MB 0044 PRODUCTION AND OPERATION MANAGEMENT

Q.NO 1- State the important considerations for locating an automobile plant.

With respect to General factors(including importance and advantages)
Ans :- A plant location cannot be changed frequently since a large capital needs to be
invested to build the plant and machinery in the selected area. Therefore,
before selecting a plant location, a long range forecasting is to be made to
foresee the future needs of the company. In this unit, location strategies, we
will learn about the various methodologies used to select the location of the
plant, the flexibility in location choice, the trends and practices across the
globe and also techniques available to determine the location for a particular
type of industry.
Location identification for an organisation is an important strategic level
decision taken by the top management. It involves planning and
management of the plant location. Location decisions are strategic decisions
that bind the organisation to a certain place. Hence utmost care has to be
taken while selecting the location.
Location decisions are made on the basis of parameters which make it
suitable for various considerations of suppliers and markets. While locating
a plant, the following long range forecasting needs are to be considered:
The companys expansion plan and policy
Diversification plan for the products
Changing market conditions
The changing sources of raw materials
Many other factors that influence the choice of the location decision
The main concern of the operations manager will be the extent of flexibility
he/she has. This can be determined by raising such questions like:
What is the volume of production of different products?
What operations have to be outsourced?
How to deal with surge or decline in demand?
What will be the growth potential in that place?
Materials need to be stocked and moved to various locations for operations
and today it is common to see plants being operated at multiple locations.
Since decisions have long term implications, thorough analysis and
involvement of senior managers from all departments is essential. Multilocations
for manufacturing and distribution to exploit situations of supplier
availability or market requirements are now a common practice among
Indian companies. This trend in the recent times has lead to Indian
companies being called by a new name, Indian MNCs.
Objectives:
After studying this unit, you should be able to:
explain the significance of location decision
list the various factors influencing plant location
describe the general and special factors that influence the plant location
analyse the various rating methods

Location Planning Process

Planning is the most important function of management, especially, when
we have to deal with lands, buildings, and machineries. Lands, buildings
and machineries are costly and once fixed cannot be moved easily.
Planning, therefore, requires a lot of thought, data gathering, and estimates for the
future. These considerations are vital for the success of any firm. To
1

deeply understand the importance of planning in operations management,

we consider the planning of the location first and later planning of the layout
in the next unit.
Before looking at the planning process
Selecting a location to a large extent is governed by the flexibility factor
based on the type of industry or service. While some industries are
completely dependent upon the location for survival, other industries may
have varied degrees of flexibility. Flexibility in choice is obviously an
advantage and a better decision can be taken. Figure 5.1 depicts the
flexibility in choice.

Special factors((including importance and advantages)

Ans: -