Module 4

Location Planning factors – Factor rating and centre of gravity methods. Plant layout:
Types of layouts, Comparison of layouts, Systematic Layout Planning (SLP), Design
procedures and methods, Software packages for SLP. Models for assembly line
balancing. Capacity planning and control, controlling continuous production, batch
processing technique.
 Location Planning

► Location planning involves selecting the optimal location for a business or facility.
 Procedure for Site Selection
► For selecting a site following procedure should be followed:
1. Constitution of a site selection committee.
2. Determining the company needs.
3. Deciding criteria for selection.
4. Accumulate the data.
5. Analyse the data.
6. Evaluate the alternatives.
7. Reduce number of alternatives.
8. Investigation in detail
9. Collect and analyse further data.
Factors affecting the selection of
Location for plant.
► 1.Proximity to Raw Materials
2. Market Proximity
3. Transportation Infrastructure
4. Labor Availability and Costs
5. Regulatory Environment
6. Land and Utility Costs
7. Economic and Political Stability
8. Access to Technology and Innovation Hubs
9. Environmental Considerations
10. Competitor Presence
Factors influence Location planning

► Several factors influence this decision:

Market Accessibility: Proximity to target customers and distribution channels is crucial
for retail and service businesses.
Costs: Consideration of land, labour, utilities, and taxes. Balancing these costs with
potential revenue is essential.
Infrastructure: Availability and quality of transportation, utilities, and communication
networks impact operations and accessibility.
Competition: Assessing the presence and strength of competitors in the area helps
determine market saturation and differentiation opportunities.
► Legal and Regulatory Environment: Understanding zoning laws, building codes,
environmental regulations, and other legal factors is necessary to ensure compliance
and avoid future issues.
Factors influence Location planning cont.

► Workforce Availability: Access to skilled labor and workforce demographics

affect hiring and training costs and overall productivity.
Supplier Proximity: Close proximity to suppliers can reduce transportation costs,
lead times, and dependency risks.
Geographic Considerations: Natural factors such as climate, terrain, and natural
disasters can influence operations, logistics, and risk management.
Market Trends and Growth Potential: Analysing demographic trends, economic
indicators, and future development plans can help forecast demand and growth
opportunities.
Risk Assessment: Evaluating potential risks, such as political instability, crime
rates, and environmental hazards, is crucial for long-term viability and continuity
planning.
Subjective techniques used for facility location.
► Three subjective techniques used for facility location are
► Industry Precedence,
In the industry precedence subjective technique, the basic assumption is that if a
location was best for similar firms in the past, it must be the best for us
now.Industry precedence relies on the assumption that if a location has been
successful for similar firms in the past, it is likely to be advantageous for the current
business as well.
► Preferential Factor.
The preferential factor involves personal preferences or biases influencing the
location decision, often disregarding objective criteria such as cost-effectiveness or
market accessibility.
► Dominant Factor.
The dominant factor technique focuses on prioritizing a single critical factor that
significantly influences the location decision, often overriding other considerations.
 Location Planning factors- Factor Rating Method:

1.Identifying Factors: This method starts by identifying key factors that are
relevant to the organization’s objectives. These factors could include things like
transportation costs, labor availability, proximity to suppliers and markets, quality
of infrastructure, access to utilities, tax incentives, and so forth.
2. Assigning Weights: Once the factors are identified, each factor is assigned a
weight indicating its importance relative to the others. For example, if proximity to
markets is considered more important than labor costs, it would be given a higher
weight in the evaluation process.
3. Scoring Locations: Next, potential locations are evaluated based on each factor.
A scoring system is typically used to assess how well each location performs with
respect to each factor. This could be a numerical scale, such as 0 to 100, where
higher scores indicate better performance.
Location Planning factors- Factor Rating Method:Cont.

4. Calculating Total Scores: The scores for each factor are then
multiplied by their respective weights, and the products are summed to
obtain a total score for each location. This total score represents how well
each location aligns with the organization’s objectives, considering all the
factors that have been evaluated.

5. Selecting the Best Location: Finally, the location with the highest total
score is typically chosen as the most favourable option. This is the
location that best meets the organization’s needs and priorities, as
determined by the factor rating analysis.
► Benefits of Factor Rating Method
- Provides a systematic and structured approach to location planning.
- Allows for transparent evaluation and comparison of potential locations.
- Helps businesses prioritize factors based on their importance.
Limitations
- Subjectivity in assigning weights and ratings.
- Reliance on available data and assumptions.
- Need for periodic review and adjustment of factors and weights.
Location Planning factors-
Factor Rating Method:Cont.

