PLANT LOCATION

Introduction:
The location where firms set up their operation is simply called as plant location.
All the manufacturing and service organizations carefully plan where they should locate
their plants and service facilities because location will have a serious affect on the
success of an organization. Firms conduct plant location analysis where they evaluate
different locations and finally choose an optimum location to start their operations.
Plant location is a strategic decision several factors influence this decision. The
main objective of any business is to optimize its cost and revenue that is, minimize its
costs and maximize its returns. The degree of significance for the selection of location
for any enterprise mainly depends on its size and nature large scale industries requiring
huge amount of investment there are many considerations other than the local demand
in the selection proper plant location these plants cannot be easily shifted to other place
and an error of judgment in the selection of site can be vary expensive to the
organization. However, small-scale industry mainly selects the site where in accordance
with its capacity; the local market is available for its products. It can easily shift to
other place when there is any change in the market.
Importance:
Selection of a plant location is a strategic decision for any organization. Therefore, it
has to be made after considering all the factors which have a bearing on it. Location
decisions are important for several reasons.
1. The location of a plant will fix the production technology and cost structure.
2. The significance of plant location depends on the size and nature of the business.
3. The location of the facility affects the companys ability to serve its customers
quickly and conveniently.
Factors affecting plant location:1) Closeness to raw material:
Normally the proportion of raw material cost to the cost of production is
significant for every product. If the plant is located close to supply points of the raw
material, the cost of procurement can be minimized, particularly if the raw material is
fragile, perishable, bulky or heavy.
Ex:- Rice mills are located near by paddy fields.
2) Nearness to the markets:
If the plant is located close to the markets, the cost of transportation can be
minimized. This also helps the producers to have direct knowledge of the requirements
of the customers. The knowledge about the profiles of customer segments enables the
plant to mould its sales strategies accordingly.
3) Transportation facilities:
The five basic modes of physical transportation are air, road, rail, water and
pipeline. Firms consider relative costs, convenience and suitability of each mode and
then select the transportation method.
Ex:- Exporters may choose a location near to a seaport or airport.
4)Availability of labour:
The availability of labour and skills is one of the important factors in production. Labour
may be readily available in some areas than in other areas. Availability of skilled and
unskilled in the required proportion in one area is usually not possible. Firms that
emphasise more on technology require skilled people and so prefer a location where the
skilled people are available and vice versa.

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5) Availability of power and fuel:

Coal, electricity, oil and natural gas are the important sources of power in the
industries.
Ex: Tata iron and steel industry is established near the coalmines of Bihar.
6) Climatic conditions:
Climatic conditions largely affect certain production processes and also the efficiency of
the employees.
Ex: Textile mills require moist climate that why these plant located at Mumbai and
Ahmedabad.
7)Availability of water:
Water is used in industries for processing as in paper in chemical industries, for
generation of power in hydroelectric power, plants and also required for drinking
sanitary purpose also.
8) Ancillary industries:
Many industries such as processing and assembly industries are not producing al the
parts of their product but purchase some of the parts from ancillary industries
producing it.
9) Financial and other aids:
For the development of backward regions central as well as state government provide
certain incentives and facilities such as cashsubsides, concession financial assistance,
land, power and other facilities at cheaper rates, tax concession etc.
10) Natural and climatic factors:
In some cases, location of industry is simply the result of certain naturalfactors.
Shipbuilding is located in vishakapatnam and Bombay as these are
deep waterharbours, besides having well-developed markets for labour, raw material and
machinery in its neighbourhood.
11) Availability of amenities:
Locations with good external amenities such as housing, shops, community services,
communication systems etc are more attractive than those located in the remote
areas.
12) Availability of services:
Electricity, water, gas, drainage, and disposal of waste are some of the important
services that need to be considered while selecting a location.
13) Safety requirements:
Some units such as nuclear power stations and other chemical and explosive factories
may present potential threat to the surrounding neighborhood. So firms should ensure
that such units are located in remote areas where the damage will be minimum in case
of an accident.
14) Political interference:
This applies more in case of public enterprises, many a time, political considerations
over ride the economic rational in assigning an industry to a particular location.
15) Site cost:
The management of the firm should ensure that the cost of the site is reasonable for
the benefits that it is going to provide.
Concept of Weber Theory:

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Alferd Weber, an eminent German economist gave a theory on industrial location.

