Page 156 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes 11. Give main criteria of plant location in following cases: Wide range of volumes or bulky
resources, Medical research centre/hospitals, fire stations, public/professional services,
cotton/textile industry, sugar industry, cement industry, jute industry, iron and steel
industry/steel mill, paper industry, coal industry.
12. How does International Location decision differ from Domestic Location consideration?
You may answer by briefly identifying areas that are unique to International locations.
13. Although facility location is a planning decision, it has implications for decisions in the
organising and controlling and sub-function. Explain.
14. What are the special problems faced by service operators like Sahara Pariwar, in locating
new facilities?

15. The Indian Seamless Tube Company Ltd. which has distribution plants in Gujarat and
Andhra is considering adding a third assembly and distribution plant either in Ahmedabad,
Bangalore or Cochin. The company has collected the following economic and other relevant
data:
Factor Cochin Ahmedabad Bangalore
Transportation cost/week 780 640 560
Labour cost/week 1200 1020 1180
Selected criteria scores (Based on 35 85 70
a scale of 0-100 points) Finishing
material supplied
Maintenance facilities 60 25 30
Community attitude 50 85 70

Company Management has pre-established weights for various factors ranging from 0-
10. They include a standard of 1.00 for each 10 per week of economic advantage. Other
weights that are applicable are 1.5 on finishing material supply, 0.8 on maintenance facilities
and 2.0 on community attitude. Maintenance also has a minimum acceptable score of 30.
Develop a quantitative factor comparison for the three locations.

16. From the following data select the most advantageous location for setting a plant for
manufacturing television sets:

Bhopal Mandideep Vidisha
i. Total initial capital expenditure 400,000 400,000 400,000
ii. Total expected sales/year 500,000 600,000 500,000
iii. Distribution expenses 80,000 80,000 150,000
iv. Raw material expenses 140,000 160,000 180,000
v. Power and water supply expenses 80,000 60,000 40,000
vi. Wages and salaries 40,000 50,000 40,000
vii. Other expenses 50,000 80,000 60,000
viii. Community attitude indifferent wants indifferent
ix. Employee housing facilities poor excellent good

17. A manufacturer of farm equipment is considering three location (A, B and C) for a new
plant. Cost per year at the sites are 2,40,000, 2,70,000 and 2,52,000 respectively. Whereas
variable costs are 100 per unit, 90 per unit and 95 per unit respectively. If the plant is
designed to have an effective system capacity of 2500 units per year and is expected to

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