Factors Influencing Industrial Location

Generally, location of industries is influenced by economic considerations though certain non-

economic considerations also might influence the location of some industries. Maximization of
profit which also implies cost minimization is the most important goal in their choice of
particular places for the location of industries. There are several factors which pull the industry
to a particular place. Some of the major factors influencing location are discussed below:
1. Availability of raw material
2. Availability of power, fuel
3. Availability labour
4. Availability of markets
5. Availability of transportation
6. Availability of water and land
7. Availability of banking facilities
8. Tax benefits
9. Govt policies
10. Climatic conditions
11. Refreshment facilities
12. Availability of Educational institutions

PLANT LAYOUT
A plant layout study is an engineering study used to analyze different physical configurations for
a manufacturing plant. It is also known as Facilities Planning and Layout.
Keeping in view the type of industry and volume of production, the type of layout to be
selected is to be decided from the following:
1. Product or Line Layout
2. Process or Functional Layout.
3. Fixed Position Layout.
4. Combination type of Layout.
1. Product or Line Layout:
If all the processing equipment and machines are arranged according to the sequence of
operations of the product, the layout is called product type of layout. In this type of layout, only
one product of one type of products is produced in an operating area. This product must be
standardized and produced in large quantities in order to justify the product layout.
 The raw material is supplied at one end of the line and goes from one operation to the
next quite rapidly with a minimum work in process, storage and material handling. Fig. 8.3
shows product layout for two types of products A and B.

Advantages offered by Product Layout:

(i) Lowers total material handling cost.
(ii) There is less work in processes.
(iii) Better utilization of men and machines,
(iv) Less floor area is occupied by material in transit and for temporary storages.
(v) Greater simplicity of production control.
(vi) Total production time is also minimized.
Limitations of Product Layout:
(i) No flexibility which is generally required is obtained in this layout.
(ii) The manufacturing cost increases with a fall in volume of production.
(iii) If one or two lines are running light, there is a considerable machine idleness.
(iv) A single machine breaks down may shut down the whole production line.
(v) Specialized and strict supervision is essential.
2. Process or Functional Layout:
The process layout is particularly useful where low volume of production is needed. If
the products are not standardized, the process layout is lower desirable, because it has creator
process flexibility than other. In this type of layout, the machines and not arranged according to
the sequence of operations but are arranged according to the nature or type of the operations.
This layout is commonly suitable for non-repetitive jobs.
Same type of operation facilities is grouped together such as lathes will be placed at one
place, all the drill machines are at another place and so on. See Fig. 8.4 for process layout.
Therefore, the process carried out in that area is according to the machine available in that
area.
Advantages of Process Layout:
(i) There will be less duplication of machines. Thus, total investment in equipment purchase will
be reduced.
(ii) It offers better and more efficient supervision through specialization at various levels.
(iii) There is a greater flexibility in equipment and man power thus load distribution is easily
controlled.
(iv) Better utilization of equipment available is possible.
(v) Break down of equipment can be easily handled by transferring work to another
machine/work station.
(vi) There will be better control of complicated or precision processes, especially where much
inspection is required.
Limitations of Process Layout:
(i) There are long material flow lines and hence the expensive handling is required.
(ii) Total production cycle time is more owing to long distances and waiting at various points.
(iii) Since more work is in queue and waiting for further operation hence bottle necks occur.
(iv) Generally, more floor area is required.
(v) Since work does not flow through definite lines, counting and scheduling is more tedious.
(vi) Specialization creates monotony and there will be difficult for the laid workers to find job in
other industries.
3. Fixed Position Layout:
This type of layout is the least important for today’s manufacturing industries. In this
type of layout, the major component remains in a fixed location, other materials, parts, tools,
machinery, man power and other supporting equipment’s are brought to this location.
The major component or body of the product remain in a fixed position because it is too heavy
or too big and as such it is economical and convenient to bring the necessary tools and
equipment’s to work place along with the man power. This type of layout is used in the
manufacture of boilers, hydraulic and steam turbines and ships etc.
Advantages Offered by Fixed Position Layout:
(i) Material movement is reduced
(ii) Capital investment is minimized.
(iii) The task is usually done by gang of operators, hence continuity of operations is ensured
(iv) Production centers are independent of each other. Hence, effective planning and loading
can be made. Thus, total production cost will be reduced.
(v) It offers greater flexibility and allows change in product design, product mix and production
volume.
Limitations of Fixed Position Layout:
(i) Highly skilled man power is required.
(ii) Movement of machines equipment’s to production center may be time consuming.
(iii) Complicated fixtures may be required for positioning of jobs and tools. This may increase
the cost of production.
4. Combination Type of Layout:
Now a day in pure state any one form of layouts discussed above is rarely found. Therefore,
generally the layouts used in industries are the compromise of the above-mentioned layouts.
Every layout has got certain advantages and limitations. Therefore, industries would to like use
any type of layout as such.
Flexibility is a very important factory, so layout should be such which can be molded according
to the requirements of industry, without much investment. If the good features of all types of
layouts are connected, a compromise solution can be obtained which will be more economical
and flexible.

