Page 253 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes  For companies that produce or buy heavy and bulky low-value-per-ton commodities as
are generally involved in import and export activities, shipping and location of ports may
be a factor of prime importance in the plant location decision.
 In service, the capacity to deliver the service to the customer must first be determined;
only then can the service be produced.

 When the site selection process is initiated, the pool of potential locations for a
manufacturing facility is, literally, global. Since proximity to customers is not normally
an important location factor for a manufacturing plant, countries around the world become
potential sites.
12.7 Keywords

Ecological Footprints: The impact of the facility on the environment.
Facility Master Plan: It helps plan the right services consistent with firm’s mission.
Facility Planning: Planning providing physical capability to add value to the organisation.

Heavy Industries: Plants that are relatively large and require a lot of space.
Impact Planning: The integration of commercial and practical environmental objectives to
produce optimum benefits for business and environment.

12.8 Review Questions

1. “The development of a location strategy depends upon the type of firm being considered”.
Discuss.

2. “Well-planned facilities offer real added value improvements to the organization’s core
business.” Explain the statement.

3. “Location is a critical element in determining fixed and variable costs for both industrial
and service firms.” Substantiate.
4. Suppose you are a businessman producing garments, looking to start your business
operations in some other country. What factors will you keep in mind while setting up
your business abroad?
5. “Manpower is the most costly input in most production systems.” Analyse this statement.
6. What do you mean by the ‘right services’ in facility master plan?

7. “Any facility will create an impact on the environment.” Elucidate.
8. Why is it important to evaluate a site beforehand?
9. If you expand your existing company by opening a new division in a foreign country,
should the new division be staffed by local personnel or by personnel imported from the
parent organisation? Explain.

10. The governing principle is that a location of plant should be fixed in such a manner that
people interested in its success can sell goods most profitably and manufacture them at
least expenses. Explain how this objective can be achieved?

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