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23 Cards in this Set
- Front
- Back
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Why need location decisions?
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-Marketing strategy
-growth -depletion of resources -cost of doing business |
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Steps in making location decisions:
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-decide on criteria
-identify the important factors -develop location alternatives -evaluate alternatives -make selection |
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Location decision factors:
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-regional factors
-community considerations -multiple plant strategies -site-related factors |
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Nature of Location decisions:
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-Strategic importance
-objectives -options |
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Strategic importance for nature of location decisions
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-long term commitment/costs
-impact on investments, revenues, and operations -supply chains |
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Objectives of location decisions
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-expand existing facilities
-add new facilities -move |
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options of location decisions
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-expand existing facilities
-add new facilities -move |
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Regional Factors
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Location of raw materials
Location of markets Labor factors Climate and taxes |
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Community Considerations
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Quality of life
Services Attitudes Taxes Environmental regulations Utilities Developer support |
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Site Related Factors
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Land
Transportation Environmental Legal |
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Evaluating Plant Location
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Break-Even Analysis
Factor-Rating Method Centroid Method Linear Programming Transportation Method |
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Multiple Plant Strategies
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Product plant strategy
Market area plant strategy Process plant strategy |
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Manufacturing focus
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-cost focus
- trans. modes/costs -energy availability/costs -labor cost/availability /skills -building/leasing costs |
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service focus
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revenue focus
-demographics -population/ drawing area -competition -traffic volume/patterns -customer access/parking |
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Factor Rating Procedure
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Determine which factors are relevant
Assign a weight for each factor that indicates its relative importance Score each location alternative Multiply the factor weight by the score for each factor, and sum the results for each location alternative Choose the alternative that has the highest composite score |
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Purpose of the Centroid Method
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Can be used to determine the location of a
distribution center that will minimize distribution costs Treats distribution cost as a linear function of the distance and the quantity shipped Includes the use of a map that shows the locations of destinations |
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Centroid Formulas
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Cx = (E d ix* Vi) / E Vi
Cy = (E diy * Vi) / E Vi |
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Transportation Method of Linear
Programming |
Transportation method of linear
programming seeks to minimize the cost (maximize the profit) of shipping units from n sources to m destinations. |
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Linear Programming for transportation
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obj. func: costs * Xij
supply const: Xi1 through Xi4 = supply at 1 demand const: X1j through X4j = demand at j nonnegativity: Xij >= 0 |
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What motivations typically cause firms to initiate a ficilities location ore relocation project?
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postive reasons:
-wish to move closer to markets or sources of supply -cost reduction -need educated work force so move near university negative reasons: -avoid costly regulation or unionization |
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2. List five major reasons why a new electronic components manufacturing firm should move into your city or town?
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-quality of education
-promixity of supply -proximity of market (LA has a big pop.) |
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3. How do facility location decisions differ for service facilities and manufacturing plants?
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service facilities need to be close to customers
manufacturing plants need to be close to resources manufacturing establishment is more costly than service facility establishment, so location decision for manufacturers is important |
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4. What are the pro and cons of relocating a small or midsized manufacturing firm (that makes mature products) from the United States to Mexico in the post-NAFTA environment?
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Mature products are more cost oriented due to price competition and low product differentiation. Mexico has low labor costs, cheap land, low regulation, and low benefits, which mean less costs for mature firms.
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