plant location

1. LECTURE - 2
Plant Location

2. Plant Location
 Plant Location can be defined as, the
determination of that location which when
considering all factors will provide minimum
cost delivered to the customer.
 Plants cannot be easily shifted to other
place & an error of judgment in the
selection of site can be very expensive to
the organisation.

3.  In general, a plant should be located at
a place where the inhabitants are
interested in its success, the product
can be sold profitable & the production
cost is minimum.

4. Need for Selection may arise :
 Starting new factory
 Expansion of existing plant
 Re-location of existing plant to some
other place.

5. General specification for selecting a
site
1. Description of building to be
constructed (including sketch).
2. Size of plot.
3. Necessary railway, highway &
waterway facilities.
4. Min. size of water mains, gas line &
power line.
5. Volume of ground water to be utilized

6. 6. Sewerage & overflow disposal
requirements
7. Safety area for offensive odors, noise,
smoke etc.
8. Provisions for sprinkler pressure
(gravity tank or local waterman)

7. Steps in Location
 Within the country or outside.
 Selection of the region.
 Selection of the locality or
community.
 Selection of exact site.

8. Deciding on domestic or
international location.

9. Selection of the Region
 Availability of raw material
 Nearness to market
 Availability of power
 Transport Facilities
 Suitability of climate
 Government policy
 Competition between states

10. Selection of Community
 Availability of Labour
 Civic amenities for workers
 Existence of complementary &
competing Industries
 Finance & Research Facilities
 Availability of Water & Fire Fighting
Facilities
 Local Taxes & Restriction

11. Selection of Site
 Soil, Size, topography
 Disposal of waste

12. Selection of site
Urban Vs. Rural
 Availability of local market
 Labour
 Transport facility
 Allied industries
 Cost of Land
 Restriction on construction
 Municipal & public Utility services

13.  Postal & communication Services
 Rate of taxes
 Cost of Labour
 Availability of Facilities
 Labour Turnover
 Trade union Movement
 Training Facility
 Transport facility

14.  Storage Facility (including Cold
storage)
 Government policy

15. Location Models
 Factor Rating method.
 Point Ranking Method.
 Quantitative Factor Analysis.
 Break even Analysis.

16. Location Information can be
obtained from:
 Ministry of Industrial Development
 Institute of Public Opinion
 Techno economic survey of state
govts (TES)
 National Council of Applied Economic
Research
 Indian Federation of Chamber of
commerce

17.  State Chambers of Commerce
 Dept of industry in state govt.
 Survey of India Maps.