Page 154 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes At macro level, the plans of the site are developed. These plans should include number,
size, and location of buildings. It should also include infrastructure such as roads, rail,
water, and energy.
Facility master planning strategy involves examining the existing facilities; the sizing of
future facilities and site amenities; the integration of these facilities into the site; traffic
flow and circulation; and the analysis of any impact that this development will have on
the site with respect to environmental issues.

Facility planning at the micro level involves decisions about the functional layout and
physical arrangement of economic activity centers.
There are a few techniques using which locational analysis is done: factor rating method,
centre of gravity method and least cost method.

5.8 Keywords

Centre of Gravity: Location based on the proximity to warehouse or other major place of
interest.
Ecological Footprints: Impact of the facility on the environment.
Facility Location: Selection of suitable location or site or place where plant or facilities to be
installed.
Facility Master Plan: Helps plan the right services consistent with firm's mission.
Facility Planning: Providing physical capability to add value to the organisation.

Factor Rating Method: Very simple method to relate factors and their salience to facility location
decisions.
Heavy Industries: Plants that are relatively large and require a lot of space.

Impact Planning: Integration of commercial and practical environmental objectives to produce
optimum benefits for business and environment.
Least Cost Location: A site is chosen for industrial development where total costs are theoretically
at their lowest.
Light Industries: Perceived as smaller, cleaner plants that produce electronic equipment and
parts used in assemblies, or assembled products.

5.9 Self Assessment

State whether the following statements are true or false:
1. The choice of location is more on a personal basis rather than being based on any specific
factors.

2. The location strategy, if it exists, is a constant function of only the cost of location.
3. The type of industry of the organization will also impact the choice of location of plant.
4. The customer base and income level of people around the site is never considered while
making a choice for plant location.
5. Labor pool and transportation system are country specific factors in deciding the plant
location.

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