PRESENTED BY:

Anam siddiqui

Anshu yadav
 FACILITY LOCATION

 Location can be defined as “a place to put something”. Facility location means a
place to put the facility. Facility location decisions are strategic, long term, and
non-repetitive in nature. Location decisions are affected by many factors, both
internal and external, to the organization's operations. Internal factors include
the technology used, the capacity, the financial position, and the work force
required. External factors include the economic, political, and social conditions
in the various localities. Thus, for long term benefits of the facility, a sound and
careful location planning is required.
 Location planning deals with determining the optimal location for one or more
new facilities to serve a set of customers. This type of problem arises in many
areas, such as location of manufacturing facility, storage facility, etc. Location
planning may involve finding the best site for the plant, which is termed as
plant location. Location planning may also involve deciding the location of each
specific piece of machinery and equipment in a particular area of a facility .
 ?

 When does a facility location (plant location) decision
arise?
 It may arise when a new facility is to be located
 In some cases, a poor site restricts the facility or plant
operations and subsequent expansions, thereby
necessitating setting up the facility at a new site.
 The growing volume of a business makes it advisable to
establish additional facilities in new territories.
 New economic, social, legal or political factors could
suggest a change of the location of the existing plant.
FACTORS AFFECTING FACILITY
LOCATION PLANNING

 FACTOR RATING METHOD

The factor rating method is explained below by an
example of deciding the best site out of the three
proposed sites.
To evaluate these alternative sites we identify five
factors such as raw material, market, land cost,
community attitude, and transportation facility.
Provide the weights to each factor. Suppose we
allocate 10 points to market and raw material, 8 points
to land cost, 7 points to community attitude, and 6
points to transportation facilities.
 Rate each alternative for each factor on a scale of 10.
Suppose, for factor raw material the A alternative gets 9
points, B alternative gets 10 points and C alternative gets 8
points.

 Tabulate all the above information as given in Table 1.
 Repeat the same procedure (step 3 and 4) for other factors.
 Multiply the weights of each factor with the rating of each
alternative and record on the lower half of the rectangle
under each alternative.
 Add the score of each alternative and record in front of
Total.
 The best alternative is that alternative which has the
maximum score. If two or more alternatives have the
maximum score, then those alternatives should be selected
and a separate evaluation should be made for those
alternatives only
 Table 1:Factor Rating Chart
Factors Weights Location A Location B Location C

Raw material
10 9 90  10 100 8 80

Market
10 8 80 8 80 9 90

Land cost
8 7 56 8 64 8 64

Community
attitude 7 10 70 9 63 10 70

Transportation
facilities 6 8 48 7 42 10 60

Total 347 349 364*

* Best Alternative is Location C
 ARDALAN HEURISTIC FOR
LOCATION PLANNING OF
SERVICE 
FACILITIES
 The Ardalan heuristic is used in making decisions regarding the location of
service facilities, such as post offices, banks , medical clinics/hospitals, etc.,
so that a large population can benefit for these facilities. From the business
point of view, the heuristic helps in deciding the location of facilities, such
as fuel service stations(petrol pumps), departmental stores, etc., such as fuel
service from a number of nearby locations, thus resulting in high profits.
 SBI decides that it would first open only one branch in any one of these four
places. Depending upon the performance of this branch, it may open a
second, third, and fourth branch in the remaining places over a period of
time. It wants to determine the sequence in which the branches should be
opened in the four places, namely, Bachchrawan, Maharajganj, Pehremau,
and Raebareli. The distance between each of these places, their populations,
and weights attached(according to the bank’s social criteria)
 Table 1.1

Location
 Population(
in
Bachchra Maharajganj Pehremau Raebareli thousands) Weights
wan

Bachchra 0 8 12 10 10 0.7
wan

Maharajg 8 0 15 6 11 1.2
anj

Pehemau 12 15 0 11 5 1.1

Raebareli 10 6 11 0 8 0.9
 
Step 1: Take the products of the distances,
populations, and weights for the
corresponding places in every cell of the table
and place the product values in the
respective cells . The total cost is equivalent
to the sum of all the weighted population
distances in a column (for a place).
Maharajganj, with the lowest total cost, is the
best location for the first branch of SBI.
 Table 1.2 Weighted population distances


Location Bachchrawan Maharajganj Pehremau Raebareli

Bachchrawan 0 56 84 70

Maharajganj 105.6 0 198 79.2

Pehremau 66 82.5 0 60.5

Raebareli 72 43.2 79.2 0

243.6 181.7 361.2 209.7

 
Step 2: Columnwise, compre the cell
values of all other locations with that of
Maharajganj. If the cell value is less
than or equal to that of Maharajganj,
keep it as is. Otherwise, replace it with
the cell value of Maharajganj
Table 1.3 :Modification of table 1.2
following step 2

Location Bachchrawan Mharajganj Pehremau Raebareli

Bachchrawan 0 56 56 56

Maharajganj 0 0 0 0

Pehremau 66 82.5 0 60.5

Raebareli 43.2 43.2 43.2 0

109.2 181.7 99.2 116.5

 
 This procedure has been followed because a person at
Bachchrawan would not like to go to a branch at
Pehremau or at Raebareli, because of the higher costs
involved. Therefore, the cost value of the cell of
Maharajganj replaces the values for Pehremau and
Raebareli.
 The total cost Pehremau is now the lowest. Therefore,
the second branch of SBI shuold be opened at
Pehremau. The column for Maharajganj was selected
already for the location of the branch, and its costs have
been already adjusted.
 Step 3: Repeat step 2 for the reduced table.
 Table 1.4 Modification of table
1.3 following step2

Location Bachchrawan Pehremau Raebareli

Bachchrawan 0 56 56

Maharajganj 0 0 0

Pehremau 0 0 0

Raebareli 43.2 43.2 0

43.2 99.2 56
 
Now, Bachchrawan is selected for the
third branch because of its lowest cost.
The last remaining place Raebarelu can
have the last (fourth) branch of SBI.
 CONCLUSION

Facility location planning involves choosing the best
place, from the available options, for setting up a
plant/service facility. Various factors are responsibilities
for making a production or service facility successful at a
particular location.
Factor ratings and location ratings help in selecting the
better location options.
For the final analysis of choosing the best service facility
location, the Ardalan heuristic is most suitable. It helps in
finding a location that can cater to a large population.
 REFERENCE

• Production And Operation Management By
Kaniska Bedi (OXFORD UNIVERSITY PRESS)
• www.nptel.ac.in