Plant Location and

UNIT 2 PLANT LOCATION AND FACILITY Facility Layout

LAYOUT
Structure
2.1 Introduction
Objectives

2.2 Facility Layout

2.3 Location Decision
2.4 Warehouse Location
2.5 Location of Service Facility
2.6 Location Evaluation Methods
2.7 Graphical Method to Solve Facility Location Problem
2.8 Transportation Model
2.9 Factors that Influence Layout Selection
2.10 Product Layout
2.11 Process Layout
2.12 Arrangement of Facilities within Departments
2.13 Material Handling
2.14 Summary
2.15 Key Words
2.16 Answers to SAQs

2.1 INTRODUCTION
One of the most important long term decision made by industrial engineers is to locate
their entities performing the basic operations. Location greatly affects cost of the
production system, i.e. it has a large impact on the overall profit of the company.
Therefore, the decision regarding the location of space consuming physical entities is of
great importance to meet the desired goal of profitability.
The plant location problem is encountered in all types of business concerned with
manufacture, supply, transport or service. Once the firm decides the nature and
specification of goods and services to be offered, the next step is to decide the location of
plant and its physical entities. The best location for a given trade depends on its type of
business with an objective to maximize the profit of location to the firms. For example,
industrial location decisions focus on its type of business. Service organisation have
focus on maximizing returns, whereas in case of manufacturing organisation location
decision depends on the combination of cost and rate of delivery.
The facility location problem is of great importance in two basic situations, i.e. in case of
entirely new business and in existing business. The existing firms seek for new locations
due to following reasons :
• To add new facilities in the existing firms
• To expand the present business capacity and facilities
• To shut down the existing facilities in order to open large premises
elsewhere.
Theoretically, both new and existing firms have a vast range of alternatives for new
locations.
21
Strategic Planning in Principal Factors in Locational Choice
Production Management
For an organization, the selection of location depends on various factors such as
accessibility from suppliers, accessibility to customers, market closeness etc. These
factors are categorized into four set of factors :
Fixed Costs
Influenced by the design of buildings, layout of facilities, provision and
maintenance of departments.
Variable Costs
It is due to the accessibility of labour, raw materials, market, etc.
Revenue Factors
The factors influencing the demand, i.e. immediacy to customers,
accessibility, usability, etc.
Subjective Factors
Factors related to individual preferences, amiability of the district, etc.
The need to select a location or site for a facility occurs due to the aforementioned
factors. Some of the common type of location problems involves adding one of
more new entities where they will interact with the existing facilities. The new
entities may be a machine or plant or a warehouse, etc. The basic location
problems are :
Single Facility Location Problem
Here we are concerned with location of facility to serve local community,
customers, etc. such as locating a cinema hall, etc. for people.
Multi-facility Location Problem
It occurs wherever there is a need to establish new multi-facility
organization.
In the entire facility location problem, the primary decision is taken for locating
the firm at a particular place that suits to its nature. Once the decision regarding the
nature of firm is taken, the next decision is made for the selection of layout. This
means that the layout should be selected that is capable of producing products
quickly and delivering them on time. In order to produce the products quickly the
central focus is to minimize the cost of processing, transporting and storing
materials throughout the production system. To achieve these, the design and
layout of buildings must be integrated with the design of the material handling
systems.
Objectives
After studying this unit, you should be able to learn about
• facility layout,
• factors affecting location decision,
• various methods used for evaluation of location alternatives,
• factors influencing the selection of layout,
• various types of layout,
• arrangement of facilities within department, and
• material handling objectives and equipment.
22
 Plant Location and
2.2 FACILITY LAYOUT Facility Layout

