Plant location or the facilities location problem is an important strategic level decision making for an organization. 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.
The selection of location is a key-decision as large investment is made in building plant and machinery. It is not advisable or not possible to change the location very often. 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 selected, long range forecasts should be made anticipating future needs of the company. 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. The purpose of the location study is to find an optimum location one that will result in the greatest advantage to the organization.
“A plant should be located at a place where in habitants are interested in its success, the product can be sold profitably and production cost is minimum.” Dr. Vishweshwarya.
Dr. Vishweshwarya says that decision of plant location is based on 10 M’s,:
- Means of Power
- Momentum to early start
- Means of Communication
Need for selecting suitable location arises because of three factors:
- When starting a new organization
- In case of existing organization
- In case of Global Location
We will be looking at these three factors in details over next three days