Embed Size (px)
DESCRIPTION
CHAPTER. 8. Location Planning and Analysis. Need for Location Decisions. Marketing Strategy Cost of Doing Business Growth Depletion of Resources. Nature of Location Decisions. Strategic Importance Long term commitment/costs Impact on investments, revenues, and operations Supply chains - PowerPoint PPT Presentation
Citation preview
8-1 Location Planning and Analysis
CHAPTER8
Location Planning and Analysis
8-2 Location Planning and Analysis
Need for Location DecisionsNeed for Location Decisions
Marketing Strategy
Cost of Doing Business
Growth
Depletion of Resources
8-3 Location Planning and Analysis
Nature of Location DecisionsNature of Location Decisions
Strategic Importance Long term commitment/costs Impact on investments, revenues, and operations Supply chains
Objectives Profit potential No single location may be better than others Identify several locations from which to choose
Options Expand existing facilities Add new facilities Move
8-4 Location Planning and Analysis
Making Location DecisionsMaking Location Decisions
Decide on the criteria Identify the important factors Develop location alternatives Evaluate the alternatives Make selection
8-5 Location Planning and Analysis
Location Decision FactorsLocation Decision Factors
Regional Factors
Site-related Factors
Multiple Plant Strategies
Community Considerations
8-6 Location Planning and Analysis
Location of raw materials Location of markets Labor factors Climate and taxes
Regional FactorsRegional Factors
8-7 Location Planning and Analysis
Quality of life Services Attitudes Taxes Environmental regulations Utilities Developer support
Community ConsiderationsCommunity Considerations
8-8 Location Planning and Analysis
Land Transportation Environmental Legal
Site Related FactorsSite Related Factors
8-9 Location Planning and Analysis
Product plant strategy Market area plant strategy Process plant strategy
Multiple Plant StrategiesMultiple Plant Strategies
8-10 Location Planning and Analysis
Comparison of Service and Comparison of Service and Manufacturing ConsiderationsManufacturing Considerations
Manufacturing/Distribution Service/Retail
Cost Focus Revenue focus
Transportation modes/costs Demographics: age,income,etc
Energy availability, costs Population/drawing area
Labor cost/availability/skills Competition
Building/leasing costs Traffic volume/patterns
Customer access/parking
Table 8.2
8-11 Location Planning and Analysis
Trends in LocationsTrends in Locations
Foreign producers locating in U.S. “Made in USA” Currency fluctuations
Just-in-time manufacturing techniques Microfactories Information Technology
8-12 Location Planning and Analysis
ForeignGovernment
a. Policies on foreign ownership of production facilitiesLocal ContentImport restrictionsCurrency restrictionsEnvironmental regulationsLocal product standards
b. Stability issuesCulturalDifferences
Living circumstances for foreign workers / dependentsReligious holidays/traditions
CustomerPreferences
Possible buy locally sentiment
Labor Level of training and education of workersWork practicesPossible regulations limiting number of foreign employeesLanguage differences
Resources Availability and quality of raw materials, energy,transportation
Table 8.3
8-13 Location Planning and Analysis
Evaluating LocationsEvaluating Locations
Cost-Profit-Volume Analysis
Determine fixed and variable costs
Plot total costs
Determine lowest total costs
8-14 Location Planning and Analysis
Location Cost-Volume AnalysisLocation Cost-Volume Analysis
Assumptions Fixed costs are constant Variable costs are linear Output can be closely estimated Only one product involved
8-15 Location Planning and Analysis
Example 1: Cost-Volume AnalysisExample 1: Cost-Volume Analysis
Fixed and variable costs for four potential locations
L o c a t i o n F i x e dC o s t
V a r i a b l eC o s t
ABCD
$ 2 5 0 , 0 0 01 0 0 , 0 0 01 5 0 , 0 0 02 0 0 , 0 0 0
$ 1 13 02 03 5
8-16 Location Planning and Analysis
Example 1: SolutionExample 1: Solution
F i x e dC o s t s
V a r i a b l eC o s t s
T o t a lC o s t s
ABCD
$ 2 5 0 , 0 0 01 0 0 , 0 0 01 5 0 , 0 0 02 0 0 , 0 0 0
$ 1 1 ( 1 0 , 0 0 0 )3 0 ( 1 0 , 0 0 0 )2 0 ( 1 0 , 0 0 0 )3 5 ( 1 0 , 0 0 0 )
$ 3 6 0 , 0 0 04 0 0 , 0 0 03 5 0 , 0 0 05 5 0 , 0 0 0
8-17 Location Planning and Analysis
Example 1: SolutionExample 1: Solution
800700600500400300200100
0
Annual Output (000)
$(000)
8 10 12 14 166420
A
BC
B SuperiorC Superior
A Superior
D
8-18 Location Planning and Analysis
Evaluating LocationsEvaluating Locations
Transportation Model Decision based on movement costs of raw
materials or finished goods Factor Rating
Decision based on quantitative and qualitative inputs
Center of Gravity Method Decision based on minimum distribution costs
8-19 Location Planning and Analysis
Design/FacilityDesign/Facility
STA04
Layout choices at St. Alexius Hospital
8-20 Location Planning and Analysis
Flow Charts/AssessmentFlow Charts/Assessment
BP3
Example, Tri State Industries
8-21 Location Planning and Analysis
Team/Visual/SystemTeam/Visual/System
PI6
Interview at McDonalds