This was published in 1909 in German language and was translated into English in 1929
and was published by Carl Joachim Friedrick. Webers effort was first systematic
approach towards the industrial location.
He divided the factors influencing location into two broad categories viz.,
(a) Primary factors influencing the distribution of industrial units over the different
regions. These are also referred as regional factors.
(b) Secondary factors relating to the redistribution of industry from the original regions
(or become cause of concentration of industry in one particular region).
Weber referred these factors as agglomerating and deglomerating factors.
Agglomerating factors refer to the advantages of the industries in a particular region in
the form of specialised labour, centralised purchases, uniform production policies and
lesser cost of production etc.
Deglomerating factors relate to various demerits associated with concentration of
industries in a particular region e.g. unhealthy competition, rise in local taxes,
congestion and housing problems etc. In formulating this theory, Weber further
analysed that certain factors like depreciation, rent and interest etc. remain the same
and do not have any bearing on the location of a business unit in different regions.
He further remarked that cost of raw material and cost of labour are two important
constituents which considerably affect the location of an industrial unit in different
regions. According to Weber, cost of transporting the raw material and finished products
to the plant greatly influence location of a unit.
If the cost of carrying the raw material from its origin to the factory is more than the
cost of carrying the finished goods to the market, the plant shall be located near the
place from where raw material is available.
Weber divided the raw material into two categories:
(a) localised relating to a particular region e.g., lime stone used for cement, iron ore,
coal and other natural deposits etc.,
(b) Ubiquitous i.e. which are universally available such as water, air and bricks etc.
Localised factors affect the location of a plant in different regions, whereas the second
category of factors does not affect.
Localised raw materials are further subdivided into two classes viz.,
(i) Gross Raw Materials or weight losing materials, are those which do not form part of
the finished products but are helpful in shaping the finished product. Most appropriate
example of this type of raw material is coal.
(ii) Pure Raw Materials are directly converted into the finished product and form the
major proportion of the article produced e.g. cotton, wool, iron ore etc. Industries using
gross raw materials can be located near the sources of these materials thereby
considerably reducing the cost of transportation.
the other hand, industries using pure raw materials should be situated near the
consumption markets because there will be no economy in the transportation costs if

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these units are located near the sources of raw material supply. Weber developed the
following mathematical derivation in order to explain his finding precisely:
Location Materials Index = Weight of localized material/Weight of finished products
Location material index is the ratio of the weight of localized raw materials to the
weight of finished product. If it is more than unity, it would be appropriate to locate the
industry near the sources of supply of raw material, if it is less than one, the industry
will be situated near the consumption points.
Another important consideration in deciding location of a plant is the cheap and
adequate labour. According to Weber, labour dominated industries should be situated
near the labour supply centres. It will considerably minimise the transportation costs
and will also lead to economies in production.
Weber gave another important concept relating to his theory which is known as split in
location. If a product consists of two or more processes and each can be carried out
independently, it is possible to have split in location of plant. Such a split in location is
possible only when the material used in the; first stage loses a substantial proportion of
its weight in first process.
In such cases the plant will be located near the raw material supply centres. The second
process (when the end product is produced) can be located near the market centres. A
good example of such a split in production is provided by paper industry. Pulp (raw
material for paper) is produced near the forests and the manufacturing of paper is
undertaken near the consumption centres.
Critical Appraisal of Webers Theory:
Webers theory has been criticised on account of the following reasons:
(a) This theory is over simplified and far away from reality. It is an unrealistic approach.
(b) The scope of theory is limited to selected factors only and it does not include many
other factors influencing the location of an industrial unit e.g. historical factors personal
factors, govt. policy and taxation policies etc.
(c) Assumptions with regard to labour are not correct. It is assumed that labour supply
centres are fixed. But in reality the position is different on account of mobility of labour.
(d) Similarly, it is assumed that there are fixed consumption centres. But in reality the
position is different on account of scattered consumers.
(e) This theory emphasises calculation of cost of transport on the basis of weight and
distance, but transportation costs are calculated on the basis of type of transport,
quality of goods and rates of different transport agencies etc.
(f) The theory is full of technical co-efficient and least coverage is given to cost and
price factors which are the most vital components of such theories. It can be said that
Webers theory is more a selective theory than a deductive one. But in spite of the
above mentioned criticism, this theory is still considered to be the first systematic and
pioneer approach towards industrial location. According to K. Balakrishna. It would be
more profitable to give up some of the unreal assumptions of the deductive theory
expounded by Weber rather than to discard it.
Plant Layout

