Unit-2 Introduction To Plant Layout and Location

Unit-2 Plant Location and Layout
ACHARYA INSTITUTE OF GRADUATE STUDIES

(NAAC Re-Accredited and Affiliated to Bengaluru City University)
Soldevanahalli, Bengaluru-560107
DEPARTMENT OF COMMERCE
FACULTY NAME: LAKSHMI V

CLASS: III BBA AVIATION Semester: 2021-22 (ODD)
PRODUCTION AND OPERATIONS MANAGEMENT
LECTURE NOTES
Unit-2 Plant location and layout
Plant should be located at a place where inhabitants are interested in its success and the
product can be sold profitably with minimum production cost. Plant location is often resulting
compromise among conflicting social, economic and geographical conditions. Layout
decisions entail determining the placement of department, work groups within the
departments, workstations, machines, and stock holding points within a production facility.
The objective is to arrange the elements in a way that ensures a smooth work flow in a
factory or a particular traffic pattern.
Meaning and Definition of Plant location:
Plant location refers to the area where the plant will operate to produce goods or services. It is
the function of determining where the plant should be located for maximum operating
economy and effectiveness.
According to Bethel Smiths & Alwater, “Plant location is that spot where, in consideration of
the business as a whole, the total cost of production & delivering goods to all the consumers
is the lowest”.
Importance of Plant location:
1. The location of plant will fix the production technology and cost structure.
Eg: A manufacturing plant, which is located in an under-developed country, will choose a
labor intensive process to utilize the availability of low cost labor.
A small scale firm normally selects the location near to the local market. But for big
firms, the amount of investment required largely depends on the location selected. Since
these investments are irreversible in nature at least in the short run, the management of
the firm should be careful in selecting a site.
Eg: An automobile manufacturing unit cannot be shifted from one place to other.
2. The location of the plant affects the company’s ability to serve its customers quickly
and conveniently.
Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

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Factors to be considered while selecting a suitable Plant location:

Decision regarding location requires a careful balancing of several factors. The factors that
should be taken into account while determine location of a plant are:
1. Within the country or Outside

A suitable plant location can be selected within country or abroad. The selection will
consider the availability of future market consideration and huge demand of the product.
If the company decides to go international, it will become necessary to decide upon a
particular country as countries compete with each other to attract foreign investment.
Factors such as: political stability, export-import restrictions, quotas, exchange rates,
cultural and economic conditions etc. will influence the selection of a particular country.
2. Selecting the region

The various factors to be considered while selecting a particular region are given
below:
a. Availability of raw materials
Raw materials usually constitute 50 to 60% of the total product cost, it is important that
the firm gets its requirement of raw materials at the right time and at the reasonable price
for which the plant must be located in the neighborhood of some source which can meet
the raw material requirement of the unit “Proximity to supply of raw material” factors
assumes still greater importance If raw materials are of perishable nature. Proximity to
sources of raw materials is equally important for small units. The availability of materials
to small units to a large extent thus depends on their follow up and personal visits to the
suppliers plant which is possible only if the buyers’ plant is close by. Hence it is
important that the plant should be located near the source of raw materials thereby
reducing transport costs.
b. Nearness to the market
Plant location should be near to the market which facilities the easily distribution and
transportation. This means it is necessary to locate the plant near market. It gives
advantage such as (i) Provision of other sales services. (ii) Executive of replacement
orders without delay. (iii) Rendering of effective and prompt services to customers. (iv)
Reduced transportation cost. Every company is in business to market and it can survive
only if their product reaches the consumers on time and at the competitive price.
c. Adequate power supply
The area of plant location should ensure the adequate power supply facilities. No industry
can function without the availability of adequate power. Coal, electricity, oil and natural
gas are the main sources of power.
d. Transport facilities
Transportation cost to the value added is a key determinant of the plant location. The need
of transport arises because raw materials and fuel are to be moved to factory are
indispensable for bringing raw materials and labor to factory and for carrying finished

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goods from factory to the market. Hence, a place which is well connected by rail, road ad
water is ideal for plant location.
e. Suitability of climate
Climatic factors may not have major influence these days because of modern air
conditioning facilities available today. However, it may be important factor for certain
industries like textile mills, which require high humidity. Climate plays a very important
role in the location of a plant.
3. Selection of the locality or community
Having selected a particular region in a particular country, the management now
needs to select a particular locality or community. This is influenced by the
following factors:
a. Labor and wages
Plant location should be such that required labor is easily available in the neighborhood.
Importing labor from outside is equally costly and it causes lot of administrative
problems. Availability of required labor locally is better since problem of arranging
accommodation and other related problems do not arise. Since normally workers with
specific skills are required, some sort of training facility should also be available in the
neighborhood. Skilled employees are easily available in ITI’s, or engineering colleges are
there in the neighborhood.
b. Civic Amenities
A place with civic amenities such as theaters, parks, schools, entertainment centers, clubs
etc will be preferred over another place which lacks them.
c. Finance and research activities
The success of an organization needs adequate capital and it needs to be dynamic. For this
reason, research facilities are essential. A place where such facilities are available and
where raising capital is easily naturally attracts new industries.
d. Complementary and competing industry
Existence of complementary industries offers the following benefits to the location of
plant: (i) Materials can be procured on better terms. (ii) A group of plants will attract a
variety of ancillary plants (iii) Loan facilities are easily available.
e. Legislation and taxation
The policies of the state government and local bodies relating to issue of licenses,
building codes, labor law etc are the factors in selection/ rejecting a particular
community/ site. In order to disperse industries and ensure balanced economic growth,
both central and state government offer a package of incentives for setting up industries in
particular location. Exemption from excise duty, sales tax and loans from financial
institutions, subsidy in electricity charges etc are some of the incentives offered. Since
taxes and duties levied by the state government and local bodies substantially influence
product cost, the incidence of such taxes/levies must be taken into account while selecting
a community/site.
f. State assistance
State provides assistance like feasibility study subsidy: investment subsidy, concession on
term loans, processing fees, working capital loan, stamp duty exemption, sales tax

