Importance of Plant Location

Location of plant partially determines operating and capital costs. It determines the nature of investment costs to be incurred and also the level of many operating costs. Each prospective location implies a new allocation of capacity to respective market area. Location fixes some of the physical factors of the overall plant design e.g. storage capacity for raw material taking into consideration their local availability. Government sometimes plays an important role in the choice of the location keeping in view the national benefits

Factors responsible for Plant Location Choices

Availability of Raw Materials Nearness to potential market Location should be near to the source of Operating requirements Supply of Labour Transport and communication facilities Integration with other group of companies Suitability of land and climate Availability of housing, other amenities and services Local building and planning regulations Safety requirements

Location Analysis

Analysis based on Quantitative factors: Comparative/Least cost centre analysis Comparison of Qualitative factors Ranking and Weight method