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Unit-2 Introduction To Plant Layout and Location
Unit-2 Introduction To Plant Layout and Location
DEPARTMENT OF COMMERCE
LECTURE NOTES
Plant should be located at a place where inhabitants are interested in its success and the
product can be sold profitably with minimum production cost. Plant location is often resulting
compromise among conflicting social, economic and geographical conditions. Layout
decisions entail determining the placement of department, work groups within the
departments, workstations, machines, and stock holding points within a production facility.
The objective is to arrange the elements in a way that ensures a smooth work flow in a
factory or a particular traffic pattern.
Plant location refers to the area where the plant will operate to produce goods or services. It is
the function of determining where the plant should be located for maximum operating
economy and effectiveness.
According to Bethel Smiths & Alwater, “Plant location is that spot where, in consideration of
the business as a whole, the total cost of production & delivering goods to all the consumers
is the lowest”.
1. The location of plant will fix the production technology and cost structure.
Eg: A manufacturing plant, which is located in an under-developed country, will choose a
labor intensive process to utilize the availability of low cost labor.
A small scale firm normally selects the location near to the local market. But for big
firms, the amount of investment required largely depends on the location selected. Since
these investments are irreversible in nature at least in the short run, the management of
the firm should be careful in selecting a site.
Eg: An automobile manufacturing unit cannot be shifted from one place to other.
2. The location of the plant affects the company’s ability to serve its customers quickly
and conveniently.
goods from factory to the market. Hence, a place which is well connected by rail, road ad
water is ideal for plant location.
e. Suitability of climate
Climatic factors may not have major influence these days because of modern air
conditioning facilities available today. However, it may be important factor for certain
industries like textile mills, which require high humidity. Climate plays a very important
role in the location of a plant.
3. Selection of the locality or community
Having selected a particular region in a particular country, the management now
needs to select a particular locality or community. This is influenced by the
following factors:
a. Labor and wages
Plant location should be such that required labor is easily available in the neighborhood.
Importing labor from outside is equally costly and it causes lot of administrative
problems. Availability of required labor locally is better since problem of arranging
accommodation and other related problems do not arise. Since normally workers with
specific skills are required, some sort of training facility should also be available in the
neighborhood. Skilled employees are easily available in ITI’s, or engineering colleges are
there in the neighborhood.
b. Civic Amenities
A place with civic amenities such as theaters, parks, schools, entertainment centers, clubs
etc will be preferred over another place which lacks them.
c. Finance and research activities
The success of an organization needs adequate capital and it needs to be dynamic. For this
reason, research facilities are essential. A place where such facilities are available and
where raising capital is easily naturally attracts new industries.
d. Complementary and competing industry
Existence of complementary industries offers the following benefits to the location of
plant: (i) Materials can be procured on better terms. (ii) A group of plants will attract a
variety of ancillary plants (iii) Loan facilities are easily available.
e. Legislation and taxation
The policies of the state government and local bodies relating to issue of licenses,
building codes, labor law etc are the factors in selection/ rejecting a particular
community/ site. In order to disperse industries and ensure balanced economic growth,
both central and state government offer a package of incentives for setting up industries in
particular location. Exemption from excise duty, sales tax and loans from financial
institutions, subsidy in electricity charges etc are some of the incentives offered. Since
taxes and duties levied by the state government and local bodies substantially influence
product cost, the incidence of such taxes/levies must be taken into account while selecting
a community/site.
f. State assistance
State provides assistance like feasibility study subsidy: investment subsidy, concession on
term loans, processing fees, working capital loan, stamp duty exemption, sales tax
exemption to some extent, subsidy on electricity tariff, technical guidance, raw materials,
marketing facilities, allotment of land and shed to entrepreneurs.
Hotelling was one of the first to introduce the principle of spatial competition (1929) by
investigating how seller would choose locations along a linear market.
He assumed that the product was uniform so customers would buy from the nearest seller
and that the friction of distance was linear and isotropic.
The total price the customer is thus the market price plus the transport price. Under such
circumstances, two competitors will select location A and B for optimal market coverage.
With P1 being the market price, the market boundary would be F1 ( point of cost
indifference) since right of F1, customers would get a lower price at location B instead of
location A and left of F1, customers would get lower price at location A. If for any
reasons, location A is able to lower the market price from P1 to P2, then its market area
would expand at the expense of location B, from F1 to F2.
