Manango - Operations ACT7 PDF

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1) In what way could the location decision affect the production system? Facility location is the process of determining a geographic site for a firm’s operations. Managers of both service and manufacturing organizations must weigh many factors when assessing the desirability of a particular site, including proximity to customers and suppliers, labor costs, and transportation costs.Location conditions are complex and each comprises a different Characteristic of a tangible (i.e. Freight rates, production costs) and non-tangible (i.e. reliability, frequency security, quality) nature. Location conditions are hard to measure. Tangible cost based factors such as wages and products costs can be quantified precisely into what makes locations better to compare. On the other hand non-tangible features, which refer to such characteristics as reliability, availability and security, can only be measured along an ordinal or even nominal scale. Other non-tangible features like the percentage of employees that are unionized can be measured as well. To sum this up non-tangible features are very important for business location decisions. 2) What are the factors that influence the choice of location? (i) Availability of Raw Materials: One of the most important considerations involved in selection of industrial location has been the availability of raw materials required. The biggest advantage of availability of raw material at the location of industry is that it involves less cost in terms of ‘transportation cost. (ii) Proximity to Market: If the proof of pudding lies in eating, the proof of production lies in consumption. Production has no value without consumption. Consumption involves market that is, selling goods and products to the consumers. Thus, an industry cannot be thought of without market. (iii) Infrastructural Facilities: Of course, the degree of dependency upon infrastructural facilities may vary from industry to industry, yet there is no denying of the fact that availability of infrastructural facilities plays a deciding role in the location selection of an industry. The infrastructural facilities include power, transport and communication, water, banking, etc. (iv) Government Policy: In order to promote the balanced regional development, the Government also offers several incentives, concessions, tax holidays for number of years, cheaper power supply, factory shed, etc., to attract the entrepreneurs to set up industries in less developed and backward areas. Then, other factors being comparative, these factors become the most significant in deciding the location of an industry. (v) Availability of Manpower: Availability of required manpower skilled in specific trades may be yet another deciding factor for the location of skill- intensive industries. As regards the availability of skilled labour, the existence of technical training institutes in the area proves useful. Besides, an entrepreneur should also study labour relations through turnover rates, absenteeism and liveliness of trade unionism in the particular area. (vi) Local Laws, Regulations and Taxes: Laws prohibit the setting up of polluting industries in prone areas particularly which are environmentally sensitive. Air (Prevention and Control of Pollution) Act, 1981 is a classical

example of such laws prohibiting putting up polluting industries in prone areas. Therefore, in order to control industrial growth, laws are enforced to decongest some areas while simultaneously encourage certain other areas.

(vii) Ecological and Environmental Factors: In case of certain industries, the ecological and environmental factors like water and air pollution may turn out to be negative factor in deciding enterprise location. For example, manufacturing plants apart from producing solid waste can also pollute water and air. Moreover, stringent waste disposal laws, in case of such industries, add to the manufacturing cost to exorbitant limits. 3) In what way are manufacturing and non-manufacturing location decisions similar? Different? Manufacturing is the act of making or producing goods by utilizing labor and machineries especially in a large -scale, which includes large division of labor. Finished goods produced after manufacturing are further divided into two groups’ producer goods and consumer goods. Producer goods are those supplied to another company for manufacturing other complex products and consumer goods are the finished products which are purchased by the customers directly for the general usage. Casting is a widely used process of manufacturing in which molten metal is poured into a mold, which comprises of a hollow cavity of predetermined design and it is then allowed to cool down and solidifies into the shape of the mold . The solidified part is also known as casting which is ejected out or broken out from the mold. wide variety of metals like aluminum copper, magnesium and copper alloys There are two types of molds used in casting like expendable and multiple use molds. It is economical for the production of much complicated parts in a large scale. Metal molds is the most widely in casting processes since they are dimensionally stable and durable compared to other method of casting. Metal molds can be reused . Manufacturing takes turns under all types of economic systems. In a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumers at a profit. In a collectivist economy, manufacturing is more frequently directed by the state to supply a centrally planned economy. In mixed market economies, manufacturing occurs under some degree of government regulation. Modern manufacturing includes all intermediate processes required for the production and integration of a product's components 4) Discuss recent trends in location and possible future strategies? Being in the right location is a key ingredient in a business's success. If a company selects the wrong location, it may have adequate access to customers, workers, transportation, materials, and so on. Consequently, location often plays a significant role in a company's profit and overall success. A location strategy is a plan for obtaining the optimal location for a company by identifying company needs and objectives, and searching for locations with offerings that are compatible with these needs and objectives. Generally, this means the firm will attempt to maximize opportunity while minimizing costs and risks. A company's location strategy should conform with, and be part of, its overall corporate strategy. Hence, if a company strives to become a global leader in telecommunications equipment, for example, it must consider establishing plants and warehouses in regions that are consistent with its strategy and that are optimally located to serve its global customers. A company's executives and managers often develop location strategies, but they may select consultants (or economic development groups) to undertake the task of developing a

location strategy, or at least to assist in the process, especially if they have little experience in selecting locations. Formulating a location strategy typically involves the following factors: 1. Facilities. Facilities planning involves determining what kind of space a company will need given its short-term and long-term goals. 2. Feasibility. Feasibility analysis is an assessment of the different operating costs and other factors associated with different locations. 3. Logistics. Logistics evaluation is the appraisal of the transportation options and costs for the prospective manufacturing and warehousing facilities. 4. Labor. Labor analysis determines whether prospective locations can meet a company's labor needs given its short-term and long-term goals. 5. Community and site. Community and site evaluation involves examining whether a company and a prospective community and site will be compatible in the long-term. 6. Trade zones. Companies may want to consider the benefits offered by free-trade zones, which are closed facilities monitored by customs services where goods can be brought without the usual customs requirements. The United States has about 170 free-trade zones and other countries have them as well. 7. Political risk. Companies considering expanding into other countries must take political risk into consideration when developing a location strategy. Since some countries have unstable political environments, companies must be prepared for upheaval and turmoil if they plan long-term operations in such countries. 8. Governmental regulation. Companies also may face government barriers and heavy restrictions and regulation if they intend to expand into other countries. Therefore, companies must examine governmental—as well as cultural—obstacles in other countries when developing location strategies. 9. Environmental regulation. Companies should consider the various environmental regulations that might affect their operations in different locations. Environmental regulation also may have an impact on the relationship between a company and the community around a prospective location. 10. Incentives. Incentive negotiation is the process by which a company and a community negotiate property and any benefits the company will receive, such as tax breaks. Incentives may place a significant role in a company's selection of a site. 5) What are some techniques in evaluating location alternatives? 1) The Factor-Rating Method: A location method that instills objectivity intothe process of identifying hard to evaluate costs. 2) Locational Break-Even Analysis: The use of cost-volume analysis to makean economic comparison of location alternatives. 3) Center-of-Gravity Method: A mathematical technique used for findingthe location of a distribution center that will minimize distribution costs. 4) Transportation Model: The objective of the transportation model is todetermine the best pattern of shipments from several points of supply toseveral points of demand....