Facility Location Models - Saint Martin's Universityhomepages.stmartin.edu/fac_staff/dstout/B… · PPT file · Web view · 2013-09-27load expressed as a weight, number of trips

Chapter 7 Supplement

Facility Location Models

Copyright 2011 John Wiley & Sons, Inc.

Lecture Outline

• Types of Facilities• Site Selection: Where to Locate• Global Supply Chain Factors• Location Analysis Techniques

Supplement 7-2


Types of Facilities

• Heavy-manufacturing facilities• large, require a lot of space, and are expensive

• Light-industry facilities• smaller, cleaner plants and usually less costly

• Retail and service facilities• smallest and least costly

Supplement 7-3


Factors in Heavy Manufacturing Location

Supplement 7-4

• Construction costs• Land costs• Raw material & finished goods shipment modes• Proximity to raw materials• Utilities• Means of waste disposal• Labor availability


Factors in Light Industry Location

• Land costs• Transportation costs• Proximity to markets

• depending on delivery requirements including frequency of delivery required by customer

Supplement 7-5


Factors in Retail Location

Supplement 7-6

• Proximity to customers• Location is everything


Site Selection: Where to Locate

• Infrequent but important• being “in the right place at the

right time”• Must consider other factors,

especially financial considerations

• Location decisions made more often for service operations than manufacturing facilities

• Location criteria for service• access to customers

• Location criteria for manufacturing facility• nature of labor force• labor costs• proximity to suppliers and

markets• distribution and transportation

costs• energy availability and cost• community infrastructure• quality of life in community • government regulations and

taxes

Supplement 7-7


Global Supply Chain Factors

• Government stability• Government regulations• Political & economic systems• Economic stability & growth• Exchange rates• Culture• Export/import regulations,

duties & tariffs• Raw material availability

• Climate • Number & proximity of

suppliers• Transportation & distribution

system• Labor cost & education• Available technology• Commercial travel• Technical expertise• Cross-border trade

regulations• Group trade agreements

Supplement 7-8


Regional and Community Location Factors in U.S.

• Labor (availability, education, cost, and unions)

• Proximity of customers• Number of customers• Construction/leasing costs• Land cost

• Modes and quality of transportation

• Transportation costs• Community government

Local business regulations• Government services (e.g.,

Chamber of Commerce)

Supplement 7-9


Regional and Community Location Factors in U.S.

• Business climate• Community services• Incentive packages• Government regulations• Environmental regs.• Raw material availability• Commercial travel• Climate

• Infrastructure (road & utilities)

• Quality of life• Taxes• Availability of sites• Financial services• Community inducements• Proximity of suppliers• Education system

Supplement 7-10


Location Incentives

Supplement 7-11

• Tax credits• Relaxed government regulation• Job training• Infrastructure improvement• Money


Geographic Information Systems (GIS)

• Computerized system for storing, managing, creating, analyzing, integrating, and digitally displaying geographic, i.e., spatial, data

• Specifically used for site selection• Enables users to integrate large quantities of

information about potential sites and analyze these data with many different, powerful analytical tools

Supplement 7-12


GIS Diagram

Supplement 7-13


Location Analysis Techniques

Supplement 7-14

• Location factor rating• Center-of-gravity• Load-distance


Location Factor Rating

Supplement 7-15

• Identify important factors• Weight factors (0.00 - 1.00)• Subjectively score each factor (0 - 100)• Sum weighted scores



Supplement 7-16

Labor pool and climateProximity to suppliersWage ratesCommunity environmentProximity to customersShipping modesAir service

LOCATION FACTOR

.30

.20

.15

.15

.10

.05

.05

WEIGHT

80100

6075658550

Site 1

65919580909265

Site 2

90757280956590

Site 3

SCORES (0 TO 100)

