In Case of Location Choice for Existing Organisation

In this case a manufacturing plant has to fit into a multi-plant operations stra
tegy. That is,
additional plant location in the same premises and elsewere under following circ
umstances:
1. Plant manufacturing distinct products.
2. Manufacturing plant supplying to specific market area.
3. Plant divided on the basis of the process or stages in manufacturing.
4. Plants emphasizing flexibility.
The different operations strategies under the above circumstances could be:
1. Plants manufacturing distinct products: Each plant services the entire market
area for
the organization. This strategy is necessary where the needs of technological an
d resource inputs
are specialized or distinctively different for the different product-lines.
For example, a high quality precision product-line should not be located along w
ith other
product-line requiring little emphasis on precision. It may not be proper to hav
e too many
contradictions such as sophisticated and old equipment, highly skilled and semiskilled personnel,
delicates processes and those that could permit rough handlings, all under one r
oof and one set
of managers. Such a setting leads to much confusion regarding the required empha
sis and the
management policies.
Product specialization may be necessary in a highly competitive market. It may b
e necessary
to exploit the special resources of a particular geographical area. The more dec
entralized these
pairs are in terms of the management and in terms of their physical location, th
e better would
be the planning and control and the utilization of the resources.
2. Manufacturing plants supplying to a specific market area: Here, each plant
manufactures almost all of the company s products. This type of strategy is useful
where market
proximity consideration dominates the resources and technology considerations. T
his strategy
requires great deal of coordination from the corporate office. An extreme exampl
e of this
strategy is that of soft drinks bottling plants.
3. Plants divided on the basis of the process or stages in manufacturing: Each
production process or stage of manufacturing may require distinctively different
equipment
capabilities, labour skills, technologies, and managerial policies and emphasis.
Since the products
of one plant feed into the other plant, this strategy requires much centralized
coordination of the
manufacturing activities from the corporate office that are expected to understa
nd the various
technological aspects of all the plants.
4. Plants emphasizing flexibility: This requires much coordination between plant
s to meet
the changing needs and at the same time ensure efficient use of the facilities a
nd resources.
Frequent changes in the long-term strategy in order to improve be efficiently te
mporarily, are not
healthy for the organization. In any facility location problem the central quest
ion is: Is this a
location at which the company can remain competitive for a long time?

64 Operations Management
For an established organization in order to add on to the capacity, following ar
e the ways:
(a) Expansion of the facilities at the existing site: This is acceptable when it
does not
violate the basic business and managerial outlines, i.e., philosophies, purposes
, strategies and
capabilities. For example, expansion should not compromise quality, delivery, or
customer service.
(b) Relocation of the facilities (closing down the existing ones): This is a dra
stic step
which can be called as Uprooting and Transplanting . Unless there are very compelli
ng reasons,
relocation is not done. The reasons will be either bringing radical changes in t
echnology, resource
availability or other destabilization.
All these factors are applicable to service organizations, whose objectives, pri
orities and
strategies may differ from those of hardcore manufacturing organizations.
III. In Case of Global Location
Because of globalisation, multinational corporations are setting up their organi
zations in India
and Indian companies are extending their operations in other countries. In case
of global locations
there is scope for virtual proximity and virtual factory.
VIRTUAL PROXIMITY
With the advance in telecommunications technology, a firm can be in virtual prox
imity to its
customers. For a software services firm much of its logistics is through the inf
ormation/
communication pathway. Many firms use the communications highway for conducting
a large
portion of their business transactions. Logistics is certainly an important fact
or in deciding on a
location whether in the home country or abroad. Markets have to be reached. Custom
ers have
to be contacted. Hence, a market presence in the country of the customers is qui
te necessary.
VIRTUAL FACTORY
Many firms based in USA and UK in the service sector and in the manufacturing se
ctor often out
sources part of their business processes to foreign locations such as India. Thu
s, instead of one s
own operations, a firm could use its business associates operations facilities. T
he Indian BPO firm
is a foreign-based company s virtual service factory . So a location could be one s own
or one s
business associates. The location decision need not always necessarily pertain t
o own operations.
REASONS FOR A GLOBAL/FOREIGN LOCATION
A. Tangible Reasons
The tangible reasons for setting up an operations facility abroad could be as fo
llows:
Reaching the customer: One obvious reason for locating a facility abroad is that
of
capturing a share of the market expanding worldwide. The phenomenal growth of th
e GDP of
India is a big reason for the multinationals to have their operations facilities
in our country. An
important reason is that of providing service to the customer promptly and econo

