PRODUCTION AND OPERATIONS

MANAGEMENT PROJECT
ON

FACTOR RATING METHOD FOR

FACILITY LOCATION

Submitted to:
Prof. B. Kar

Submitted by:

Aditya Sengupta (19202002)

Adrija Banerjee (19020003)

Nirabrha Paul (19202024)

Section A, MBA-1
AIM
Analysis to check which location from Mumbai, Bangalore, Kolkata,
Hyderabad and Bhubaneswar is the most favourable for setting up a restaurant
for college students and young working professionals.

INTRODUCTION
There are a variety of procedures that can be used to decide the best location
choice for setting up a facility. Here our objective is to find out the best possible
location for a restaurant that we intend to set up. The target market includes
working professionals and students. So, evaluating the target locations will be
of prime importance.
These days Satellite kitchen is also a concept which can be used without having
to choose an expensive location or large area, but for the time-being we wanted
to go with the traditional restaurant.
The locations were compared by analysing few factors like preference of
customers, how frequently they visit or order food from restaurants, how much
they are willing to pay for food, whether ambience affects their choice of
restaurants, how much rent we need to pay to set up restaurant in the city and
how accessible the city is.
We have chosen the Factor Rating method for facility location planning for our
project. This method deals with qualitative and quantitative inputs, and then
alternatives are evaluated based on comparison after assigning a weightage to
each alternative.

STEPS AND PROCEDURES

1. Relevant and important factors are to be determined from what we
understand from the data of our potential consumers.
2. Each factor should be assigned a weight in such a manner that the total
weightage adds up to 100.
3. A common scale of 0-5 is determined for each factor.
4. Each alternative for each location is scored.
5. Scores are adjusted using weights by multiplying the rates with these
weights and added up individually for each location.
6. The one with highest score stands to be the best option.
RESEARCH METHODOLOGY
Primary Research was done with the help of questionnaires and surveys, which
was sent college students and working professionals from these four cities.
Values of rents was found through magicbricks.com.

SURVEY QUESTIONS
 Which city do you live in? -To classify the responses according to the
cities.
 What is your age? -To check whether the respondent belongs to the
targeted age group or not.
 What kind of cuisine do you prefer? -to understand the taste preference of
the customer
 How often do you eat out (order/visit a restaurant) in a month? -to get
information on how many times an average person visits restaurant in that
city
 On an average how much do you pay when you eat out? -to understand
the purchasing power of the consumer, and how much can they be
charged
 How important is ambience to you? -to estimate the expenditure we need
to design the interiors
 How would you rate public transport facility for your city? -to understand
how accessible the city is

FACTORS CHOSEN
Frequency of eating out
From this we can get to know about footfall we can get in the location.
Average order price
It will help us to decide our menu pricing for that particular location.
Ambience
It will give us an idea about how much do we have to spend on the interior
designing of the restaurant.
 Public Transport Facility
We can decide the locality of the city where we would set up our restaurant so
that it would be easily accessible by the people.
Cuisine preference
From this we will get an idea about the taste and preference of the customer and
we will also get to know how much we need to spend on the raw materials
required for cooking food
Rent
It is one of the major expenses for a restaurant, and hence the most important
factor for setting up restaurant

All the factors are rated on a scale of 1-5, 1 being the worst and 5 being the best.

SURVEY RESULTS

Rating
Sample 1 2 3 4 5 6 7 8 9 10 Average
(1-5)
Cuisine 1 2 2 4 1 5 4 5 2 4 3 3
Frequency 5 4 2 2 2 5 2 2 4 4 3.2 3.2
Purchasing power 350 750 350 350 750 750 350 750 750 350 550 2.75
Ambience 3 2 4 2 2 3 4 2 2 3 2.7 2.7
Accessibility 2 4 5 4 3 5 4 4 2 3 3.6 3.6
Rent (Lakhs) 1.5 0.25 0.6 0.8 0.2 1.5 0.85 0.85 0.85 1 0.84 4.16
Bangalore (R1)
 Bhubaneswar (R2)

Rating
Sample 1 2 3 4 5 6 7 8 9 10 Average
(1-5)
Cuisine 3 5 5 4 4 4 1 4 4 4 3.8 3.8
Frequency 5 2 4 5 5 5 5 2 2 2 3.7 3.7
Purchasing power 350 350 750 350 750 350 350 750 350 350 470 2.35
Ambience 3 2 3 2 1 3 1 1 2 2 2 2
Accessibility 3 4 4 5 4 2 5 4 4 4 3.9 3.9
Rent (Lakhs) 1.8 0.3 0.77 0.14 0.6 0.6 0.8 1.6 0.4 0.75 0.776 4.224

Kolkata (R3)

Rating
Sample 1 2 3 4 5 6 7 8 9 10 Average
(1-5)
Cuisine 5 3 4 4 2 4 2 5 5 4 3.8 3.8
Frequency 5 2 2 2 4 4 4 5 2 4 3.4 3.4
purchasing power 350 350 750 350 750 350 750 350 1500 350 585 2.925
Ambience 1 1 1 2 1 2 2 2 1 2 1.5 1.5
Accessibility 4 3 4 4 4 3 5 3 2 4 3.6 3.6
Rent (Lakhs) 3.9 1 1.5 0.36 2.7 0.25 0.3 2.2 0.4 0.35 1.296 3.704

Rating
Sample 1 2 3 4 5 6 7 8 9 10 Average
(1-5)
Cuisine 4 5 4 1 2 4 3 1 5 3 3.2 3.2
Frequency 5 2 5 2 4 2 2 5 2 5 3.4 3.4
Purchasing power 350 350 350 1500 750 750 350 750 750 350 625 3.125
Ambience 2 3 4 1 2 1 3 2 1 1 2 2
Transport 4 5 5 5 4 4 4 4 5 5 4.5 4.5
Rent (Lakhs) 3.8 2.5 4 1.6 2.5 2.3 3 2.3 3.2 3 2.82 2.18
Mumbai (R4)
 FACTOR RATING

The weightage has been gives as per the importance of the factor, and menu
pricing has been taken from the purchasing power of the customers.
Form the data collected we can make the following table

Bangalore Bhubaneswar Kolkata Mumbai

Sl. Weight
Factor
No (W) Rating Total= Rating Total= Rating Total= Rating Total=
(R1) W*R1 (R2) W*R2 (R3) W*R3 (R4) W*R4
1 Rent 30 4.16 124.8 4.224 126.72 3.704 111.12 2.18 65.4

2 Accessibility 15 3.6 54 3.9 58.5 3.6 54 4.5 67.5

Frequency of
3 20 3.2 64 3.7 74 3.4 68 3.4 68
visit
Menu
4 20 2.75 55 2.35 47 2.925 58.5 3.125 62.5
pricing
5 Ambience 5 2.7 13.5 2 10 1.5 7.5 2 10

6 Cuisine 10 3 30 3.8 38 3.8 38 3.2 32

  TOTAL 100   341.3   354.22   337.12   305.4

From this table we can rank the location using the total scores for each location
1. Bhubaneswar
2. Bangalore
3. Kolkata
4. Mumbai

CONCLUSION
Bhubaneswar the highest score, hence it is the best location to open a new
restaurant, whereas Mumbai has the lowest score, hence it is the worst place to
open a new restaurant.