Chapter II - Plant, Location and Layout -30.6.04

Chapter II Plant Location and Layout Plant Loca tion: Plan t loca tion decis ions concern both manufac turin g and as sembly unit s (for example, fertiliser, plants, st eel plants, cement factories, textile sugar mills, automobile factories etc.) as well as service organisations (for example, banks, hospitals, hotels, retail supermarket etc.). Pla nt loc ation dec isi ons be ing str ate gic , lon g-t erm and non-re spe ctive require detailed analysis of long-term consequences because: i. Poor location of the plant can be constant source of higher cost , different transportation and marketin g, frequent disturbances of production, dissatisfied employees and customers, etc. ii. Once a pl an t is set up at a pa rtic ul ar locati on , it is compa ra ti ve ly immobile and can be shifted and relocated only at a considerable cost and interruption of production. iii. Th e investmen t in lan d and bu il di ng s is qui te la rge in cas e of big ger firms and economics of one location against another needs to be evaluated carefully to ensure fair return on such investment. When Does a Locational Decision arise?: Locational decisions generally arise when: i. A n ew manufacturin g, or, ser vice unit, is to be set-up. ii. Existi ng plant operations are difficult to be expanded, due to poor selection of the earlier site. iii. The gro wth of th e bu sin ess make s it a dvi sab le to e sta bli sh a ddi tiona l facilities in new territories. iv. There is emer gence of new social, political, or, economic conditions, which suggest a change in the location of the existing plant. v. Th e pr od uc t de ve lo pmen ts ha ve outwei gh ed th e ad vant ag es of th e existing plant. vi. To stra te gicall y en ter new mar ke ts .

Chapter II - Plant, Location and Layout -30.6.04

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Transcript of Chapter II - Plant, Location and Layout -30.6.04