In the modern production and service operations, facility layout design has been the
subject of considerable interest. It is mainly due to the need for reduction in material
handling cost and ever growing application of flexible manufacturing systems.
Definition
Facility layout means a technique for the location of machines, utilities, employee
workstations, customer’s services area, restrooms etc. to obtain greatest possible
output with better quality at lowest possible overall cost.
Proper layout is one of the keys of success in factory management. The main objectives
of facility layout are as follows.
2.2.1 Main Objectives of Layout
• Better quality of product,
• Maximum utilization of space, labour and machine,
• Lower scrap and waste,
• Minimum production delays,
• Provision for space for future expansion,
• Avoidance of unnecessary changes,
• Proper production control,
• Minimum wasteful efforts and speeding of production,
• Fewer accidents,
• Proper lightning and ventilating of area,
• Minimum material handling cost,
• Easy supervision, and
• Safety of equipments and personal.
2.2.2 Categories of Layout
To achieve these objectives, a variety of layouts have been developed. Some of them are
as follows :
Fixed Position Layout
Deals with the layout requirements of large, bulky projects such as ships and
buildings. For these it is essential to bring the tools, machines and men, etc. close
to the work place.
Process Layout
Deals with the low volume, high variety production.
Product Layout
Such a layout deals with high volume single product production. There is
maximum utilization of personnel and machines.
Warehouse Layout
Deals with shelf space and aims to strike a trade-off between space and material
handling.
Service Layout
It deals with shelf space and responds to the customer behaviour.
23
Strategic Planning in 2.2.3 Principles Related Facility Layout
Production Management
According to Muther, the six basic principles related facility layout are :
Principle of Overall Integration
Deals with the integration of men, materials and machinery.
Principle of Minimum Distance
According to this, the best layout is the one in which men and materials have to
move minimum distance.
Principle of Flow
It signifies that the best layout is one which arranges the work area for each
operation or process in the same order in which assembly takes place of the
materials.
Principle of Cubic Space
It states that there should be best utilization of space, both horizontal and vertical
space.
Principle of Satisfaction and Safety
The best layout offers safety for worker and gives a feeling of satisfaction.
Principle of Flexibility
It states that the efficient layout offers minimum cost and least inconvenience
during rearrangement.
The above principles state the clauses for obtaining the best layout. In order to obtain the
best layout the foremost thing in the decision makers mind is to select the space for
locating the firm. Next section elicits the brief details related to the location decision and
factors affecting it.
SAQ 1
(a) What are the principal factors affecting the location choice? What are
different types of facility location problem?
(b) What are the different types of facility layout?
(c) List the principles related to facility layout.

2.3 LOCATION DECISION

2.3.1 Factors Affecting Location Decision
Due to the globalisation and intense competition, a decision regarding the facility
location is not an easy task for management. Products life cycles are becoming shorter.
Organisations are now capable of developing new and innovative products because of
following reasons :
• Effective and efficient use of IT tools.
• Better modes of transport and shipment.
• Easy cash flow.
• Availability of skilled labour.
24
Due to aforementioned factors facility location decision involves long and costly studies Plant Location and
of locations. Generally, in the selection procedure several sites come before the decision Facility Layout
maker each with its strengths and weaknesses. Therefore, selection of the final location is
usually a tradeoff decision that involves long and careful weighing of the pros and cons
of each alternative location.
Location decision can be better understood by verifying the factors that commonly affect
the final selection of the facility location. Selection of location involves a sequence of
decisions comprising nation decision, region decision, community decision and finally
the site decision respectively. In the beginning, management must take the decision
regarding the domestic or international location of the facility. Only a few decades ago
few firms has taken this choice into consideration. After resolving the international-
versus-domestic issue, management decides the general geographic region within the
country where the facility is to be placed. Once the geographical region decision has been
made, then the management judges the communities among several communities within
the region. Various factors affecting the community decision are given in Table 2.1.
Finally, the decision about the selection within the community is made based on various
factors such as size and cost of each site, proximity to transportation systems and various
other factors given in Table 2.1.
Table 2.1 : Factors Affecting the Location Decision
Sl. Community
National Decision Regional Decision Site Decision
No. Decision
Customers and
Labour availability and Transportation Preference of
1 constituents and
cost system availability management
trends
Export and import Government Transportation
2 Site costs
duties and taxes incentives costs
Environmental Government
3 Exchange rate Size of site
regulation inducement
Telecommunication Utilities supply and Proximity of
4 Banking services
system costs transportation cost
Environment
Cultural and economic
5 Climate regulation and Utilities availability
peculiarities
impact
Material and supplies Labour availability Government
6 Zoning restrictions
availability costs incentives
Construction and Environmental
7 Energy supply Construction cost
land cost impacts
Material and
Material and
8 Transportation system Labour availability supplies availability
supplies availability
and costs

