Facility Location Planning

A factory or plant is the manufacturing

facility of a company. A warehouse is the
storage facility of a manufacturing or a
distribution company. The offices of a
service sector company such as a courier
company, a bank, or an insurance
company are its facilities.
Problem due to Improper location Planning
Close down the operations completely and
liquidate the assets.
Continue operations at the existing
location
Relocate facility to a new location
Sell off the facility to other companies.
Operations strategies for multiple facilities
Separate facilities for different
products/services
Separate facilities to serve different
Geographical Areas
Separate facilities for different processes.
Steps in Facility Location planning
1.Generate List of Alternative Location options
2. Find out the factors relevant to facility being planned
3. a) Screen better location options using factor and location rating
Analysis
b) Screen better location options using Break even Analysis.

4.a) Apply Simple median model for finding location with least overall
transportation cost
b) Apply centre of gravity model for finding location with least overall
transportation cost
c) Apply transportation model for finding location with least overall
transportation cost.
d) Apply Ardalan Heuristic to choose the best location for Services
Operations.
5. Best Location Chosen

Factors affecting facility Location
Proximity to customers (markets)
Proximity to raw materials
Good transportation facilities
Availability of power supply
Basic amenities
Government policies
Environmental and community considerations
Proximity to sub-contractors
Easy availability of cheap land
Availability of cheap, skillful and efficient labor
Residential complexes, schools, hospitals, clubs,
etc



Locating Foreign Operations Facilities
Factors to be considered while locating
foreign location:
1. Trade Barriers
2. International customers
3. International competition
4. Regulations
5. Additional resources
6. Lower cost
7. Incentives
8. Economies of scale