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Unit 5: Facility Location

(v) Environmental concerns can be met at minimum cost outlay. Notes
(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.

Community Considerations

The proposed plant must fit in with and be acceptable to the local community. Full Consideration
must be given to the safe location of the plant so that it does not impose a significant additional
risk to the community. Adverse climatic conditions at site will increase costs. Extremes of low
temperatures will require the provision of additional insulation and special heating for equipment
and piping. Similarly, excessive humidity and hot temperatures pose serious problems and
must be considered for selecting a site for the plant. Stronger structures will be needed at
locations subject to high wind loads or earthquakes. Capital grants, tax concessions, and other
inducements are often given by governments to direct new investment to preferred locations;
such as areas of high unemployment. The availability of such grants can be the overriding
consideration in site selection. State and local tax rates on property income, unemployment
insurance, and similar items vary from one location to another. Similarly, local regulations on
zoning, building codes, nuisance aspects and others facilities can have a major influence on the
final choice of the plant site

5.5.4 Micro-level Planning

Figure 5.1: Facility Planning Model

INPUTS OUTPUTS
Forecasts CAPACITY
Drawings Internal
Specifications External
Operation sheets LAYOUT
Route Sheets Process
Job descriptions Product
Plant location Fixed-position
Cellular
EQUIPMENT
Type
Quantity
Location

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