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M odule-2

M odule-2. Sessions 16-35. Facility Location. Facility location : Plant location is the function of determining location for a plant for maximum operating economy and effectiveness. Steps in Location Selection:

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M odule-2

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  1. Module-2 Sessions 16-35

  2. Facility Location • Facility location: • Plant location is the function of determining location for a plant for maximum operating economy and effectiveness. • Steps in Location Selection: • in choosing a plant location, the entrepreneur would do well to proceed step by step, the steps being; 1.Within the country or outside; 2.Selection of the region; 3.Selection of the locality or community; 4. Selection of the exact site.

  3. Cond. 1. Deciding on Domestic or International Location • Selection of Region • Availability of Raw Materials • Nearness to the Market • Availability of Power • Transport Facilities • Suitability of Climate • Government Policy • Competition Between Status 3. Selection of Community • Availability of Labour • Civic Amenities for Workers • Existence of Complementary and Competing Industries • Finance and Research Facilities • Availability of Water and Fire-fighting Facilities • Local Taxes and Restrictions • Momentum of an Early Start • Personal Factors 4. Selection of the Site • Soil, Size and Topography • Disposal of Waste

  4. Issues in Facility Location • Proximity to customers • Business climate • Total cost • Infrastructure • Quality of labor • Suppliers • Political risk • Governmental Barrier • Environmental regulation • Competitive Advantage

  5. Location Models • Factor rating • Centre of gravity • Break-even analysis • Qualitative factor analysis

  6. Factor Rating Method Example Two refineries sites (A and B) are assigned the following range of point values and respective points, where the more points the better for the site location. Sites A B Major factors for site location Pt. Range 123 150 54 24 45 4 8 5 5 156 100 63 96 50 5 4 50 20 Best Site is B Total pts. 418 544

  7. Centre of Gravity Method Where: Cx = X coordinate of centroid Cy = Y coordinate of centroid dix = X coordinate of the ith location diy = Y coordinate of the ith location Vi = volume of goods moved to or from ith location

  8. Y Q (790,900) D (250,580) A (100,200) (0,0) X • Example • Several automobile showrooms are located according to the following grid which represents coordinate locations for each showroom Question: What is the best location for a new Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per month?

  9. Y Q (790,900) D (250,580) A (100,200) (0,0) X Plant Location Methodology: Example of Centroid Method (Continued): Determining Existing Facility Coordinates To begin, you must identify the existing facilities on a two-dimensional plane or grid and determine their coordinates. You must also have the volume information on the business activity at the existing facilities.

  10. Y New location of facility Z about (443,627) Q (790,900) Z D (250,580) A (100,200) (0,0) X You then compute the new coordinates using the formulas: You then take the coordinates and place them on the map:

  11. Project Assignment • Visit the website of 5 major organizations in your region. Find out where their facilities are located . Form discussion groups to analyze the rationale behind the location of these facilities

  12. Reference for problems • Aswathappa and K.SridharBhat • Kindly go through the solved examples

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