Work Study
Meaning of Work Study:
According to ILO — International Labour Organization — work study is “a term used to
embrace the techniques of method study and work measurement which are employed to
ensure the best possible use of human and material resources in carrying out a specified
activity.” In other words, “work study is a tool or technique of management involving the
analytical study of a job or operation.” Work study helps to increase productivity.
Objectives of Work Study:
(i) Work study brings higher productivity;
(ii) Work study improves existing method of work for which cost becomes lower;
(iii) It eliminates wasteful elements;
(iv) It sets standard of performance;
(v) It helps to use plant and human more effectively;
(vi) It improves by saving in time and loss of material also.
Advantages of work study
1. Work study ensures higher productivity,
2. Better working conditions with less fatigue,
3. Higher wages to workers,
4. Uniform production flow,
5. Job satisfaction and job security to workers,
6. Reduction in unit cost of production,
7. Quality products to consumers,
8. Fast delivery schedule,
Types of Work Study:
1. Method Study:
According to ILO, method study is “the systematic recording, analysis and critical examination
of existing and proposed ways of doing work and the development and application of easier
and more effective method”. In short, it is a systematic procedure to analyses the work to
eliminate unnecessary operations.
2. Time and Motion Study:
According to ILO, Time Study means “a technique for determining as accurately as
possible from a limited number of observations the time necessary to carry out a given
activity at a different standard of performance”. In other words, “time study is the art of
observing and recording time required to do each detailed element of an individual operation.”
Practically, it studies the time taken on each element of a job.
Method Study
Method study is the process of subjecting work to systematic, critical scrutiny to make it more effective
and/or more efficient. It is one of the keys to achieving productivity improvement.
It was originally designed for the analysis and improvement of repetitive manual work but it can be used
for all types of activity at all levels of an organization.
The process is often seen as a linear, described by its main steps of:
▪ Select (the work to be studied);
▪ Record (all relevant information about that work);
 ▪ Examine (the recorded information);
▪ Develop (an improved way of doing things);
▪ Install (the new method as standard practice);
▪ Maintain (the new standard proactive).
Select
Work selected for method study may be an identified problem area or an identified
opportunity. It may be identified through a systematic review of available data, normal
monitoring or control processes, high levels of dissatisfaction and complaint or as part of a
change in management policy, practice, technology or location, and usually because it meets
certain conditions of urgency and/or priority.

Record
The Record stage of method study involves gathering sufficient data (in terms of both quality
and quantity) to act as the basis of evaluation and examination. A wide range of techniques are
available for recording; the choice depends on the nature of the investigation; the work being
studied; and on the level of detail required. Many of the techniques are simple charts and
diagrams, but these may be supplemented by photographic and video recording, and by
computer based techniques.

Examine
The recorded data are subjected to examination and analysis; formalized versions of this
process are critical examination and systems analysis. The aim is to identify, often through a
structured, questioning process, those points of the overall system of work that require
improvements or offer opportunity for beneficial change.