Weber lists some more factors which influence the transportation costs such as:
i) The type of transportation system and extent of its use,
ii) The nature of the region and kinds of roads
iii) The nature of goods themselves, i.e., the qualities which, besides weight,
determine the facility of transportation.
However, the location of the place of production must be determined in relation to the place
of consumption and the most advantageously located material deposits. Thus, ‘location
figures’ are created. These location figures depend upon:
i) The type of material deposits, and
ii) The nature of transformation into products.
Weber classified and calls those raw materials, which are available practically everywhere as
‘ubiquities’ (like bricks-clay, water, etc.) and ‘localized’ (like iron-ore, minerals, wood. Etc)
which are available only in certain regions. It is clear that localized materials play a more
important role on the industry than the ubiquities. Further, regarding the nature of the
transformation of materials into products, Weber categorized the raw materials as ‘pure’ and
‘weight losing’. Pure materials impact their total weight to the products (e.g., cotton, wood.
Etc) and the materials are said to be ‘weight losing’ it only a part enters into the product (e.g.,
wood, coal, etc.) Hence, the location of industries using weight-losing materials is drawn
towards their deposits and that of industries using pure-materials towards the consumption
centres.
2. Secondary causes (Agglomerative and Deglomerative factors): An agglomerative factor is
an advantage or a cheapening of production or marketing which results from the facts that
production is carried-on at one place. A deglomerative factor is a cheapening of production
which results from the decentralization of production, i.e., production in more than one place.
To some extent these agglomeration and deglomeration factors also contribute to local
accumulation and distribution of industry. These factors will operate only within the general
frame work formed by the two regional factors, i.e., cost of transportation and cost of labor.
The advantages which could be derived in this context are external economies.
The pulls which the agglomeration factors possess to attract an industry to a particular point
are mainly dependent on two factors. Firstly, on ‘the index of manufacture’ and secondly, on
the ‘location weight’. To deduce a general principle, Weber uses the concept of “co-efficient
of manufacture” which is the ratio of manufacturing cost to location weight. Agglomeration
is encouraged with high co-efficient of manufacture and deglomeration with low co-efficient
and these tendencies are inherent in their nature.
Firms should select a location by formulating relevant decision criteria. The criteria
should include several economic factors such as labor and material cost, and non
economic factors such as impact of the plant on the surrounding environment.
Plant Layout
Meaning:
It refers to the arrangement of facilities. A plant layout refers to the arrangements of
machinery, equipment and other industrial facilities such as receiving and shipping
departments, tool rooms, maintenance rooms and employee amenities for the purpose of
achieving the quickest and smoothest production at the least cost.
Definition:
According to Keith and Gubellini, “Plant layout deals with the arrangement of the physical
facilities and the manpower which are required to manufacture a product or perform a
service.
run above head-height and used as moving work-in- process stores, or tools and
equipment can be suspended from the ceiling.
4. Maximum visibility: All the people and materials should be readily observable at the
times: there should be no ‘hiding places’ into which goods or information can get
mislaid. This criterion is sometimes difficult to fulfill, particularly when an existing
facility is taken over.
5. Maximum accessibility: All servicing and maintenance points should be readily
accessible. Eg: equipment should not be placed against a wall in such a manner that
necessary maintenance cannot easily be carried out.
6. Minimum distance: All movement should be both necessary and direct. Handling
work adds to cost but does not increase value; consequently any unnecessary or
circuitous movement should be avoided.
7. Minimum handling: The best handling of materials and information is no handling,
but where it is unavoidable it should be reduce to a minimum by the use of whatever
devices are most appropriate.
8. Minimum discomfort: Draughts, poor lighting, excessive sunlight, heat noise,
vibration and smells should be minimized and if possible counteracted. Apparently
trivial discomforts often generate troubles greatly out of proportion to the discomfort
itself. Attention paid to the lighting and general decoration and furniture can be
rewarding without being costly.
9. Inherent safety: All layouts should be inherently safe, and no person should be
exposed to danger.
10. Maximum security: Safeguard against fire, moisture, theft and general deterioration
should be provided, as far as possible in the original layout rather than in later
accretions of cages, doors and barriers.
