The document discusses facility location analysis. It defines facilities as buildings where people, materials, and machines come together for a stated purpose, such as manufacturing or service provision. Proper facility management is important to achieve goals while satisfying objectives. Location analysis determines the best geographic site for a firm's operations based on factors like costs, market access, and plant design impacts. Quantitative techniques in location analysis include cost-benefit analysis and break-even analysis to evaluate locations and minimize total costs and maximize profits. Qualitative factors considered are availability of resources, climate suitability, and integration with other companies. Multiple location analysis methods are outlined including weighted factor rating.

1. Aijaz Ahmed Rather
I.K Gujral P.T University

2. Facility can be broadly defined as
buildings where People , Material, and
Machines come together for a stated
purpose - Typically to make a tangible
product or provide service.
The Facility must be properly managed to
achieve its stated purpose while satisfying
several objectives.

3. Heavy manufacturing facilities.
Light industry facilities.
Retail and Service facilities.

4. Process of determining
geographic sites for a firm’s
operations .

5.  Location determines operating & capital
costs .
 Allocation of capacity to respective market
area.
 Impact on plant design.
 Tax benefits.

6.  Determine firm’ profitability and long term
survival.
 Delivery of products to customers in service
sector.
 Proximity to suppliers and markets.

7.  Availability of Raw Materials.
 Nearness to potential Market.
 Nearness to source of operating requirements.
 Supply of Labour.
 Transport and communication facilities.
 Integration with other companies.
 Suitability of land & climate.
 Safety requirements.

8.  The factor must be sensitive to location.
 The factor must have high impact on the
company 'ability to meet its goals.

9.  Evaluation of various geographic areas and
selection of optimum area.
 Choice of particular site.

10.  Objective is to reduce total cost and
maximize profits.
 Total Cost= Fixed cost+ Variable cost

11. Location
analysis
Quantitative
analysis
Qualitative
Analysis

12.  Appropriate for choice of location for single
plant.
 Based on location cost summary chart.
 A comparative chart of total costs involved in
setting up a plant of desired size is prepared.

13. 0
2
4
6
8
10
12
14
Category 1 Category 2 Category 3 Category 4
Series 3
Series 2
Series 1
Total
Cost
Location

14.  Choice of location depends upon
minimization of operational cost.
 Operational costs are linearly related to the
distance involved.
 Transport costs associated with various
alternatives as a basis of location decisions.

15. Specificatio
ns of
subassembl
ies/product
Quantit
y
moved/
year
Transpo
rt cost
/unit
k.m. in
Location
cost
factor
(ii)*(iii)
Location
grid
Row Col
E F
(IV)*E (IV)*F
X 7000 10 70000 8 8 560000 560000
Z 6000 8 48000 11 11 528000 528000
W 5000 15 75000 1 11 75000 825000
P 4000 15 60000 15 15 900000 900000
Total 25300 Total 2063000 281300

16.  Least cost Grid Row=2063000 = 8.16
253000
Least Cost Grid column=28130000 = 11.11
253000

17.  Used to contrast the objective cost factors of
individual locations.
 It involves contrast between operating costs
and value of capital required at different
levels of output.

18.  In location analysis , a location at which the
break even volume is low is preferred.
 FC and VC may be different at different
locations options and have different values
of BE.

19.  List the most relevant factors in location
decision.
 Rate each factor from 1 (very low) to 5 (very
high) acc. to relative importance.
 Each location is rated 1 (very low) to 5 (very
high) acc. to its merits on each
characteristics.
 Finally factor rating is multiplied by location
rating for each factor and sum of products
yield the total score.

20. Factor Rating
Close proximity to markets 3
Close proximity to suppliers 5
Transportation facilities 4
Basic Amenities 2
Acceptance of leather factory by local
people
4
Availability of cheap land 3
Low construction cost 1
Easy availability of cheap & skilled labor 3

21. FACTOR FACTOR
RATING
LOCATION RATINGS
LUCKHNOW NOIDA GORAKHPUR
Proximity to markets 3 4 (12) 6 3
proximity to suppliers 5 10 (50) 5 4
Transportation facilities 4 9 (36) 10 5
Basic Amenities 2 6 (12) 7 6
Acceptance of leather factory by
local people
4 8 ( 32) 3 7
Availability of cheap land 3 7 (21) 2 8
Low construction cost 1 5 (5) 1 6
Easy availability of cheap & skilled
labor
3 3 (9)
177
8
140
4
131

22. It is a mathematical model used to
evaluate locations based on proximity
factors.
The objective is to set a location that
minimizes the total weighted loads moving
in and out of the facility.