Technical Note 11 Facility Location Issues in Facility Location Various Plant Location Methods Slides used in class may be different from slides in student.
Download ReportTranscript Technical Note 11 Facility Location Issues in Facility Location Various Plant Location Methods Slides used in class may be different from slides in student.
Technical Note 11
Facility Location
Issues in Facility Location Various Plant Location Methods Slides used in class may be different from slides in student pack 1
Competitive Imperatives Impacting Location
The need to produce close to the customer due to time-based competition, trade agreements, and shipping costs.
The need to locate near the appropriate
labor pool
to take advantage of low wage costs and/or high technical skills.
2 Slides used in class may be different from slides in student pack
Issues in Facility Location
Slides used in class may be different from slides in student pack 3
Issues in Facility Location
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Characteristics of Location Decisions Long-term decisions Very difficult to reverse Affect fixed & variable costs – » – Objective: Slides used in class may be different from slides in student pack 5
Location Decision Sequence
1. Country 2. Region/Community 3. Site
© 1995 Corel Corp.
© 1995 Corel Corp.
Slides used in class may be different from slides in student pack © 1995 Corel Corp.
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Factors Affecting Country Decision Government Culture & economy Market location & size Labor – – – Infrastructure Exchange rate Incentives Slides used in class may be different from slides in student pack © 1995 Corel Corp.
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Factors Affecting Region/Community Decision Slides used in class may be different from slides in student pack © 1995 Corel Corp.
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Factors Affecting Site Decision Site size Site cost Transportation in/out Proximity of services Environmental impact © 1995 Corel Corp.
9 Slides used in class may be different from slides in student pack
Manufacturing Location Strategies
Cost
focus – Location is a major cost factor – – © 1995 Corel Corp.
Slides used in class may be different from slides in student pack 10
Service Location Strategies
Revenue
focus – Location is a major revenue factor – – © 1995 Corel Corp.
11 Slides used in class may be different from slides in student pack
Some Location Methods Factor weighting method Center of gravity method Slides used in class may be different from slides in student pack © 1995 Corel Corp.
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Location Methods: Factor Rating Method Most widely used location technique Useful for service & manufacturing locations Rates locations using factors – » Example: – » Example: 13 Slides used in class may be different from slides in student pack
Weighted Factor Rating Method Steps 1. List relevant factors 2. Assign importance weight to each factor (0-1 with all weights adding to 1) 3. Give a score to each location by factor (1-10, etc.) 4. Multiply scores by weights for each factor & total 5. Select location with maximum total score 14 Slides used in class may be different from slides in student pack
Factor Rating Method Example You’re an analyst for John Deere. You’re considering locating a new plant in Omaha (NE) or Denver (CO). Factor Wgt NE CO Mfg. costs Cost of living Labor avail.
.7
.1
8 7 .2 10 6 6 8 Where should you locate?
Slides used in class may be different from slides in student pack © 1995 Corel Corp.
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Factor Rating Method Solution
Factor
Mfg. costs Cost of living
Weight Score
0.7
8 0.1
7 Labor avail.
0.2
1 10
Omaha Weighted Factor
5.6
0.7
2 8.3
Score
6 6 8
Denver Weighted Factor
4.2
0.6
1.6
6.4
16 Slides used in class may be different from slides in student pack
Factor Rating Method Thinking Challenge You’re owner of a hot tub store. You’re considering relocating to Phoenix (AZ) or Santa Fe (NM). Factor Wgt AZ NM Population Competition Life style .4
.1
.5
10 3 2 5 8 9 Where should you locate?
Slides used in class may be different from slides in student pack © 1995 Corel Corp.
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Solution
Factor
Population Compensation Life Style
TOTAL Weight Score
0.4
0.1
0.5
10 3 2 1
Phoenix Weighted Factor
4 0.3
1 5.3
Score
5 8 9
Santa Fe Weighted Factor
2 0.8
4.5
7.3
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Location Methods: Factor Rating Method +/ + Slides used in class may be different from slides in student pack 19
Location Methods:
Transportation Method of Linear Programming
Seeks to minimize costs of shipping
n
units to
m
destinations or its seeks to maximize profit of shipping
n
units to
m
destinations.
+ Slides used in class may be different from slides in student pack 20
Location Methods:
Centroid Method
The centroid is used for locating single facilities that considers: – existing facilities, – – the distances between them, and the volumes of goods to be shipped between them.
This methodology involves formulas used to compute the coordinates of the two dimensional point that meets the distance and volume criteria stated above.
21 Slides used in class may be different from slides in student pack
Plant Location Methodology: Centroid Method Formulas
C = x d V ix i V i C = y d V iy i V i C x = X coordinate of the centroid C y = X coordinate of the centroid d ix = X coordinate of the ith location d iy = Y coordinate of the ith location V i = volume of goods moved to or from ith location Slides used in class may be different from slides in student pack 22
Plant Location Methodology: Example of Centroid Method
Centroid method example – Y Several automobile showrooms are located according to the following grid which represents coordinate locations for each showroom.
S ho wro o m No o f Z-Mo b ile s
Q
(790,900) s o ld p e r mo nth
D
(250,580) A 1250 D 1900
A
(100,200) Q 2300 (0,0) X Question: What is the best location for a new Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per month? Slides used in class may be different from slides in student pack 23
Plant Location Methodology: Example of Centroid Method: Determining the Coordinates of the New Facility
You then compute the new coordinates using the formulas: Y
Q
(790,900)
D
(250,580)
A
(100,200) (0,0) X Slides used in class may be different from slides in student pack S ho wro o m A D Q No o f Z-Mo b ile s s o ld p e r mo nth 1250 1900 2300 24
Thinking Challenge You’re a planner for Sears. You want to find the best location of a warehouse serving retail stores in: Seattle ( 50 , 60 ) Aberdeen ( 20 , 35 ) Spokane ( 160 , 50 ) Monthly demand is: Seattle 494k units Aberdeen 18k units Spokane 171k units respectively.
Slides used in class may be different from slides in student pack © 1995 Corel Corp.
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Centroid Method Grid
90 Seattle (50,60) 494k units 60 30 Aberdeen (20,35) 18k units 0 0 30 60 90
Slides used in class may be different from slides in student pack
Spokane (160,50) 171k units 120 150
© 1995 Corel Corp.
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C x i d ix W i W i i Solution C y i d iy W i W i i Slides used in class may be different from slides in student pack 27
Thinking Challenge Solution
90 Seattle (50,60) 494k units 60 30 Aberdeen (20,35) 18k units 0 0 30 60 90
Slides used in class may be different from slides in student pack
120 Spokane (160,50) 171k units 150
© 1995 Corel Corp.
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