Page 155 - DMGT501_OPERATIONS_MANAGEMENT

Unit 5: Facility Location

6. Environmental regulation and raw material availability are important considerations Notes
while selecting a part of the country as plant location.
7. State amenities and inducements also tend to affect the choice of plant location among
various states.
8. A low cost overseas plant location will not be chosen if there is no economic and political
stability in the region.
9. Industry concentrations have developed in certain states on account of raw material
availability and strong customer base.

10. The site evaluation process can never rely on secondary sources of data.
Fill in the blanks:
11. Labor climate includes cost of labor, availability of labor, ......................... and .........................
12. It is important that the plant location be near the ......................... and .........................

13. A software company may choose Bangalore or Gurgaon as its office location on account of
......................... concentration.
14. In the location factor rating system, each factor is assigned a weight from ......................... to
......................... and a score is assigned from ......................... to ......................... based on which
plant location decision is made.

15. Consumer consideration in deciding the office location becomes ......................... important
in case of service industry.

5.10 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? Discuss the least cost and centre of
gravity method and their relevance.

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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