The above table lists the factors affecting the location decision. But along with these
factors, one major factor affecting the location of the firm is the type of the firm going to
be placed. The two examples are given to illustrate to consideration of these factors.
Example 2.1
Mining, quarrying and heavy manufacturing have capital intensive facilities that
are expensive to build and cover large area and use large quantity of heavy and
bulky raw material. In addition, a large amount of wastes comes out during the
process. Therefore, these facilities consequently tend to be located near their raw
material sources rather then near the market so as to minimize the total
transportation cost. The site selected for placing the firm must be less expensive
and the waste must not affect the environment.
Example 2.2 25
Strategic Planning in Manufacturing firms making light items such as electronic component should be
Production Management located near either raw material sources or market. The availability and cost of
labour is important in the location decision of these facilities, whereas
transportation cost is of less importance.
SAQ 2
(a) List various factors affecting the national and regional site location decision
for a manufacturing facility.
(b) What are the major criteria taken into consideration for placing a
manufacturing firm making lighter items?

2.4 WAREHOUSE LOCATION

In recent years, manufacturing firms have spent much time in reducing work-in-process
inventory. Flexible automation, set time reduction and point of use storage have
contributed heavily. But we still find it necessary to build warehouses particularly for
receiving and distribution. Warehouse is often considered as a place to store goods. But
in reality a variety of facility is associated with warehousing.
2.4.1 Definition of Warehouse and its Major Facilities
A warehouse is composed of the building shell, storage medium, storage/retrieval
transportation mechanism and its control policies.
The brief description for each of them is given in Table 2.2.
Table 2.2 : Warehouse System

Facility Activity

Storage racks/slots For storing raw material and finished goods

Quality control Performing the inspection on received materials

Receiving docks Unloading, depackaging, identifying and sorting

Store/Retrieve Location selection and transport sequencing

Manufacturing Preparation of part for manufacturing

Shipping docks Order assembling, packing, labeling and transporting

2.4.2 Objectives of Warehouse Location

The basic objectives taken into consideration while locating a warehouse are as follows :
• Provide effective stock picking, order filling,
• Allow ease to inventory counts,
• Efficient loading and unloading of vehicles, and
• Accurate maintenance of inventory records.

26
The location of warehouse is one of the most simple and straightforward location Plant Location and
decisions among all the facilities. The dominant factors affecting the location of Facility Layout
warehouse are the incoming and outgoing transportation cost. For placing a warehouse it
is worth necessary that it should be placed near the market to communicate effectively
with recipients of outgoing products and react quickly to customer’s orders with
minimum transportation cost.
SAQ 3
List the factors affecting location of warehouse.

2.5 LOCATION OF SERVICE FACILITY

Location of service facility is based on the nature of the service and the way the
businesses deliver or convey their services. The most distinct characteristic of service
facility is its diversity. For example : airlines, banks, retailers, hospitals, etc. have much
diversity in their services that tend to create variety in their layouts.
2.5.1 Objectives
The basic objectives for placing the service facility are as follows :
• Provide convenience and comfort to customers,
• Provide privacy in work areas,
• Reduce travel of personal and customers, and
• Easy communications between work areas.
An addition to aforementioned dominant factors affecting the location decision is the
proximity to concentration of customers. Facilities such as retailing, customer’s services
for profit and health and other service facilities attempt to locate near their customers or
constituents.
2.5.2 Analysis of Service Location
The steps followed in analyzing the service location are :
• Consumer research behaviour
• Market research
• Collection of data for each location alternatives
• Revenue projection for each location alternatives
• Profit projection for each alternatives.
SAQ 4
Name various factors affecting the national and regional site location decision for a
service facility.