Develop
The Examine stage merges into the Develop stage of the investigation as more thorough
analysis leads automatically to identified areas of change. The aim here is to identify possible
actions for improvement and to subject these to evaluation in order to develop a preferred
solution.

Install
The Install phase is very important. Making theoretical change is easy; making real change
demands careful planning - and handling of the people involved in the situation under review.
They may need reassuring, retraining and supporting through the acquisition of new skills.
Install, in some cases, will require a parallel running of old and new systems, in others, it may
need the build-up of buffer stocks, and other planning to manage the change. what matters is
that the introduction of new working methods is successful. There is often only one chance to
make change!
Maintain
Sometime after the introduction of new working methods, it is necessary to check that the new
method is working, that it is being properly followed, and that it has brought about the desired
results. This is the Maintain phase.

Process Charts Used In Method Study

1. Outline process chart:
An outline process chart records an overall picture of the process and records only the main
events sequence-wise. It considers only the main operations and inspections.
2. Operation process chart:
The basic process chart, called an operation process chart, is understood as a graphic
representation of the points at which the materials are introduced into the process and of the
sequence of inspections and all operations except those involved in materials handling. It
includes information considered desirable for analysis such as time required to carry out the
operation and the location.
3. Flow process chart:
Flow process charts are graphic representations of the sequences of all operations,
transportation, inspections, delays, delays and storages occurring during a process or a
procedure and include information considered for analysis such as, time required and distance
moved.
The flow process chart could be of three types namely,
(i) Flow process chart material or product type.
(ii) Flow process chart man type.
(iii) Flow process chart machine type or equipment.
Two handed process charts:
In this chart, the activities of a worker both hands or limbs are recorded chronographically.

Multiple Activity Chart:

In this chart, the activities of more than one subject worker, machine or equipment are
recorded on a common time scale to show their inter-relationship.
The man machine chart or worker-machine chart:
This is a variation of multiple activity charts and illustrates the operation and delays of the
operator and the machine which he operates. An example of man machine chart may be one
worker running two machines simultaneously.
Flow diagram:
The flow diagram is a drawing or diagram drawn to a scale to show the relative position of a
machine or equipment, jigs and fixtures, gangways or aisles and shows the path followed by
materials or machines.
String diagram:
It is scale plan or model on which a string or a thread is used to trace and measure the path of
workers, material or equipment during a specified sequence of events.
SIMO chart:
Therbligs indicate the basic motions consisting of three parts, viz.,
(i) When the motion begins.
(ii) The nature of the motion.
(iii) When the motion ends.
The simultaneous motion cycle chart (SIMO) is a type of two handed process chart in which the
micro motions (therbligs) of both hands are recorded.
Motion Study:
Motion study is the science of eliminating wastefulness, resulting from using
unnecessary; ill-directed and inefficient motion. The aim of motion study is to find and
perpetuate the scheme of the least waste methods of labor.
Micro motion study provides a valuable technique for making minute analysis of those
operations that are short in cycle, contain rapid movements and involve high production over a
long period of time. For example, sewing of garments and assembling small parts. Micro motion
study may be used for the following purposes in addition to its primary use for job-analysis
work:
(i) To study the inter-relationship among the members of a work group.
(ii) To study the relationship between an operator and the machine which he operates.
(iii) To obtain the time for an operation.
(iv) To establish a permanent record of the method of doing a job.
Symbols Used in Method Study:
Graphical method of recording was originated by Gilberth, in order to make the presentation of the facts
clearly without any ambiguity and to enable to grasp them quickly and clearly. It is useful to use symbols
instead of written description.