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exemption to some extent, subsidy on electricity tariff, technical guidance, raw materials,
marketing facilities, allotment of land and shed to entrepreneurs.
4. Selection of exact site

a. Suitability of land
Site selection should also take into account topography and soil structure of the land. The
soil structure must be capable of bearing loads of foundations. Though modern building
techniques can overcome the limitation of the soil, but if considerable improvement is
required then selection of a low cost and may ultimately turn out to be expensive.
b. Availability and cost of the land
Site size must be large enough to accommodate the present production facilities, parking
and access facilities but also leave sufficient room for future expansion. As a general rule,
a site five times and actual plant size is considered minimum for all these things including
future expansion.
c. Waste disposal
The site chosen should have facilities for effective disposal of waste in order to avoid
health hazards to the society and people. There must be enough vacant land for dumping
for solid waste.
Error in selection of Plant location:

1. Personal likes and unfairness of key executives or owners overriding impartially
established facts.
2. Unwillingness of key executives to move from traditional established home ground to
new better location.
3. Lack of thorough investigation and consideration of factors involved.
4. Moving to congested areas already or about to be over industrialized.
5. Preference for acquiring an existing structure.
6. Choice of community with low cultural and educational standards, so that key
administrative and technical personnel eventually accept employment elsewhere.
Theory of Plant location:

1. Median Location Theory
A basic principle of location theory stating that an activity will select the median or
middle point of location when selling an output to, or buying an input from, activities
located a disperse points. In particular this analysis indicates that the activity will locate at
the median point, with an equal number of attraction points in any direction, rather than
the arithmetic average of the distances to all points. The analysis imposes several
restrictive assumptions, including a trip to each location, the same transit cost per mile to
each location, the same quantity of output solid to, or input purchased from each location.
The principle of median voter is a similar principle that has been developed in the public
choice study of voting behavior.
2. Linear Market Competition ( Hotelling)

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Hotelling was one of the first to introduce the principle of spatial competition (1929) by
investigating how seller would choose locations along a linear market.
He assumed that the product was uniform so customers would buy from the nearest seller
and that the friction of distance was linear and isotropic.
The total price the customer is thus the market price plus the transport price. Under such
circumstances, two competitors will select location A and B for optimal market coverage.
With P1 being the market price, the market boundary would be F1 ( point of cost
indifference) since right of F1, customers would get a lower price at location B instead of
location A and left of F1, customers would get lower price at location A. If for any
reasons, location A is able to lower the market price from P1 to P2, then its market area
would expand at the expense of location B, from F1 to F2.
3. Alfred Weber’s Plant location theory

Weber formulated a theory of industrial location in which an industry is located where
it can minimize its costs, and therefore maximize its profits. Weber’s least cost theory
accounted for the location of a manufacturing plant in terms of the owners desire to
minimize three categories of cost:
1. Transportation: The site chosen must entail the lowest possible cost of:
(i) Moving raw materials to the factory
(ii) Finished products to the market
Thus according to Weber, is the most important.
2. Labor: Higher labor costs reduce profits, so a factory might do better farther from
raw material and markets if cheap labor is available (eg., China- today)
3. Agglomeration: When large number of enterprises cluster in the same area (city)
they can provide assisting to each other’s through shared talents, services and
other facilities( eg., manufacturing plants need office furniture)
Weber’s Theory of Industrial Location (The pure theory)
Alfred Weber, a German economist, enunciated a systematic theory of industrial
location in 1909. Weber’s theory of location is purely deductive in its approach. He
analyzed the factors that determine the location of industry and classified these factors
into two divisions. These are:
1. Primary causes of regional distribution of industry( regional factors)
2. Secondary causes (agglomerative and deglomerative factors) that are responsible
for re-distribution of industry.
The factors that determine the location of industry:
1. Primary causes: According to Weber, transport costs and labor costs are the two
regional factors on which his pure theory is based. Assuming that there are no
other factors that influence the distribution of industry, except transportation costs.
Then it is clear that the location of industry will be pulled to those locations which
have the lowest transportation costs. The key factors that determine transportation
costs are:
a. The weight to be transported, and
b. The distance to be covered.

