Plant Location and Facility Layout:
One of the most significant long term decision made by industrial engineers is to locate their entities performing the basic operations. Location seriously affects cost of the production system that means it has a large impact on the total profit of the company. Thus, the decision regarding the location of space consuming physical entities is of great significance to meet the desired goal of profitability.
The plant location problem is encountered in all kinds of business concerned with manufacture, supply, transport or service. Once the firm decides the nature and specification of goods and services to be offered, the next step is to decide the place of plant and its physical entities. The best place for a given trade based on its type of business with an objective to maximize the profit of location to the firms. For instance, industrial location decisions focus on its type of business. Service organisation have focus on maximizing returns, whereas in case of manufacturing organisation location decision depends on the combination of cost and rate of delivery.
The facility location problem is of great significance in two basic situations, that means. in case of entirely new business and in existing business. The existing firms seek for new locations because of following reasons:
- To add new facilities in the present firms
- To expand the present business capacity and facilities
- To shut down the existing facilities in order to open large premises elsewhere.
Theoretically, new and existing both firms have a vast range of alternatives for new locations.