76  Facility Location and Layout

76.1 Facility Location

Facility Location = the strategic decision of where to locate a plant, warehouse, retail outlet, or service centre to optimise costs, market access, and competitive position. Alfred Weber (1909) — Theory of Industrial Location — is the classical foundation.

76.2 Location Factors

TipLocation factors
  • Proximity to raw materials.
  • Proximity to markets.
  • Labour availability and cost.
  • Transportation cost and infrastructure.
  • Utilities — power, water.
  • Government incentives — SEZ, tax holidays.
  • Climate.
  • Community attitudes.
  • Quality of life.
  • Land cost and availability.
  • Currency and political risk (international).
  • Suppliers and ecosystem.

76.3 Location-Decision Models

TipLocation models
  • Weber’s Theory (1909) — location to minimise transportation cost.
  • Centre of Gravity / Centroid Method — for distribution centres.
  • Factor Rating Method — weighted scoring.
  • Break-even Analysis — by location.
  • Transportation Method (LP).
  • Load-Distance Method.
  • Reilly’s Law of Retail Gravitation (1929) (Topic 66).
  • Huff’s Probability Model (1964).
  • GIS-based site selection.
  • AHP (Analytic Hierarchy Process) — Saaty.

76.4 Centre of Gravity Method

\[C_X = \frac{\Sigma d_{ix} W_i}{\Sigma W_i}; \quad C_Y = \frac{\Sigma d_{iy} W_i}{\Sigma W_i}\]

Where d = coordinates of demand point i, W = weight (volume).

76.5 Location Strategies

TipStrategic location patterns
  • Single location — concentration.
  • Multi-plant — capacity spread.
  • Hub-and-spoke.
  • Clustering (Marshall externalities; Silicon Valley).
  • Offshoring / Reshoring / Friend-shoring.
  • Free Trade Zones / SEZs.
  • Global sourcing.

76.6 Industrial Estates and Indian Context

TipIndian location considerations
  • SEZ Act 2005 — 250+ approved SEZs.
  • Industrial corridors — Delhi-Mumbai (DMIC), Chennai-Bengaluru.
  • National Industrial Corridor Development Programme.
  • PMAY (Industrial), MIDC, GIDC, KIADB — state agencies.
  • Make in India clusters.
  • Bharatmala — highway connectivity.
  • Sagarmala — port-led development.

76.7 Facility Layout

Facility Layout = the arrangement of physical resources within a facility — equipment, machines, workstations, and storage to optimise flow, cost and productivity.

76.8 Types of Layouts

TipMajor layout types
Layout Description Best for
Product (Line) Layout Sequential by product flow Mass production, autos
Process (Functional) Layout Grouped by similar function Job shops, hospitals
Cellular Layout Group technology cells Mid-volume, mid-variety
Fixed-Position Layout Resources move to product Shipbuilding, construction
Combination / Hybrid Mix Flexible factories
Office Layout Workspaces Service firms
Retail Layout Shopping experience Stores
Warehouse Layout Storage + picking DCs

76.9 Layout Design Principles

TipLayout design principles
  • Material handling minimisation.
  • Effective utilisation of space.
  • Flexibility for change.
  • Safety.
  • Compactness.
  • Adequate supervision.
  • Smooth flow / no bottlenecks.
  • Employee morale and comfort.

76.10 Methods of Layout Design

TipLayout-design methods
  • From-To Chart — frequency of movement between departments.
  • REL Chart (Relationship chart) — Muther’s SLP.
  • Systematic Layout Planning (SLP) — Richard Muther (1961).
  • CRAFT — Computerised Relative Allocation of Facilities Technique.
  • ALDEP, CORELAP, BLOCPLAN — algorithms.
  • Activity Relationship Diagram.
  • Travel-distance minimisation.
  • Line balancing.

76.11 Line Balancing

TipLine balancing
  • Cycle time = Total time / units per period.
  • Theoretical minimum stations = Σ task times / cycle time.
  • Efficiency = Σ task times / (Actual stations × Cycle time).
  • Balance delay = 1 − Efficiency.
  • Heuristics: Longest Task Time · Most Followers · Ranked Positional Weight.

76.13 Practice Questions

Q 01WeberMedium

"Theory of Industrial Location" (1909) is by:

  • AAlfred Weber
  • BMax Weber
  • CReilly
  • DHuff
View solution
Correct Option: A
Alfred Weber (1909).
Q 02Product layoutEasy

Product layout is best for:

  • AJob shops
  • BMass production
  • CConstruction
  • DCustom one-offs
View solution
Correct Option: B
High volume, low variety.
Q 03ProcessMedium

Process layout groups by:

  • ASimilar function / operation
  • BProduct sequence
  • CWorker ranking
  • DMaterial weight
View solution
Correct Option: A
All milling machines together, etc.
Q 04FixedMedium

Shipbuilding uses:

  • AProduct layout
  • BProcess layout
  • CFixed-position layout
  • DCellular
View solution
Correct Option: C
Resources come to the product.
Q 05SLPHard

Systematic Layout Planning was developed by:

  • ARichard Muther
  • BWeber
  • CSaaty
  • DTaylor
View solution
Correct Option: A
Richard Muther (1961).
Q 06Centre of GravityMedium

Centre of Gravity Method is used for:

  • AJob sequencing
  • BSingle-facility location among many demand points
  • CLine balancing
  • DDemand forecasting
View solution
Correct Option: B
Weighted-average coordinates.
Q 075SEasy

"5S" originated in:

  • AJapan
  • BUSA
  • CGermany
  • DUK
View solution
Correct Option: A
Japanese 5S — Seiri, Seiton, Seiso, Seiketsu, Shitsuke.
Q 08CellularMedium

Cellular layout is a form of:

  • AGroup Technology
  • BFixed position
  • CPure process
  • DRandom
View solution
Correct Option: A
Family-based cells.
Q 09DMICHard

DMIC stands for:

  • ADelhi-Mumbai Industrial Corridor
  • BDelhi-Mumbai Investment Council
  • CDefence Manufacturing & IT Corridor
  • DDomestic Manufacturing Industrial Cluster
View solution
Correct Option: A
Industrial corridor between Delhi and Mumbai.
Q 10SEZMedium

SEZ Act came in:

  • A2000
  • B2005
  • C2010
  • D2014
View solution
Correct Option: B
SEZ Act 2005.
Q 11Line balancingMedium

Cycle time in line balancing is:

  • AProduction time / Output
  • BOutput / Production time
  • CSetup + Run time
  • DSetup time only
View solution
Correct Option: A
Available time per unit.
Q 12CRAFTHard

CRAFT layout algorithm stands for:

  • AComputerised Relative Allocation of Facilities Technique
  • BCustomer-Resource Allocation Framework
  • CCost-Reducing Activity Flow Tool
  • DCritical-Path Allocation Framework
View solution
Correct Option: A
CRAFT (Buffa 1964).
Q 13AHPHard

AHP is by:

  • AThomas Saaty
  • BMuther
  • CReilly
  • DHuff
View solution
Correct Option: A
Thomas L. Saaty — Analytic Hierarchy Process.
Q 14ClusteringMedium

Marshall's industrial clustering benefits are known as:

  • AAgglomeration economies
  • BDiseconomies of scale
  • CNetwork externalities
  • DMass-customisation
View solution
Correct Option: A
Marshall externalities; Silicon Valley.
Q 15MatchHard

Match layout with industry:

(i) Product (a) Hospital
(ii) Process (b) Auto assembly
(iii) Fixed (c) Cellular machines
(iv) Cellular (d) Shipbuilding
  • A(i)-(b), (ii)-(a), (iii)-(d), (iv)-(c)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(c), (ii)-(d), (iii)-(a), (iv)-(b)
  • D(i)-(d), (ii)-(c), (iii)-(b), (iv)-(a)
View solution
Correct Option: A
Product — auto; Process — hospital; Fixed — shipbuilding; Cellular — cells.

76.13.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Centre-of-Gravity locates a DC to minimise weighted distance.
R: Coordinates are weighted by demand volumes.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: A
S 1Statement-basedMedium

Layout types: (i) Product. (ii) Process. (iii) Cellular. (iv) Fixed-position.

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i), (ii), (iii) only
View solution
Correct Option: A
N 1NumericalMedium

Line balance: Total task time 60 min; cycle time 12 min. Theoretical minimum stations:

  • A5
  • B6
  • C12
  • D60
View solution
Correct Option: A
60/12 = 5.
N 2NumericalHard

Cycle time 10 min; production time per day 480 min. Daily output:

  • A48
  • B50
  • C10
  • D100
View solution
Correct Option: A
480/10 = 48.

76.14 Quick Recall

ImportantQuick recall
  • Location — Weber (1909) — minimise transport cost.
  • Factors: materials · markets · labour · transport · utilities · incentives · climate · community · land · risk · suppliers.
  • Models: Weber · Centre of Gravity · Factor Rating · Break-even · Transportation method · Reilly · Huff · GIS · AHP (Saaty).
  • Strategies: Single · Multi-plant · Hub-and-spoke · Clustering (Marshall) · Offshore/Reshore/Friend-shore.
  • India: SEZ Act 2005 · DMIC · CBIC · Bharatmala · Sagarmala · State agencies (MIDC, GIDC, KIADB).
  • Layout types: Product · Process · Cellular (Group Tech) · Fixed-Position · Hybrid · Office · Retail · Warehouse.
  • Layout principles: minimise handling · use space · flexibility · safety · supervision · flow · morale.
  • Methods: From-To Chart · REL Chart · SLP (Muther 1961) · CRAFT · ALDEP · CORELAP · BLOCPLAN · Activity Relationship.
  • Line balancing: Cycle time = T/n; Efficiency = task time / (stations × CT); Heuristics: LTT, MF, RPW.
  • Modern: Lean · 5S · Cellular · Reconfigurable · Smart/Industry 4.0 · Cobot · LEED · Digital Twin · AGVs · dark stores.