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Weber lists some more factors which influence the transportation costs such as:
i) The type of transportation system and extent of its use,
ii) The nature of the region and kinds of roads
iii) The nature of goods themselves, i.e., the qualities which, besides weight,
determine the facility of transportation.
However, the location of the place of production must be determined in relation to the place
of consumption and the most advantageously located material deposits. Thus, ‘location
figures’ are created. These location figures depend upon:
i) The type of material deposits, and
ii) The nature of transformation into products.
Weber classified and calls those raw materials, which are available practically everywhere as
‘ubiquities’ (like bricks-clay, water, etc.) and ‘localized’ (like iron-ore, minerals, wood. Etc)
which are available only in certain regions. It is clear that localized materials play a more
important role on the industry than the ubiquities. Further, regarding the nature of the
transformation of materials into products, Weber categorized the raw materials as ‘pure’ and
‘weight losing’. Pure materials impact their total weight to the products (e.g., cotton, wood.
Etc) and the materials are said to be ‘weight losing’ it only a part enters into the product (e.g.,
wood, coal, etc.) Hence, the location of industries using weight-losing materials is drawn
towards their deposits and that of industries using pure-materials towards the consumption
centres.
2. Secondary causes (Agglomerative and Deglomerative factors): An agglomerative factor is
an advantage or a cheapening of production or marketing which results from the facts that
production is carried-on at one place. A deglomerative factor is a cheapening of production
which results from the decentralization of production, i.e., production in more than one place.
To some extent these agglomeration and deglomeration factors also contribute to local
accumulation and distribution of industry. These factors will operate only within the general
frame work formed by the two regional factors, i.e., cost of transportation and cost of labor.
The advantages which could be derived in this context are external economies.
The pulls which the agglomeration factors possess to attract an industry to a particular point
are mainly dependent on two factors. Firstly, on ‘the index of manufacture’ and secondly, on
the ‘location weight’. To deduce a general principle, Weber uses the concept of “co-efficient
of manufacture” which is the ratio of manufacturing cost to location weight. Agglomeration
is encouraged with high co-efficient of manufacture and deglomeration with low co-efficient
and these tendencies are inherent in their nature.
Plant Location Decision Process

1. Define the location objectives and associated constraints:
The location objectives and associated constraints are defined on the basis of the
views are requirement of the promoters, owners, employees, suppliers, and customers
of the firm.
2. Identify the Relevant Decision Criteria:

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Firms should select a location by formulating relevant decision criteria. The criteria
should include several economic factors such as labor and material cost, and non
economic factors such as impact of the plant on the surrounding environment.
3. Relate the objectives to the criteria using appropriate models:

Using the models like break even analysis, linear programming, and qualitative factor
analysis, the relevant decision criteria should be evaluated. Though it is preferred to
model the location decision process in a systematic and quantitative manner, it is
difficult to quantify the intangible criteria. Therefore, the judgment of responsible
managers is taken into consideration to obtain a solution.
4. Select the location that best satisfies the criteria:
A location, which can meet the defined objectives, is able to satisfy the criteria and
provides benefits to the community should be selected.
Cost Factor in Location:

Main consideration in plant location is to minimize the total cost which consists of capital
cost, operating cost, and distribution cost. The location of plant determines all the three as is
evident from the following:
1. Capital cost: It consists of cost of land, land development, building and services like
air conditioning, effluent disposal, environmental protection measures, and
infrastructural facilities such as water, electricity, township, quarters, etc. In addition,
in house facilities depend on its availability or otherwise of such facilities in the
selected location.
2. Operation cost: It consists of cost of capital, overhead and depreciation on capital,
cost of materials, labor and cost of working capital. These have direct bearing on the
availability and cost of labor and raw materials in the location selected.
3. Distribution cost: It is transportation and sales cost. The transportation and sales cost
naturally depends on the cost of communication such as rail, road, air transportation,
telex, telephone and postage expenses, tax expenses. This again depends on the
distance of plant from the market.
Plant Layout
Meaning:
It refers to the arrangement of facilities. A plant layout refers to the arrangements of
machinery, equipment and other industrial facilities such as receiving and shipping
departments, tool rooms, maintenance rooms and employee amenities for the purpose of
achieving the quickest and smoothest production at the least cost.

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Definition:
According to Keith and Gubellini, “Plant layout deals with the arrangement of the physical
facilities and the manpower which are required to manufacture a product or perform a
service.
Objectives of good layout:

1. Integrate the production centers: A good layout integrates the production centers
into a logical, balanced and effective production unit.
2. Reduce material handling: The equipments may be arranged in such a manner to
minimize material handling and transportation.
3. Effective utilization of available space: The layout determines the location of
departments and production centers, their proximity to each other and to various
services, and hence the efficient utilization of the available space. Moreover, a good
layout utilizes space, both vertical and horizontal in the best possible manner.
4. Workers convenience and job satisfaction: It is obvious that everybody wants to
work in a pleasant and clean environment. Reducing excessive noise and safety are
the factors that should be considered while planning a layout. Further, attention to
such items as convenient working temperature, ventilation, and light, removal of
moisture and dirt and safety is also important in promoting workers job satisfaction.
5. Flexibility: A good layout should be adaptable to possible changes in the plant’s
production programme; either changes in product design or changes in the required
output. Since these changes may necessitate re-arrangement of equipment or
expansion or the plants facilities.
6. Quick disposal of work: Good layout allows quick disposal of work and minimum
waste of time in production.
7. Avoids industrial accidents: By providing adequate space for the movement of men,
material, etc., and by proper arrangement for storages, and good environment helps to
minimize accidents.
8. Eliminates physical efforts required of operative workers.
9. Maintenance of decency and orderliness inside the plant area.
Plant layout principles:

1. Maximum flexibility: A good layout will be one which can be rapidly modified to
meet changing circumstances. In this context, particular attention should be paid to
supply of services, which should be ample and easy access.
2. Maximum coordination: Entry into and disposal from any department or functional
area should be in such a manner that it is most convenient to the issuing or receiving
department. Layout requires to be considered as a whole and not partially.
3. Maximum use of volume: Facilities should be considered as cubic devices and
maximum use made of the volume available: cables, pipelines and conveyors can be