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Introduction:
Plant layout deals with the arrangement of work areas and equipment. It is related to
allocation of adequate spaces at the appropriate places for work equipment, working
men, materials, other supporting activities and also customers. The basic theme behind
the arrangement of work area is to produce the product economically, to provide the
service effectively and to provide a safe and good physical environment for the users
that is, the workers and / or the consumers
Plant Layout:
Plant Layout can be defined as the process of determining a spatial location for a
collection physical production facility suitable to manufacture a product or service. It is
concerned with arranging
The manufacturing and servicing departments in the factory site
The machinery within these departments
The layout of individual work places
Principles of Plant Layout
1. The total movement of materials should be minimum. For this, one has to
consider the movement distances between different work areas and the number
times such movements occur per unit period of time.
2. The arrangement of the work area should have as much congruence as possible
with the flow of materials within the plant. Here, flow means not any particular
direction, it means that the different stages through which the material passes
before it becomes a finished product.
3. the layout should ensure adequate safety and healthy working conditions for the
employees
4. The layout should be adaptable or flexible enough so as to allow for probable
changes in the future as all systems should anticipate changes in the future.
5. A good layout should take into consideration all the three dimensions of space
available. In addition to the floor space, the vertical space available should also
be taken into account while designing the work areas.
6. The best layout is the one which can be adopted and re-arranged at a minimum
cost with least inconvenience.
Factors influencing plant layout:
Management policy:
Management has to decide on many matters e.g. nature and quality of products, size of
the plant, integration of production process, plans for expansion, amount of inventory
in stock, employee facilities
Manufacturing process:
The type of manufacturing process e.g. synthetic/analytical, continuous/intermittent
and repetitive/non-repetitive, will govern the type of plant layout.
Nature of product:
Small and light products can be moved easily to the machines, whereas for heavy and
bulky products the machines may have to be moved.
Type of equipment:
The use of single purpose and multi-purpose machine substantially affects the plant
layout. Similarly, noisy and vibrating machines require special attention in the plant
layout decision.

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Types of buildings:
The plant layout in a single storey building will be different from that in a multi storey
building. The covered areas, the number of storeys, elevators and stairs, parking and
storage area all affect the layout.
Availability of total floor area:
The allocation of space for machines, workbenches, sub-store aisles etc., is made on
the basis of the available floor area use of overhead space is made in case of shortage
of space.
Arrangement of materials handing equipment:
Provide sufficient aisles for free movement of material handling equipment such as
hand truck, fork truck etc.
Service facilities:
The layout of factory must include proper service facilities required for the comfort and
welfare of workers. These include canteen, lockers, drinking water, first aid etc.
Possibility of future expansion: Plant layout is made in the light of future
requirement and installations of additional activities.
Basic types of layout
Process layout or layout by function
This is typical of the job-shop type of production where the equipment
performing similar operations is grouped together. For instance, grinding machines
could be grouped together to form a work area, milling machines could be grouped
together, drilling machines could be grouped together, etc. such a layout is particularly
useful where the volume of manufacturing is low and the variety of jobs is great. Here,
the layout should provide tremendous flexibility in the sequence of operations because;
the sequence of operation for one job is different from that of another job. For this
reason, in all job-shop types of production, work areas are grouped together. The use of
process-focused systems is very wide in both manufacture and other service facilities
such as hospitals, large offices, municipal services, etc.
Process layout can be preferred when
more varieties of products are manufactured in fewer quantities
close quality inspection is required
it is difficult to carry out time and motion study
it is necessary to use the same machine for more than one product

