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Facility location is the process of identifying the best geographical location for a service or production facility, in order to be efficient and effective; economically and operationally.
Fertilizer Plant Steel Plant Textile Mill Bank Petrol Pump Library
M/s Samrat Thermo Plastic Industries, Mixers & Grinders manufacturers in Raipur, In MP 75% raw materials bringing from Mumbai 75% finished products to Pune & Mumbai Result : Had to shift entire plant to Pune Associated Breweries & Distilleries, brewing beer in GOA -- Losses Shifted to Vashi near Mumbai Success at last
Facility Planning
Facility planning answers: How much long-range capacity is needed When more capacity is needed Where facilities should be located (location) How facilities should be arranged (layout)
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Facility Planning
The capital investment in land, buildings, technology, and machinery is enormous A firm must live with its facility planning decisions for a long time, and these decisions affect:
Operating efficiency Economy of scale Ease of scheduling Maintenance costs Profitability!
A Sequence of Decisions
National Decision Political, social, economic stability; Currency exchange rates; . . . . . Climate; Customer concentrations; Degree of unionization; . . . . . Transportation system availability; Preference of management; . . . . . Site size/cost; Environmental impact; Zoning restrictions; . . . . .
Regional Decision
Community Decision
Site Decision
. . . more
Changes in inputs
Labor skills and/or costs Materials costs and/or availability Utility costs
. . . more
Changes in technology
In Villages, Sites are not readily available But if, they are at a cheaper rates Taxes are negligible, Spacious & Open space available Low wages for unskilled But higher for skilled labour Waste disposal Lack of civic amenities for staff, transportation problems
In Town, offer the advantages of both rural as well as cities Less costly compared to city, Transportation; Skilled labour Civic amenities In city, municipality services available, transportation, entertainment Local market (CONSUMERS), Banking, Finance Supporting Industries, Skilled labour at economical rates But, Pollution restrictions, Unions, Taxes, Land Cost City Small Plants Rural Very big Plant
Developments in 21st century making Site selection easier Improvements in Transportation; Communication & speed of services Reduction in wage differentials between regions Mobility of workers & Management Improvement in construction methods Government policies removing variations in regional imbalances Technological improvements less labor more; output Air-conditioning equipment Expansion of markets and thus fuelling demand TV programme & advertisement industries Realty Shows; IPL; World Cup Sports as Olympics; CWG; Asiad; National Games Beauty competitions and demand creation & Fashion Industry State government and special facilities Personal & Emotional reasons Disposal waste and environmental awareness
LOCATIONAL MODELS
1. 2. 3. 4.
Factor Rating Method Point Rating Method Break Even Analysis Qualitative Factor Analysis