room O
O
Toolroom

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Relationship Chart

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