2.6 LOCATION EVALUATION METHODS

There are four basic methods for evaluating a certain location viz. the factor rating
method, location break-even analysis method, the centre of gravity method and the
transportation method. 27
Strategic Planning in 2.6.1 The Factor Rating Method
Production Management
In factor rating method both quantitative and qualitative factors are used for evaluating a
location. Generally, some factors are more important than others, therefore weights are
assigned to these factors while solving location problem. This method is more popular
because a wide range of factors from education to recreation is considered in this method.
The factor rating method has five basic steps :
(a) Develop a list of relevant factors effecting the location.
(b) Assign weights to the factors considered for evaluation.
(c) Generate a scale for each factor (for example 1-10, 1-100).
(d) Allot a score to each location for each factor, using the scale developed in
the above step.
(e) Multiply the score by the weight for each factor of each location.
(f) Finally, make a reference based on the score evaluated for each location.
2.6.2 Location Break-even Analysis
This method makes the cost-volume analysis to make an economic comparison of
location alternatives. In this method the location providing lowest cost is determined by
identifying fixed and variable costs and graphing them for each location. The three basic
steps for locational break-even analysis are :
(a) Find out the fixed and variable cost for each location.
(b) Plot the cost for each location with annual volume on horizontal axis and
costs on vertical axis.
(c) Opt for the location that offers the lowest total cost for the expected
production volume.
2.6.3 The Centre of Gravity Method
It is a mathematical technique used for finding the location of a distribution centre that
will minimize distribution costs. The method considers the location of markets, the
volume of goods shipped to those markets, shipping cost, etc. for finding the best
location.
The basic steps for the centre of gravity method are :
(a) Place the location on a coordinate system. The origin of the coordinate
system and the scale used are chosen arbitrarily.
(b) The centre of gravity is determined by using the following equation :

∑d V ix i
Cx = i

∑V i
i

∑d V iy i
Cy = i

∑V i
i

where, Cx = x-coordinate of the centre of gravity,

Cy = y-coordinate of the centre of gravity,
dix = x-coordinate of location i,
diy = y-coordinate of location i, and
Vi = Volume of goods moved to or from location i.

28 2.6.4 The Transportation Method

This is one of the simplest methods for the selection of layout and uses the linear Plant Location and
programming. The aim of this model is to determine the best pattern of shipments from Facility Layout
several points of sources to several points of destination so as to minimize the total
production and transportation cost. The details related to transportation model using
linear programming are given in Section 2.8.
SAQ 5
How will you apply centre of gravity method for evaluating the alternatives of
locations?

2.7 GRAPHICAL METHOD TO SOLVE FACILITY

LOCATION PROBLEM
The easiest way to solve the facility location problem is the Graphical Method. The
graphical method is useful when there are two variables. When there are more then two
variables, it is not possible to plot the solution on a two dimensional graph. We will first
introduce basic properties of linear programming models.
2.7.1 Properties of Linear Programming
Linear Programming (LP) models have following four properties :
(a) The objective function of any LP problem is to maximize or minimize basic
solution function.
(b) The objective is reached by satisfying the constraints, i.e. there are certain
restrictions that decide the range of the objective function. In general, an
objective is optimized subjected to certain constraints.
(c) There must be alternative solutions from which the best solution is to be
opted.
(d) In LP the objective function and constraints are expressed in terms of linear
equations or inequalities.
2.7.2 Formulating Linear Programming Model
For obtaining an optimal solution through LP, a set or region of optimal solution is
obtained. Initially the problem constraints are plotted on the graph. While plotting the
constraints of the problem the problem inequalities are transformed into equations. To
plot the line for these equations, the general trend is to find the points at which the line
intersects the horizontal and vertical axis. Similarly second constraint is plotted in the
form of equation.
After plotting the feasible region, the next step is to find the optimal solution to the
problem. There are several approaches that can be taken to solve the LP model for getting
the optimal solution. The two methods generally used for finding the optimal solution are
:
• Iso-profit line method, and
• Corner point solution method.
In general, many linear programming problems involve minimizing an objective such as
cost or time. Such minimization problems can be solved graphically by first setting up
the feasible solution region and then using either of the aforementioned approaches to
find the minimal solution.
SAQ 6
Where will you use the Iso-profit line method and corner point solution method? 29
Strategic Planning in
Production Management

2.8 TRANSPORTATION MODEL

The main purpose for modeling the transportation problem is to find the least cost of
shipping from various origins to destinations. Usually, the source point is factory,
warehouse, etc. and the destinations are the points that receive the goods.

