Plant location

and
Facilities
Layout
Location is the general area and
site i.e. place chosen within the
location – Geographic location.
 Locating Production and Service Facilities
Many organisations whether
public or private have to make a
decision on the number of
facilities to have and the
location of these facilities.
Location decisions of facilities
affects the operations of
businesses in many ways.
Locating Production and Service Facilities
Plant location or the facilities location
problem is an important strategic level
decision making for an organisation.
One of the key features of a
conversion process (manufacturing
system) is the efficiency with which the
products (services) are transferred to
the customers.
This fact will include the
determination of where to place the
plant or facility.
Locating Production and Service Facilities
The selection of location is a key-
decision as large investment is
made in building plant and
machinery.
So an improper location of plant
may lead to waste of all the
investments made in building and
machinery, equipment.
Before a location for a plant is
Locating Production and Service Facilities
The plant location should be based
on:
the company’s expansion plan and
policy,
diversification plan for the products,
changing market conditions,
the changing sources of raw
materials and
many other factors that influence the
choice of the location decision.
Locating Production and Service Facilities
The purpose of the location
study is to find an optimum
location one that will result
in the greatest advantage to
the organization.
Locating Production and Service Facilities
Any consideration of this
will include:
determination of where to
place the plant or operational
facility, and
how much transportation of
the inputs and outputs will
be required
Locating Production and Service Facilities
The way in which the inputs are
obtained and the outputs distributed
has an effect on:
 The total cost of the product / service.
 Number of customer that can be
reached.
 The location of the organization and its
units.
 The design of the plant or operational
facilities.
Locating Production and Service Facilities
An efficient supply distribution
system will reduce cost and lead
to a more effective service in the
form of quarter deliveries and
less stock outs.
The type of output involved
is clearly a major factor in the
determination of the best
Locating Production and Service Facilities
The supply, storage and
movement of materials,
people, equipment and
finished goods and services
affects not only the number of
location of units to be
established but also the design
of the transformation facilities.
Locating Production and Service Facilities
All the potentially available plant must
be considered as part of the whole
supply distribution system to devise
the most strategy for obtaining the
right inputs and desired outputs.
Plant flexibility, efficiency,
effectiveness, capacity e.t.c will be
determined by the plant design and
constantly changing environment may
require repeated redesigns.
Locating Production and Service Facilities
The advancement in technology
and the availability of certain
materials and energy source
must also be carefully examined
by the operations management
team when deciding on the
facilities.
 Location strategy
Location is the general area
and site is the place chosen
within the location.
There are a number of factors
which should be considered
when choosing a location.
Making Location Decisions
Decide on the criteria
Identify the important
factors
Develop location
alternatives
Evaluate the alternatives
 Factors influencing
the choice of location
 1. Proximity to market
Organization may choose to locate
facilities close to their market to
minimize transportation cost and
provide better service.
The closer the plant is to the consumer
the easier it is providing better service.
The closer the plant is to the consumer
the easier it is to provide JIT delivery
and to respond to changes in demand
and to react to field or service problems.
2.Integration with other parts of the organization
If the new plant is one of many
owned or operated by a single
organization it should be
situated where its work can be
integrated with that of the
associated units.
This will require that the group
will be considered as an entity
3.Availability of labor and skills
Labor may be more readily
available in some cases but certain
geographical areas require the
company to import labor.
4.Availability of
transport
It is important that good
transport facilities are
 5.Availability of inputs
Good transport facilities will
enable goods and services to be
delivered readily but a location
near main suppliers will reduce
costs and permit staff to meet
suppliers easily to discuss
quality, technical or delivery
problems.
6.Availability of service
These are main services which need
to be considered and these are
water, electricity, drainage, gas
disposals of waste and
communications.
An assessment must be made of the
requirements of these as
underestimating the needs of any of
the services can be costly and
inconvenient.
7.Regional regulations
It is important to check in
early stages that the proposed
location does not infringe on
the local regulations.
A study must be made of the
appropriate by-laws and of
any special regulations.
8.Suitability of land and climate

Geology of the area need to be

examined and considerations
made together with the climatic
conditions.
Products/ Services are different
hence requirements also differ.
9.Room for expansion
It is most unwise to build to
the limit of any site unless
the long range forecasts
indicates very definitely that
the initial building will never
be required to increase in
size.

