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Operations Management - Introduction to Operations Management

Plant location analysis - Introduction to Operations Management

   Posted On :  22.06.2018 06:45 am

Location analysis is a dynamic process where the business analyses and compares the appropriateness or otherwise of alternative sites with the aim of selecting the best site for a given firm. It consists of the following:

Plant location analysis
 
 
Location analysis is a dynamic process where the business analyses and compares the appropriateness or otherwise of alternative sites with the aim of selecting the best site for a given firm. It consists of the following:
 

Demographic Analysis

 
 
It involves study of population in the area in terms of total population, age of the population group, per capita income of the state, country and at times, the district, adjacent district per capita incomes, educational level, occupational structure etc. This will give an insight about the market, availability of manpower and composition of trained manpower.
 

Trade Area Analysis

 
 
It is an analysis of the geographic area that provides continued clientele to the firm. The business would also see the feasibility of accessing the trade area from alternative sites. It involves the transportation cost, mode of transportation, availability of infrastructure such as road, railway lines and sea and air ports and facilities such as storages, climate condition, which may also influence the firm’s decision.
 

Competitive Analysis

 
 
It helps to judge the nature, location, size and quality of competition in a given trade area.

 

Traffic analysis

 
 
To have a rough idea about the number of potential customers passing by the proposed site during the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of pedestrian and vehicular traffic passing a site. This will give an idea about how other business units evaluate the site.
 

Site economics

 
 
Alternative sites are evaluated in terms of establishment costs and operational costs under this. Costs of establishment is basically cost incurred for permanent physical facilities but operational costs are incurred for running business on day to day basis, they are also call d as running costs. 
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