Unit4

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Unit4

  1. 1. MANAGEMENT OF MACHINES AND MATERIALS (MS-5) UNIT 4 FACILITIES LOCATION R Gnyawali
  2. 2. Need for Location Decisions <ul><li>Marketing Strategy </li></ul><ul><li>Cost of Doing Business </li></ul><ul><li>Technological Development </li></ul><ul><li>Growth </li></ul><ul><li>Depletion of Resources </li></ul>4-
  3. 3. Making Location Decisions <ul><li>Decide on the criteria </li></ul><ul><li>Identify the important factors </li></ul><ul><li>Develop location alternatives </li></ul><ul><li>Evaluate the alternatives </li></ul><ul><ul><li>Identify general region </li></ul></ul><ul><ul><li>Identify a small number of community alternatives </li></ul></ul><ul><ul><li>Identify site alternatives </li></ul></ul><ul><li>Evaluate and make selection </li></ul>4-
  4. 4. Weber’s Analysis <ul><li>Based on Raw Materials </li></ul><ul><ul><li>Ubiquities: Available Everywhere </li></ul></ul><ul><ul><li>Localized: Available in specific locations </li></ul></ul><ul><ul><ul><li>Pure Materials: All material go into finished products </li></ul></ul></ul><ul><ul><ul><li>Gross Materials: A small fraction into finished product </li></ul></ul></ul><ul><li>If MI > 1, location near raw material </li></ul><ul><li>If MI < 1, location near market </li></ul>4-
  5. 5. Steps in Location Decision <ul><li>General Territory/ Regional Selection </li></ul><ul><ul><li>Markets </li></ul></ul><ul><ul><li>Raw Material and Supplies </li></ul></ul><ul><ul><li>Transportation Facilities </li></ul></ul><ul><ul><li>Manpower Supply </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><li>Legislation and Taxation </li></ul></ul><ul><ul><li>Climate </li></ul></ul>4-
  6. 6. Steps in Location Decision <ul><li>Community Selection </li></ul><ul><ul><li>Community Facilities </li></ul></ul><ul><ul><li>Community Attitudes </li></ul></ul><ul><ul><li>Waste Disposal </li></ul></ul><ul><ul><li>Ecology and Pollution </li></ul></ul><ul><ul><li>Site size </li></ul></ul><ul><ul><li>Topography </li></ul></ul><ul><ul><li>Transportation Facilities </li></ul></ul><ul><ul><li>Supporting Industries and Services </li></ul></ul><ul><ul><li>Land Cost </li></ul></ul>4-
  7. 7. Community Selection <ul><li>City Location </li></ul><ul><li>Suburban Location </li></ul><ul><li>Rural Location </li></ul>4-
  8. 8. Subjective Techniques <ul><li>Industry Precedence </li></ul><ul><ul><li>If some location was suitable for similar firms in the past, it must be suitable for us now. </li></ul></ul><ul><li>Preferential Factor </li></ul><ul><ul><li>Depending upon individual whims or preferences </li></ul></ul><ul><ul><li>Not much professional approach </li></ul></ul><ul><li>Dominant Factor </li></ul><ul><ul><li>Location of resource availability </li></ul></ul><ul><ul><li>Petroleum, Sugar, Cement Plants </li></ul></ul>4-
  9. 9. Qualitative Techniques <ul><li>Equal Weights Method </li></ul><ul><li>Variable Weights Method </li></ul><ul><li>Weight-cum-Rating Method </li></ul><ul><li>Factor-Point Rating Method </li></ul>4-
  10. 10. Qualitative Techniques <ul><li>Equal Weights Method </li></ul><ul><li>Variable Weights Method </li></ul><ul><li>Weight-cum-Rating Method </li></ul><ul><li>Factor-Point Rating Method </li></ul>4-
  11. 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. 12. Qualitative Techniques <ul><li>Equal Weights Method </li></ul><ul><li>Variable Weights Method </li></ul><ul><li>Weight-cum-Rating Method </li></ul><ul><li>Factor-Point Rating Method </li></ul>4-
