(1) Policies of management:
It is important to keep in mind various managerial policies and plans before deciding plant layout.
Various managerial policies relate to future volume of production and expansion, size of the plant, integration of production processes; facilities to employees, sales and marketing policies and purchasing policies etc. These policies and plans have positive impact in deciding plant layout.
(2) Plant location:
Location of a plant greatly influences the layout of the plant. Topography, shape, climate conditions, and size of the site selected will influence the general arrangement of the layout and the flow of work in and out of the building.
(3) Nature of the product:
Nature of the commodity or article to be produced greatly affects the type of layout to be adopted. In case of process industries, where the production is carried in a sequence, product layout is suitable. For example, soap manufacturing, sugar producing units and breweries apply product type of layout. On the other hand in case of intermittent or assembly industries, process type of layout best suited. For example, in case of industries manufacturing cycles, typewriters, sewing machines and refrigerators etc., process layout method is best suited.
Production of heavy and bulky items need different layout as compared to small and light items. Similarly products with complex and dangerous operations would require isolation instead of integration of processes.
(4) Volume of production:
Plant layout is generally determined by taking into consideration the quantum of production to be produced. There are three systems of production viz.,
(a) Job production:
Under this method peculiar, special or non- standardized products are produced in accordance with the orders received from the customers. As each product is non- standardized varying in size and nature, it requires separate job for production. The machines and equipment’s are adjusted in such a manner so as to suit the requirements of a particular job.
Job production involves intermittent process as the work is carried as and when the order is received. Ship building is an appropriate example of this kind. This method of plant layout viz., Stationery Material Layout is suitable for job production.
(b) Mass production:
This method involves a continuous production of standardized products on large scale. Under this method, production remains continuous in anticipation of future demand. Standardization is the basis of mass production. Standardized products are produced under this method by using standardized materials and equipment. There is a continuous or uninterrupted flow of production obtained by arranging the machines in a proper sequence of operations. Product layout is best suited for mass production units.
(c) Batch production:
It is that form of production where identical products are produced in batches on the basis of demand of customers or of expected demand for products. This method is generally similar to job production except the quality of production.
Instead of making one single product as in case of job production a batch or group of products is produced at one time, It should be remembered here that one batch of products has no resemblance with the next batch. This method is generally adopted in case of biscuit and confectionary manufacturing, medicines, tinned food and hardware’s like nuts and bolts etc.
(5) Availability of floor space:
Availability of floor space can be other decisive factor in adopting a particular mode of layout. If there is a scarcity of space, product layout may be undertaken. On the other hand more space may lead to the adoption of process layout.
(6) Nature of manufacturing process:
The type of manufacturing process undertaken by a business enterprise will greatly affect the type of layout to be undertaken.