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run above head-height and used as moving work-in- process stores, or tools and
equipment can be suspended from the ceiling.
4. Maximum visibility: All the people and materials should be readily observable at the
times: there should be no ‘hiding places’ into which goods or information can get
mislaid. This criterion is sometimes difficult to fulfill, particularly when an existing
facility is taken over.
5. Maximum accessibility: All servicing and maintenance points should be readily
accessible. Eg: equipment should not be placed against a wall in such a manner that
necessary maintenance cannot easily be carried out.
6. Minimum distance: All movement should be both necessary and direct. Handling
work adds to cost but does not increase value; consequently any unnecessary or
circuitous movement should be avoided.
7. Minimum handling: The best handling of materials and information is no handling,
but where it is unavoidable it should be reduce to a minimum by the use of whatever
devices are most appropriate.
8. Minimum discomfort: Draughts, poor lighting, excessive sunlight, heat noise,
vibration and smells should be minimized and if possible counteracted. Apparently
trivial discomforts often generate troubles greatly out of proportion to the discomfort
itself. Attention paid to the lighting and general decoration and furniture can be
rewarding without being costly.
9. Inherent safety: All layouts should be inherently safe, and no person should be
exposed to danger.
10. Maximum security: Safeguard against fire, moisture, theft and general deterioration
should be provided, as far as possible in the original layout rather than in later
accretions of cages, doors and barriers.
11. Efficient process flow: Work flow and any transport flow should not cross. Every
effort must be made to ensure that paper or material flows in one direction only, and a
layout which does not conform to this will result in consideration difficulties, if not
downright chaos.
12. Identification: Whenever possible, working groups should be provided with their
‘own’ working space. The need for a defined ‘territory’ seems basic to many animals
including the human being, and provision of a space with which a person can identify
can often enhance morale and provide a very real feeling of cohesion.
Importance of plant layout:

1. Economies in Handling: Nearly 30 to 40% of the manufacturing cost is accounted
for, by materials handling. Every effort should, therefore, be made to cut down on this
cost. Long distance movements should be avoided and specific handling operations
must be eliminated. In a factory, materials have to be handled; and therefore, the
answer to the question how best to avoid handling depends on layout.
2. Effective use of available area: Every inch of the plant area is valuable, especially in
urban areas. Efforts should therefore be made to make use of the available area by
planning the layout of equipment and services in order that they may perform multiple

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functions; developments of up to date work areas and operate job assignments for a
full utilization of the labor force.
3. Minimization of production delays: Repeat orders and new customers will be the
result of prompt execution of orders. Every management should try to keep to the
delivery schedules.
4. Improved quality control: Timely execution of orders will be meaningful when the
quality of the output is not below expectations. To ensure quality, inspection should
be conducted at different stages of manufacture. An ideal layout provides for
inspection to ensure better quality control.
5. Minimum equipment investment: Investment on equipment can be minimized by
planned machine balance and location, minimum handling distances, by the
installation of general purpose machines and by planned machine loading. A good
plant layout provides all these advantages.
6. Avoidance of Bottlenecks: It refers to any place in a production process where
materials tend to pile up or produced at rates of speed, less rapid than the previous or
subsequent operations. Bottlenecks are caused by inadequate machine capacity,
inadequate storage space or low speed on the part of the operators. The results of
bottlenecks are delays in production schedules, congestion, accidents and wastages of
floor area. All these may be overcome with an efficient layout.
7. Better production control: Production control is concerned with the production of a
product of the right type at the right time and at reasonable cost. A good plant layout
is a requisite of good production control and provides the plant control offers with a
systematic basis upon which to build organizational procedures.
8. Better supervision: A good plant layout ensures better supervision in two ways:
i. Determining the number of workers to be handled by a supervisor
ii. Enabling the supervisor to get a full view of the entire plant at one glance.
9. Improved utilization of labor: Labor is paid for every hour he spends in the factory.
The efficiency of a management lies in utilizing the time for productive purpose. A
good plant layout is one of the factors in effective utilization of labor.
10. Avoidance of unnecessary and costly changes: A planned layout avoids frequent
changes which are difficult and costly. The incorporation of flexibility elements in the
layout would help in the avoidance of revisions.
Factors influencing plant layout:

1. Materials: It influence plant layout that there is a need to provide for the storage and
movement of raw materials in a plant until they are converted into finished products.
Every factory should buy raw materials economically when they are available they
should be stored properly and moved through production centers efficiently for
manual or mechanical operations.
2. Product: A layout is designed with the ultimate purpose of production of producing a
product the type of production i.e. whether the product is heavy or light, big or small,

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liquid or solid and it is position in relation to the pant location influence the layouts.
In a majority of cases the product moves from work station to work station.
3. Workers: The layout designers should also consider the type, position and
requirements of employees. If women workers are employed the layout should be
planned after keeping in mind their particular requirement. The position of employees
i.e. whether they remain stationary or moving, also influences the layout. Employee
facilities such as health and related services looks rooms and toilets also influences
the layout significantly. Employee safety must also receive due consideration.
4. Machinery: The type of the product the volume of production, the type of process
and management policy determines the size and type of machinery to be installed
which in turn influences the plant layout.
5. Type of industry: The type of industry and method of production influences the
layout of the plant to a great extent. There are four types of industries, namely (a)
Synthetic. (b) Analytical. (c) Conditioning and. (d) Extractive.
6. Managerial policies: Top management policies such as: (a) Volume of production
and provision of expansion. (b) Extent of automation. (c) Purchase policy. (d)
Personnel policy. (e) Make/buy decisions of a particular component.
Types of Plant layout:

