LAy Out and Location Unit 5

8/8/2019 LAy Out and Location Unit 5

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TECHNO ECONOMIC

FEASIBILITY OF THE PROJECT

location and layoutlocation and layout


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PLANT LOCATION

Meaning - the establishment of an industry at a particular place.

It is of 2 types-

1. Localization /centralization-means concentration of similar type of

industries at some particular place. E.g. textile in Mumbai.

2. Delocalization /Decentralization-means spreading of similar type of

industries at different places. E.g. banking industries.


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F ACTORS A FF ECTING LOCATION & SITE DECISIONS

1. Availability of raw material

2. Nearness to the potential market

3. Near to the source of operating requirements like electricity, disposal of waste,

drainage facilities.

4. Supply of labor

5. Transport & communication facilities

6. Integration with other group of companies

7. Suitability of land & climate

8. Availability of housing, other amenities & services

9. Local building & planning regulations

10. Safety requirements

11. Others like low interest on loans, special grants, living standards


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SELECTION OF THE SITE FOR THE FACTORY

Known as location analysis where firstly some geographical area is

selected & from that area a particular site is selected for the

establishment of the plant.

Methods for the evaluation of plant location-

1.Involving quantitative factors

a. Comparative cost chart, b. dimensional analysis.

2. Comparison of qualitative factors.


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COMPARATIVE COST CHART

Is appropriate where the location problem concerns the placement of

a single plant. This is based on location cost summary chart. A

comparative chart of total costs involved in setting up a plant of

desired size is prepared.

0

10

20

30

40

locations

AB

C

D


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The total cost is represented by the height of column for each location. we select a

location for which total cost is minimum.

The cost summary chart has advantage of clarity in presentation. but analysis is

restricted to certain specified factors only.

LEASTLEAST COSTCOST CENTRECENTRE ANALYSISANALYSIS

Here transportation cost associated with various location alternatives is considered.

Limitation of these techniques-

1.Choice of plant location assumed to be entirely dependent upon minimization of

operational costs.

2.Operational costs are assumed to be linearly related to distance involved.


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D imensional analysis

It involves

1. Calculation of the relative merits or cost ratios for each of the

factors,

2. Giving each of the cost factor an appropriate weightage by means of

an index to which the cost ratio is raised

3. Multiplying these weighted ratios in order to arrive at a figure on

the relative merits of alternative sites.


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Let Cm1,Cm2,Cm3,..Cmz are the costs associated with site M for various cost

factors . Cn1,Cn2,Cn3,.Cnz are of site N.

W 1,W 2,W 3,. Wz are weightage for various factors.

Merit of location M=(Cm1)W1*(Cm2)W2*(Cmz)Wz

Merit of location N=(Cn1)W1*(Cn2)W2*(Cnz)Wz

Relative merits of sites M & N are- merit of M

merit of N

If this value is > 1, then select site M & vice-versa.

Advantages- it compares both subjective & objective factors & gives a quantitative

figure.


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COMPARISON OF QUALITATIVE FACTORS.

These are the factors to which cost values cant be assigned. Like lack of

good schools, community attitude. These can be termed as good or excellent.

Clearly location B appears to be better one.

FACTORSFACTORS LOCATION ALOCATION A LOCATION BLOCATION B

labor adequate excellent

relation good Very good

education Good Very good


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RANKING & W EIGHT METHO DRANKING & W EIGHT METHO D

1. Various locations are ranked acc. To their contribution

2. Various factors are assigned weights acc. To their

importance

3. Weights are then multiplied with rank assigned

4. Total of these products for each location is calculated

5. Location having max. total is then selected.


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AD VANTAGES & D ISA D VANTAGES OF URBAN, RURAL &AD VANTAGES & D ISA D VANTAGES OF URBAN, RURAL &SUBSUB--URBAN SITES FOR A PLANTURBAN SITES FOR A PLANT- -

URBANURBAN RURALRURAL SUBSUB--URBANURBAN

Better transportation More water Planned industrial

Large labor supply Cheaper land Larger area

Big local market Lower taxes

Easy finance F ew ordinances

Municipal services

Better civil attitude Labor stability


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GLOBAL LOCATIONS

World-wide locations are called global locations.

E.g. MNCs are setting up their branches in India & Indian companies

are extending their operations in other countries like - USA,

EUROPE , CHINA.

virtual proximity Social networking at a distance .with the advances

in telecommunications technology , a firm can be in virtual proximity

to its customers.


