Plant Location and Layout
Plant Location and Layout
Plant Location and Layout
Tech)
STRUCTURE
INTRODUCTION
One should learn how the entrepreneur conducts the detailed analysis
comprising of technical, financial, economic and market study before
laying down a comprehensive business plan. For implementation of
this plan, he has to take various crucial decisions namely location of
business, layout (the arrangement of physical facilities), designing the
product, production planning and control and maintaining good quality
of product. This lesson deals with various aspects of plant location and
layout. Investment in analyzing the aspects of plant location and the
appropriate plant layout can help an entrepreneur achieve economic
efficiencies in business operations. These decisions lay the foundation
of the business of small entrepreneurs.
OBJECTIVES
Every entrepreneur is faced with the problem of deciding the best site
for location of his plant or factory. What is plant location? Plant
location refers to the choice of region and the selection of a particular
site for setting up a business or factory. But the choice is made only
after considering cost and benefits of different alternative sites. It is a
strategic decision that cannot be changed once taken. If at all changed
only at considerable loss, the location should be selected as per its own
requirements and circumstances. Each individual plant is a case in
itself. Businessman should try to make an attempt for optimum or ideal
location. What is an ideal location? An ideal location is one where the
cost of the product is kept to minimum, with a large market share, the
least risk and the maximum social gain. It is the place of maximum net
advantage or which gives lowest unit cost of production and
distribution. For achieving this objective, small-scale entrepreneur can
make use of locational analysis for this purpose.
LOCATIONAL ANALYSIS
SELECTION CRITERIA
SIGNIFICANCE
DEFINITION
A plant layout can be defined as follows: Plant layout refers to the
arrangement of physical facilities such as machinery, equipment,
furniture etc. within the factory building in such a manner so as to have
quickest flow of material at the lowest cost and with the least amount
of handling in processing the product from the receipt of material to the
shipment of the finished product. “The overall objective of plant layout
is to design a physical arrangement that most economically meets the
required output – quantity and quality.” “Plant layout ideally involves
allocation of space and arrangement of equipment in such a manner
that overall operating costs are minimized.
IMPORTANCE
TYPES OF LAYOUT
1. Manufacturing units:-
In case of manufacturing unit, plant layout may be of four types:
c) Materials may be fed where they are required for assembly but
not necessarily at one point.
d) All the operations including assembly, testing packing must be
included in the line A line layout for two products is given below.
a) Low cost of material handling, due to straight and short route and
absence of backtracking.
b) Nature of product:
Product layout is suitable for uniform products whereas process
layout is more appropriate for custom-made products.
c) Production process:
In assembly line industries, product layout is better. In job order
or intermittent manufacturing on the other hand, process layout is
desirable.
d) Type of machinery:
General purpose machines are often arranged as per process
layout while special purpose machines are arranged according to
product layout.
f) Human needs:
Adequate arrangement should be made for cloakroom, washroom,
lockers, drinking water, toilets and other employee facilities,
proper provision should be made for disposal of effluents, if any.
g) Plant environment:
Heat, light, noise, ventilation and other aspects should be duly
considered, e.g. coloring and finishing section should be located
in another hall so that dangerous fumes can be removed through
proper ventilation etc. Adequate safety arrangement should also
be made. Thus, the layout should be conducive to health and
safety of employees. It should ensure free and efficient flow of
men and materials. Future expansion and diversification may also
be considered while planning factory layout.