METHOD STUDY SYMBOLS

• OPERATION
• INSPECTION
• TRANSPORTATION
• DELAY
• STORAGE

Operation
An operation occurs when an object is intentionally changed in one or more of its
characteristics (physical or chemical). This indicates the main steps in a process, method or
procedure. An operation always takes the object one stage ahead towards completion.
Inspection
An inspection occurs when an object is examined and compared with standard for quality and
quantity.
Transportation
A transport indicates the movement of workers, materials or equipment from one place to
another.
Example: Movement of materials from one work station to another.
Workers travelling to bring tools.
Delay (Temporary Storage)
A delay occurs when the immediate performance of the next planned thing does not take place.
Example: Work waiting between consecutive operations.
Workers waiting at tool cribs.
Operators waiting for instructions from supervisor.
Storage
Storage occurs when the object is kept in an authorized custody and is protected against
unauthorized removal. For example, materials kept in stores to be distributed to various work.
Work Measurement: Introduction, Definition and Objectives
Introduction:
Attempts to measure work and to establish work standards have always resulted in reactions,
promoted criticism and generally have been the topic of considerable controversy among the
managements and work force/workers.
It gives feeling to the workers that standards may result in more effective control and they may
be required to do hard work for lesser wages. Management feels that the use of standards may
lead workers to work hard which may result in higher wage bills.
Definition:
Work measurement may be defined as “the art of observing and recording the time
required to do each detailed element of an Industrial activity/operation.”
Objectives of Work Measurement:
The main objectives of work measurement are the followings:
(1) Target time for each job can be scientifically estimated, with this estimate realistic schedules
and manpower requirements can be prepared.
(2) Sound comparison of alternative methods is possible by comparing their basic times.
(3) Useful wage incentive schemes can be formulated on the basis of target times.
(4) In can lead to proper balancing of the work distribution.
(5) It can help to analyses the activities for performing a job with the view to eliminate or
reduce unnecessary or repetitive operations so that human effort can be minimized.
(6) To standardize the efficient method of performing operations.
(7) To standardize conditions for efficient performance.

Techniques
• Time study
• Predetermined motion time systems
• Standard data
• Work sampling
Time study
Time Study consists of recording times and rates of work for elements of a specified job carried
out under specified conditions to obtain the time necessary to carry out a job at a defined level
of performance.
In this technique the job to be studied is timed with a stopwatch, rated, and the Basic Time
calculated.

Predetermined motion time system

A predetermined motion time system is a work measurement technique whereby times
established for basic human motions (classified according to the nature of the motion and the
conditions under which it is made) are used to build up the time for a job at a defined level of
performance.
The systems are based on the assumption that all manual tasks can be analyzed into basic
motions of the body or body members. They were compiled as a result of a very large number
of studies of each movement, generally by a frame-by-frame analysis of films of a wide range of
subjects, men and women, performing a wide variety of tasks.
Standard time
Standard time is the total time in which a job should be completed at standard performance i.e.
work content, contingency allowance for delay, unoccupied time and interference allowance,
where applicable.
The Standard Time is the product of three factors:
1.Observed time: The time measured to complete the task.
2.Performance rating factor: The pace the person is working at. 90% is working slower than
normal, 110% is working faster than normal, 100% is normal. This factor is calculated by an
experienced worker who is trained to observe and determine the rating.
3.Personal, fatigue, and delay (PFD) allowance.
The standard time can then be calculated by using

STANDARD TIME = (NORMAL TIME / OBSERVED TIME) *RATING FACTOR

Work sampling
Work sampling is the statistical technique for determining the proportion of time spent
by workers in various defined categories of activity (e.g. setting up a machine, assembling two
parts, idle…etc.). It is as important as all other statistical techniques because it permits quick
analysis, recognition, and enhancement of job responsibilities, tasks, performance
competencies, and organizational work flows. Other names used for it are 'activity sampling',
'occurrence sampling', and 'ratio delay study'.
 In a work sampling study, a large number of observations are made of the workers over
an extended period of time. For statistical accuracy, the observations must be taken at random
times during the period of study, and the period must be representative of the types of
activities performed by the subjects.