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Merits:
It is more flexible, since, it allows to change the sequence of operations.
Production can be increased by installing additional equipment.
Better working conditions
More specialization
If a machine fails, it does not effect on other machines.
Demerits:
It is very difficult to shift material from one stage to another.
Diseconomy in utilization of floor space.
Under this method of layout more manpower is required to check the work of
each and every department.
It increases the material handling cost.
Product layout or line production
The equipment here is laid out accordance to the sequence in which it is used for
making the product. Product layout is usually suitable for assembling operations, for
example in the automobile industry. In product layout the logical sequence in the
production process forms the basis for the arrangement.
This type of layout is developed for product-focused systems. In this type of
layout only one product, or one type of product, is produced in a given area. In case of
product being assembled, this type of layout is popularly known as an assembly line
layout. The work centers are organized in the sequence of appearance. The raw
material centre at one end of the line and goes from one operation to another rapidly
with minimum of work-in-process storage and material handling
Product layout can be applicable where
the machines can be continuously handled for longer periods
time and motion study can be conducted
the products so manufactured do not require higher degree of inspection

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Merits:
This layout ensures constant flow of production.
Under this method there is direct channel for the flow of material. So that , there
is economy in material handling.
Inspection is more easy and convenient. Since, all the machines are in a
sequence.
Economy is manufacturing time
Maximum utilization of available space.
Lesser work-in-progress or semi finished goods
Economy in manufacturing time.
Demerits:
If one machine in the line stops on account of breakdown, the remaining
machines cannot operate.
Certain changes are very costly and impracticable under this method of layout
It is an expensive layout.
Fixed position layout:
In this layout, the material remains in a fixed position, but the machinery, tools,
workmen, etc. are brought to the material.
It is suitable when the equipment and the machinery are small in number and
size, and where the workmen are highly skilled to perform the various small jobs on the
product. This type of layout is used in case o large projects such as building ships,
manufacture of aircrafts, heavy pressure vessels and automobile industries etc.,
This type of layout is now not used very commonly as the machines required for
manufacturing work are big and complicated. The fixed position layout is used only
when it is difficult to move the major component and fabrication is to be carried out.

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Merits:
It is more flexible layout.
It requires less floor space because machines are moved from one location to
another.
Material handling cost is minimum.
Demerits:
This type of layout is not suitable for manufacturing small products in large
quantity.
It involves high equipment handling cost.
It requires more capital.
Cellular or group layout:
It is special type of functional layout in which the facilities are clubbed together
into cells. This is suitable for systems designed to use the concepts, principles and
approaches of group technology. Such a layout offers the advantages of mass
production with high degree of automation even if the numbers of products are more
with flexible requirement. In such a system the facilities are group in to cells which are
able to perform similar type of functions for a group of products.

Job Shop Layout:

It is a layout for a very general flexible system that is processing job production, The
preparation of such a layout is dependent on the analysis of the possible populations of
orders and is a relatively, complex affair.
Features of good layout:
1. Maximum Flexibility: A good layout is one which can be modified to meet changing
circumstances. It must be capable of incorporating, without major changes, new
equipment to meet technological requirement.

