Q.3 Briefly describe the term plant location. Why it is needed to select a suitable location and what are the factors influencing plant location.
Ans. Plant Location: -
Plant location problem is an important strategic level decision-making for an organisation. One of the key features of a conversion process (manufacturing system) is the efficiency with which the product (services) are transferred to the customers. This fact will include the determination of where to place the plant or facility.
Holmes defines plant location problem as one of determining “That location which, in consideration of all factors affecting products delivered-to-customers cost of products(s) to be manufactured, will afford the enterprise the greatest advantages obtained by virtue of location.”
The selection of location is a key-decision as large investment is made in building plant and machinery. It is not advisable or not possible to change the location very often. So an improper location of plant may lead to waste of all the investments made in building machinery, and equipment.
Before a location for a plant is selected, long range forecasts should be made anticipating future needs of the company.
The plant location should be based on the company’s expansion plan and policy, diversification plan for the products, changing market conditions, the changing sources of raw materials and many other factors that influence the choice of the location decision. The purpose of the location study is to find an optimum location one that will result in the greatest advantage to the organisation.
Need for Selecting a Suitable Location: -
The need for selecting a suitable location arises because of two situations.
1. When starting a new factory.
2. In case of existing factory.
The existing firms will seek new locations in order to expand the capacity or to place the existing facilities. The increase in demand for the company’s products can give rise to following decisions :
1. Whether to expand the existing capacity and facilities.
2. Whether to look for new locations for additional facilities.
3. Whether to close down existing facilities to take advantage of some new locations.
Factors Influencing Plant Location: -
Following factors influence plant location
1. Proximity to markets
2. Supply of raw material
3. Transport facilities
4. Infrastructure availability
5. Labour and wages
6. Law and taxation
7. Suitability of land and climate
8. Supporting industries and services
9. Community and labour attitudes
10. Social infrastructure.
Q.4 What is plant layout? (AKTU. 2008 - 09, 2009-10)
Related Questions -
Q. What do you mean by plant layout? (AKTU. 2012 - 13)
Ans. The term plant layout has been defined in many ways considering various different aspects. But in very simple terms can be defined as follows:
Plant layout is such a systematic and effective functional arrangement of different departments, machines, equipment and services of an organisation that will facilitate the processing of the proposed or undertaken product in the most efficient and economical manner in the minimum possible time.
The term plant layout incorporates all the aspects connected with the enterprise, viz, grounds, buildings, machinery, equipment, departments, methods of manufacturing, factory services, material handling, flow of production, working conditions, hygiene, labour and shipment of goods, etc. The term ‘Plant Layout’ does not necessarily mean planning a new enterprise only. It implies all the following:
(i) Minor improvements, here and there, in the existing layout.
(ii) Expansion of the existing plant.
(iii) Re-layout of the existing plant.
(iv) Layout of a new (proposed ) plant.
