ASSIGNMENT N0.

2
LOCATION PLANNING 1. Discuss the factors to be considered while locating a plant for the manufacture of: a. b. c. d. e. Sugar Cement Steel Thermal Power Cars / Four-wheelers

. Santro !lectronics is considering two locations for its "udio !#uipment Factor$. %ne location option is "hmedabad and the other is Chennai. "t "hmedabad& the fi'ed cost of the factor$ is estimated at (s 1 million and the )ariable cost at (s 1& ** per audio e#uipment manufactured. "t Chennai& the fi'ed cost of the factor$ is estimated at (s 1. million and the )ariable cost at (s 1&1** per audio e#uipment manufactured. The selling price of the e#uipment will be (s +&*** per unit irrespecti)e of the place of manufacture. Decide which location is best for the factor$ using brea,-e)en anal$sis. +. ./ 0ond Paper manufactures photocopier paper. 1t is e)aluating two location options for its new facilit$. The first location option is Dehradun& where the fi'ed cost of the facilit$ will be (s million 2 the )ariable cost will be (s ** per ream of paper. The second location option is 3$derabad& where the fi'ed cost of the facilit$ will be (s .4 million 2 the )ariable cost will be (s 15* per ream of paper. The factor$ will produce 1*&*** reams of paper in the first $ear of production. The compan$ will decide the location depending upon the lower cost of production in the first $ear. 6hich location should the compan$ choose7 The mar,et research department of the compan$ forecasts the demand for the ne't 4 $ears as 11***& 1+***& 14***& 18*** and **** reams of paper. 1n case the management decides to plan location ,eeping in )iew the o)erall forecast& what will be $our recommendation to the management7 9. :dhampur Distilleries ;td has four e'isting facilities - 6& <& = 2 >. The details of these facilities are gi)en in the table below. The compan$ wants to locate a new facilit$ such that the total transportation cost is minimum. "d)ise the management of the compan$ about the best possible location using the simple median method. "lso& find the total transportation cost. !'isting facilit$ F "nnual loads b/w F and new facilit$ Cost of mo)ing one unit b$ unit distance Co-ordinates of the e'isting facilit$

?units@ 6 < = > 5A* 95+* +4** BB*

?(s@ 1* 1* 1* 1*

?'& $@ ? *&+*@ ?5*&1*@ ?4*&9*@ ?1*&8*@

4. Sol)e the abo)e problem using the center of gra)it$ model. B. ./S Cagdeesh Chand 2 Co. started an appliance repair business three $ears ago. 6hene)er he recei)ed a call from the customer& he would dri)e to the customerDs place or bring the appliance bac, to his wor, place. 3is operations ha)e grown so high& that there is a need to open up a proper ser)ice station and as such& he is confronted with the decision of locating this ser)ice centre so as to economiEe his total tra)el. The ,e$ customers located at present are at si' different places of the cit$. The coordinates of these customers along with the no. of trips made b$ the owner of the unit& are gi)en below:C:ST%.!(D ;%C. (%:FD T(1PS / C%-%(D1F"T!S C%-%(D1F"T!S .%FT3 <-"<1S ?/.S.@ =-"<1S ?/.S.@ 1 B* 1** 9 1* + 9* B B 9 1 * B 1 4 B* 1* 9 B 8* 19 8 Suggest the location of Ser)ice Centre. "ssume that it costs the %wner (s.1*/- per /m. to ma,e one trip& find the total e'penses which the owner is supposed to spend while operating from the proposed location. ?:se centre of gra)it$ method for anal$sis@ 5. " .anufacturer of Garments is considering fi)e alternati)e locations for setting up its factor$. The owner has accepted Si' ,e$ factors to be considered for site selection. The rating of each of the factors on a scale of 1 to 1** and the ad)antage offered b$ each of the location under consideration& on a scale of 1 to 1** is gi)en in the table below: Factor (ating ;ocation1 ;ocation 1nfrastructure A* * 9* .ar,et SiEe B* +* +* 1ndustrial 4* 8* +* (elations Ta' 0enefits +* 8* * ;ocation+ ;ocation9 ;ocation4 B* +4 44 9* B* 8* 4* 1* B* * 4* *

Cheap ;abour Fearness to Port

+* B4

5* *

5* 9*

94 A*

4* 4*

4* B*

6hich of the Five Locations should be considered b$ the owner for further anal$sis7 8. " compan$ planning to manufacture rac#uets has four options to choose from )iE. 3$derabad& .$sore& 0angalore and 3osur. The fi'ed costs of operations at these locations are estimated to be (s 9* lacs& (s +* lacs& (s 4* lacs and (s 4 lacs per annum. The )ariable costs per unit are (s 8*& +**& ** and +4* respecti)el$. The a)erage sales price per unit ma$ be assumed to be (s 8** for the whole $ear. Suggest the range of production / sales for which each location is suitable.