Page 134 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes Based on strategic importance, the macro layout is accepted to be the most critical and strategically
important aspect of facility planning. However, all the stages have their own importance and
significance.
Table 5.1: Facility Planning Matrix

Level Activity Space Planning Unit Environment
Site Location &
Global Sites World or Country
Selection
Site Features, and Site and Building
Macro Layout Site Planning
Departments Concept
Facility, Building Buildings, Workstations
Micro Layout Plant or Departments
and Factory Layout Features
Workstation & Cell
Sub-Micro Layout Tool & Fixture Locations Workstation & Cells
Design

5.3 Factors affecting Location Decisions

5.3.1 Factors affecting Manufactured Products

Manufactured products differ from many service products as production may take place at a
location, and then the goods are distributed to the customer. Often the source of raw materials
is an important factor in deciding locations. Very often, you want to locate your operation close
to that source of raw material.

Example: In aquaculture, the incubation of salmon eggs and the first stage lifecycle of
the fish are done in fresh water. Therefore, it is advantageous to locate hatcheries where there is
an abundance of fresh water.

The typical factors that require consideration are:
1. Location of markets: Locating plants and facilities near the market for a particular product
or service may be of primary importance for many products in the sense that location may
impact the economics of the manufacturing process. This may be because of:
(a) Increased bulk or weight of the product
(b) Product may be fragile.

(c) It susceptible to spoilage.
(d) Add to transportation costs.
(e) Increase transit time.
(f) Decrease deliveries.
(g) Affect the promptness of service.

(h) Affect the selling price of the product – the transportation cost often makes the
product expensive.
Assembly-type industries, in which raw materials are gathered together from various
diverse locations and are assembled into a single unit, often tend to be located near the

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