11. Efficient process flow: Work flow and any transport flow should not cross. Every
effort must be made to ensure that paper or material flows in one direction only, and a
layout which does not conform to this will result in consideration difficulties, if not
downright chaos.
12. Identification: Whenever possible, working groups should be provided with their
‘own’ working space. The need for a defined ‘territory’ seems basic to many animals
including the human being, and provision of a space with which a person can identify
can often enhance morale and provide a very real feeling of cohesion.
functions; developments of up to date work areas and operate job assignments for a
full utilization of the labor force.
3. Minimization of production delays: Repeat orders and new customers will be the
result of prompt execution of orders. Every management should try to keep to the
delivery schedules.
4. Improved quality control: Timely execution of orders will be meaningful when the
quality of the output is not below expectations. To ensure quality, inspection should
be conducted at different stages of manufacture. An ideal layout provides for
inspection to ensure better quality control.
5. Minimum equipment investment: Investment on equipment can be minimized by
planned machine balance and location, minimum handling distances, by the
installation of general purpose machines and by planned machine loading. A good
plant layout provides all these advantages.
6. Avoidance of Bottlenecks: It refers to any place in a production process where
materials tend to pile up or produced at rates of speed, less rapid than the previous or
subsequent operations. Bottlenecks are caused by inadequate machine capacity,
inadequate storage space or low speed on the part of the operators. The results of
bottlenecks are delays in production schedules, congestion, accidents and wastages of
floor area. All these may be overcome with an efficient layout.
7. Better production control: Production control is concerned with the production of a
product of the right type at the right time and at reasonable cost. A good plant layout
is a requisite of good production control and provides the plant control offers with a
systematic basis upon which to build organizational procedures.
8. Better supervision: A good plant layout ensures better supervision in two ways:
i. Determining the number of workers to be handled by a supervisor
ii. Enabling the supervisor to get a full view of the entire plant at one glance.
9. Improved utilization of labor: Labor is paid for every hour he spends in the factory.
The efficiency of a management lies in utilizing the time for productive purpose. A
good plant layout is one of the factors in effective utilization of labor.
10. Avoidance of unnecessary and costly changes: A planned layout avoids frequent
changes which are difficult and costly. The incorporation of flexibility elements in the
layout would help in the avoidance of revisions.
liquid or solid and it is position in relation to the pant location influence the layouts.
In a majority of cases the product moves from work station to work station.
3. Workers: The layout designers should also consider the type, position and
requirements of employees. If women workers are employed the layout should be
planned after keeping in mind their particular requirement. The position of employees
i.e. whether they remain stationary or moving, also influences the layout. Employee
facilities such as health and related services looks rooms and toilets also influences
the layout significantly. Employee safety must also receive due consideration.
4. Machinery: The type of the product the volume of production, the type of process
and management policy determines the size and type of machinery to be installed
which in turn influences the plant layout.
5. Type of industry: The type of industry and method of production influences the
layout of the plant to a great extent. There are four types of industries, namely (a)
Synthetic. (b) Analytical. (c) Conditioning and. (d) Extractive.
6. Managerial policies: Top management policies such as: (a) Volume of production
and provision of expansion. (b) Extent of automation. (c) Purchase policy. (d)
Personnel policy. (e) Make/buy decisions of a particular component.
2. Process or functional layout: Under this type of layout the machines of similar type
are arranged together at one place. This type of layout is used for group production. It
is preferred when the product is not standardized and the quantity produced is very
small.
Advantages:
(i) Lower initial capital investment is required.
(ii) In process layout machines are better utilized and fewer machines are required.
(iii) Flexibility of equipment and personnel is possible in process layout.
(iv) Lower investment on account of comparatively less number of machines and
lower cost of general purpose machines.
(v) There is high degree of machine utilization, as a machine is not blocked for a
single product.
(vi) Breakdown of one machine does not disturb the production process.
(vii) Supervision can be more effective and specialized.
Disadvantages:
(i) Materials handling costs are high due to backtrack.
(ii) More skilled labor is required resulting in higher cost.
(iii) Work in progress inventory is high needing greater storage space.
(iv) Backtracking and long movement may occur in the handling of materials thus,
reducing material handing efficiency.
(v) Material handling cannot be mechanized which adds to cost.
(vi) Process time is prolonged which reduce the inventory turnover and increases the
in process inventory.