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REASONS FOR A FOREIGN LOCATION

1. Reaching the Customer -One obvious reason for locating a facility

abroad is that of capturing a share of the market expandingworldwide.

2. Other Tangible Reasons-

The host country may have/offer substantial tax advantages

compared to the home country.

The costs of manufacturing and/or running operations may be

substantially less in that foreign country.


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This may be due to

Low labor cost

Low raw material cost

Better availability of inputs

The co. may overcome the tariff (table of fixed charges) barriers by setting up

a manufacturing plant in foreign country rather than exporting the items to

that country.

Intangible reasons

Customer-related reasons-

firms customer may feel secure that firm is more accessible.

F irm may be able to give a personal touch.

F irm may understand customers requirements better.

It may discover other potential customers in abroad.


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3. Organi z ational learning related reasons

Firm can learn advanced technology

F irm can learn from its customers abroad

It can also learn from its competitors operating in abroad.

It may also learn from its suppliers abroad.


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PLANT LAYOUTPLANT LAYOUT

Meaning-

Plant layout is the physical arrangement of industrial facilities . It

involves the allocation of space & the arrangement of

equipment in such a manner that overall operating costs are

minimized.


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OBJECTIVES OF PLANT LAYOUTOBJECTIVES OF PLANT LAYOUT

An efficient layout can be instrumental in the accomplishment of

the following objectives-

1. Economies in materials, facilitate manufacturing process &

handling of semi-finished & finished goods.

2. Proper & efficient utilization of available floor space.

3. To avoid congestion & bottlenecks.

4. Provision of better supervision & control of operations.


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5. Careful planning to avoid frequent changes in layout which may result

in undue increase in cost of production.6. To provide adequate safety to the workers from accidents.

7. To meet the quality & capacity requirements in the most economical

manner.

8. Provision of medical facilities & cafeteria at suitable & convenient

places.

9. To provide efficient material handling system.

10. To suggest the improvements in production process & work methods.


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PRINCIPLES OF PLANT LAYOUT

Principle of integration (of 5Ms)

The plant should integrate all the essential resources of men,

machines and materials in order to give an optimum level of

productionPrinciple of minimum distance

The less the movement of men, machines and materials, the less will

be the cost of production. Thus, minimum movement of thesesresources will provide cost efficiency.


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Principle of cubic space utili z ation( both hori z ontal & vertical space)

The space used up during the plant work also costs money as more the

space required, more will be the floor rent. The materials should be

organized in stacks in a proper and recognizable order to maintain space

efficiency.

Principle of flow( must be forward no backtracking)

All materials should progressively move towards the same direction i.e.

towards the stage of completion. Any back-tracking should be avoided

here.


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Principle of maximum flexibility

The plant layout should not be rigid and permanent. If the need arises, the plant

layout should be able to change itself without being expensive.

Principle of safety, security & satisfaction

The layout should ensure the protection of the materials and machines while they

are in the working or the storage stage. The security system should be efficient

without making too many doors or barriers.

The environment of the plant should be safe for the workers as well as the

machines. There should be fire extinguishers and fire exits placed strategically.

There should be minimum contact of the labour to toxic chemicals and environment.


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Principle of minimum handling.

The ineffective handling of materials leads to a rise in cost. Materials should be handled

in stacks and transferred in one go. Handling of a material twice in the same direction

must be avoided.

Maximum observation capacity

The layout of the plant should such that all of its resources and workforce can be

observed and evaluated at all points in time. This helps in better supervision of work and

helps in increasing both effectiveness and safety.

Maximum accessibility

The layout of the plant should ensure that all essential resources are accessible to the

labour and machines without any delay. The aisles should be free from obstacles. The

materials should be placed as close to the machines concerned, as possible.


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The factors affecting plant layout can be grouped into 8 categories:The factors affecting plant layout can be grouped into 8 categories:

Materials

Machinery

Labor

Material Handling

W aiting Time

Auxiliary Services

The building

Future Changes

The final solution for a Plant Layout has to take into account a

balance among the characteristics and considerations of all factors

affecting plant layout, in order to get the maximum advantages .


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MaterialsMaterials

The layout of the productive equipment will depend on the

characteristics of the product to be managed at the facility, as well as the

different parts and materials to work on.

Main factors to be considered: size, shape, volume, weight, and the

physical-chemical characteristics, since they influence the manufacturing

methods and storage and material handling processes.

The sequence and order of the operations will affect plant layout as well,

taking into account the variety and quantity to produce


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MachineryMachinery

Having information about the processes, machinery, tools and necessary

equipment, as well as their use and requirements is essential to design a

correct layout.

