IAF 716 week3 plant location.ST

IAF 716 week3 plant location.ST -...

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Dr. Rama Srivastava Office: C2010 Email: rama.srivastava@senecac.on.ca
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Plant Location Plant location means the establishment of an industry at a particular place . Location decisions are STRATEGIC : affect the entire organisation Operative over long time spans, Difficult to reverse & Capital Intensive Location decisions are Dynamic : Due to changing technology, competition, change of consumers requirements.
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Types of Plant location 2 types- Localization/ centralization- means concentration of similar types of industries at some particular place. E.g. stock brokers at Wall Street, Oil related industries in Alberta. Delocalization/ decentralization- means spreading of similar types of industries at different places e.g. banking industries
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Site Selection
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Major factors affecting location and site  decisions  Factors Affecting Country (vital for international business): Political & economic systems & stability, Culture, Climate, Factors Related to Resources : Labor, raw materials, Equipment, Factors Related to the Market : Proximity to the market, size of the market, potential needs of the market. Factors Related to the Infrastructure : Transport, communication facilities, roads, rails, disposal of waste, drainage facilities, Availability of housing, other amenities
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Selection of the site for the factory Selection of the site for the factory Methods for the evaluation of plant location- 1. Involving quantitative factors- - Comparative cost chart - Factor Rating - Dimensional Analysis - Cost-Profit-Volume analysis - Brown and Gibson Model. 2. Comparison of qualitative factors .
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Comparative cost chart Comparative cost chart This 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.
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Factor Rating   Identify the most Important factors Assign a weight between 0.1-1 OR 1-10 to each of these factors making a total of 1 OR 10 Rate based on these factor weights. The most weighted alternative is the best alternative. Example- ABC Ltd. has shortlisted three potential sites for its new facility. The managers chose availability of skilled labour , availability of raw materials and construction cost as three most important factors.
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Factor Weight Availability of skilled labour 0.50 Availability of Raw materials 0.30 Construction cost 0.20 (Total= 1.00) Factor Site Scores   Site A Site B Site C Availability of skilled labour 85 80 50 Availability of Raw materials 70 50 80 Construction cost 60 85 90 Factor Site A Site B Site C   Score
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This note was uploaded on 02/01/2012 for the course IAF IAF716 taught by Professor Tba during the Spring '11 term at Seneca.

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IAF 716 week3 plant location.ST -...

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