1. Production line layout: Under this type of layout the machines and equipment are
arranged in one line depending upon the sequence of operations required for the
product. It is also called as line layout. The material moves to another machine
sequentially without any deviation. It is used for mass production of standardized
products.
Advantages:
(i) Production layout scan generate a large volume of products in a short time.
(ii) Unit cost is low as a result of the high volume and labor specialization results in
reduced training time and cost.
(iii) A wider span of supervision also reduces labor costs.
(iv) Accounting, purchasing, and inventory control are routine because routing is
fixed, less attention is required.
(v) There is a high degree of labor and equipment utilization.
(vi) The flow of product will be smooth and logical in flow lines.
(vii) Unskilled workers can learn and manage the production.
Disadvantages:
(i) The system inherent division of labor can result in dull, repetitive jobs that can
prove to be quite stressful. Assembling line layouts make it very hard to
administer individual incentives plans.
(ii) Product layouts are inflexible and cannot easily respond to required system
changes especially changes in product or process design.
(iii) The system is at risk from equipment breakdown, absenteeism, and downtime due
to preventive maintenance.
(iv) A change in product design may require major alteration in the layout.

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(v) The line output is decided by the bottleneck machine.

(vi) Comparatively high investment in equipment is required.
2. Process or functional layout: Under this type of layout the machines of similar type
are arranged together at one place. This type of layout is used for group production. It
is preferred when the product is not standardized and the quantity produced is very
small.
Advantages:
(i) Lower initial capital investment is required.
(ii) In process layout machines are better utilized and fewer machines are required.
(iii) Flexibility of equipment and personnel is possible in process layout.
(iv) Lower investment on account of comparatively less number of machines and
lower cost of general purpose machines.
(v) There is high degree of machine utilization, as a machine is not blocked for a
single product.
(vi) Breakdown of one machine does not disturb the production process.
(vii) Supervision can be more effective and specialized.
Disadvantages:
(i) Materials handling costs are high due to backtrack.
(ii) More skilled labor is required resulting in higher cost.
(iii) Work in progress inventory is high needing greater storage space.
(iv) Backtracking and long movement may occur in the handling of materials thus,
reducing material handing efficiency.
(v) Material handling cannot be mechanized which adds to cost.
(vi) Process time is prolonged which reduce the inventory turnover and increases the
in process inventory.
3. Fixed position or location layout: It involves the movement of manpower and

machines to the product which remains stationary. The movement of men and
machines is available as the cost of moving them would be lesser. This type of layout
is preferred where the size of job is large and heavy.
Advantages:
(i) The investment on layout is very small.
(ii) The layout is flexible as change in job design and operation sequence can be
easily incorporated.
(iii) Adjustment can be made to meet shortage of materials.
Disadvantages:
(i) As the production period being very long so the capital investment is very high.
(ii) Very large space is required for storage of materials and equipments near the
product.

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(iii) As several operations are often carried out simultaneously so there is possibility of
confusion and conflicts among different workgroups.
Combined layout: A combination of process and product layout is known as combined

layout. A combination of the product and process layouts, with an emphasis on either, is
noticed in most industrial establishment.
Advantages:
(i) Manufacturing concerns where several products are produced in repeated number.
(ii) Supervision can be more effective and specialized.
(iii) Smooth and continuous operations.
Disadvantages:
(i) Higher initial capital investment.
(ii) More skilled labor is required resulting in higher cost.
(iii) Breakdown of one machine will disturb the production process.
Cellular plant layout: In cellular plant layout, the materials and information entering the
operation are pre-selected to move to one part of operation in which all the machines to
process these resources are located. After being processed in the cells, the part-finished
products may go on to another cell. In effect the cell layout brings some order to the
complexity of flow that characterizes process layout. An example is specialist computer
component manufacture.
Advantages:
(i) Cellular layouts are lower work-in-process inventories.
(ii) Reduced material handling costs.
(iii) Shorter flow times in production.
(iv) Simplified production planning.
Disadvantages:
(i) Reduced manufacturing flexibility and potentially increased machine down time.
(ii) Duplicate pieces of equipment may be needed so that parts need not be
transported between cells.
Space requirement:
It finalizes the area, suitable to the function and ventilation. Rules and regulations
regarding plant layout should be referred to at this stage.
An architect should study the regulations and bye-laws laid down by the corporation,
municipal authority, town planning department and industrial development corporation or
revenue department as per its jurisdiction. The plan of any type of building must fulfill
the requirements mentioned in the code, architects, contractors, civil engineers, and
draftsmen are supposed to keep a copy of these bye-laws with them for ready reference
along with the amendments thereto.
Factor considered for space requirement:

