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Technical Note 11 Facility Location

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.

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Technical Note 11 Facility Location

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  1. Technical Note 11Facility Location • Issues in Facility Location • Various Plant Location Methods

  2. Competitive Imperatives Impacting Location • The need to produceclose to the customer due to time-based competition, trade agreements, and shipping costs. • The need to locatenear the appropriate labor pool to take advantage of low wage costs and/or high technical skills.

  3. Issues in Facility Location

  4. Issues in Facility Location

  5. Characteristics of Location Decisions • Objective:

  6. Location Decision Sequence 2. Region/Community 1. Country 3. Site © 1995 Corel Corp. © 1995 Corel Corp. © 1995 Corel Corp.

  7. Factors Affecting Country Decision © 1995 Corel Corp.

  8. Factors Affecting Region/Community Decision © 1995 Corel Corp.

  9. Factors Affecting Site Decision © 1995 Corel Corp.

  10. Manufacturing Location Strategies © 1995 Corel Corp.

  11. Service Location Strategies © 1995 Corel Corp.

  12. Some Location Methods • Factor weighting method • Center of gravity method © 1995 Corel Corp.

  13. Location Methods:Factor Rating Method • Most widely used location technique • Useful for service & manufacturing locations • Rates locations using factors

  14. Weighted Factor Rating Method Steps 1. 2. 3. 4. 5.

  15. 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 COMfg. costs .7 8 6Cost of living .1 7 6 Labor avail. .2 10 8 Where should you locate? © 1995 Corel Corp.

  16. Factor Rating Method Solution

  17. 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 NMPopulation .4 10 5Competition .1 3 8 Life style .5 2 9 Where should you locate? © 1995 Corel Corp.

  18. Solution TOTAL

  19. Location Methods:Factor Rating Method +/- + - -

  20. 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. + -

  21. 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.

  22. Plant Location Methodology: Centroid Method Formulas 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

  23. Y Q (790,900) D (250,580) A (100,200) (0,0) X Plant Location Methodology: Example of Centroid Method • Centroid method example • Several automobile showrooms are located according to the following grid which represents coordinate locations for each showroom. Question: What is the best location for a new Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per month?

  24. Y Q (790,900) D (250,580) A (100,200) (0,0) X Plant Location Methodology: Example of Centroid Method: Determining the Coordinates of the New Facility You then compute the new coordinates using the formulas:

  25. Thinking Challenge You’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.

  26. Solution

  27. Thinking Challenge Solution Seattle(50,60)494k units 90 60 Spokane (160,50)171k units 30 Aberdeen (20,35)18k units 0 © 1995 Corel Corp. 0 30 60 90 120 150

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