The methods and time studies to improve the processes are closely

linked to the plant layout.

Regarding machinery, we have to consider the type, total available for

each type, as well as type and quantity of tools and equipment.

Its essential as well to know about space required, shape, height,

weight, quantity and type of workers required, risks for the personnel,

requirements of auxiliary services, etc


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Labor

o Labor has to be organized in the production process (direct labor,

supervision and auxiliary services).

o Environment considerations: employees safety, light conditions,

ventilation, temperature, noise, etc.

o Process considerations: personnel qualifications, flexibility, number of

workers required at a given time as well as the type of work to be

performed by them.

MaterialMaterial HandlingHandling

Material handling does not add value to the product; its just waste.

Objective: Minimi z e material handling as well as combining with

other operations when possible, eliminating unnecessary and costly

movements .


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W aiting time - Stock

Objective: Continuous Material F low through the facility, avoiding the cost of

waiting time and demurrages that happen when the flow stops.

On the other hand, the material waiting to flow through the facility not always

represents a cost to avoid. As stock sometimes provides safety to protect

production, improving customer service, allowing more economic batches, etc.

Its necessary then to consider space for the required stock at the facility

when designing the layout .

Resting time to cool down or heating up

The buildingIf it has been already selected, its characteristics will be a constraint at the

moment of designing the layout, which is different if the building has to be

built.


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Future changes

One of the main objectives of plant layout is flexibility.

Its important to forecast the future changes to avoid having an

inefficient plant layout in a short term.

F lexibility can be reached keeping the original layout as free as

possible regarding fixed characteristics, allowing the adjustment to

emergencies and variations of the normal process activities.

Possible future extensions of the facility must be taken into account, as

well as the feasibility of production during re-layout.


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Types of plant layout

1. Product layout

2. Process layout

3. F ixed Position/ Stationary layout


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PRODUCT LAYOUT

Layout that uses standardized processing operations to achieve

smooth, rapid, high-volume flow

Here machines are arranged acc. To the needs of product & in

the same sequence as the operations are necessary for

manufacture. E.g. back office of services such as banks and

insurance companies.


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Rawmaterialsor customer

Finisheditem

Station2

Station3

Station4

Materialand/orlabor

Station1

Materialand/orlabor

Materialand/orlabor

Materialand/orlabor

Used for Repetitive or Continuous Processing

PRODUCT LAYOUTPRODUCT LAYOUT


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1. High rate of output

2. Low unit cost

3. Labor specialization

4. Low material handling cost

5. High utilization of labor and equipment

6. Established routing and scheduling

7. Short processing time

Advantages of Product Layout


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1. Creates dull, repetitive jobs

2. Poorly skilled workers may not maintain equipment or quality of

output

3. F airly inflexible to changes in volume

4. Highly susceptible to shutdowns

5. Needs preventive maintenance

6. Require large capital investment

D isadvantages of Product Layout


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PROCESS LAYOUT

Layout that can handle varied processing requirements

Here all machines performing similar type of operations are

grouped together at one location in the process layout. Thus here

facilities are grouped together acc. To their functions. E.g. all

drilling machines are located at one place known as drilling

section.


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Dept. A

Dept. B Dept. D

Dept. C

Dept. F

Dept. E

Used for Intermittent processingJob Shop or Batch

Process Layout

(functional )


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Work Station 1

Work Station 2

Work Station 3

Product Layout(sequential)

Used for Repetitive ProcessingRepetitive or Continuous

Product Layout


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1. Can handle a variety of processing requirements

2. Machines breakdown doesnt result in shutdown.

3. Equipment used is less costly

4. Wide flexibility in production facilities.

5. Each production unit of system works independently.

6. High utilization of facilities

7. Variety makes the job interesting.

Advantages of Process Layouts


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1. In-process inventory costs can be high

2. Challenging routing and scheduling

3. Equipment utilization rates are low

4. Material handling is slow and inefficient & is more.

5. More space is required

6. Longer processing time

7. Back tracking may occur.

D isadvantages of Process Layouts


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Comparison of product & process layout

FACTORS PRO D UCT LAYOUT PROCESS LAYOUT

1. nature Sequence of facilities Similar aregp2gether

2. Machines utili z ation Not to full capacity Better utilization

3. product standardized diversified

4. Processing time less more

5. Material handling less more

6. inventory High WIP Low WIP7. breakdown Cant tolerate Can tolerate

8. Production centre simple complex

9.flexibilty low high

10. floor space Requires less more11. investment high low


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LAy Out and Location Unit 5

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