  13. 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. 14. Qualitative Techniques <ul><li>Equal Weights Method </li></ul><ul><li>Variable Weights Method </li></ul><ul><li>Weight-cum-Rating Method </li></ul><ul><li>Factor-Point Rating Method </li></ul>4-
  15. 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. 16. Qualitative Techniques <ul><li>Equal Weights Method </li></ul><ul><li>Variable Weights Method </li></ul><ul><li>Weight-cum-Rating Method </li></ul><ul><li>Factor-Point Rating Method </li></ul>4-
  17. 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. 18. Semi-Quantitative Techniques 4- Composite Measure Method
  19. 19. Composite Measure Method 4-
  20. 20. Composite Measure Method 4- Best Site is B
  21. 21. Break-Even Analysis 4- Cost/Revenue (‘000) Sales Volume (‘000)
  22. 22. Quantitative Techniques <ul><li>Median Model </li></ul><ul><li>Gravity Method </li></ul><ul><li>Composite Location Measure Model </li></ul><ul><li>Bridgeman’s Dimensional Analysis </li></ul>4-
  23. 23. Median Model <ul><li>Number of Loads </li></ul><ul><li>S1 to New = 60 </li></ul><ul><li>S2 to New = 70 </li></ul><ul><li>New to D1 = 40 </li></ul><ul><li>New to D2 = 50 </li></ul>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. 24. Median Model 4-
  25. 25. Gravity Model <ul><ul><li>Several Z-Mobile showrooms are located according to the following grid which represents coordinate locations for each showroom </li></ul></ul>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. 26. Gravity Model 4- You then compute the new coordinates using the formulas:
  27. 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. 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. 29. Globalization <ul><li>Facilitating Factors </li></ul><ul><ul><li>Trade agreements </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><li>Benefits </li></ul><ul><ul><li>Markets </li></ul></ul><ul><ul><li>Cost savings </li></ul></ul><ul><ul><li>Legal/ Regulatory </li></ul></ul><ul><ul><li>Financial </li></ul></ul>4- <ul><li>Disadvantages </li></ul><ul><ul><li>Transportation costs </li></ul></ul><ul><ul><li>Security </li></ul></ul><ul><ul><li>Unskilled labor </li></ul></ul><ul><ul><li>Import restrictions </li></ul></ul><ul><ul><li>Criticisms </li></ul></ul><ul><li>Risks </li></ul><ul><ul><li>Political </li></ul></ul><ul><ul><li>Terrorism </li></ul></ul><ul><ul><li>Legal </li></ul></ul><ul><ul><li>Cultural </li></ul></ul>
  30. 30. Discussion Questions <ul><li>Different organizations are considering your home town as a potential location for one of the following: </li></ul><ul><ul><li>A medical research centre </li></ul></ul><ul><ul><li>A soft-drink producer </li></ul></ul><ul><ul><li>A steel plant </li></ul></ul><ul><ul><li>A software producer </li></ul></ul><ul><ul><li>A paper mill </li></ul></ul><ul><ul><li>An automobile repair shop </li></ul></ul><ul><ul><li>A distribution warehouse </li></ul></ul><ul><ul><li>A modern shopping mall </li></ul></ul><ul><ul><li>Select any one of the above four and systematically evaluate the relevant location factors. </li></ul></ul><ul><li>Why is facility location important? Discuss different factors important for locating any bread manufacturing unit. Make relevant assumptions. </li></ul>4-
  31. 31. Discussion Questions <ul><li>Discuss briefly, the community factors and regional factors affecting a company’s location decision. Give suitable examples. </li></ul><ul><li>Why are new facilities built on sites that are far away from the companies’ present sites? Justify your answer with suitable examples. </li></ul><ul><li>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. </li></ul>4-
  32. 32. End of Unit 4 UNIT 5: Facilities Layout

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