2.8.1 Basic Requirements of Transportation Model

The basic requirements for this system are :
• The source point and the supply of the product per period,
• The destination point and the demand per period, and
• The cost for the movement of unit distance.
The transportation model is a linear programming model discussed above section.
Solving this problem using LP, it has to be structured in a special manner, i.e. with an
objective subjected to certain constraints.
When the transportation problem is formulated, two entities are used, i.e. demand and
supply. Each source x has a supply capacity Sx and each destination y has a specified
demand Dy. The cost of supplying a unit cost from source to destination is given by cxy.
The problem is to determine how much of the demand at each destination is to be
supplied by each source x to minimize the cost.

2.8.2 Formulation
The transportation problem is formulated as follows :
p q
Minimize w = ∑ ∑ cxy u xy
x =1 y =1

q
Subjected to ∑ u xy ≤ S x for every source x = 1, 2, . . . , p
y =1

p
∑ u xy ≤ D y for every destination y = 1, 2, . . . , q
x =1

where, p and q are the number of source and destination respectively.

This transportation problem involving two variables, i.e. demand and supply can be
easily solved by using graphical procedure given in former section.

SAQ 7
Give the procedure for solving the transportation model using graphical
information system.

30
 Plant Location and
2.9 FACTORS THAT INFLUENCE LAYOUT Facility Layout
SELECTION
2.9.1 Key Factors
The basic factors affecting the selection of layout are as follows :
Type of Industry
Industries are generally classified according to their procedure of manufacturing
the products. The processes of manufacture are classified into following
categories :
Synthetic Industry
When an industry produces product by mixing two or more materials, the
industry is known as synthetic industry. For example, cement industry is a
synthetic industry which produces cement by mixing limestone and clay.
Analytic Industry
Function of analytic industry is opposite of synthetic industry which
produces several products’ breaking materials. Industry involved in the
extraction of petroleum from crude oil belongs to analytic industry.
Extractive Industry
In such type of industry, the product is obtained by applying heat to the raw
materials. Industry involves in the extraction of Aluminum from Bauxite is
the example of extractive industry.
Conditioning Industry
In conditioning industry, the raw materials are transformed into desired
products that belong to conditioning process. The molding of plastic into
chairs and other plastic products is the example of conditioning process.
Volume of Production
The selection of layout also depends on the volume of manufactured goods to be
produced. While selecting a layout, consideration towards batch production, mass
production or single job should also be taken.
Type of Products
This point reveals that whether products to be produced are light or heavier and
liquid, solid or gas. In general, the following characteristics must be carefully
studied for the selection of layout.
Physical Characteristics
• Size : length, width, height
• Weight : Weight per unit or weight per unit volume (density)
• Shape : flat, curved, compact, irregular, etc.
• Risk of Damage : fragile, explosive, contaminable, toxic, corrosion,
etc.
• Condition : Unstable, sticky, dirty, powdery, hot, deep frozen.
Other Characteristics
• Timing : regularity, urgency, seasonal condition.
• Special Control : Government regulation, in-plant standards,
operating policy.
Types of the Process Involved in Delivery of Product 31
Strategic Planning in It is one of the most important factors that must be taken into consideration with
Production Management regard to the delivery of product, safety of product and personal. Care should be
taken for material handling problems, position of store room, tool room etc.

2.9.2 Types of Layout

Keeping in view the above factors, there are four types of layout.
Product Layout
Deals with the best machine utilization and personal in repetitive and continuous
production.
Process Layout
Addresses the low volume and high variety production.
Fixed Position Layout
Deals with large, bulky production such as ships and buildings.
Combination Layout
Uses the combination of aforementioned layout.

SAQ 8
How the layout selection depends upon the type of factory?