10.Safety requirements - Some
production units may present
potential dangers/ hazards to
the surrounding neighborhood
11.Political, cultural and
economic situation
It is important to consider
these as they can affect the
organization operation
 12.Availability of amenities
A location which provides good
external amenities i.e. housing,
shops, community service,
communication system is often more
attractive than one which is remote.
This must be looked at in line with
the type of products/ services to be
produces but these amenities are
needed.
LOCATION EVALUATION METHODS
In most location problems there
are some mandatory factors
which must be fulfilled.
Once these key factors are
identified the location problem
ceases to be open and become a
choice from a number of sites.
LOCATION EVALUATION METHODS
An evaluation technique based an
ranking the various weighted factors
can be helpful
The principals of ranking are:
Examine various factors and assign to
them weights representing their
importance.
Ranking is carried out factor by factor.
Each of the locations is examined and
ranked.
LOCATION EVALUATION METHODS
Each ranking is then multiplied
by the appropriate weighting
factor and the scores totaled for
the each possible location.
These totals indicate the
desirability of the possible
locations compared with each
other.
Location Cost-Volume Analysis
Fixed costs
Variable costs
Output estimate
Land
Transportation
Environmental
Legal
Other Considerations
Surrounding Community(ies)
Attitudes
Quality of life
Services and Utilities
available
Taxes
Environmental regulations
Developer support
Foreign a. Policies on foreign ownership of production facilities
Government Local Content
Import restrictions
Currency restrictions
Environmental regulations
Local product standards
b. Stability issues
Cultural Living circumstances for foreign workers / dependents
Differences Religious holidays/traditions