mically which
is logistics-dependent. Therefore, cost and case of logistics is a reason for se
tting up manufacturing
facilities abroad. By logistics set of activities
The desired range is usually denoted as f(x1, . . . ,xi, . . . ,xn); in particul
ar,
for addition, this notation takes the form x1 + x2. Thus, we can define
addition of two intervals as follows,
[x1, x1] + [x2, x2] = [x1 + x2, x2 + x2]. (18)
This formula makes perfect intuitive sense: if one town has between 700 and
800 thousand people, and it merges with a nearby town whose population is
between 100 and 200 thousand, then:
The smallest possible value of the total population of the new big town is
when both populations are the smallest possible, 700 + 100 = 800, and
The largest possible value is when both populations are the largest possible,
that is, 800 + 200 = 1000.
The subtraction function f(x1, x2) = x1 -x2 is increasing with respect to
x1 and decreasing with respect to x2, so we have
[x1, x1] - [x2, x2] = [x1
- x2, x1 - x2]. (19)
These operations are also in full agreement with common sense. For
example, if a warehouse originally had between 6.0 and 8.0 tons, and we moved
between 1.0 and 2.0 tons to another location, then the smallest amount left is
when we start with the smallest possible value 6.0 and move the largest possible
value 2.0, resulting in 6.0 - 2.0 = 4.0. The largest amount left is when we
start with the largest possible value 8.0 and move the smallest possible value
1.0, resulting in 8.0 - 1.0 = 7.0.
For multiplication f(x1, x2) = x1 x2, the direction of monotonicity
depends on the actual values of x1 and x2: for example, when x2 > 0, the
product increases with x1; otherwise it decreases with x1. So, unless we know
the signs of the product beforehand, we cannot tell whether the maximum
is attained at x1 = x1 or at x1 = x1. However, we know that it is always
attained at one of these endpoints. So, to find the range of the product, it is
sufficient to try all 2 2 = 4 combinations of these endpoints
130 V. Kreinovich
[x1, x1] [x2, x2]
= [min(x1
x2, x1
x2, x1 x2, x1 x2), max(x1
x2, x1
x2, x1 x2, x1 x2)].
(20)
Finally, the function f(x1) = 1/x1 is decreasing wherever it is defined
(when x1 = 0), so if 0 ? [x1, x1]; then
1
[x1, x1]
=  1
x1
,
1
x1
 . (21)
The formulas for addition, subtraction, multiplication, and reciprocal of interv
als
are called formulas of interval arithmetic.
Comment. Alternative faster-to-compute formulas that lead to slightly wider
intervals are described, for example, in Cerimele and Venturini Zilli [18].
Straightforward ( naive ) interval computations. Historically the first method
for computing the enclosure for the general case is the method which is
sometimes called straightforward interval computations. In this method,

we repeat the computations forming the program f step by step, replacing

each operation with real numbers by the corresponding operation of interval
arithmetic. It is known that, as a result, we get an enclosure Y ? y for the
desired range.
In some cases, this enclosure is exact. In more complex cases (see example
below), the enclosure has excess width.
Example. Let us illustrate the above idea on the example of estimating the
range of the function f(x1) = x1 - x21
on the interval x1 ? [0, 0.8].
We start with parsing the expression for the function (i.e., describing how
a computer will compute