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Every entrepreneur is faced with the problem of deciding the
location for his/her factory or plant. Location of the business is the most
important factor influencing its success or failure. It is a long-term
decision which should take into consideration not only the present
requirements of the organisation but also its future expansion plans. Errors
in location may be very difficult and expensive to rectify. Location of a
plant has a bearing on the layout of machinery and equipment as well as on
the process of production. The objective of a locational plan is to find out
the optimum or best location for the particular plant. Such a location not
only results in lowest cost per unit but also facilitates orderly growth of
the firm. Hence, the most advantageous location is that at which the cost of
gathering material and fabricating it plus the cost of distributing the
finished product to the customers will be at a minimum. It is not necessarily
the most favourable location but rather the site at which all the considerations
are optimised. There is no ideal location for all firms or even for one firm
at all times. The choice of location depends on several important factors. It
is influenced by the kind of products being manufactured, costs of production
and distribution. The location of the plant should also be able to meet the
environmental guidelines and other regulations set by the Government specific
to a particular industry. The choice of an optimum location requires
judicious balancing of all these factors.
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