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MATERIAL HANDLING:
DEFINITION:
Material Handling can be defined as the movement of raw materials, semifinished goods, and finished articles through various stages of production and
warehousing is called as materials handling.
Material handling and logistics are expensive operations which comprise of 10%
to 80% of the product cost and this percentage tends to rise for inexpensive or
commodity products. Physical distribution alone i.e., the movement of products from
the manufacturing plants to customers, accounts for 25% of the product cost. Internal
to the plants, more than 90% of the product flow time in a job shop is spent in material
handling functions including waiting for an available machine.
Principles of Material Handling
Although there are no definite rules that can be followed when designing an
effective MHS, the following Ten Principles of Material Handling,
1. Planning Principle. All MH should be the result of a deliberate plan where the needs,
performance objectives, and functional specification of the proposed methods are
completely defined at the outset.
2. Standardization Principle. MH methods, equipment, controls and software should be
standardized within the limits of achieving overall performance objectives and without
sacrificing needed flexibility, modularity, and throughput.
3. Work Principle. MH work (defined as material flow multiplied by the distance moved)
should be minimized without sacrificing productivity or the level of service required of the
operation.
4. Ergonomic Principle. Human capabilities and limitations must be recognized and
respected in the design of MH tasks and equipment to ensure safe and effective operations.
5. Unit Load Principle. Unit loads shall be appropriately sized and configured in a way that
achieves the material flow and inventory objectives at each stage in the supply chain.
6. Space Utilization Principle. Effective and efficient use must be made of all available
(cubic) space.
7. System Principle. Material movement and storage activities should be fully integrated to
form a coordinated, operational system which spans receiving, inspection, storage,
production, assembly, packaging, unitizing, order selection, shipping, and transportation,
and the handling of returns.
8. Automation Principle. MH operations should be mechanized and/or automated where
feasible to improve operational efficiency, increase responsiveness, improve consistency and
predictability, decrease operating costs, and to eliminate repetitive or potentially unsafe
manual labor.
9. Environmental Principle. Environmental impact and energy consumption should be
considered as criteria when designing or selecting alternative equipment and MHS.
10. Life Cycle Cost Principle. A thorough economic analysis should account for the entire
life cycle of all MHE and resulting systems.

Unit Load:
A unit load is very often used in the material handling of discrete load materials.
A unit load is a collection of materials so arranged and restrained that it can be
handled, stored, and controlled as a single entity.
The advantages of using a unit load are amongst others the uniform handling
and uniform storage operations, the reduced burden on information and control
systems. In addition, unit loads allow efficient (macro) external space utilization since
each load is the same size and storage locations can be sized to accommodate this unit
load and the loads can be packed tightly together without gaps.

