Mb 004/Mb5F

(Spring/Feb 2013) Master of Business Administration - MBA Semester 2

MB 0044 - Production and Operation Management (4 credits)
(Book ID: B1627)
ASSIGNMENT- Set 1

Q1. State the important considerations for locating an automobile plant.
Answer: - Important considerations planning the location of the plant
The various factors that affect the economics of competing locations which helps in choosing the most optimal location, Factors influencing plant location can be broadly divided into two types. 1. General factors 2. Special factors
1. General Factors Influencing Plant Location as under:-

Availability of land – Availability of land plays an important role in determining the plant location. On several occasions, our plans, calculations and forecasts suggest a particular area as the best to start an organisation. However, availability of land may be in question. In such cases, need to choose the second best location.
Availability of inputs – While choosing a plant location, it is very important for the organisation to get the labour at the right time and good quality raw materials. The plant should be located: Near to the raw material source At the market place Close to the market when universally available, so as to minimise the transportation cost.
Closeness to market places – Organisations can choose to locate the plant near to the customers’ market or far from them, depending upon the product they produce. It is advisable to locate the plant near to the market place, when:
The projected life of the product is low
The transportation cost is high
The products are delicate and susceptible to spoilage
After sales services have to be prompt
The advantages of locating the plant near to the market place are:
Consistent supply of goods to the customers
Reduction of the cost of transportation
Communication facilities – Communication facility is also an important factor which influences the