Page 250 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 12: Facility Location

Locating an establishment can be in a (a) city, (b) industrial estate or industrial area, or (c) Notes
at a greenfield location. Each option has advantages and disadvantages. The criteria for
choosing each of these locations are given below:
(a) City Location:
(i) Availability of high proportion of highly skilled employees.
(ii) Fast transportation or quick contact with customers and suppliers.

(iii) Size of plant often a limitation, small plant sites or multi-floor operations.
(iv) Transportation of large variety of materials and supplies possible, but usually
in relatively small quantities.

(v) Urban facilities and utilities available at reasonable rates.
(vi) Possible to start production with a minimum investment in land, buildings,
etc., as these can usually be rented.

(b) Industrial Estates/Industrial Areas:
(i) Limitations in locating close to employee’s homes.
(ii) Often provided exemptions from high taxes.
(iii) Freedom from strict city building and zoning restrictions.

(iv) Infrastructure often not a major concern.
(v) Environmental concerns can be met at minimum cost outlay.
(vi) The site should be close to transportation and population.
(c) Interior Greenfield Location:

(i) Large land requirement.
(ii) Suitable to production processes/product which are dangerous or
objectionable.

(iii) Requirement for large volumes of relatively pure water.
(iv) Often provided exemptions from high taxes.
(v) Limited availability of highly skilled employees.
(vi) Need to invest in infrastructure and housing.

Plant location analysis is a periodic task. Management should recognize that successful
businesses are dynamic. A location may not remain optimal forever.

Task Interview any one businessman in your locality who owns either a production
outlet or a large service outlet. Ask what all factors he kept in mind while choosing his site
of operation.

Self Assessment

Fill in the blanks:
11. The master planning team’s work is broadly divided into ………….phases.

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