Weighted Score for “Labor pool and climate” for Site 1 = (0.30)(80) = 24



Supplement 7-17

24.0020.00

9.0011.256.504.252.50

77.50

Site 1

19.5018.2014.2512.00

9.004.603.25

80.80

Site 2

27.0015.0010.8012.00

9.503.254.50

82.05

Site 3

WEIGHTED SCORES

Site 3 has the highest factor rating


Location Factor Rating With Excel

Supplement 7-18


Location Factor Rating With OM Tools

Supplement 7-19


Center-of-Gravity Technique

Supplement 7-20

• Locate facility at center of movement in geographic area

• Based on weight and distance traveled; establishes grid-map of area

• Identify coordinates and weights shipped for each location


Grid-Map Coordinates

Supplement 7-21

where,x, y = coordinates of new facility at center of gravityxi, yi = coordinates of existing facility iWi = annual weight shipped from facility i

n

Wi

i = 1

xiWi

i = 1

n

x =

n

Wi

i = 1

yiWi

i = 1

n

y =

x1 x2 x3 x

y2

y

y1

y3

1 (x1, y1), W1

2 (x2, y2), W2

3 (x3, y3), W3



Supplement 7-22

A B C Dx 200 100 250 500y 200 500 600 300W 75 105 135 60

y700

500

600

400

300

200

100

0 x700500 600400300200100

A

B

C

D

(135)

(105)

(75)

(60)

Miles

Mile

s



Supplement 7-23

x = = = 238n Wi

i = 1

xiWii = 1

n

n

Wii = 1

yiWii = 1

n

y = = = 444(200)(75) + (500)(105) + (600)(135) + (300)(60)

75 + 105 + 135 + 60

(200)(75) + (100)(105) + (250)(135) + (500)(60)75 + 105 + 135 + 60



Supplement 7-24

A B C Dx 200 100 250 500y 200 500 600 300W 75 105 135 60

y700

500

600

400

300

200

100

0 x700500 600400300200100

A

B

C

D

(135)

(105)

(75)

(60)

Miles

Mile

s Center of gravity (238, 444)


Center-of-Gravity With Excel

Supplement 7-25

Formula for x coordinate


Center-of-Gravity With OM Tools

Supplement 7-26


Load-Distance Technique

• Compute (Load x Distance) for each site• Choose site with lowest (Load x Distance)• Distance can be actual or straight-line

Supplement 7-27


Load-Distance Calculations

Supplement 7-28

li di

i = 1

nLD =

LD = load-distance value

li = load expressed as a weight, number of trips or unitsbeing shipped from proposed site and location i

di = distance between proposed site and location i

di = (xi - x)2 + (yi - y)2

(x,y) = coordinates of proposed site(xi , yi) = coordinates of existing facility

where,

where,


Load-Distance

Supplement 7-29

Potential SitesSite X Y1 360 1802 420 4503 250 400

SuppliersA B C D

X 200 100 250 500Y 200 500 600 300Wt 75 105 135 60

Compute distance from each site to each supplier

= (200-360)2 + (200-180)2dA = (xA - x1)2 + (yA - y1)2Site 1 = 161.2

= (100-360)2 + (500-180)2dB = (xB - x1)2 + (yB - y1)2 = 412.3

dC = 434.2 dD = 184.4


Load-Distance

Supplement 7-30

Site 2 dA = 333 dC = 226.7dB = 323.9 dD = 170

Site 3 dA = 206.2 dC = 200dB = 180.3 dD = 269.3

Compute load-distance

i = 1

n

li diLD =

Site 1 = (75)(161.2) + (105)(412.3) + (135)(434.2) + (60)(434.4) = 125,063

Site 2 = (75)(333) + (105)(323.9) + (135)(226.7) + (60)(170) = 99,789

Site 3 = (75)(206.2) + (105)(180.3) + (135)(200) + (60)(269.3) = 77,555*

* Choose site 3


Load-Distance With Excel

Supplement 7-31

=B7*C11+C7*C12+D7*C13+E7*C14


Load-Distance With OM Tools

Supplement 7-32

Copyright 2011 John Wiley & Sons, Inc. Supplement 7-33

Copyright 2011 John Wiley & Sons, Inc.All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.

Documents

Facility Location Models - Saint Martin's Universityhomepages.stmartin.edu/fac_staff/dstout/B… · PPT file · Web view · 2013-09-27load expressed as a weight, number of trips