Facility location decisions are strategic, long term and non-repetitive in nature. Without sound and careful location planning in the beginning itself, the new facility may pose continuous operating disadvantages, for the future operations. Location decisions are affected by many factors, both internal and external to the organization’s operations. Internal factors include the technology used, the capacity, the financial position, and the work force required. External factors include the economic political and social conditions in the various localities. Most of the fixed and some of the variable costs are determined by the location decision. The efficiency, effectiveness, productivity and profitability of the facility are also affected by the location decision. The facilities location problem is concerned primarily with the best (or optimal!) location depending on appropriate criteria of effectiveness. Location decisions are based on a host of factors, some subjective, qualitative and intangible while some others are objective, quantitative and tangible.
Concept of a facility
Traditionally, location theorists have dealt with industrial plant/factory location. However, the concept of plant location has now been generalized into that of facility location, since the facility could include a production operation or service system. The term `Plant’ has been traditionally used as synonymous to a factory, manufacturing or assembly unit. This could include fertilizer, steel, cement, rice milling plants, textile, jute, sugar mills, rubber factories, breweries, refineries,
Thermal or hydro-electric nuclear power stations etc.
However, with the enlarged scope of a facility, this term can now be used to refer to banks, hospitals, blood banks, fire stations, police stations, warehouse, godown, depot, recreation centre, central repair workshop etc. At a lower hierarchical level is the facility/plant layout problem which will be discussed in the next unit. In such a case machines, equipment, desks, workshop, canteen, emergency room etc. could mean a facility. Thus, in fact, we could generally state that a facility could connote almost any physical object relevant to location analysis. Let us now see when a location decision arises.
