plant location, ideal location and some other contents

1. Plant Location
By: Muzhgan Athaee
Anshi Patle

2. Introduction
Production is an analysis comprising of technical, financial,
economic and market study before laying down a
comprehensive business plan.
For implementation of this plan, a manager has to take various
crucial decisions regarding location of business as a plant
should be located at an ideal place where both the cost of
production and distribution is minimum.

3. Objectives
• Describe the concepts of plant location and plant layout.
• Identify the various factors to be considered for selection of
plant location from state/area to the specific site.
• Distinguish among the alternative patterns of plant layout.
• Discuss the various factors influencing the choice of an initial
layout and its subsequent modification .

4. What is Plant location
• Plant location refers to the choice of region and the selection of a particular
site for setting up a business or factory.
• It is a strategic decision that cannot be changed once taken.
• If at all changed only at considerable loss, the location should be selected as
per its own requirements and circumstances. Each individual plant is a case in
itself.

5. Definitions of Plant Location
• According to Kimball: The most advantageous location is that at which the
cost of gathering material and fabricating it plus the cost of distributing the
finished product to the customers will be the minimum.
• As per Spriegel and Lanshurg: PL is often the result of a compromise
among conflicting social, economic, governmental and geographic
consideration.
• According to R.C.Davis: PL is the function where the plant should be located
for maximum operating economy and effectiveness.

6. Need and Importance of Plant Location
• Efficient and economical working of the business unit depends on its
suitable site.
• Appropriate decision regarding location of the business unit helps in the
establishment of the firm with all the conveniences, smoothly, efficiency.
• Wrong or defective location leads to wastage of resources, efforts and talents
with consequent uncertainly in result.

7. What is an ideal location?
• Businessman should try to make an attempt for optimum or ideal location.
• An ideal location may not, by itself, guarantee success but it certainly
contributes to the smooth and efficient working of the organization.
• It is the place of maximum net advantage or which gives lowest unit cost of
production and distribution.
• For achieving this objective, small-scale businessperson can make use of
locational analysis for this purpose.

8. • Locational analysis is a dynamic process where entrepreneur analyses and
compares the appropriateness or otherwise of alternative sites with the aim
of selecting the best site for a given enterprise.
• It consists:
• Demographic Analysis
• Trade Area Analysis
• Competitive Analysis
• Traffic analysis
• Site economics
LOCATIONAL ANALYSIS

9. • Demographic Analysis: It involves study of population in the area in terms of
total population in NO, age composition, per capita income, educational level,
occupational structure etc.
• Trade Area Analysis: It is an analysis of the geographic area that provides
continued clientele to the firm.
• Competitive Analysis: It helps to judge the nature, location, size and quality of
competition in a given trade area.
• Traffic analysis: The traffic analysis aims at judging the alternative sites in terms of
pedestrian and vehicular traffic passing a site.
• Site economics: Alternative sites are evaluated in terms of establishment costs and
operational costs under this.

10. 0

11. Factors Effecting Plant Location
Primary Factors
• Supply of Raw-Materials
• proximity to Markets
• Availability of Labour
• Transport Facilities
• Supply of Power, Fuel & Water
• Finance or Money or Capital
Secondary Factors
• Natural Factors or Suitability of Climate
• Political Factors
• Government or State Aid and Subsidies
• Personal and Historical Factors
• Momentum of an Early Start
• Suitability to Decentralisation

12. Thank You!