Operations Assignment

Site Selection Exercise

Name: Gaurav Varshney

Roll No.: 21230022309
Batch: CK Prahalad
 Data for the cost of production.

1.Cost of production = Material cost + Labour cost + OH

Material cost will include the material (Rs 20,000/ to be supplied to vendor).
Labour cost includes – Fabrication cost plus assembly cost.
OH, will include the cost of transportation of material (Rs 20,000/) to the vendor
facility.
2.Telangana Govt. Is ready to give extra incentives to facilitate location.
3. Powai (HQ) in Mumbai City - Union is ready to allow their nominated vendor to work
at Mulund.
4.Hyderabad Vendor is a stockist for South India for last 25 years and is ready to start
soon.
5.Mulund in Mumbai: Factory Shed is ready for possession and company buses are
parked. Enough space available.
6.Engg. Offices in Powai (Mumbai), Pune, Hyderabad
7.Material to be supplied per Panel: Rs. 20,000/- (2 Trucks)
8.Truck Charges: Powai to Mulund Rs. 1000/- (per Truck)
Powai to Pune Rs. 5000/- (per Truck)
Powai to Hyderabad Rs. 8000/- (per Truck)
9.Marketing says there is a peak demand, may last for 2/3 years. Factory is incurring
heavy
overtime.

Total cost of production at all the 3 available site location

       
Cost Estimation
  Material Cost Fabrication Assembly Over Head Transportation Total Cost
Cost Cost Cost

Hyderabad ₹ 20,000.00 ₹ 7,500.00 ₹ 4,000.00 ₹ 21,000.00 ₹ 16,000.00 ₹ 68,500.00

Pune ₹ 20,000.00 ₹ 7,500.00 ₹ 5,400.00 ₹ 24,000.00 ₹ 10,000.00 ₹ 66,900.00

Mulund ₹ 20,000.00 ₹ 9,000.00 ₹ 7,000.00 ₹ 24,000.00 ₹ 2,000.00 ₹ 62,000.00

 Relevant location factors which can affect the site location selection
are:

1. Skilled Labour
2. Power Avail
3. Water Avail
4. Labour Union
5. Climate
6. Education Schools
7. Health Facility
8. Transport
9. Business Climate
10. Control by H.Q.

 Report of all the point for the rating of all quantitative factors is as
follows:

1. Union of Powai (HQ) in Mumbai City is ready to allow their nominated vendor to
work at Mulund which helps in the rating of labour union.

2. Climate, education facility and health facility doesn’t carry much importance for a site
location so I give 7%, 5% and 5% weightage respectively to each of them.

3. For Mulund Factory Shed there is enough available space for inward outward
operations. Being in the same city will affect the transport cost so for Mulund facility
location, transport will be less cost consuming and less time consuming as well. So, I
give 13% weightage to transport.

4. Control by H.Q is a must for locating any new site. So, 15% weightage goes for that
parameter.

5. Hyderabad and Mumbai have more availability of skilled labour so this location must
have the highest successive rating.

6. Power & water availability is adequate at all locations so it will not be a much
important parameter to select a better site location.

7. Pune and Mumbai serve the most suitable business climate among all the 3 available
site location.
 Factor Weightage Hyderabad Score Pune Scor Mulun Score
(Out of (Vendor) (Rating e d
100) Rating ) (Rating
)
1. Skilled 14% 10 1.4 8 1.12 9 1.26
Labour
2. Power Avail 8% 8 0.64 6 0.48 10 0.8
3. Water Avail 8% 8 0.64 4 0.32 8 0.64
4. Labour Union 15% 8 1.2 8 1.2 6 0.9
5. Climate 7% 10 0.7 7 0.49 7 0.49
6. Education 5% 8 0.4 8 0.4 8 0.4
Schools
7. Health 5% 5 0.25 10 0.5 10 0.5
Facility
8. Transport 13% 8 1.04 8 1.04 10 1.3
9. Business 10% 7 0.7 10 1 10 1
Climate
10. Control by 15% 9 1.35 10 1.5 9 1.35
H.Q.
TOTAL 100% 8.32 8.05 8.64

Conclusion: after analysing all the aspects Mulund (Mumbai) have

1. Lowest cost of production and
2. Highest score of qualitative parameters.
So Mulund (Mumbai) is the most suitable site location.