PLANTLOCATION

Presented by :

Monika garg

Ayush gupta

Anish gupta

Topics to be covered:

• Decision for plant location

• Factors considered by the company for plant location

• Methods used by the company to evaluate plant location

• Examples of plant location

Decisions for plant location

• Factors that influence location decisions are:Manufacturing :o Availability of energy and watero Proximity to raw materialso Transportation costService:o Traffic patternso Proximity to marketso Location of competitors

Factors affecting plant location

• The ten main factors that affect a plant location are discussed briefly below :

• Law and order situation: If a state has bad law and order situation, then the business must not be located within that state.

• Availability of infrastructure facilities: The infrastructure facilities are the backbone of all industries .

• Good industrial relations :Industrial relations become bad, because of militant and selfish trade unions.

• Availability of skilled workforce: Most businesses require skilled-labor force such as engineers, management experts, computer programmers, etc.

• Social infrastructure : The availability of social-infrastructure will increase the employees' welfare.

• Investor friendly attitude : An investor-friendly attitude will not only attract investment, but will also result in the overall development.

• Nearness to market : Locating a plant near the market is preferred, when the product is fragile (easily breakable), perishable, heavy or bulky and when quick service is required.

• Nearness to the raw material : Raw-materials' costs are about 50% of the total cost.

• Nearness to supporting industries : It will be difficult, to control the quality of the spare parts because of the distant location.

• Must meet safety requirements : Safety of environment must also be given priority in this regards.

EVALUATING LOCATION ALTERNATIVES

There are three specific analytical techniques available to aid in evaluating location alternatives:

• Location cost volume profit analysis : there are four assumptions one must keep in mind when using this method :

• Fixed costs are constant.• Variable costs are linear.• Required level of output can be closely estimated.• There is only one product involved.• Total cost • Factor Rating This method involves qualitative and quantitative inputs,

and evaluates alternatives based on comparison after establishing a composite value for each alternative.

• Center of Gravity Method This technique is used in determining the location of a facility which will either reduce travel time or lower shipping costs

• IDENTIFYING A COUNTRY, REGION, COMMUNITY, AND SITE• IDENTIFYING A COUNTRY

o A decision maker must understand the benefits and risks as well

• IDENTIFYING A REGION- 4 major considerationso Location to Raw Materialso Location to Marketso Labor Factorso Other : Climate is sometimes a consideration because bad weather can disrupt operations. Taxes are also an important factor due to the fact that taxes affect the bottom line in some financial statements. as the probabilities of them occurring.

• IDENTIFYING A COMMUNITYo There are many important factors for deciding upon the community in which move a business. They include facilities for education, shopping, recreation and transportation etc.

Examples of plant locationVadodara, Gujarat, India Plant : Caustic Oxidation Unit (Process: Wet Air Oxidation process by Linde-KCA-Dresden GmbH for Oxidation

Indian Oil's refinery, at Panipat, Haryana