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The space requirement should be checked even for the smallest unit, such as wash basins,
etc. Hence, the points to be considered for space requirement are:
1. Regulations and bye-laws of the plan sanctioning authority.
2. Establishment of area for different units:
i) Function
ii) Number of persons
iii) Furniture requirements
3. Flexibility
4. Sanitation
5. Requirement for air condition, equipment and other provision.
6. Cubical requirements for ventilation.
Methods of determining space requirements:
1. Production centre method: It consists of a single machine with all the associated
equipment and space required for its operation. Work space, maintenance space,
material set-down space and access space for aisles are added to the space
requirement for the machine. This is then multiplied by the number required of each
pieces of machinery; and added in space allowances for aisles and in general or for
support areas.
2. Conversion method: The amount of space required currently for each machine, a
machine group or activity area is determined. Adjustment is made of this to what
should be used to perform the job efficiently. Then the conversion of this is done by
some factor or multiplier to determine what would be needed for the new requirement.
This method is mostly used to determine space requirements for supporting services
and storage areas.
3. Rough layout method: A rough detailed layout plan to scale is prepared using
templates or models to obtain an estimate of the general configuration and space
requirements.
4. Ratio trend and projection method: In this method one establishes a ratio of area to
some other factor that can be measured and predicted for the proposed layout. By
knowing the projected denominator the corresponding area requirement can be
calculated.
Facilities utilities
It is now well recognized that factory conditions exert a powerful influence on the efficiency
of the worker. They act both directly and indirectly. The direct effect of good lighting and
suitable heating can easily be recognized, but the indirect effect may be equally important.
Bad factory conditions may cause a lowering of health and well-being, a slackness and
depression of spirits, which react on the productivity of the worker. In course of time, they
may include chronic ill-health and seriously reduce the duration of industrial life. Hence, bad
factory conditions are economically unsound as well as morally reprehensible.
Different types of factories

1. Factory building

14
2. Lighting
3. Ventilation
4. Air-condition
5. Noise control
6. Sanitation
Factory building:
It is a factor which is the most important consideration for every industrial enterprise. A
modern factory building is required to provide protection for men, machines, products or
even the company secrets. It has to serve as a part of the production facilities and as a factor
to maximize economy and efficiency in plant operations. It should offer a pleasant and
comfortable working environment and project the management image and prestige. Factory
building is like skin and bones of a living body for an organization. It is for these reasons that
the factory building acquires great importance.
Factory considered in factory building

Following factors are considered foe an industrial building:
1. Design of the building
2. Types of building
1. Design of the building: The building should be designed so as to provide a number

of facilities – such as lunch rooms, cafeteria, locker room, crèches, libraries, first-aid
and ambulance rooms, materials handling facilities, heating, ventilation, air-
conditioning etc. Following factors are considerations in the designing of the factory
building:
i) Flexibility: It is one of the important considerations because the building is
likely to become obsolete and provide greater operating efficiency even when
processes and technology change. Flexibility is necessary because it is not
always feasible and economical to build a new plant, every time a new firm is
organized or the layout is changed. With minor alterations, the building should
be able to accommodate different types of operations.
ii) Product and equipment: The type of product that is to be manufactured,
determines column-spacing, type of floor, ceiling, heating and air-
conditioning. A product of a temporary nature may cell for a less expensive
building and that would be a product of a more permanent nature. Similarly, a
heavy product demands a far more different building than a product which is
light in weight.
iii) Expandability: Growth and expansion are natural to any manufacturing
enterprises. They are the indicators of the prosperity of a business. The
following factors should be borne in mind if the future expansion of the
concern is to be provided for:

15
a) Area of the land: The area of the land which is to be acquired should be large
enough to provide for the future expansion needs of the firm and accommodate
current needs.
b) Design of the building: The design of the building should be in a rectangular
shape. Rectangular shapes facilities expansion on any side.
c) Vertical expansion: If vertical expansion is expected, strong foundations,
supporters and columns must be provided.
d) Horizontal expansion: If horizontal expansion is expected, the side walls must be
made non-load-bearing to provide for easy removal.
iv) Employee facilities and services area: Employee facilities must find a proper
place in the building design because they profoundly affect the morale,
comfort and productivity. The building plan should include facilities for lunch
rooms, cafeteria, water coolers, parking area and the like. The provision of
some of these facilities is a legal requirement.
Service areas, such as the tools room, the supervisor’s office, and the
maintenance room, receiving and dispatching stations, the stock room and
facilities for scrap disposal, should also be included in the building design.
2. Types of building: Industrial buildings may be grouped under two types:

i) Single story building: Most of the industrial buildings manufacturing which are
now designed and constructed are single storey building offer several operating
advantages. A single storey construction is preferable when materials handling is
difficult because the product is big or heavy, natural lighting is desired, heavy
floor loads are required and frequent changes in layout are anticipated.
Advantages:
a) There is a greater flexibility in layout and production routing.
b) The maintenance cost resulting from the vibration of machinery is reduced
considerably because of the housing of the machinery on the ground.
c) Expansion is easily ensured by the removal of walls.
d) The cost of transportation of materials is reduced because of the absence of
materials handling equipment between floors.
e) All the equipment is on the same level, making for an easier and more
effective layout supervision and control.
f) Greater floor load bearing capacity for heavy equipment is ensured.
Disadvantages:
a) High cost of land particularly in the city.
b) High cost of heating, ventilation and cleaning of windows.
c) High cost of transportation for moving men, material to the factory which is
generally located in the city.
ii) Multi-storey building: School, colleges, shopping complex and residences and
for service industries like software, BPO. Multi-storey structures are generally
popular, particularly in cities. Multi-storey building is useful in manufacture of

