Plant location selection of a manufacturing industry using analytic hierarchy process approach

Abstract

Selection of plant location is a multi-person and multi-criteria decision problem. Location selection is a strategic decision that cannot be changed overnight. Even if the location decision is changed at all, a considerable loss is bound to be incurred. Without sound location planning in the beginning, the new facility may pose continuous operating disadvantages for the future operations. In this paper, analytic hierarchy process (AHP) approach is used to arrive at consensus decision. The AHP model is formulated and applied to a real case study to examine its feasibility in selecting the plant location for a manufacturing industry. Different factors were identified affecting the plant location on the five locations (Delhi, Manesar, Chandigarh, Mumbai and Baddi) suggested by a particular manufacturing industry and then AHP technique was implemented to select the best location out of these five locations. After analysis, Baddi is found to be the best location to setup their new plant. AHP is a powerful and flexible tool for tackling the complex decision problem into a simple concept of hierarchy, which incorporates both financial and non-financial factors influencing the decision alternatives in a systematic way.