Unit4
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  • 1. MANAGEMENT OF MACHINES AND MATERIALS (MS-5) UNIT 4 FACILITIES LOCATION R Gnyawali
  • 2. Need for Location Decisions
    • Marketing Strategy
    • Cost of Doing Business
    • Technological Development
    • Growth
    • Depletion of Resources
    4-
  • 3. Making Location Decisions
    • Decide on the criteria
    • Identify the important factors
    • Develop location alternatives
    • Evaluate the alternatives
      • Identify general region
      • Identify a small number of community alternatives
      • Identify site alternatives
    • Evaluate and make selection
    4-
  • 4. Weber’s Analysis
    • Based on Raw Materials
      • Ubiquities: Available Everywhere
      • Localized: Available in specific locations
        • Pure Materials: All material go into finished products
        • Gross Materials: A small fraction into finished product
    • If MI > 1, location near raw material
    • If MI < 1, location near market
    4-
  • 5. Steps in Location Decision
    • General Territory/ Regional Selection
      • Markets
      • Raw Material and Supplies
      • Transportation Facilities
      • Manpower Supply
      • Infrastructure
      • Legislation and Taxation
      • Climate
    4-
  • 6. Steps in Location Decision
    • Community Selection
      • Community Facilities
      • Community Attitudes
      • Waste Disposal
      • Ecology and Pollution
      • Site size
      • Topography
      • Transportation Facilities
      • Supporting Industries and Services
      • Land Cost
    4-
  • 7. Community Selection
    • City Location
    • Suburban Location
    • Rural Location
    4-
  • 8. Subjective Techniques
    • Industry Precedence
      • If some location was suitable for similar firms in the past, it must be suitable for us now.
    • Preferential Factor
      • Depending upon individual whims or preferences
      • Not much professional approach
    • Dominant Factor
      • Location of resource availability
      • Petroleum, Sugar, Cement Plants
    4-
  • 9. Qualitative Techniques
    • Equal Weights Method
    • Variable Weights Method
    • Weight-cum-Rating Method
    • Factor-Point Rating Method
    4-
  • 10. Qualitative Techniques
    • Equal Weights Method
    • Variable Weights Method
    • Weight-cum-Rating Method
    • Factor-Point Rating Method
    4-
  • 11. Equal Weight Method 4- Two refineries sites (A and B) are evaluated under the following factors with 0 to 10 points each factor. Best Site is A
  • 12. Qualitative Techniques
    • Equal Weights Method
    • Variable Weights Method
    • Weight-cum-Rating Method
    • Factor-Point Rating Method
    4-
  • 13. Variable Weight Method 4- Two refineries sites (A and B) are evaluated under the following variable points to each factor. Best Site is B
  • 14. Qualitative Techniques
    • Equal Weights Method
    • Variable Weights Method
    • Weight-cum-Rating Method
    • Factor-Point Rating Method
    4-
  • 15. Weight-cum-Rating Method 4- Two refineries sites (A and B) are evaluated by assigning following weights and rating points (0-10). Best Site is A
  • 16. Qualitative Techniques
    • Equal Weights Method
    • Variable Weights Method
    • Weight-cum-Rating Method
    • Factor-Point Rating Method
    4-
  • 17. Factor Point Rating Method 4- Two refineries sites (A and B) are evaluated by assigning following scales and ratings. Best Site is B
  • 18. Semi-Quantitative Techniques 4- Composite Measure Method
  • 19. Composite Measure Method 4-
  • 20. Composite Measure Method 4- Best Site is B
  • 21. Break-Even Analysis 4- Cost/Revenue (‘000) Sales Volume (‘000)
  • 22. Quantitative Techniques
    • Median Model
    • Gravity Method
    • Composite Location Measure Model
    • Bridgeman’s Dimensional Analysis
    4-
  • 23. Median Model
    • Number of Loads
    • S1 to New = 60
    • S2 to New = 70
    • New to D1 = 40
    • New to D2 = 50
    4- Two Suppliers S1 and S2 Two Distributors D1 and D2 Location of New Plant??? D2 (60,70) D1 (40,60) S1 (10,50) S2 (30,10)
  • 24. Median Model 4-
  • 25. Gravity Model
      • Several Z-Mobile showrooms are located according to the following grid which represents coordinate locations for each showroom
    4- Question: What is the best location for a new warehouse/ temporary storage facility considering only distances and quantities sold per month? X Y A (100,200) D (250,580) Q (790,900) (0,0)
  • 26. Gravity Model 4- You then compute the new coordinates using the formulas:
  • 27. Gravity Model 4- You then take the coordinates and place them on the map: 1. Now Calculate the total transportation cost per month. 2. Also solve this problem using Median model and compare the transportation costs. X Y A (100,200) D (250,580) Q (790,900) (0,0) Z New location of facility Z about (443,627)
  • 28. Comparison of Service and Manufacturing Considerations 4- Manufacturing/Distribution Service/Retail Cost Focus Revenue focus Transportation modes/costs Demographics: age,income,etc Energy availability, costs Population/drawing area Labor cost/availability/skills Competition Building/leasing costs Traffic volume/patterns Customer access/parking
  • 29. Globalization
    • Facilitating Factors
      • Trade agreements
      • Technology
    • Benefits
      • Markets
      • Cost savings
      • Legal/ Regulatory
      • Financial
    4-
    • Disadvantages
      • Transportation costs
      • Security
      • Unskilled labor
      • Import restrictions
      • Criticisms
    • Risks
      • Political
      • Terrorism
      • Legal
      • Cultural
  • 30. Discussion Questions
    • Different organizations are considering your home town as a potential location for one of the following:
      • A medical research centre
      • A soft-drink producer
      • A steel plant
      • A software producer
      • A paper mill
      • An automobile repair shop
      • A distribution warehouse
      • A modern shopping mall
      • Select any one of the above four and systematically evaluate the relevant location factors.
    • Why is facility location important? Discuss different factors important for locating any bread manufacturing unit. Make relevant assumptions.
    4-
  • 31. Discussion Questions
    • Discuss briefly, the community factors and regional factors affecting a company’s location decision. Give suitable examples.
    • Why are new facilities built on sites that are far away from the companies’ present sites? Justify your answer with suitable examples.
    • How is the problem of locating an emergency public utility such as a fire station different from the location of an automobile service station? Discuss with suitable examples.
    4-
  • 32. End of Unit 4 UNIT 5: Facilities Layout