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29 Cards in this Set
- Front
- Back
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Location strategy
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Facility location is the process of identifying the best geographic location for a service or production facility
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Objective of location strategy
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Maximize benefit of location to the firm
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Manufacturing goal
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Minimize cost
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Service goal
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Maximize revenue by maximizing contact with customers.
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Factors affecting location decision
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LAbor climate
Proximity to markets/customers Proximity to suppliers.raw materials Quality of life Other factors (such as tax holidays) |
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Labor climate
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In recent years there's a shift to going over seas. India for service countries, china for manufacturing because China has better infrastructure.
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Why don't service jobs go to China?
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Language skills. Chinese don't speak English as well. India used to be a british colony. India's national language is Hindi. People from South India don't speak much Hindi so it's hard for south india and north india to speak to one another in the native language. In the south they are taught English.
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BRICS
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Brazil, Russia, India, China, South Africa. Was NIE in the 90's Newly Industrialized Economies and included Taiwan, Singapore, Hong Kong.
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Labor climate in terms of cost:
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In the US auto industry the cost is lower than Japan. Most luxury cars are now manufactured in the US.
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Proximity to markets/customers what do we want to do
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minimize. Cutting outbound transportation costs is the objective. That's be like Visio Manufacture closer. Coca Cola are an Atlanta based company but they have different bottling companies across the country. They mfg it at these locations to minimize transporation costs.
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Proximity to suppliers / raw materials
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Object is to minimize transportation costs.
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Quality of life
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Factors can relate to educaiton - KCMO school district is falling apart. CAn go different places for better schools.
Recreation - this is important for many people. Crime rate - Quality of life. Some companies decide to move for places iwth lower crime rates. Hard to attract customers if there's too much crime. Climate - people like different climates. It can affect people's productivity. Real estate cost - Want to go somewhere where cost of living is lower. Cost of living- before you take a job be sure to investigate |
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Other factors related to location planning
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Tax holiday's why did NFM go to Wyandotte county? Because good tax incentive.
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Cost volume analysis (break even analysis)
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Determine fixed and variable costs
Plot total costs Determine lowest total costs |
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Objective of cost volume analysis
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minimize cost
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Total cost equation
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TC = FC + VC x
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x =
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number of units
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What do you do if X is unknownn?
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If X is unknown we should plot lines for it. Since they're linear we can substitute values for X and we will find it.
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What does the graph tell us?
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The graph tells us which one has a lower cost. Go for the line that is closest to zero.
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To find the point of inter section we?
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Set the two equations equal to one another
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What is the equation for profit?
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Revenue - Total cost
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What is the more technical equation for profit?
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p*X - FC - VC*X
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Break even point equation
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FC / (p - VC)
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Transporatation method objective
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Minimize transport costs by looking at capacity of supply point by looking at resources used at the supply point.
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What question does transportation method deal with?
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How much should be shipped from several sources to several destinations.
Sources can be factories, warehouses ect. Destinations are warehouses, stores, ect. |
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Transport models
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Find lowest cost shipping arrangement
Used primarily for existing distribution |
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Constraints:
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Supply constraints: Cannot exceed the capacity of your suppliers.
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Transportation problems: What are the solution steps?
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Define the problem
Set up transportation table (matrix) Summarize data Keeps track of all computations Develop initial solution Northwest corner rule Minimize cost rule Find optimal solution Stepping stone method |
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Northwest corner What is it? What is the drawback?
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You always start in the northwest corner. The drawback is that we don't take into account the minimum cost.
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