16
light products, when the acquisition of land becomes difficult and expensive and
when the floor load is less.
Advantages:
a) Maximum operating floor space.
b) Lower cost of heating and ventilation.
c) Reduced cost of materials handling.
Disadvantages:
a) Material handling becomes very complicated.
b) A lot of space is wasted on elevators, staircases and fire escapes.
c) Floor load-bearing capacity is limited.
d) Natural lighting is limited.
e) Layout changes cannot be effected easily and quickly.
Lighting:
There are many different types of industries that need industrial lighting. Manufacturing
facilities require specific types of industrial lighting to illuminate their exterior grounds, their
indoor shipping and receiving bays, and their production areas. They are critical to task
lighting that workers need to safely operate machinery and assemble parts.
Characteristics of good lighting:

1. Light should be of sufficient intensity for the particular operation being performed.
2. Light should be diffused and not glaring.
3. Light should be equally bright throughout the shop floor.
4. Light should not permit marked shadows.
5. Dazzling light should be avoided.
Advantages:
1. Increased output therefore decreased costs.
2. Reduced accidents.
3. Improved product quality.
4. Better visibility.
5. Less spoilage and consequent rework.
6. Better floor space utilization.
7. Plant neatness and cleanliness can be maintained.
8. Easier and better supervision.
9. Improved morale among employees resulting in reduced labor turnover.
Types of light sources in a factory:

i) General lighting services: An element of tungsten is heated up to a point where it
emits visible light of orange yellow color. GLS lamp are not ideal for industries,
as they are less efficient, less durable, and sensitive to voltage fluctuations,

17
incapable of giving the day light color and product heat. But they are cheap and
the installation is easy.
ii) Fluorescent lamps: Introduced in 1940 fluorescent lamps are widely used in
industries lighting. Energy is released by electron bombardments. The light
produced is like day light and is uniformly distributed. There is no glare, heat
produced in less and it is better suited for air conditioned operations.
iii) Electro-Luminescent lamps or mercury vapor lamps: Light is produced by an
electric are through mercury vapor in a long glass tube housed in a trough like
reflector. The light produced is of blue green color with a high luminous
efficiency. The cost is low and these do not produce sharp shadows. Halogen light
in street lighting.
Types of light in factory:

1. Natural light: It is the light which is supplied by the sun. Light originates from stars
like the sun, so solar light is the form of natural light with which people are most
familiar and use most. It also can occur as a result of chemical processes on or in the
earth.
2. Artificial light: It is man-made, such as fluorescent, tungsten, mercury vapor, sodium
vapor, halogen, compact fluorescent, etc. It can be turned on and off at a flick of a
switch.
Air conditioning:
It refers to any form of cooling or heating that modifies the conditions of the air. An air
conditioner is an appliance, system, or machine designed to change the air temperature
and humidity within an area, It means simultaneous control of temperature and humidity
and distribution and purity of air by artificial means.
Objectives of Air condition:

1. To increase workers comfort level: Workmen feel happy when they have the correct
temperature, humidity and fresh air flow suited to the body. Too many people
working in the same place makes the air vitiated and stuffy, creating an unpleasant
smell. Hence there should be sufficient ventilation or air condition.
2. To protect workers health: Certain factories create injuries fumes, bad smell, dust,
bacteria etc. During the manufacturing operations which spoils the workers health.
Air conditioning helps in such situation by controlling the quality of the air.
3. To increase the productivity: When workers are comfortable and happy they put in
more work. Thus good working condition helps to increase the productivity.
4. To improve the quality of products: Quality is the combination of several attributes-
forms, finish, color dimension, strength, durability and utility. To incorporate these

18
attribution in an object and make it highly useful, air conditioning is necessary,

particularly in such industries as foodstuff, chemicals etc.
5. To increase the prevention of products: Perishable articles like food items
deteriorate faster. To preserve these, air conditioning is required.
6. To secure specified temperature conditions: Certain manufacturing requires air
conditioning as they require specific conditions of temperature. For e.g. in light
engineering industries which manufacture precision products, air conditioning is
necessary to prevent the expansion or contractions of metal and maintain tolerance in
microns.
7. To reduce in maintenance cost: The equipment may be affected when exposed to
temperature changes, moisture, foreign substances and corrosive fumes. To prevent
this air conditioning is required.
8. To improve employer-employee relations: The installation of air conditioning to
improve and protect the workers health will foster better between the employer and
the employees.
Types of Air conditioning

A. Depending on the season, air condition may be classified into:
1. Winter air conditioning: The various steps involved are: (i) Pre-heating (ii)
Humidification (iii) Purification by passing through air filters and (iv) Reheating.
2. Summer air conditioning: In summer air conditioning efforts are made to reduce the
temperature and humidity to comfortable limits. The various stages involved are: (i)
Cooling (ii) Dehumidification (iii) Air filtration (iv) Heating.
B. Depending on the purpose air conditioning may be classified into:
1. Comfort or domestic air conditioning: It provides comfort to the occupants. The
method of installation is called unit air conditioning or room air conditioning.
2. Industrial air conditioning: It aims at meeting the requirements of the
manufacturing process and equipment. Dust control, heat dissipation etc.
C. Depending on the coverage , air condition may be classified into:
1. Partial: It may be attained by one or more of the following installation like,
cooling system, ventilation system.
2. Complete: The installation of the complete air condition will provide
simultaneously for heating or cooling, ventilating, purifying.
Ventilation:
It is the dynamic parameter that complements the concept of air space. For a given number of
workers, the smaller the work premises, the more should be the ventilation.
Types of ventilation:
1. Natural ventilation: It is the use of wind and temperature differences to create
airflows in and through building.

