Operations managementLesson 1 of 2 in the course Achieving World-Class Operations Management

Facility Location Factors and Production Layout Types

5 flashcards · 5 quiz questions · 5 match pairs · 5 fill-in sentences · English

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Summary

Choosing where to place a factory or service facility is an important early decision in operations planning. Location affects operating and shipping costs, customer service, and a company’s ability to compete. Because moving a facility later can be difficult and expensive, managers weigh several factors before choosing a site.

A production input is a resource an organization needs to make a product or provide a service. Managers compare possible sites based on the availability and cost of raw materials, components, equipment, and labor. Transportation costs matter, too: shipping raw materials to a facility and finished goods to customers can account for as much as 25 percent of a manufacturer’s total cost.

All flashcards

Production input
A resource an organization needs to make a product or provide a service, such as materials, equipment, or labor.
Labor factors in site selection
Managers compare wages, worker availability, skills, productivity, cost of living, and—in some industries—unionization.
Manufacturing environment
The local network of manufacturers, workers, suppliers, transportation links, and related resources.
Product layout
An arrangement of workstations in production sequence, suited to repetitive, high-volume production of standardized products.
Cellular manufacturing
An approach that uses compact work cells and cross-trained workers to complete most or all steps for an order.

Quiz questions

  1. Why can a facility location decision be difficult to reverse once operations are established?Answer: Relocation can be costly and disrupt established operations.
  2. Which business is most likely to benefit from locating near its raw-material source?Answer: A paper mill that uses bulky wood supplies.
  3. Why might an established manufacturing area appeal to a new manufacturer?Answer: It may offer experienced workers, accessible suppliers, and transport links.
  4. A company wants to shorten delivery times and provide faster customer support. Which location factor is especially relevant?Answer: Proximity to customers.
  5. A city offers a tax abatement to attract a facility. How should the firm factor it into its decision?Answer: Compare it with long-term costs and operational needs.

Based on Introduction to Business 2e by Lawrence J. Gitman, Carl McDaniel, Amit Shah, Monique Reece, Linda Koffel, Bethann Talsma, James C. Hyatt (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.

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