--- title: "Importance and factors of plant location" subject: "Industrial Engineering and Management" chapter: 2 key: "semester_6/industrial_engineering_and_management:factors-affecting-plant-location" source: https://www.bctengineer.com/q/semester_6/industrial_engineering_and_management/factors-affecting-plant-location site: BCT Engineering --- # Importance and factors of plant location Industrial Engineering and Management · Chapter 2: Design of Production Systems - Asked in: year not given, 8 marks - Video: [Plant location, Factors affecting Plant Location #plantlocation](https://www.youtube.com/watch?v=OshyCwH3TJM) — Educationleaves - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_6/industrial_engineering_and_management/factors-affecting-plant-location - Whole chapter: https://www.bctengineer.com/md/semester_6/industrial_engineering_and_management/chapter-2 ## Question What is meant by plant location? Explain its importance and discuss the factors that affect the selection of a plant location. ## Short answer Plant location is selecting a long-term, costly-to-reverse factory site, affecting transport, labour, costs, and competitiveness. Key factors include nearness to raw materials and markets, transport facilities, labour, power, water, land, government policies, and community amenities. Selection methods like weighted factor rating or break-even analysis are used. ## Answer **Plant location** means selecting the geographical site where the factory will be built. The decision is long term and costly to reverse, because land, buildings and machines are fixed investments. #### Importance of plant location - It decides the transport cost of raw materials and finished goods. - It affects the availability and cost of labour, power and water. - It influences the production cost, and so the selling price and competitiveness. - It affects the possibility of expansion and relations with the community. - A wrong choice cannot easily be corrected and may cause long-term loss. #### Factors affecting plant location 1. **Nearness to raw materials:** important when the raw material is bulky or perishable or loses weight in processing (sugar mill, cement plant). 2. **Nearness to market:** important when the product is fragile, perishable or heavy (bakery, soft drinks). 3. **Transport facilities:** road, rail, air and waterways; their cost and reliability. 4. **Availability of labour:** skilled and unskilled labour, wage level, labour relations. 5. **Power and fuel:** cheap and reliable electricity and fuel (e.g. hydropower for power-intensive industries). 6. **Water and waste disposal:** supply of water and facilities for effluent treatment. 7. **Climate and land:** soil bearing capacity, drainage, flood risk, cost of land, room for expansion. 8. **Government policy:** taxes, subsidies, industrial estates, environmental rules, zoning. 9. **Capital and financial facilities:** banks, insurance, availability of finance. 10. **Community and living conditions:** housing, schools, hospitals, security, safety from hazards. 11. **Competitors and supporting industries:** nearby suppliers, repair and service facilities. #### Selection method Because many factors conflict, the final decision is made using methods such as the weighted factor rating, break-even (cost) analysis or the centre-of-gravity method. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Why is plant location a critical decision? A. It can be changed freely every year B. It is long term and costly to reverse because land, buildings and machines are fixed investments C. It only affects the colour of the building D. It has no effect on production cost Answer: B. Fixed investments make a wrong choice hard to correct, with long-term effect on cost and competitiveness. (Key point: Importance of location) 2. When is nearness to raw materials most important? A. When the product is fragile and perishable B. When the product is light and non-perishable C. When the raw material is bulky, perishable or loses weight in processing D. When labour is cheap Answer: C. Sugar mills and cement plants locate near raw materials since they are bulky or lose weight in processing. (Key point: Nearness to raw material) 3. Which product type favours location near the market? A. Fragile, perishable or heavy products such as bakery items B. Ores that lose weight in processing C. Products needing hydropower D. Products with no transport cost Answer: A. Fragile or perishable products like bread and soft drinks are best made close to customers. (Key point: Nearness to market) 4. Which methods are used to make the final selection when factors conflict? A. Gantt chart and PERT B. Weighted factor rating, break-even analysis or centre-of-gravity method C. ABC analysis and EOQ D. Time study and motion study Answer: B. The answer lists weighted factor rating, break-even (cost) analysis and the centre-of-gravity method. 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