Customer Possible buy locally sentiment

Preferences

Labor Level of training and education of workers

Work practices
Possible regulations limiting number of foreign employees
Language differences
Resources Availability and quality of raw materials, energy,
transportation
Effects of location on revenues
and costs
 Revenues
In some industries revenues depend on
whether the production facility is closer to
the potential customers whereas for
manufacturing firms revenues are dependent
on whether the firm is located closer to the
supplies or not.
However for service firms location is not
very important for stored services i.e. those
not directly consumed.
On those services that are directly
consumed location is very critical e.g. dry
cleaning services, restaurants among others.
 Costs
Fixed costs:
New or additional facilities entail additional fixed costs
which must be recouped from the revenues generated.
It can also involve the costs of new constructions, purchase
or renovations of existing facilities. The magnitude of these
costs depend on the site chosen.
Variable costs:
Once built the new facilities need staffing and needs to be
operated. For labour intensive operations, labour costs
constitute the bulk of the variable costs of such operations.
Management should also take into account the proximity to
the sources of raw materials and markets for finished
products as this can result in increased transportation and
distribution costs.
In selecting any potential site, Operations Managers should
consider all these revenue and cost factors using break even
analysis.
Reasons for locational changes
Sometimes an organisation may consider changing its
operations site because for the need for greater
capacity. The following are some of the driving forces
for locational changes:
1. Changes in resources may occur. Resource change
can occur in terms of cost or availability.
2. The geography of demand may shift it may be
necessary to change facility location to provide better
services to customers, e.g. a shift from rural to urban
and vice versa.
3. Companies may merge making other facilities
redundant.
4. New products may be introduced requiring change in
availability of resources and markets.
5. Political and economic changes may occur.
General procedures for facility Location planning.
1. The preliminary screening:
This involves the identification of
feasible sites by considering
environmental and labour considerations
for instance brewery requires adequate
supplies of water while an aircraft
requires a variety of subcontractors.
After identifying key location
requirements, alternative locations are
identified consistent with these
requirements. Such information can be
General procedures for facility Location planning.
2. Detailed analysis:
Once the preliminary screening has narrowed
alternative sites the next stage is the detailed
analysis.
Labour survey will be carried out to assess the local
skills as well as a community assessment is done to
see the community’s response to the site.
Factor ratings are frequently used to evaluate location
alternatives by listing the most relevant factors in the
location decision.
Each location is rated from very low to very high
according to its merits on each characteristics.
The sum of the products yields the total rating score
for that location.
The total scores indicate which alternative locations
 Facility Location Models
Quantitative models are used to
determine the best location facilities.
Some of the generic models that can be
applied include:
1. The simple median model - This is a quantitative model
for choosing an optimal facility location, minimising costs of
transportation and based on the median load
2. Linear programming model
3. Simulation. Applied in complex real world problems where systems
have multiple sources of shipping to numerous plants and in term the
finished goods are shipped to warehouses which are further shipped to
retailers.
 Problems of this magnitude do not have optimal solution and hence
approximation techniques like computer simulation are used.
Behavioural impact on facility location
The previous models have emphasised more on
cost differences that can be quantified.
The models ignore the qualitative factors in
facility location.
New locations should have a relationships with
the new environments and employees.
These are some of the system hidden costs
excluded from quantitative models and are an
important aspect of the location decision.
Cultural differences - Organisational structure
must adapt to the norms and customs of local
subcultures. The organisation must therefore
establish appropriate community relations to fit
Behavioural impact on facility location
Job satisfaction - It is employee perception of
the extent to which their work fulfils or satisfies
their needs.
Job satisfaction affects how well the
organisation operates and it also affects the
productivity of employees. Job satisfaction is
characterised by the following variables.
Labour turnover
Absenteeism
Tardiness
Number of grievances.
These factors affect both the costs and
operations.
Layouts of the Facilities
 Layout
The configuration of
departments, work
centers, and equipment in
the conversion process,
Whose design involves
particular emphasis on
movement of work (customers
or materials) through the
system 4
Strategic Layout
Layout is used to indicate
the physical disposition of
the Facilities/ Plant and of
the various parts of the plant
the location of equipment
using a small department
the disposition of
departments upon a site.
 Strategic Layout
Policy decisions concerning the
organization, methods and
workflow are made before the
facilities are laid out.
It is an important area of
POM’s responsibility since we
are dealing with capital
equipment of the organization
which is difficult to relocate
Layout Planning
Successful operations depend
upon the physical layout of
facilities.
Flows of materials,
productivity and human
relationships also affect the
arrangement of the
conversion facility.
Layout planning
LP is deciding on the best physical
arrangement of all resources that
consume space within a facility.
These resources might include a
desk, a work centre, a cabinet, a
person, an entire office, or even a
department.
Also, layout planning is performed
any time there is an expansion in the
facility or a space reduction.
 Layout Planning
Decisions about the arrangement of
resources in a business are not made
only when a new facility is being
designed; they are made any time there
is a change in the arrangement of
resources, such as a new worker being
added, a machine being moved, or a
change in procedure being
implemented.
Facility resource arrangement can
Layout Planning
The following information should
be available when planning a layout.
The original structure
Type of production / operating
system to be employed
Type of quality and people involved
Dimensional plan of the space to be
laid out
 Layout Planning
The following information should be
available when planning a layout
Operations to be undertaken, their
descriptions, sequence and standard
times.
The equipment needed to carry out the
operations and any special requirements
it imposes such as maintenance facilities
and safety devices
The number of movements of materials
from one work center to another during
the working period
Layout Planning
The following information
should be available when
planning a layout
Volume of materials required at
each work station
Any special inspection
requirements
Any spare facilities or equipment
which will need to be stored
 Types of Layout
Organizations usually start with
very small product/ service layouts.
As they increase in size they tend to
move towards a process layout in
the belief that such a layout will
make better use of the physical
resources
There are different types of Layouts
Basic types of layout
 Product layouts; most
conducive to repetitive
processing
Process layouts: used for
intermittent processing
Fixed position layouts: are
used when projects require
layouts.
 Basic Layout Types
Product Layout
One that uses standardized
processing operations to
achieve smooth, rapid, high-
volume flow
Seeks the best personnel and
machine utilization in
repetitive or continuous
production.
Auto plants, cafeterias
 Basic Layout Types
Process Layout
Layout that can handle varied
processing requirements
Deals with low volume and high
variety production
Ideal for intermittent
operations where the workflow
is not consistent for all the
products.
Products are produced in
different variations.
 Basic Layout Types
Process Layout
Workstations are grouped together
according to their functional types
Ideal for producing a single
standardized product in large
volumes.
Each product will require the same
sequence of operations from the
beginning right up to the end.
Workstations are arranged in a line
to afford a specialized sequence of
tasks.
 Basic Layout Types
Fixed Position Layout
Layout in which the product or
project remains stationary, and
workers, materials, and equipment
are moved as needed to the site
Addresses the layout requirement of
large bulky project s such as
buildings, dam construction
Product is difficult or impossible to
movebecause of its size, i.e. very
large or fixed
Building / Construction projects
 Basic Layout Types
Combination Layouts/ Hybrid
layouts - This when an operations system
combines two or more layouts for instance
process layout can be combined with product
layout
Combine elements of both product &
process layouts
Maintain some of the efficiencies of
product layouts
Maintain some of the flexibility of process
layouts
Examples:
 Group technology & manufacturing cells
 Grocery stores
 Service Layouts
Warehouse and storage
layouts
 Issue: Frequency of
orders
Addresses trade offs
between space and
5
 Service Layouts
Retail layouts
 Issue: Traffic patterns
and traffic flows
Allocates shelf space and
responds to customer
behavior
6
Service Layouts
Office layouts
 Issue: Information
transfer, openness
It positions workers
equipment and spaces /
offices to provide for
moment of information. 6
Characteristics of a good Layout
The techniques employed in making a layout
are normal work study or industrial
engineering techniques, the process is a
creative which can be set down with any
finality and one’s experience plays a great role.
 It is not possible to define a good layout but
there are certain criteria which may be
satisfied by a layout a
It is not possible to define a good layout but
there are certain criteria which may be
satisfied by a layout.
Characteristics of a good Layout
1. Maximum Coordination
 Entry into physical form any
departmental or financial area
should be in such a manner that
it is most convenient to the
issuing/ receiving departments.
Effective coordination must be
high
Characteristics of a good Layout
2. Maximum flexibility
 A good layout will be one which can be
rapidly modified to meet changing
circumstances.
Attention should be paid to the supply
of service/ product which should be easy
to access
Any modification must be easily done
Future

