Facility Location and Layout

(Part-1)

Prof. P. Acharya
Professor, OSCM Area
IIM Mumbai

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 Facility Location and Layout
Comes under the category of Strategic Decision

Product Facility Facility

Location Layout

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Hierarchy of Site Selection Decision
Region

Community/State

Site

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 Facility Location
Factors

Specific Locational
General Locational Factors Factors

For
Controllable Uncontrollable For Service
Manufacturing
Factors Factors Organisations
Organisations

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 General Locational Factors
1. Controllable factors
➢ Proximity to market
➢ Supply of raw material
➢ Transportation facility
➢ Infrastructure availability
➢ Labour and wages

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2. Uncontrollable Factors
➢ Government policy
➢ Climate condition
➢ Supporting industries and services
➢ Community and labour culture

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 Economics of Site Selection

1. Break Even Analysis

2. Transportation Method

3. Factor Rating Method

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Site Selection: Rural vis-à-vis Urban
Category Rural Urban
Transport/Commn.
× ✓
Market
× ✓
Labour Availability
✓ ×
Labour Quality
× ✓
Land
✓ ×
Scope for Future
Expansion
✓ ×
Taxes
✓ ×
Power/Infrastrucure
× ✓
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 Facility Layout
• Ireson’s Definition: Analysis and proposal for the
arrangement of the physical facilities after the decision
on the site, production processes and equipments
have been made

• Moore’s Definition: It is the act of planning and

optimum arrangement of industrial facilities including
personnel/equipment/storage space/material handling
equipments and all other supporting services with the
design of the best structure to contain these facilities.

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 Objectives of the Plant Layout
1. To minimise material handling (time/money)

2. To effect smooth workflow through the plant by

removing bottlenecks and points of congestion

3. Effective utilisation of cubic space

4. Safety and convenience for workers

5. A flexible arrangement that can adapt to changes in

product and/or process design.

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 Types of Plant Layout

1. Product Layout or Line Layout

2. Process Layout or Functional Layout
3. Combination Layout
4. Fixed Position Layout

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 Product Layout
Various operations on a product are performed in
a sequence and machines are placed
accordingly along the flow line;

i.e. Machines are arranged in the sequence in

which the given product will be operated upon.

The layout is product specific.

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 Advantages of Product Layout
1. Since the layout corresponds to the sequence of operations,
smooth and logical flow lines result
2. Since the work from one machine is fed directly to the next,
small in-process inventory results. Hence less space is
required for WIP and temporary storage
3. Total production time/unit is small
4. Since machines are so located as to minimise distance
between consecutive operations, material handling is reduced
5. Production, planning and control is simpler

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 Disadvantages
1. A breakdown in one machine may lead to a
complete stoppage in the line that follows
2. Since layout is product specific, the change product
necessitates entire change in layout
3. The pace in production is determined by the
slowest machine in the line
4. Comparatively high investments are required as
some machines (not fully utilised) are distributed
along the line.
5. Overall a rigid and costly layout

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