1 Slides used in class may be different from slides in student pack Technical Note 11 Facility Location Issues in Facility Location Various Plant Location

1Slides used in class may be different from slides in student pack

Technical Note 11

Facility Location

Issues in Facility Location

Various Plant Location Methods


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.






Characteristics of Location Decisions

– »

– Objective:


Location Decision Sequence

1. Country1. Country 2. Region/Community2. Region/Community

3. Site3. Site© 1995 Corel Corp.

© 1995 Corel Corp.

© 1995 Corel Corp.


Factors Affecting Country Decision

– – –

© 1995 Corel Corp.


Factors Affecting Region/Community Decision

© 1995 Corel Corp.


Factors Affecting Site Decision

© 1995 Corel Corp.

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Slides used in class may be different from slides in student pack

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–

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Manufacturing Location Strategies

© 1995 Corel Corp.

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Service Location Strategies

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– © 1995 Corel Corp.

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Some Location Methods

Factor weighting method

Center of gravity method

© 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

– »

– »

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Weighted Factor Rating Method Steps

1.

2.

3.

4.

5.

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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 .7 8 6

Cost of living .1 7 6

Labor avail. .2 10 8

Where should you locate?

© 1995 Corel Corp.

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Factor Rating Method Solution

Omaha Denver

Factor Weight ScoreWeighted Factor Score

Weighted Factor

Mfg. costs 0.7 8 5.6 6 4.2Cost of living 0.1 7 0.7 6 0.6Labor avail. 0.2 10 2 8 1.6

1 8.3 6.4

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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 .4 10 5

Competition .1 3 8

Life style .5 2 9

Where should you locate? © 1995 Corel Corp.

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Solution

TOTAL

Phoenix Santa Fe

Factor WeightScore

Weighted Factor Score

Weighted Factor

Population 0.4 10 4 5 2Compensation 0.1 3 0.3 8 0.8Life Style 0.5 2 1 9 4.5

1 5.3 7.3

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Location Methods:

Factor Rating Method +/-

+

-

-

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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.+

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Location Methods:

Centroid Method The centroid method 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.

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Plant Location Methodology: Centroid Method Formulas

C = d V

V x

ix i

i

Cx = X coordinate of centroid

Cy = X coordinate of centroid

dix = X coordinate of the ith location

diy = Y coordinate of the ith location

Vi = volume of goods moved to or from ith location

C = d V

Vy

iy i

i

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Plant Location Methodology: Example of Centroid Method

Question: What is the best location for a new Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per month?

Centroid method example– Several automobile showrooms are located according to the

following grid which represents coordinate locations for each showroom.

S howroom No o f Z-Mo b ile s s o ld p e r mo nth

A 1250

D 1900

Q 2300X

Y

A(100,200)

D(250,580)

Q(790,900)

(0,0)

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Plant Location Methodology: Example of Centroid Method: Determining the Coordinates of the New Facility

= Cx

= Cy

S ho wro o m No o f Z-Mo b ile s s o ld p e r mo nth

A 1250

D 1900

Q 2300X

Y

A(100,200)

D(250,580)

Q(790,900)

(0,0)

You then compute the new coordinates using the formulas:

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Thinking ChallengeYou’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.

© 1995 Corel Corp.

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Solution

ii

iiiy

y

ii

iiix

x

V

VdC

V

VdC

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Thinking Challenge Solution

00 3030 6060 9090 120120 150150

3030

6060

9090

00

Seattle(50,60)494k units

Aberdeen (20,35)18k units

Spokane (160,50)171k units

© 1995 Corel Corp.

Documents

1 Slides used in class may be different from slides in student pack Technical Note 11 Facility Location Issues in Facility Location Various Plant Location