(iii) As several operations are often carried out simultaneously so there is possibility of
confusion and conflicts among different workgroups.
Disadvantages:
(i) Higher initial capital investment.
(ii) More skilled labor is required resulting in higher cost.
(iii) Breakdown of one machine will disturb the production process.
Cellular plant layout: In cellular plant layout, the materials and information entering the
operation are pre-selected to move to one part of operation in which all the machines to
process these resources are located. After being processed in the cells, the part-finished
products may go on to another cell. In effect the cell layout brings some order to the
complexity of flow that characterizes process layout. An example is specialist computer
component manufacture.
Advantages:
(i) Cellular layouts are lower work-in-process inventories.
(ii) Reduced material handling costs.
(iii) Shorter flow times in production.
(iv) Simplified production planning.
Disadvantages:
(i) Reduced manufacturing flexibility and potentially increased machine down time.
(ii) Duplicate pieces of equipment may be needed so that parts need not be
transported between cells.
Space requirement:
It finalizes the area, suitable to the function and ventilation. Rules and regulations
regarding plant layout should be referred to at this stage.
An architect should study the regulations and bye-laws laid down by the corporation,
municipal authority, town planning department and industrial development corporation or
revenue department as per its jurisdiction. The plan of any type of building must fulfill
the requirements mentioned in the code, architects, contractors, civil engineers, and
draftsmen are supposed to keep a copy of these bye-laws with them for ready reference
along with the amendments thereto.
The space requirement should be checked even for the smallest unit, such as wash basins,
etc. Hence, the points to be considered for space requirement are:
1. Regulations and bye-laws of the plan sanctioning authority.
2. Establishment of area for different units:
i) Function
ii) Number of persons
iii) Furniture requirements
3. Flexibility
4. Sanitation
5. Requirement for air condition, equipment and other provision.
6. Cubical requirements for ventilation.
Methods of determining space requirements:
1. Production centre method: It consists of a single machine with all the associated
equipment and space required for its operation. Work space, maintenance space,
material set-down space and access space for aisles are added to the space
requirement for the machine. This is then multiplied by the number required of each
pieces of machinery; and added in space allowances for aisles and in general or for
support areas.
2. Conversion method: The amount of space required currently for each machine, a
machine group or activity area is determined. Adjustment is made of this to what
should be used to perform the job efficiently. Then the conversion of this is done by
some factor or multiplier to determine what would be needed for the new requirement.
This method is mostly used to determine space requirements for supporting services
and storage areas.
3. Rough layout method: A rough detailed layout plan to scale is prepared using
templates or models to obtain an estimate of the general configuration and space
requirements.
4. Ratio trend and projection method: In this method one establishes a ratio of area to
some other factor that can be measured and predicted for the proposed layout. By
knowing the projected denominator the corresponding area requirement can be
calculated.
Facilities utilities
It is now well recognized that factory conditions exert a powerful influence on the efficiency
of the worker. They act both directly and indirectly. The direct effect of good lighting and
suitable heating can easily be recognized, but the indirect effect may be equally important.
Bad factory conditions may cause a lowering of health and well-being, a slackness and
depression of spirits, which react on the productivity of the worker. In course of time, they
may include chronic ill-health and seriously reduce the duration of industrial life. Hence, bad
factory conditions are economically unsound as well as morally reprehensible.
2. Lighting
3. Ventilation
4. Air-condition
5. Noise control
6. Sanitation
Factory building:
It is a factor which is the most important consideration for every industrial enterprise. A
modern factory building is required to provide protection for men, machines, products or
even the company secrets. It has to serve as a part of the production facilities and as a factor
to maximize economy and efficiency in plant operations. It should offer a pleasant and
comfortable working environment and project the management image and prestige. Factory
building is like skin and bones of a living body for an organization. It is for these reasons that
the factory building acquires great importance.
a) Area of the land: The area of the land which is to be acquired should be large
enough to provide for the future expansion needs of the firm and accommodate
current needs.
b) Design of the building: The design of the building should be in a rectangular
shape. Rectangular shapes facilities expansion on any side.
c) Vertical expansion: If vertical expansion is expected, strong foundations,
supporters and columns must be provided.
d) Horizontal expansion: If horizontal expansion is expected, the side walls must be
made non-load-bearing to provide for easy removal.
iv) Employee facilities and services area: Employee facilities must find a proper
place in the building design because they profoundly affect the morale,
comfort and productivity. The building plan should include facilities for lunch
rooms, cafeteria, water coolers, parking area and the like. The provision of
some of these facilities is a legal requirement.
