loction decision.pptx

Location Decision Dr. Ahmed Barakat Location Decision • Definition: Location Decision is finding an ideal geographical region to install a Facility or Plant. It is a vital component in facility planning as it greatly impacts the organization’s Profitability, Cost and Success. • In other words, the...

Location Decision Dr. Ahmed Barakat Location Decision • Definition: Location Decision is finding an ideal geographical region to install a Facility or Plant. It is a vital component in facility planning as it greatly impacts the organization’s Profitability, Cost and Success. • In other words, the decision about the area for locating a facility is the Location Decision. It is also termed as Facility Location and Site Selection. The decision depends on….??! • The decision depends on several factors that impact the business in the short and long run. - Customers - Workers - Transportation - Materials, etc. Objectives of Facility Location • Revenue Potential from that Site • Availability of Resources • Tax advantages • Reducing Cost and Production Time • Convenient Transportation Facilities • Suitable Environment for Employees • Meet the Maximum Demands of Customers • Maximum Space Utilization Criteria 1.Costs: The cost perspective is an essential criterion concerning the location of a facility. Any wrong decision will adversely impact the company’s finances. 2.Competition: Effective location decision helps in achieving a competitive advantage in the markets. As industries can control costs and offer products at reasonable prices to consumers. 3.Hidden Effects: The plant’s location affects many factors in the long run in a direct or indirect manner. To remain competitive, organizations must strategically locate their facilities. Location Decision Process Step 1: Investigation • Firstly, the organizations investigate their requirements regarding their location. They conduct an internal SWOT analysis and decide whether to move, expand or install a new setup. Step 2: Identification • Post investigation, they try to identify the potential locations for locating the facility. For example, installing the facility in the Domestic or Foreign regions. Step 3: Evaluation • The next step in the location decision process is evaluating the potential locations. The evaluation process may include a detailed comparison of all the alternatives available. step 4: Selection • Companies conduct a thorough analysis of the location and government policies in the selected region. Also, an in-depth evaluation of the merits and demerits of the chosen area. Therefore, choosing the most appropriate location of the facility for installation. Three-Tier Model for Assessing Location Competitiveness Location Planning Techniques 1.Weighted Scoring Method Disadvantages of Poor Location Decision • Following are the disadvantages of selecting a poor location of the facility: • The maintenance of the plant is a constant addition to the cost. • Purchase of land and construction of infrastructure is an expensive affair. • Difficulty in marketing and transportation of the products. • Dissatisfaction among employees and workers. • Abnormal wastage and delays in the processes. Conclusion • To conclude, facility location is the strategic and logical decision about the factory’s geographical location. There are a variety of factors that affects this decision. The organization must make efficient location decisions as it impacts the business’s finances.