Characteristics of a good Layout
3. Maximum use of volume
Facilities should be considered
as cubic devices for maximum
use made of the volume
available e.g. cables, pipelines
and conveyers can be run above
head height and used as moving
WIP stores and or tools or
Characteristics of a good Layout
4. Maximum visibility
All the people and
material must be readily
observable at all times.
They should be no hiding
places into which goods /
information can get
Characteristics of a good Layout
5. Maximum Accessibility
All serving and maintenance
points should be readily
accessible e.g. equipment
should not be placed against a
wall in such a manner that
necessary maintenance cannot
be easily carried out.
Characteristics of a good Layout
6. Minimum Discomfort
Poor lighting excessive
sunlight, noise vibrations and
smells should be minimized ..
CONDUCIVE
ENVIRONMENT
Characteristics of a good Layout
7. Inherent Safety
All layouts should be safe and no person
should be exposed to danger.
Care must be taken on both the people
operating the equipment and of the
customers and any passerby
Adequate medical facilities and services
must be provided and these must satisfy
the requirements of the healthy and
safety regulations
Characteristics of a good Layout
8.Maximum Security
Safeguards against fire, moisture,
theft and general deterioration should
be provided for in the original layout.
NO HARM ON ALL
9. Minimum distance
All movements should be both
necessary and direct .
There should be very little distance
between offices/buildings
Characteristics of a good Layout
10. Efficient process flow
Work flow and any transport flow
must not cross each other’s way
Effort should be taken to ensure
that paper or material flows are in
one direction only
The use of gravitational force in
certain types of processing can lead
to great saving in energy and time.
 Characteristics of a good Layout
11. Identification
Wherever possible,
working groups should be
provided with their own
working place
The need for a defined
territory is basic.
 Advantages of a good layout
The overall process time will be
minimized
Overall cost will be minimized by
reducing unnecessary handling
Supervision and control will be
simplified by the elimination of
hidden corners in which both
information and material can be
misplaced.
Advantages of a good layout
Changes in the programmes
will be most readily
accommodated.
Total output from the given
facility will be as high as
possible by making the
maximum effective use of
Advantages of a good layout
A feeling of unity among
employees will be
encouraged by avoiding
unnecessary segregation
Quality of the product
service will be sustained by
safer or more effective
 Questions
Using examples, explore 10
factors that can be considered
when choosing good location.
Examine the significance of the
following models used to determine
the optimum location of facilities:
The simple median model
Linear programming model
Simulation