Generally, a business will choose to produce a new product in an existing factory as long as the existing factory has enough capacity to handle customer demand for both the new product and established products. After exploring the capacity of existing factories, management may decide to build a new production facility. The firm must recruit employees with the appropriate skills, develop training programs, or do both. It may even be necessary to transfer skilled workers to the new location or to train local workers. Plant Layout .
Plant layout is the arrangement of machinery, equipment, and personnel within the facility.
Three general types of layout are used. The process layout is used when different operations are required for creating small batches of different products. The product layout is used when all products undergo the same operations in the same sequence, such as in an assembly line. A fixed-position layout is used when a very large product is produced. Operational Planning .