2.10 PRODUCT LAYOUT

2.10.1 Definition
Product layouts are designed to accommodate only a few product designs. Such layouts
are designed to allow direct material flow through the facilities for products. This type of
layout is very popular in mass production, i.e. only one product or one type of product is
produced in such type of layout. The necessary condition for the profitability in such
layout is to manufacture the items in huge quantities. The machines in such layout are
laid in such a manner that the operation is performed in sequence. This arrangement of
layout is also known as “synthetic system” of manufacture.
Example 2.3
Suppose a factory manufactures taps, drills, reamers and cutters. The production of
each of these items requires different machines which can be placed in different
departments. It is to be noted that in each departments the machines are to be laid
in the sequence of operation to be performed on job. For example in the taps
department there will be groups of lathe (L) followed by milling (M) machines.
Next to these there will the furnace for heat treating (HT) the job and at last there
will be grinding and fine grinding (FG) machines for finishing. Figure 2.1 shows
the product layout for above example.
Error!
32 L

G FG
 Plant Location and
Facility Layout

Figure 2.1 : Product Layout

Suitability
The product layout is suitable for continuous process industries such as the
manufacturers of television, car or automobile viz. Tata motors, Maruti Udyog
Limited, etc.

2.10.2 Advantages and Disadvantages of Product Layout

Advantages
(a) The product layout diminishes the overall production time.
(b) Less space is required for placing the machines.
(c) Minimum amount of material handling and transportation.
(d) Better utilization of machine and labour.
(e) Minimum of counting, inspecting and clerical works.
(f) Smooth flow of materials.
(g) More reliability in supplying the products to the customers.
(h) Less Work-in-Progress.
Disadvantages
(a) The machines placed in the plant are not fully utilised, i.e. less system
utilisation.
(b) Plant layout changes as the product changes.
(c) It is not possible to add more machines in this type of layout.
(d) Specified and strict supervision is required.
(e) Each worker performs job at a particular machine, so he is not skilled for
other machine or operation.

SAQ 9
What are the advantages and disadvantages of product layout?

33
Strategic Planning in
Production Management 2.11 PROCESS LAYOUT
2.11.1 Definition
Process layout, functional layout or job shops are designed to accommodate the variety
of product designs. This layout is generally used for producing a variety of products in
relatively small batches. Under this arrangement each department or section is
responsible for carrying out a particular process, irrespective of type of product as in the
case of product layout. In such layout, similar operations are carried out in each
department or section. The factories using this layout have no standard products, and if
any, they are few. Therefore, machine in this type of layout are generally arranged on
functional basis. This type is also called analytical layout.
Example 2.4
In a factory manufacturing drills, taps, reamers and cutters mentioned above, there
are five departments viz. lathe, milling machine, heat treatment, grinder, and fine
grinder each for a specific operation. All the products manufactured in the
company have to pass through any of these five machines. Figure 2.2 shows the
arrangement of departments for process layout.
Suitability
Such type of layout is suitable for the firms where low volume of production is
required because in such type of layout similar equipments and similar machines
are grouped together.
2.11.2 Advantages and Disadvantages of Process Layout
Advantages
(a) Supervision is simple as similar jobs are manufactured on similar machines.
(b) Fewer machines are required.
(c) There is incentive for each worker to raise the level of performance.
(d) Better control is possible over accuracy and precision required for the
complicated jobs.

Error!
L M G FG

HT
L M G FG

L M G FG

HT

L M G FG

L : Lathe, M : Milling Machine, HT : Heat and Treatment, G : Grinding, FG : Finished Goods

Figure 2.2 : Process Layout

(e) As the process layout is flexible in nature, therefore it can be easily managed
to the changes in the rate of production, in the design of products, in the
methods of production or in the raw material used.