Steps in Conducting a Work Sampling Study

There are several recommended steps when starting to prepare a work sampling study:[1]
Define the manufacturing tasks for which the standard time is to be determined.
Define the task elements. These are the defined broken-down steps of the task that will be
observed during the study. Since a worker is going to be observed, additional categories will
likely be included as well, such as "idle", "waiting for work", and "absent".
• Design the study. This includes designing the forms that will be used to record the
observations,
• Determining how many observations will be required,
• Deciding on the number of days or shifts to be included in the study, scheduling the
observations, and finally determining the number of observers needed.
• Identify the observers who will do the sampling.
• Start the study. All those who are affected by the study should be informed about it.
• Make random visits to the plant and collect the observations.
• After completing the study, analyze and present the results. This is done by preparing a
report that summarizes and analyzes all data and making recommendations when
required.
Applications of Work sampling
Work sampling was initially developed for determining time allocation among workers'
tasks in manufacturing environments. However, the technique has also been applied more
broadly to examine work in a number of different environments, such as healthcare and
construction.
More recently, in the academic fields of organizational psychology and organizational
behavior, the basic technique has been developed into a detailed job analysis method for
examining a range of different research questions
 INVENTORY MANAGEMENT
In any business or organization, all functions are interlinked and connected to each
other and are often overlapping. Some key aspects like supply chain management, logistics and
inventory form the backbone of the business delivery function. Therefore, these functions are
extremely important to marketing managers as well as finance controllers.

Inventory management is a very important function that determines the health of the
supply chain as well as the impacts the financial health of the balance sheet. Every
organization constantly strives to maintain optimum inventory to be able to meet its
requirements and avoid over or under inventory that can impact the financial figures.

Objectives of inventory management

• To buy at the lowest price, consistent with desired quality and service

• To maintain a high inventory turnover, by reducing excess storage, carrying costs and
inventory losses occurring due to deteriorations, obsolescence and pilferage

• To maintain continuity of supply, preventing interruption of the flow of materials and

services to users

• To maintain the specified material quality level and a consistency of quality which
permits efficient and effective operation

• To develop reliable alternate sources of supply to promote a competitive atmosphere in

performance and pricing

• To minimize the overall cost of acquisition by improving the efficiency of operations and
procedures

• To hire, develop, motivate and train personnel and to provide a reservoir of talent

• To achieve a high degree of cooperation and coordination with user departments

• To maintain good records and controls that provide an audit trail and ensure efficiency
and honesty

• To participate in Make or Buy decisions.

 ABC analysis
In materials management, the ABC analysis is an inventory categorization technique.
ABC analysis divides an inventory into three categories- "A items" with very tight control and
accurate records, "B items" with less tightly controlled and good records, and "C items" with
the simplest controls possible and minimal records.
The ABC analysis provides a mechanism for identifying items that will have a significant
impact on overall inventory cost, while also providing a mechanism for identifying different
categories of stock that will require different management and controls.
The ABC analysis suggests that inventories of an organization are not of equal value. Thus, the
inventory is grouped into three categories (A, B, and C) in order of their estimated importance.
A’ item is very important for an organization. Because of the high value of these 'A'
items, frequent value analysis is required. In addition to that, an organization needs to
choose an appropriate order pattern (e.g. ‘Just- in- time’) to avoid excess capacity. 'B' items
are important, but of course less important than 'A' items and more important than 'C' items.
Therefore, 'B' items are intergroup items. 'C' items are marginally important.

COST QUANTITY
A class 70 10
B class 20 20
C class 10 70
 Economic Order Quantity - EOQ
Economic order quantity (EOQ) is an equation for inventory that determines the ideal
order quantity a company should purchase for its inventory given a set cost of production,
demand rate and other variables. This is done to minimize variable inventory costs, and the
formula takes into account storage, or holding, costs, ordering costs and shortage costs
The full equation is as follows

Where,
A = Annual consumption
O = Ordering cost
C = Carrying cost

Assumptions of EOQ
• Demand is known and is deterministic, i.e. Constant;
• The lead time, i.e. The time between placement of the order and the receipt of the
order is known and constant;
• The receipt of inventory is instantaneous. In other words, the Inventory from an order
arrives in one batch at one point in time;
• Quantity discount are not possible, in other words it does not Make any difference how
much we order, the price of the product will still be the same
• That only costs pertinent to inventory model are the cost of Placing an order and cost of
holding or storing inventory over time