Scribd Logo
Upload

Welcome to Scribd!

  • 20 views

    Operations Management Lect 7

    Uploaded by

    mmmohitt
    This document discusses factors to consider when making facilities location decisions. It outlines that location decisions are strategic and long-term, and affect costs, efficiency, and profitability. Both internal factors like technology and capacity, and external factors like economic conditions must be evaluated. The document then describes different reasons a location decision may arise, and the steps and considerations involved in general territory selection and exact site selection. It provides requirements for choosing a city, suburban, or country/rural location.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd

    Operations Management Lect 7

    Uploaded by

    mmmohitt
    20 views9 pages
    This document discusses factors to consider when making facilities location decisions. It outlines that location decisions are strategic and long-term, and affect costs, efficiency, and profitability. Both internal factors like technology and capacity, and external factors like economic conditions must be evaluated. The document then describes different reasons a location decision may arise, and the steps and considerations involved in general territory selection and exact site selection. It provides requirements for choosing a city, suburban, or country/rural location.

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses factors to consider when making facilities location decisions. It outlines that location decisions are strategic and long-term, and affect costs, efficiency, and profitability. Both internal factors like technology and capacity, and external factors like economic conditions must be evaluated. The document then describes different reasons a location decision may arise, and the steps and considerations involved in general territory selection and exact site selection. It provides requirements for choosing a city, suburban, or country/rural location.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    20 views9 pages

    Operations Management Lect 7

    Uploaded by

    mmmohitt
    This document discusses factors to consider when making facilities location decisions. It outlines that location decisions are strategic and long-term, and affect costs, efficiency, and profitability. Both internal factors like technology and capacity, and external factors like economic conditions must be evaluated. The document then describes different reasons a location decision may arise, and the steps and considerations involved in general territory selection and exact site selection. It provides requirements for choosing a city, suburban, or country/rural location.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 9

    OPERATIONS MANAGEMENT

    FACILITIES LOCATION

    FACILITIES LOCATION
    Strategic, long term and non-repetitive decision for any organisation. Most of the fixed and some of the variable costs are determined by the

    location decisions.
    Efficiency, effectiveness, productivity and profitability of the facility are

    affected by location decision.


    Location decisions are based on a host of factors

    - some subjective, qualitative and intangible. - some objective, quantitative and tangible.
    Location decisions are affected by many factors

    - Internal factors technology used, capacity, financial position, and the work force required. - External factors economic, political and social conditions.

    When does a location decision arise?


    New facility is to be established. Facility or plant operations and subsequent expansions are restricted by a

    poor site.
    Growth volume of business makes it advisable to establish additional facilities

    in new territory.
    Decentralisation and dispersal of industries reflected in the Industrial policy

    resolution so as to achieve an overall development of a developing country.


    Original advantages of the plant have been outweighed due to new

    developments
    New economic, social, legal, or political factors could suggest a change of

    location of the existing plant.

    Shifting a Plant
    Once a facility is set up at a location, it is very

    difficult to shift later to a better location because of


    Economic reasons total costs, profits, availability

    of raw materials, labour, power, transportation facilities, markets etc. Social reasons employee welfare, employment opportunities etc. Political reasons- pursuance of a policy of decentralisation, regional and developmental planning. Security considerations military invasions, sabotage from anti-social elements etc. Policy matters anti-pollution etc.

    Steps in Facilities Location


    Two Phases Phase I General territory selection Phase II Exact site/Community selection
    Location Factors Market Raw Material Phase I X X Phase II

    Power
    Transportation Climate and Fuel Labour and Wages Laws and Taxation Community Services and Attitude Water and waste Ecology and Pollution Capital Availability Vulnerability to enemy attack

    X
    X X X X

    X
    X X X X X X

    X X

    X X

    Requirements governing choice of city location


    Availability of adequate supply of labour force.

    High proportion of skilled employees.


    Rapid public transportation and contact with suppliers and

    customers. Small plant site or multi-floor operation. Processes heavily dependent on city facilities and utilities. Good communication facilities like telephone, fax, post offices. Good banking and health care delivery systems.

    Requirements governing choice of suburban location


    Large plant site close to transportation or population

    centre. Free from some common city building zoning (industrial areas) and other restrictions. Freedom from higher parking and other city taxes etc. Labour force required resides close to plant. Community close to, but not in, large population centre. Plant expansion easier than in the city.

    Requirements governing choice of country/rural location


    Large plant site required for either present demands or

    expansions. Dangerous production processes. Lesser effort required for anti-pollution measures. Large volume of relatively clean water. Lower property taxes, away from urban land ceiling act restrictions. Protection against possible sabotage or for a secret process. Balanced growth and development of a developing or underdeveloped area. Unskilled labour force required. Low wages required to meet competition.

    Subjective techniques
    Three Techniques
    Industry Precedence Basic assumption is that if a

    location was best for similar firms in the past, it must be best for now also. Preferential Factor Location decision is dictated by personal factor. It depends on individual whims or preferences. Dominant Factor To locate at the source.

    You might also like