34
 (f) The breakdown of one machine does not affect the production rate as in Plant Location and
each department more than one machine are available. Facility Layout

(g) New workers have better training facilities on the job. Workers know how to
run various machines in the group and also to set up work.
Disadvantages
(a) Handling and back-tracking of the products is too much.
(b) It is essential to supervise the work of each job, each machine and each
worker, which makes the production control more complex and expensive.
(c) In general more space is required in process layout in comparison to product
layout.
(d) Workers need to have higher skill level.
(e) Absence of cheaper and automatic devices for internal transportation.
(f) Total lead time is more due to long distances and waiting.
(g) Specialization of workers on certain machines creates monotony.
(h) Routing and scheduling is more complicated, as the work does not flow
through any definite channels.

SAQ 10
(a) What are the advantages and disadvantages of process layout?
(b) State the Indian industries where process layout is used.

2.12 ARRANGEMENT OF FACILITIES WITHIN

DEPARTMENTS
Arrangement of facilities means the system to be adopted for the movement of raw
materials from the beginning of the operations to the end of manufacturing. The overall
objective for such pattern is to plan for the economical arrangement of facilities that
affects the aspect of the firms. Figure 2.3 depicts aspects depend on the facility pattern.
Error!
Material Work in
Handling Progress

Facility Pattern

Lead Time
Physical and Mental
Strain

Supervision and Control

Figure 2.3 : Aspects Depending on the Facility Pattern

35
Strategic Planning in 2.12.1 Factors Affecting Facility Pattern within the Department
Production Management
(a) External transport facilities.
(b) Number of product to be handled.
(c) Number of operations on each product.
(d) Number of units to be processed.
(e) Number of sub-assemblies made up ahead of assembly lines.
(f) Size and shape of available land.
(g) Necessary flow between work areas.

2.12.2 Facility Patterns

The arrangement of facilities within department depending upon the flow of material can
be classified into two pattern viz. Horizontal and Vertical. The horizontal arrangement is
adopted on a shop floor whereas vertical arrangement is adopted where material flows in
the multi-storey building.
Horizontal Facility Pattern
‘I’ Pattern
It is one of the simplest arrangement of facilities within department. In such
layout each facility is arranged in a straight line. In such arrangement,
material is fed at one end and component leaves the line at other end. This
type of layout is economical in space and conventional in ‘I’ shaped
buildings, e.g. for automobile industries (Figure 2.4(a)).
‘L’ Pattern
This type of arrangement is used where ‘I’ pattern cannot be made due to the
shortage of available space (Figure 2.4(b)).
‘U’ Pattern
In such type of arrangement the departments for receiving and dispatching
of goods are located at one end. This type of layout is well suited for
manufacturing electric motors and other electric appliances (Figure 2.4(c)).
‘S’ Pattern
This type of layout is adopted for the better arrangement of available space.
If the production of goods requires large number of machines, then this
pattern is much economical (Figure 2.4(d)).
‘O’ Pattern
This type of arrangement is adopted, where process or operations are
performed in a circular manner, i.e. when the entry of the input material and
the exit of the final product are done from the same place. In general, we can
say that after receiving the order, when the job reaches at the same place the
complete set of operation have been performed. This type of arrangement is
adopted for the formation of electric bulbs and music cassettes etc. (Figure
2.4(e)).

36

(b)
 Plant Location and
Facility Layout

Figure 2.4 : Arrangement of Facilities within Departments

The aforementioned five basic arrangements of facilities within a department are

used in industries in various combinations.
Vertical Facility Pattern
Vertical facility systems are used in firms which are given as follows :
(c) Centralized and decentralized arrangement.
(d) Single storey and multi storey arrangement.
(e) Arrangement between buildings.
SAQ 11
What are the various types of horizontal and vertical arrangement of facilities?