19
2. Task ventilation: This system supply a mixture of outside and re-circulated air in
high velocity jets so that the indoor air in rooms is often well mixture.
3. Mechanical ventilation: The use of a machine to take over active breathing for a
patient. It is used when a patient can no longer breathe on his own due to injury,
illness or general anesthesia during surgery.
4. Hybrid ventilation: It is the mix of natural and mechanical ventilation. In this project
there is only one aspect of mechanical ventilation, which contributes to the hybrid
one: the fan which enhances the natural stack effect if the conditions are poor.
Industrial safety:
It can be defined as the control of recognized hazards to achieve an acceptable level of
risk. This is primarily a management activity which is considered with reducing,
controlling and eliminating hazards from the industries or industrial units.
Industrial safety measures:

1. Material handling safety: The hazards of using powerful equipment and of moving
heavy materials require a wide variety of protective measures to employees on the
site. This equipment ranges from the most basic forklift to cranes, derricks, hoists,
elevators and conveyors. The work talks about regulatory requirement and safe use
for this equipment. The work covers safe rigging and slings foe proper lifting, and
safety requirements for specific type of cranes, derricks, hoists, elevators, conveyors,
and forklifts. Bearing this in mind the cranes, hoists, lifts are periodically tested and
certificate issued for continuous use.
2. Industrial safety training programme: Safety training for different categories of
people is organized. Safety training for control personnel, for supervisors and for
engineers, is organized regularly.
3. Industrial safety activities: It includes monitoring of physical and chemical hazards.
Importance of industrial safety:

1. Treatment: Industrial safety management provides treatment for injuries and illness
at the work place.
2. Medical examination: It carries out medical examination of staff joining the
organization or returning to work after sickness or accidents.
3. Hazards identification
4. Provision of protective devices
5. Consultancy: It provides medical advised on other condition potentially affecting
health.
6. Education: It provides safety and health training.
Noise control:
The word industrial noise means an unwanted and unpleasant sound generating in industry.
Importance:

20
1. Long exposure to excessive noise impairs the hearing of employees. Noise control is
necessary to avoid such loss of hearing capacity.
2. Exposure to noise results in headache nervousness and fatigue.
3. Noise control assumes significance when one realizes its harmful effects on the
operations, in a plant.
4. Vibration will be having damaging effects on machinery and equipments noise
control assumes importance on this account as well.
5. The morale of the employee depends to a large extent on their working conditions.
Methods of controlling industrial noise:

1. Control at source: This meaning controlling noise at the point of generation itself.
The different ways of controlling noise are re-designing the machine or with new
elements such as bearing gears, spindles, repairing the machines or by substitution.
2. Control through enclosures: A large reduction in the level of noise may be achieved
by providing enclosures for machines with specially made covers or housing the noisy
machines in rooms. Care should therefore be taken to make the enclosure as complete
and perfect as possible.
3. Control by absorption: Noise may be reduced by absorbing the excessive noise
production by machines. Ceilings and walls may be constructed with sound materials
to absorb sound.
4. Control through ear protective: Where noise is excessive and other methods of
noise control are likely to be ineffective, employee working close to the noise
producing sources may be given ear protection to prevent any injury of the hearing
capacity.
Sanitation:
It is the science of safeguarding health of industrial workers. It involves the provision to
safeguard and promote the health of workers in an industry.
Elements of industrial sanitation:

1. Supply of water
2. Disposal of waste
3. Good industrial housekeeping
4. Avoidance and control of insects
5. Providing facilities for personnel services.

21

Unit-2 Introduction To Plant Layout and Location

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Unit-2 Plant Location and Layout

ACHARYA INSTITUTE OF GRADUATE STUDIES

FACULTY NAME: LAKSHMI V

PRODUCTION AND OPERATIONS MANAGEMENT

Unit-2 Plant location and layout

Meaning and Definition of Plant location:

Importance of Plant location:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Factors to be considered while selecting a suitable Plant location:

1. Within the country or Outside

2. Selecting the region

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

4. Selection of exact site

Error in selection of Plant location:

Theory of Plant location:

2. Linear Market Competition ( Hotelling)

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

3. Alfred Weber’s Plant location theory

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Plant Location Decision Process

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

3. Relate the objectives to the criteria using appropriate models:

Cost Factor in Location:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Objectives of good layout:

Plant layout principles:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Importance of plant layout:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Factors influencing plant layout:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Types of Plant layout:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

(v) The line output is decided by the bottleneck machine.

3. Fixed position or location layout: It involves the movement of manpower and

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Combined layout: A combination of process and product layout is known as combined

Factor considered for space requirement:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Different types of factories

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Factory considered in factory building

1. Design of the building: The building should be designed so as to provide a number

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

2. Types of building: Industrial buildings may be grouped under two types:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Characteristics of good lighting:

Types of light sources in a factory:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Types of light in factory:

Objectives of Air condition:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

attribution in an object and make it highly useful, air conditioning is necessary,

Types of Air conditioning

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Industrial safety measures:

Importance of industrial safety:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

Methods of controlling industrial noise:

Elements of industrial sanitation:

Prof. Lakshmi V MBA, M.Com, M.Phil., UGC-NET-JRF(Ph.D.)

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