1 / 14

Facility location

Facility location. Facilities location/plant location can be defined as selection of suitable location or site or place where plant will start functioning. Signi ficance: the location can alter the total prodn & distn cost. We need strategy to maximize the benefit of location of the firm.

karik
Download Presentation

Facility location

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Facility location

  2. Facilities location/plant location can be defined as selection of suitable location or site or place where plant will start functioning. • Significance: the location can alter the total prodn & distn cost. We need strategy to maximize the benefit of location of the firm.

  3. Types of facilities • Heavy manufacturing : heavy facilities are the plants which are large n require a lot of space n r expensive to construct e.g. car plant. construction cost, mode of transportation for shipping heavy items, waste disposal , labor availability r considered for heavy plant location • Light industry: light ind r small, cleaner plants that produce electronic equipment and components parts. it is not necessary to be near the raw material becoz bulk qty n storage is not reqd they require only the proximity to customers

  4. Warehouses and distn centre:in warehouses , no manufacturing is been done nor they r into sale of product. there construction cost and land cost tends to be less important as they req no raw material, no waste

  5. Factors affecting location analysis • Location of mkt • Location of raw material • Infrastructure: eg aluminum ind r power intensive so these ind must be located closed to power generation sites. • Transportation cost • Availability of labor • Govt policies • Climate factors

  6. Community attitude • Safety measures • Availability of land • Topography of land: the soil should be capable to sustain the load of plant foundation. • If plant is to be located in other country • Govt stability • Exchange rates • Govt rules and regulations

  7. Climate • Culture • Import & export regulation

  8. Site evaluation process A search team or individual r hired for site selection for diff facilities and the evaluation process requires large amt of data n information relative to diff location factors

  9. Location analysis technique • Location factor rating: in this the factors important in location decision are identified . Each factor is assigned weight from 0-10 and that prioritizes the factor and reflects the importance. the factor rating and location rating r considered and on the basis of their product the decision is taken.

  10. Factor Rating Example Factor Factor Location Product Inter-company integration 4 8 32 Availability & cost of labour 3 2 6 services 3 6 18 materials 5 2 10 transport 1 3 3 car parking space 5 4 20 Expansion potential 4 1 4 Zoning & legal regulations 3 10 30 Cost of land 2 7 14 New development areas 2 6 12 Living conditions 2 5 10 Total 159

  11. Location break even analysis: it refers to the use of cost volume analysis to make economic comparison of location alternatives. By identifying the FC n VC for each location they r plotted on graph to determine the low cost.it is basically related with the selection of location that has low total cost for d expected prodn volumes.

  12. Point rating method: in this method , each location factor is assigned the point out of d defined limit .e.g. unfavorable one (0-35), average(35-65), favourable(65-100). And d location which has the max pt is d best location • Dimensional analysis: relative merit (ratio) of diff cost r considered to identify the plant location. in this case , d plant site having a less cost is selected. To obtain relative merits of one plant site on another , ratio of each cost for

  13. Plant site is taken n each cost ratio is givenweightage .these ratios r multiplied to obtain a fig on relative merit of 2 plant sites. • Brown and Gibson model :this method considers 3 types of factors critical, objective and subjective. critical factors r the one which is d base for decision n which determines whether or not a location would b considered further for evaluation or not .

  14. Location Analysis Techniques • Dimensional Analysis: Relative merits of different costs considered • Brown & Gibson Model: 3 types of factors – critical, objective, & subjective. Location measure: LMi=CFMi*[D*OFMi+(1-D)*SFMi] CFMi=measure of critical factors (value 0 or 1) OFMi=measure of objective factors (0<SFMi<1 SFMi=measure of subjective factors all for plant site I D specifies objective factor decision weight(0<D<1)

More Related