The document discusses factors to consider when selecting a location for a new manufacturing plant. It analyzes three potential locations - Rudrapur, Dehradun, and Baddi. Key criteria include proximity to markets and suppliers, costs, and competitiveness. Calculations like factor rating, cost-volume analysis, and center-of-gravity are applied. Baddi is selected as it has lower labor costs, shorter lead times for raw materials and deliveries, and opportunities for new business partners located there.

1. LOCATION SELECTION :
A CASE STUDY

2. Location selection –
Manufacturing Unit
PRESENTED BY : SHASHANK SHEKHAR SINGH
(2015HB79013)

3. Our Firm -
 Despite being a new entrant in this domain, we are successfully offering
a comprehensive range of Extruded Aluminum Heat Sinks.
Established in 2013.
 Our firm is amongst the distinguished manufacturers and supplier of
an extensive range of Extruded Heatsinks.
 We have developed an advanced manufacturing unit which is well
equipped with all requisite tools and latest machinery which enable us to
meet the bulk requirements of our clients within specified time frame.
 Our entire unit is spread across a vast area of 25000 square feet. Our
team of professions work with the complete dedication to offer our
clients a quality range of product which is at par with their requirements.
 Our customers are Schneider and Luminous situated in Rudrapur and
Baddi respectively.
 Our RM suppliers –Valco and Indo are in Chandigarh and Bhiwadi.

4. • With time the demand of our customers
changes and due to this we sometimes feel that
we are lagging behind in fulfilling the
commitments and to satisfy their needs.
• To fulfill the commitments , we have decided
to establish a plant.
• The locations that we are thinking of
considering are RUDRAPUR,DEHRADUN,
BADDI.

5. Factors That Affect Location Decisions
 Country Decisions
• Government rules, attitudes, stability, incentives
• Cultural and economic issues
• Location of markets
• Labor availability, attitudes, productivity, costs
• Availability of supplies, communications, energy
• Exchange rates
 Region/Community Decisions
• Corporate desires
• Attractiveness of region (culture, taxes, climate, etc…)
• Labor availability, costs, attitudes towards unions
• Cost and availability of utilities
• Environmental regulations of state and town
• Government incentives
• Proximity to raw materials and customers
• Land/construction costs

6. Factors That Affect Location Decisions (cont.)
 Site Decisions
• Site size and cost
• Air, rail, waterway systems
• Zoning restrictions
• Nearness of services/supplies needed
• Environmental impact issues

7. Costs: Tangible Vs. Intangible
 Tangible costs – those that are readily identifiable and precisely measured
• Utilities
• Labor
• Material
• Taxes
• Depreciation
• Other costs that accounting can easily identify
 Intangible costs – not easily quantifiable
• Quality of education
• Public transportation facilities
• Community attitudes toward the industry and the company
• Quality and attitude of prospective employees
• Climate

8. Proximity To Markets
 Schneider Electric is located in Rudrapur (Uttarakhand) which is near to our existing
plant.
• Quicker transportation and lesser lead time in completing purchase orders.
 Luminous Power Technology is located in Baddi (Himachal Pradesh) 600km approx.
• Longer transit time leads greater lead time in completing purchase orders.
Proximity To Suppliers
 Raw material supplier is located in Chandigarh 500km from existing plant location.
 Perishability:- Aluminum is softer than other metals, there is a threat of getting
damaged while transporting from longer distance.
 Transportation costs:- Higher due to long travelling distance.
 Inventory:- Because of longer transit time we have to keep more inventories and
buffer stocks..

9. Proximity To Competitors
 Amset (KN interplast)-Bahadurgarh, Haryana-
Senior most in this field and well established.
 Saitech-Noida, UttarPradesh- Growing.
 Naaz Metal and components-Noida,
Uttarpradesh.
 V.P Electronics-New Delhi.
 Micrologic- Gurgaon,Haryana
Baby
Boomers

10. Factor Rating Method
 Identify important factors
 Weight factors (0.00 - 1.00)
 Subjectively score each factor (0 - 10)
 Sum weighted scores

12. Cost-Volume Analysis
 Determine fixed and variable costs for each location
 Plot total costs for each location
 Select location with lowest total cost for expected production volume
-must be above break-even

15. Center-of-Gravity Method
x - coordinate =
∑dixQi
∑Qi
i
i
∑diyQi
∑Qi
i
i
y - coordinate =
where dix = x-coordinate of location i
diy = y-coordinate of location i
Qi = Quantity of goods moved to or from
location i

18. Conclusion:
 We are selecting Baddi (Himachal Pradesh) as our new business
location reason being:-
1) Less labor cost.
2) Lesser lead time in procuring Raw material, as our supplier is located just
30km apart at Chandigarh.
3) Scope of making new business partners who manufacture UPS and Inverter
in Baddi named SUKAM and MICROTEK.
4) It will take minimum transportation time and cost in delivery of consignments
to our existing customer LUMINOUS POWER TECHNOLOGY.
5) JIT (Just In Time) can applicable easily and could be followed flawlessly.
6) Close proximity makes it far easier to travel to them for supplier
development and contract management purposes, as well as for site
inspections