Service areas, such as the tools room, the supervisor’s office, and the
maintenance room, receiving and dispatching stations, the stock room and
facilities for scrap disposal, should also be included in the building design.
ii) Multi-storey building: School, colleges, shopping complex and residences and
for service industries like software, BPO. Multi-storey structures are generally
popular, particularly in cities. Multi-storey building is useful in manufacture of
light products, when the acquisition of land becomes difficult and expensive and
when the floor load is less.
Advantages:
a) Maximum operating floor space.
b) Lower cost of heating and ventilation.
c) Reduced cost of materials handling.
Disadvantages:
a) Material handling becomes very complicated.
b) A lot of space is wasted on elevators, staircases and fire escapes.
c) Floor load-bearing capacity is limited.
d) Natural lighting is limited.
e) Layout changes cannot be effected easily and quickly.
Lighting:
There are many different types of industries that need industrial lighting. Manufacturing
facilities require specific types of industrial lighting to illuminate their exterior grounds, their
indoor shipping and receiving bays, and their production areas. They are critical to task
lighting that workers need to safely operate machinery and assemble parts.
Advantages:
1. Increased output therefore decreased costs.
2. Reduced accidents.
3. Improved product quality.
4. Better visibility.
5. Less spoilage and consequent rework.
6. Better floor space utilization.
7. Plant neatness and cleanliness can be maintained.
8. Easier and better supervision.
9. Improved morale among employees resulting in reduced labor turnover.
incapable of giving the day light color and product heat. But they are cheap and
the installation is easy.
ii) Fluorescent lamps: Introduced in 1940 fluorescent lamps are widely used in
industries lighting. Energy is released by electron bombardments. The light
produced is like day light and is uniformly distributed. There is no glare, heat
produced in less and it is better suited for air conditioned operations.
iii) Electro-Luminescent lamps or mercury vapor lamps: Light is produced by an
electric are through mercury vapor in a long glass tube housed in a trough like
reflector. The light produced is of blue green color with a high luminous
efficiency. The cost is low and these do not produce sharp shadows. Halogen light
in street lighting.
Air conditioning:
It refers to any form of cooling or heating that modifies the conditions of the air. An air
conditioner is an appliance, system, or machine designed to change the air temperature
and humidity within an area, It means simultaneous control of temperature and humidity
and distribution and purity of air by artificial means.
Ventilation:
It is the dynamic parameter that complements the concept of air space. For a given number of
workers, the smaller the work premises, the more should be the ventilation.
Types of ventilation:
1. Natural ventilation: It is the use of wind and temperature differences to create
airflows in and through building.
2. Task ventilation: This system supply a mixture of outside and re-circulated air in
high velocity jets so that the indoor air in rooms is often well mixture.
3. Mechanical ventilation: The use of a machine to take over active breathing for a
patient. It is used when a patient can no longer breathe on his own due to injury,
illness or general anesthesia during surgery.
4. Hybrid ventilation: It is the mix of natural and mechanical ventilation. In this project
there is only one aspect of mechanical ventilation, which contributes to the hybrid
one: the fan which enhances the natural stack effect if the conditions are poor.
Industrial safety:
It can be defined as the control of recognized hazards to achieve an acceptable level of
risk. This is primarily a management activity which is considered with reducing,
controlling and eliminating hazards from the industries or industrial units.
Noise control:
The word industrial noise means an unwanted and unpleasant sound generating in industry.
Importance:
1. Long exposure to excessive noise impairs the hearing of employees. Noise control is
necessary to avoid such loss of hearing capacity.
2. Exposure to noise results in headache nervousness and fatigue.
3. Noise control assumes significance when one realizes its harmful effects on the
operations, in a plant.
4. Vibration will be having damaging effects on machinery and equipments noise
control assumes importance on this account as well.
5. The morale of the employee depends to a large extent on their working conditions.
Sanitation:
It is the science of safeguarding health of industrial workers. It involves the provision to
safeguard and promote the health of workers in an industry.