Geographic Information Systems

1. Geographic Information Systems • Use to manipulate, analyze, and present information relevant to a location decision • Create a visual representation of a firm’s location choices • Useful decision-making tool • Using GIS to identify locations and demographic customer segments • Identifying locations that relate to target market • Part of an array of decision-making tools

2. Special Economic ZonesAnother dimension to location choices • The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005 • Land for the 270 notified SEZs where operations have since commenced involved is approximately over 31,405 hectares • Every SEZ is divided into a processing area where alone the SEZ units would come up and the non-processing area where the supporting infrastructure is to be created • Benefits of SEZs include employment generation, increased exports, development of quality infrastructure • Nokia and Flextronics electronics hardware SEZs in Sriperumbudur providing employment to 14,577 and 1,058 persons respectively. • Hyderabad Gems SEZ for Jewellery manufacturing in Hyderabad has already employed 2,145 persons • Apache SEZ being set up in Andhra Pradesh will employ 20, 000 persons to manufacture 1 million pairs of shoes every month

3. Location Models Various models are available which help to identify the ideal location. Some of the popular models are: • Weighted Factor Rating Method • Load – Distance Method • C.G Method • Break Even Analysis Method • Transportation Model

4. Factor Rating Method The process of selecting a new facility location involves a series of following steps: • Identify the important location factors • Rate each factor according to its relative importance i.e. higher ratings is indicative of prominent factor • Assign each location according to the merits of the location for each factor • Calculate the rating for each location by multiplying each factor assigned to each location with basic factors considered • Find the sum of product calculated for each factor and select best location having highest total score

5. Calculating Weighted Scores EXAMPLE 1A Let us assume a new medical facility, Health-Star, is to be located in New Delhi. The following table shows the location factors, weights, and scores (1 = poor, 5 = excellent) for one potential site. The weights in this case add up to 100 percent. A weighted score (WS) will be calculated for each site. What is the WS for this site?

6. Calculating Weighted Scores SOLUTION The WS for this particular site is calculated by multiplying each factor’s weight by its score and adding the results: (25  4) + (20  3) + (20  3) + (15  4) + (10  1) + (10  5) WS = = 100 + 60 + 60 + 60 + 10 + 50 = 340 The total WS of 340 can be compared with the total weighted scores for other sites being evaluated.

7. Application 1 B Management is considering three potential locations for a new cookie factory. They have assigned scores shown below to the relevant factors on a 0 to 10 basis (10 is best). Using the preference matrix, which location would be preferred?

8. Solution Management is considering three potential locations for a new cookie factory. They have assigned scores shown below to the relevant factors on a 0 to 10 basis (10 is best). Using the preference matrix, which location would be preferred?

9. Example A manufacturer of garments is actively considering five alternative locations for setting up its factory. The locations vary in terms of the advantages that it provides to the firm. Hence the firm requires a method of identifying the most appropriate location. Based on a survey of its senior executives the firm has arrived at six factors to be considered for final site selection. The ratings of each factor on a scale of 1 to 100 provide this information. Further, based some detailed analysis of both the qualitative and quantitative data available for each of the location, the rating for the locations against each factor has also been arrived at (on a scale of 0 to 100). Using this information obtain a ranking of the alternative locations. Rating of each locations against the factors Factor Ratings

10. Solution to Example Overall rating for location 3 = 60*0.28 + 40*0.18 + 50*0.15 + 10*0.09 + 45*0.09 + 90*0.20 = 54.77

11. Center of Gravity Method • Finds location of Distribution centre that minimizes distribution costs • Considers: • Location of markets • Volume of goods shipped to those markets • Shipping cost (or distance)

12. Center of Gravity Method • Place existing locations on a coordinate grid • Grid origin and scale is arbitrary • Maintain relative distances • Calculate X and Y coordinates for Centre of Gravity • Assumes cost is directly proportional to distance and volumes shipped

13. li xi li li yi li i y* = i x* = i i Center of Gravity Method • Find x coordinate, x*, by multiplying each point’s x coordinate by its load (lt), summing these products li xi, and dividing by li • The center of gravity’s y coordinate y* found the same way

14. Application The new Health Care Facility is targeted to serve 7 census tracts in Delhi. The table given below shows the coordinates for the centres of each census tract, along with the projected populations, measured in thousands. Customers will travel from the 7 census tract centres to the new facilities when they need health care. Details of 7 census tracts centres, coordinate distances along with the population for each centre are given below. Find the target area’s C.G for the Health Care medical Facility

15. Solution

16. Now we will find CG’s coordinates x* = 453.5 /68 = 6.67 y* = 205.5 /68 = 3.02 The CG is (6.67,3.02). Using CG as a starting point managers can now search in its vicinity for the optimal location.