► Example 1- A new medical facility, Healthcare, is to be located in

Delhi. The location factors, factor rating and scores for two potential
sites are shown in the following table. Which is the best location based
on factor rating method?
Location Planning factors-
Factor Rating Method:Cont.
Example 2- Five flags over Florida ,a U.S chain of 10 family –oriented
theme parks ,has decided to expand overseas by opening its first park
in Europe. It wishes to select between France and Denmark.

Sl no: Critical Success Weight France Denmark

factors
1 Labour availability 0.25 70 60

2 People to car ratio 0.05 50 60

3 Per capita income 0.1 85 80

4 Tax structure 0.39 75 70

5 Education and health 0.21 60 70

 Location Planning factors- Centre of Gravity Method:

1. Identifying Demand Points: In this method, the first step is to identify the locations of
demand points, such as customers, markets, or distribution centres. These demand points
could be represented as coordinates on a map.

2. Determining Volumes: For each demand point, the volume of goods or services
required is determined. This could be based on historical sales data, market projections, or
other relevant information.

3. Calculating Distance and Weighted Distance: The centre of gravity is calculated by

taking into account both the distances between the facility location and the demand points,
as well as the volumes associated with each demand point. The weighted distance is
calculated by multiplying the distance between the facility location and each demand
point by the volume associated with that demand point.
► Iterative Calculation: The centre of gravity is determined through an iterative
calculation process. Initially, an arbitrary location may be chosen for the
facility. Then, the weighted distances are calculated based on this initial
location. The location is then adjusted, and the process is repeated until the
centre of gravity stabilizes or converges to a specific point.
Selecting the Optimal Location: The final location identified as the centre of
gravity represents the optimal location for the facility based on minimizing
transportation costs. This location is ideally situated to serve the demand points
efficiently, taking into account both the distances and volumes associated with
each point.
These methods provide systematic approaches to location planning, allowing
organizations to make informed decisions based on various factors and
considerations.
► Benefits of Centre of Gravity Method
- Provides a quantitative approach to location planning based on spatial analysis.
- Helps identify the most efficient location for facilities or operations within a
distribution network.
- Allows for strategic decision-making to optimize transportation routes and
minimize costs.

Limitations
- Assumes uniform transportation costs and ignores factors such as traffic
congestion, road conditions, and mode of transportation.
- May not fully capture the complexities of market dynamics, customer preferences,
and regulatory requirements
Comparison of layouts
Systematic layout Design Procedure
► The Systematic Layout Design Procedure (SLP) is an
organized approach to layout planning developed by
Muther.
1. **Gathering Information**: Start by collecting all
relevant information such as the available space,
equipment needed, workflow requirements, safety
regulations, etc. This could involve site visits,
meetings with stakeholders, and data collection.
2. **Flow Analysis**: Analyse the flow of materials,
people, and information through the facility.
► 3. **Activity Analysis**: Break down the activities or
tasks that will be performed in the facility. This
could include manufacturing processes, storage
requirements, office tasks, etc.
SLP Cont.

► Relationship Diagram: Develop a relationship diagram

based on the flow and activity analysis. This diagram
illustrates the spatial relationships between different
activities and areas within the facility. For example,
you might identify that certain activities need to be
close together for efficiency, while others need to be
separated for safety reasons.
► Space-Relationship Diagram: Combine space
considerations with the relationship diagram to create
a space-relationship diagram. This involves determining
the space requirements for each activity and ensuring
that the layout meets those requirements while
maintaining optimal relationships between activities.
SLP Cont.

6. **Designing Alternative Layouts**: Using the

space-relationship diagram as a guide, design a number of
alternative layouts that meet the requirements and constraints
identified earlier. These layouts might vary in terms of the
arrangement of equipment, storage areas, etc.
7. **Evaluation and Modification**: Evaluate each alternative
layout based on criteria such as efficiency, safety, flexibility,
and cost. Consider practical limitations such as building
constraints or budget constraints. Modify the layouts as needed
based on the evaluation.
8. **Final Layout Selection**: Select the layout that best meets
the requirements and constraints identified in the earlier steps.
This layout will serve as the basis for the final design of the
facility.
By following the systematic layout design procedure, you can
ensure that the layout of the manufacturing facility is
well-planned, efficient, and meets the needs of the
organization.