Chapter 8 Objectives • Discuss importance of location decisions. • Discuss factors that influence location decisions. • Discuss recent location trends. • Use techniques to solve typical location problems: – Cost-Profit-Volume Analysis.

– Center of Gravity Method.

Chapter 8 - Location Planning and Analysis Location planning is the determination of where to geographically locate your manufacturing or service facilities.

Typically one of the most infrequent activities unless you work for a retail organization that is rapidly expanding (e.g. Starbucks)

Center of Gravity Method Used to determine location when minimizing shipping costs or travel time is the primary objective.

Center of Gravity Method Identify destinations using a coordinate system (x and y axis).

y axis 6 5 4 (4,5) 3 2 (2,3) (5,2) 1 (1,1) 1 2 3 4 5 6 If all weights are equal then:

x

 

x i

 ( 1

y

 

n n y i

 ( 1   2 3  4  4 4 5   5 ) 2 )  3  2 .

75 x axis

Center of Gravity Method Identify destinations using a coordinate system (x and y axis).

y axis 6 5 4 (4,5) Destination (1,1) (2,3) (4,5) (5,2) Number of Trips 10 20 30 20 3 2 (2,3) (5,2) 1 (1,1) 1 2 3 4 5 6 x axis If all weights are not equal then:

x

  

x i Q i Q i

 1 ( 10 )  2 ( 10  20 ) 20   4 ( 30 ) 30   20

y

  

y i Q i Q i

 1 ( 10 )  3 ( 10  20 ) 20   5 ( 30 ) 30   20 5 ( 20 ) 2 ( 20 )   270 80 260 80  3 .

375  3 .

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