2.13 MATERIAL HANDLING

2.13.1 Definition
Facility location and layout decision also depends on material handling. Material
Handling (MH) is a system or combination of methods, facilities, labour and equipments
for moving, packing and storing of materials to meet specific objectives viz. increased
production capacity, reduced waste, improved working condition and reduce cost.
Material handling is very important in plants and process industries as inefficient material
handling may increase production cost, delayed production delivery, occupation of
excessive space in plant and warehousing. In order to select handling system in plants
and industries, the prime consideration is given to cost and safety.
2.13.2 Principles
The basic principles of material handling as developed to date fall into four major
classifications :
Planning Principle
Efficient handling is the result of planning that includes recognition of the
fundamental relationships of materials movement and storage, an understanding of
their effects on costs and production and knowledge of the methods of achieving
the most efficient relationship of these cost factors.
(a) Plan handling for over-all economy. 37
Strategic Planning in (b) Sell the philosophy of handling to the organization.
Production Management
(c) Revise layout to reduce handling.
(d) Delegate responsibilities to one man.
Operating Principle
In recent years, a number of fundamental relationships in the day-by-day operation
of material handling systems and methods have been recognized. The basic factors
of this principle are :
(a) Efficient handling for safety of goods and workers.
(b) Avoid re-handling.
(c) Preference should be given to unit load.
(d) Use gravity where possible.
(e) Schedules and procedures should be established for the maintenance
of equipments.
Equipment Principle
With the availability of variety of equipments for handling and movement of
materials, it is some time necessary to define certain principles to guide the
material handling engineers.
(a) Select proper equipment for the job.
(b) Integrate the equipments into the plant handling systems.
(c) Coordinate the operations of material handling.
(d) Reduce terminal time of power units.
(e) Prefer flexible equipment.
Costing Principle
Basic factors of costing principle are as follows :
(a) Engineers must be aware of handling costs.
(b) Equipments with less overall handling cost having effective strength
should be preferred.
(c) Amortize equipments within a reasonable length of time.
The above mentioned principles have been evolved to ensure an efficient handling
of materials.
2.13.3 Equipment
In designing the material handling systems, equipment type must be specified for each
material movement. The basic equipment used in industries for the handling of materials
are given as follows :
Automatic Transport Devices
Machines that automatically grasp materials hold them firmly while operation are
being performed and move them to other locations.
Conveyors
These are used for moving materials of relatively uniform size and weight with
moderate to high frequency between a specified set of locations over a fixed path.
The conveyors are basically characterized into
(a) belt
38
 (b) chain Plant Location and
Facility Layout
(c) pneumatic
(d) roller
(e) tube.
Cranes, Hoists and Elevators
It includes all the equipment for moving material having a reversing vertical or
lateral movement.
Positioning, Weighting and Hoist Equipments
It includes equipment used for local positioning and transportation.
Industrials Vehicles
Includes all types of industrial trucks, railcars, tractors and grading equipment.
Containers and Supports
Include all types of pressure, tight, loose and open-top containers; also platforms
an coil supports.
Of all above classification of MH equipments, one school of thought categorises them to
methods of moving materials by :
(a) Lifting.
(b) Dragging, pulling and pushing.
(c) Carrying and lifting.
(d) Conveying and continuous flow.

SAQ 12
(a) How the material handling affects facility location decision?
(b) Divide the equipment given in the above section into different categories.

2.14 SUMMARY
This unit describes the general definition of Plant location and facility layout. Various
factors affecting the location decision of a firm or industry are also explained. In
addition, the objectives for locating warehouse and service facility and factors affecting it
are also discussed. Different strategies to evaluate a location are also discussed. These
strategies include different types of mathematical and graphical methods to solve the
location problem. Subsequently, usefulness of graphic information system and its use for
solving transportation model is illustrated. Further, the factors affecting the selection of
layout are discussed along with analysing the advantages and disadvantages related to
process layout, product layout and others. Finally, the brief description of material
handling equipment along with material handling principles is also given.

39
Strategic Planning in
Production Management 2.15 KEY WORDS
Fixed Position Layout : It is the arrangement of a facility so that the
product stays in one location and all the tools,
equipment and workers are brought to it as needed.
Product Layout : Facility arrangement so that the work centers or
equipment are in a line to afford a specialised
sequence of tasks.
Process Layout : Facility arrangement so that work centers or
departments are grouped together according to
their functional type.
Layout : It is physical configurations of departments, work
centres and equipment.
Material Handling : Combination of methods, facilities, labour and
equipments for moving, packaging and storing of
materials to meet specific objectives.

2.16 ANSWERS TO SAQs

Refer the relevant text in this unit for answers to SAQs.

40