Page 153 - DMGT501_OPERATIONS_MANAGEMENT

Unit 5: Facility Location

Notes
2. A Kids' Center: Young mothers would like not to divide their attention between the
various stores on one hand and her kid on the other. Young couples prefer malls
with kid centers where caretakers are present. They are ready to pay for it.
3. Disciplined Parking: Most people who visit shopping malls do so in their own
vehicle. Visitors expect to get parking space and guidance inside the parking, and
speedy acceptance of payment and verification.

Though Sahara has a large discount store, with Big Bazaar as its major traffic puller, it
doesn't have a multiplex so far. Mr. Asad Ahmed, the Assistant General Manager and
Chief of Planning of the Sahara Pariwar, was mulling over the idea whether they should
add a multiplex to the Sahara Mall in order to improve its attractiveness. A multiplex
would require a built-up area of 37,000 sq. ft. He was aware that the people who visit malls
to watch a movie may end up eating out, but only 40-45 per cent actually shop. Would this
constitute reason enough to invest in the multiplex?
Questions
1. Comment on the facility planning of the Sahara Mall.
2. Can you give suggestions for expansion of the mall?

5.7 Summary

Facilities location may be defined as selection of suitable location or site or place where
the factory or plant or facilities to be installed, where plant will start functioning.
The development of a location strategy depends upon the type of firm being considered.
Industrial location analysis decisions focus on minimising costs; retail and professional
service organisations typically have a focus of maximising revenue.

One of the major reasons for new facilities is the global economic boom that has been
accompanied by an enhancement of capacity worldwide.
Well-planned facilities enable an organization to function at its most efficient and effective
level, offering real added value improvements to the organization's core business.
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.
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.

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.

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