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The disadvantages of using a unit load are the cost of assembling and
disassembling the unit load, the cost of the container and wrapping, and the cost of the
empty returnable container handling or the disposal cost of single use container. In
addition, unit loads can have efficient (micro) internal space utilization if the unit loads
can be completely filled up.
Prime examples of unit loads are a pallet, drum, over the road truck and ocean
going intermodal container.
Classification of Materials Handling Equipments:
Tompkins and White divide materials handling equipment into five classifications.
They give the following list but note that numerous variations can exist within each
category:
1. Conveyors
2. Monorails, hoists, and cranes
3. Industrial trucks
4. Containers and supports
5. Auxiliary and other equipment
Conveyors:
Conveyors are used when the material needs to be move in a continuous
movement over a fixed path. Conveyors have very limited access area and a very high
hardware cost and are thus suitable only for very high volume operations. Conveyors
can be synchronous or asynchronous. A conveyor is synchronous if all the material on
the conveyor moves at the same time and at the same speed, it is an asynchronous
conveyor otherwise. Examples of synchronous conveyors are belt and roller conveyors.
An example of asynchronous conveyor is an automated electrified monorail or AEM.
Cranes and Hoists:
Cranes and hoists are overhead devices that are primarily used to provide a
vertical movement capability i.e for raising and lowering loads. There may also be a
horizontal movement component usually above the factory floor and production
equipment. Cranes and hoists usually have a fixed pulley, a movable pulley with a hook
or other method of attaching the load and connecting rope or cable. The material is
transported in intermittent moves. Cranes and hoists have limited access areas,
medium hardware costs, and are suitable for medium volume applications.
Bridge cranes cover rectangular areas, while jib cranes cover circular or semicircular areas. Bridge cranes can be hung from the ceiling, mounted on the walls, or be
floor-supported. Jib cranes can be floor-supported or wall-mounted. Bridge cranes
provide consistent ease of operation throughout the whole access area. Jib cranes are
more easily operated when the load is at the very end of the boom and are more
difficult to operate as the load approaches the picot point.
With ceiling or wall mounted systems, the support steel of the crane does not
interfere with the handling operations. On the other hand, the cranes require a building
with adequate overhead or wall structure to support the crane. Floor supported cranes
are free standing and do not put stress on buildings overhead or wall structure.
Installation of floor-supported cranes is usually more straightforward and the cranes are
easier to relocate at the later time. Floor-supported cranes require a reinforced concrete
floor.
When sizing a crane, the capacity should be kept to a minimum. If a crane has
been over capacitated, then for each operation extra crane weight has to be moved and
the support structures might have been designed to sustain larger loads then required.
Long bridge crane lengths are acceptable for slower production cycles or for
maintenance operations, while fast production cycles require a short crane length. Keep

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the bridge or crane height to a minimum to clear the operations, since lower loads are
easier to control and to position.
Industrial trucks:
Industrial trucks are vehicles moving on wheels and excluding over the road
trucks, which are described in long distance carriers. The material is transported in
intermittent moves. The industrial trucks have variable paths and a very wide access
area and low hardware cost. They are primarily used in low volume operations. A
prominent example is the forklift truck, which is an industrial truck used for
transporting a load horizontally and for elevating or lowering a load to store it.
Container & Supports:
The primary goal of container is to maintain a unit load. Prime examples of
container are pallet, drum and intermodal containers.
In the 1960s large and fast ocean going ships were designed specifically for
carrying containers above deck as well as in their hold. The cargo was easily loaded and
unloaded which minimized the time spent in the port. The container was then
transported further by rail or truck, which decreased the overall transit time of the
products and avoided damage and loss in the ports. Such containers are called
intermodal and except for bulk, ore, or crude products, make now up the majority of
the international freight. The shift to the transportation of freight in large, standardized
containers is called containerization. The ports that can handle these containers rapidly
and transfer them to internal transportation systems are expensive and their operations
are complex.
A significant operational concern is the management of the empty containers,
especially between the countries with a large trade imbalance or cargo traffic that is
unbalanced.
Factors Affecting the selection of Materials Handling Equipment:
The selection of materials handling equipment requires the attaining of proper balance
between the production problem, the capabilities of the equipment available, and the
human element involved. The ultimate aim is to arrive at the lowest cost per unit of
material handled.
Equipment factors to be taken into consideration may well include the following:
Adaptability: the load carrying and movement characteristics of the equipment should
fit the materials handling problem.
Flexibility:
Where possible the equipment should have flexibility to handle more than one material,
referring either to class or size.
Load capacity:
Equipment selected should have great enough load-carrying characteristics to do the
job effectively, yet should not be too large and result in excessive operating costs.
Power:
Enough power should be available to do the job.
Speed:
Rapidity of movement of material, within the limits of the production process or
plant safety, should be considered
Space requirements:
The space required to install or operate materials handling equipment is an important
factor in its selection.
Supervision required:

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As applied to equipment selection, this refers to the degree of automaticity designed

into the equipment.
Ease of maintenance:
Equipment selected should be easily maintained at reasonable cost.
Environment:
Equipment selected must conform to any environment regulations.
Cost:
The consideration of the cost of the equipment is an obvious factor in its selection.

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