The document outlines the importance of facility location planning in operations strategy, emphasizing optimal placement to minimize transportation costs and its critical role for businesses. It discusses various strategies for managing multiple facilities, including separate facilities for diverse products, geographical areas, and processes, with examples from companies like ICICI, Pepsi, and Coca-Cola. Additionally, it highlights factors affecting facility location planning, such as power supply, government policy, labor availability, and transportation facilities, as well as considerations for establishing foreign operations.

1. Prepared By,
Mr. Nishant Agrawal
Facility Location Planning

2. Session Outline
 What is facility location ?
 Operations Strategies for Multiple Facilities
 Factors affecting Facility Location Planning
 Locating Foreign Operations Facilities

3. Facility location / location analysis / k-center
problem
 It is a branch of operations research and computational
geometry concerned with the optimal placement of facilities
to minimize transportation costs .
 The facility location decision is very important for big
business house
 Wrong location of facility may lead to failure of the

4. Operations Strategies for Multiple
Facilities
Strategies
Facilities
Different
Product /
Service
Different
Geographical
Area
Different
Process

5. Separate Facilities for Different Product / Service
 Companies which are into diversified product / service ranges prefer to
have separate facilities for each of these.
 Each facility take care entire population. This is done to avoid confusion
 Ex. ICICIC which is into banking , insurance , mutual funds has separate
network of office for each of these segments.
Separate Facilities to serve different geographical areas
 Ex. Pepsi and Coca Cola offer a perfect example of this strategy. Both
these companies have bottling plants scattered all over the country.
 This strategy reduce overall transportation costs. Prompt actions can be
taken to deal with sudden changes in demand.
 Ex. Banks, courier services

6. Separate Facilities for Different Processes
 Many color TV manufacturers have separate facilities for manufacturing
pictures tubes.
 Reliance which are into backward integration. Which manufacture their own
raw materials

7. Factors affecting Facility Location Planning
Facility
Location
Planning
Availabilit
y of
power
supply
Governmen
t Policy
Environmen
t and
Community
Easy
availability
of cheap
land
Low
construction
cost
Availability
of cheap
labor
Good
Transport
ation
facilities

8. Locating Foreign Operations Facilities
Facility
Location
Planning
Trade
Barriers
Internationa
l Customers
Internationa
l
Competition
s
RegulationsLow Costs
Incentives
Good
Transport
ation
facilities

9. Assignments
Q.1) Explain the Factors affecting Facility Location Planning.
OR
What do you understand by facility Location? If you want to set up a Chemical
manufacturing plant anywhere in Gujarat, what are the factors which you will consider to
choose the location for your plant explain in detail?
OR
If you want to set up a Power Plant, what are the factors will you consider before selecting
the location?
OR
Suppose you are working as a turnkey project consultant. One of your clients wants
guidance in selecting facility location for his new fast-food restaurant. Guide your client.
Q. 2) Discuss the pros and cons for a company considering a foreign location for its operations