LOCATION SELECTION : A CASE STUDY

Location selection –

Manufacturing Unit

PRESENTED BY : SHASHANK SHEKHAR SINGH (2015HB79013)

Our Firm - Despite being a new entrant in this domain, we are successfully offering

a comprehensive range of Extruded Aluminum Heat Sinks. Established in 2013.

Our firm is amongst the distinguished manufacturers and supplier of an extensive range of Extruded Heatsinks.

We have developed an advanced manufacturing unit which is well equipped with all requisite tools and latest machinery which enable us to meet the bulk requirements of our clients within specified time frame.

Our entire unit is spread across a vast area of 25000 square feet. Our team of professions work with the complete dedication to offer our clients a quality range of product which is at par with their requirements.

Our customers are Schneider and Luminous situated in Rudrapur and Baddi respectively.

Our RM suppliers –Valco and Indo are in Chandigarh and Bhiwadi.

• With time the demand of our customers changes and due to this we sometimes feel that we are lagging behind in fulfilling the commitments and to satisfy their needs.

• To fulfill the commitments , we have decided to establish a plant.

• The locations that we are thinking of considering are RUDRAPUR,DEHRADUN, BADDI.

Factors That Affect Location Decisions Country Decisions• Government rules, attitudes, stability, incentives• Cultural and economic issues• Location of markets• Labor availability, attitudes, productivity, costs• Availability of supplies, communications, energy• Exchange rates Region/Community Decisions• Corporate desires• Attractiveness of region (culture, taxes, climate, etc…)• Labor availability, costs, attitudes towards unions• Cost and availability of utilities• Environmental regulations of state and town• Government incentives• Proximity to raw materials and customers• Land/construction costs

Factors That Affect Location Decisions (cont.) Site Decisions• Site size and cost• Air, rail, waterway systems• Zoning restrictions• Nearness of services/supplies needed• Environmental impact issues

Costs: Tangible Vs. Intangible Tangible costs – those that are readily identifiable and precisely measured• Utilities• Labor• Material• Taxes• Depreciation• Other costs that accounting can easily identify Intangible costs – not easily quantifiable• Quality of education• Public transportation facilities• Community attitudes toward the industry and the company• Quality and attitude of prospective employees• Climate

Proximity To Markets Schneider Electric is located in Rudrapur (Uttarakhand) which is near to our existing

plant.• Quicker transportation and lesser lead time in completing purchase orders. Luminous Power Technology is located in Baddi (Himachal Pradesh) 600km approx.• Longer transit time leads greater lead time in completing purchase orders.

Proximity To Suppliers Raw material supplier is located in Chandigarh 500km from existing plant location. Perishability:- Aluminum is softer than other metals, there is a threat of getting

damaged while transporting from longer distance. Transportation costs:- Higher due to long travelling distance. Inventory:- Because of longer transit time we have to keep more inventories and

buffer stocks..

Proximity To Competitors Amset (KN interplast)-Bahadurgarh, Haryana-

Senior most in this field and well established. Saitech-Noida, UttarPradesh- Growing.

Naaz Metal and components-Noida, Uttarpradesh.

V.P Electronics-New Delhi. Micrologic- Gurgaon,Haryana

Baby Boomers

Factor Rating Method Identify important factors Weight factors (0.00 - 1.00) Subjectively score each factor (0 - 10) Sum weighted scores

Cost-Volume Analysis

Determine fixed and variable costs for each location Plot total costs for each location Select location with lowest total cost for expected production volume -must be above break-even

Center-of-Gravity Method

x - coordinate =∑dixQi

∑Qi

i

i

∑diyQi

∑Qi

i

i

y - coordinate =

where dix = x-coordinate of location idiy = y-coordinate of location iQi = Quantity of goods moved to or from location i

Conclusion:

We are selecting Baddi (Himachal Pradesh) as our new business location reason being:-

1) Less labor cost.2) Lesser lead time in procuring Raw material, as our supplier is

located just 30km apart at Chandigarh.3) Scope of making new business partners who manufacture UPS and

Inverter in Baddi named SUKAM and MICROTEK.4) It will take minimum transportation time and cost in delivery of

consignments to our existing customer LUMINOUS POWER TECHNOLOGY.

5) JIT (Just In Time) can applicable easily and could be followed flawlessly.

6) Close proximity makes it far easier to travel to them for supplier development and contract management purposes, as well as for site inspections