The important factors while planning for installation of plant include availability of space, power, water, raw material, good climatic conditions, good means of communication, ancillaries, low local taxes and similar other economic considerations, marketing facilities for the planned product, space for process disposal and skilled and unskilled labor locally. One has to keep in mind the possibilities of utilization and sale of the process wastes and by-products of the planned industry. Decision of manufacturing new product, financial and other aids, facilities for expansion presence of related industries, local by laws and securities, hospitality are also important factors which one must keep in mind for location of an enterprise. After finalizing the size and location of the plant, the next step is to design the inner layout of the plant to plan out the sequence of different shops and their locations accordingly to specifications of material and product, manufacturing processes, type of production, material handling facilities, system and facilities for storing, inter-dependability of one shop over the other, links among various shops, service facilities and lighting and ventilation. Next, the internal arrangement of the above mentioned infracturctral facilities of different shops are identified. This identification is termed as shop layout. The main factors namely size and type of equipment, number of machines to be installed, floor area required for working on each machine, power requirements for the machines, requirements of factory services, sequence of operations to be followed, visibility to all the machines for proper supervision and control, type of drive used, safe working conditions, provision of stores within the shop, i.e. for tools, instruments, finished parts and consumable materials, etc. affects the layout of the plant. A good plant layout should meet the following basic requirement:
1. Integration of manufacturing centre facilities in terms of man, machine and material.
2. Movements of production personnel and material handling should be minimized.
3. Smooth and continuous flow of production or manufacturing work with least possible bottlenecks and congestion points.
4. Floor space utilization should be optimum as for as possible.
5. Working place should be free from pollution and safe working conditions should prevail in each shop of the plant.
6. The handling of raw material, semi finished and finished product should be should be tackled optimally and effectively
7. Plant layout and shop layouts must be flexible to facilitate changes in production requirements
8. There should be better working environment in term of proper light, ventilation and other amenities such as drinking water and toilets for welfare for the manufacturing personnel