You are on page 1of 12

ME - 307 : Fac i l i t y Locat i on

L - T- P- C : 3- 0- 2- 3

Mechanical Engineering Department


School of Engineering
INDIAN INSTITUTE OF TECHNOLOGY INDORE

Facility Location
Facility location is the process of identifying the best
geographic location for a service or production
facility.

Types of Facilities

Heavy-manufacturing facilities

large, require a lot of space, and are expensive

Light-industry facilities

smaller, cleaner plants and usually less costly

Retail and service facilities


smallest and least costly

Factors in Heavy
Manufacturing Location
Construction costs
Land costs
Raw material and finished goods
shipment modes
Proximity to raw materials
Utilities
Labor availability

Factors in Light
Industry Location

Transportation costs
Proximity to markets
Frequency of delivery required by
customer
Land costs
Easily accessible geographic
region
Education and training capabilities

Factors in Retail Location

Proximity to customers
Location is everything

Global Location Factors

Government stability
Government regulations
Political and economic
systems
Economic stability and
growth
Exchange rates
Culture
Climate
Export import regulations,
duties and tariffs

Raw material availability


Number and proximity of
suppliers
Transportation and
distribution system
Labor cost and education
Available technology
Commercial travel
Technical expertise
Cross-border trade
regulations
Group trade agreements

Regional Location
Factors

Labor (availability,
education, cost, and
unions)
Proximity of
customers
Number of
customers
Construction/leasing
costs
Land cost

Modes and quality of


transportation
Transportation costs
Community
government Local
business regulations
Government services
(e.g., Chamber of
Commerce)

Regional Location Factors


(cont.)

Business climate
Community services
Incentive packages
Government
regulations
Environmental
regulations
Raw material
availability
Commercial travel
Climate

Infrastructure (e.g.,
roads, water, sewers)
Quality of life
Taxes
Availability of sites
Financial services
Community
inducements
Proximity of suppliers
Education system

Location Analysis Techniques


Location rating factor
Center-of-gravity
Load-distance

Location rating factor

Based on weighted sum of score for each site


Example: construction project

Center-of-gravity

Locates a facility at the center of movement in a geographic


area based on weight and distance
When transportation cost is of prime importance
Single set of location is determined
Example: location of a restaurant unit

Load-distance

Evaluates various locations based on load and distance


When transportation cost is of prime importance
When you have to choose from given alternatives
Example: identifying best site for restaurant unit

You might also like