Submitted By:

M Ahsan
Abdullah
Abu Hurraira
Arooba Yousuf
Kinza Qamar
Location Planning and Analysis

Definition

Location Decision in operation management is finding an ideal geographical

region to install a Facility or Plant. It is a vital component in facility planning
as it greatly impacts the organization’s Profitability, Cost and Success.
Need for Location
Decisions

• Marketing Strategy

• Cost of Doing Business

• Growth

• Depletion of Resources
 Nature of Location Decisions
 Strategic Importance
• Long term commitment/costs
• Impact on investments, revenues, and operations
• Supply chains

 Objectives
• Profit potential
• Identify several locations from which to choose
 Options
• Expand existing facilities
• Add new facilities
• Move
Types of Facilities
• Heavy Industry Facilities

• Light Industry Facilities

• Retail And service facilities

Making Location
Decisions

• Decide on the criteria

• Identify the important factors
• Develop location alternatives
• Evaluate the alternatives
• Make selection
General Factors Affecting Location
Decision
Availability of basic infrastructure
Basic amenities
Proximity to raw material and markets
Residential complexes, schools, hospitals, clubs etc.
Availability of cheap labour
Govt. policies
Env. And community
Cheap land
Locating Foreign operations

TRADE BARRIERS INTERNATIONAL INTERNATIONAL REGULATIONS

CUSTOMERS COMPETITION

ADDITIONAL LOW COSTS OFFENSIVE IN

RESOURCES COMPETITOR’S
HOME COUNTRY
 Factors At Country Level

POLITICAL RISKS, GOVT. CULTURAL AND LABOUR TALENT, AVAILABILITY OF

REGULATIONS, ECONOMIC ISSUES PRODUCTIVITY, COST SUPPLIES,
ATTITUDES, INCENTIVES INFRASTRUCTURE

EXCHANGE RATES AND

CURRENCY RISKS
 Location Decision Factors
Community
Regional Factors Considerations

Multiple Plant Site-related

Strategies Factors
 Regional Factors

• Attractiveness of region(culture, taxes,

climate)
• Labour availability
• Location of raw materials
• Location of markets
• Availability of utilities
• Govt. Incentives and policies
• Climate and taxes
 Community Considerations
Quality of life
Services
Attitudes
Taxes
Environmental regulations
Utilities
Developer support
 Site Related Factors
• Land
• Transportation
• Environmental
• Legal
Multiple Plant Strategies

• Product plant strategy

• Market area plant strategy

• Process plant strategy

 Comparison of Service and
Manufacturing Considerations

Manufacturing/Distribution Service/Retail
Cost Focus Revenue focus

Transportation modes/costs Demographics: age,income,etc

Energy availability, costs Population/drawing area

Labor cost/availability/skills Competition

Building/leasing costs Traffic volume/patterns

Customer access/parking
Evaluating
Locations

• Cost-Profit-Volume Analysis
Determine fixed and variable
costs
Plot total costs
Determine the lowest total costs

• Centre of Gravity Method

Decision-based on minimum
distribution costs
• Load Distance model
Decisions are based on evaluating
potential locations based on load
distance value.
THANK YOU