Bài giảng Operations Management - Chapter 8: Location Planning and Analysis

Location Planning and AnalysisMcGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.You should be able to:Identify some of the main reasons organizations need to make location decisionsExplain why location decisions are importantDiscuss the options that are available for location decisionsGive examples of the major factors that affect location decisionsOutline the decision process for making these kinds of decisionsUse the techniques presented to solve typical problems8-*Student SlidesLocation decisions arise for a variety of reasons:Addition of new facilitiesAs part of a marketing strategy to expand marketsGrowth in demand that cannot be satisfied by expanding existing facilitiesDepletion of basic inputs requires relocationShift in marketsCost of doing business at a particular location makes relocation attractive8-*Student SlidesLocation decisions are based on:Profit potential or cost and customer serviceFinding a number of acceptable locations from which to choosePosition in the supply chainEnd: accessibility, consumer demographics, traffic patterns, and local customs are importantMiddle: locate near suppliers or marketsBeginning: locate near the source of raw materialsWeb-based retail organizations are effectively location independent8-*Student SlidesSteps:Decide on the criteria to use for evaluating location alternativesIdentify important factors, such as location of markets or raw materialsDevelop location alternativesIdentify the country or countries for locationIdentify the general region for locationIdentify a small number of community alternativesIdentify the site alternatives among the community alternativesEvaluate the alternatives and make a decision8-*Student SlidesFactors relating to foreign locationsGovernmentPolicies on foreign ownership of production facilitiesLocal content requirementsImport restrictionsCurrency restrictionsEnvironment regulationsLocal product standardsLiability lawsStability issuesCultural differencesLiving circumstances for foreign workers and their dependentsWays of doing businessReligious holidays/traditionsCustomer preferencesPossible “buy locally” sentimentLaborLevel of training and education of workersWork ethicWage ratesPossible regulations limiting the number of foreign employeesLanguage differencesResourcesAvailability and quality of raw materials, energy, transportation infrastructureFinancialFinancial incentives, tax rates, inflation rates, interest ratesTechnologicalRate of technological change, rate of innovationsMarketMarket potential, competitionSafetyCrime, terrorism threat8-*Student SlidesPrimary regional factors:Location of raw materialsNecessityPerishabilityTransportation costsLocation of marketsAs part of a profit-oriented company’s competitive strategySo not-for-profits can meet the needs of their service usersDistribution costs and perishability8-*Student SlidesLabor factorsCost of laborAvailability of suitably skilled workersWage rates in the areaLabor productivityAttitudes toward workWhether unions pose a serious potential problemOther factorsClimate and taxes may play an important role in location decisions8-*Student SlidesMany communities actively attempt to attract new businesses they perceive to be a good fit for the communityBusinesses also actively seek attractive communities based on such factors such as:Quality of lifeServicesAttitudesTaxesEnvironmental regulationsUtilitiesDevelopment support8-*Student SlidesPrimary site location considerations areLandTransportationZoningOther restrictions8-*Student SlidesConsiderations:Nearness to raw materials is not usually a considerationCustomer access is aPrime consideration for some: restaurants, hotels, etc.Not an important consideration for others: service call centers, etc.Tend to be profit or revenue driven, and so areConcerned with demographics, competition, traffic/volume patterns, and convenienceClusteringSimilar types of businesses locate near one another8-*Student SlidesCommon techniques:Locational cost-volume-profit analysisTransportation modelFactor ratingCenter of gravity method8-*Student SlidesLocational Cost-Profit-Volume AnalysisTechnique for evaluating location choices in economic termsSteps:Determine the fixed and variable costs for each alternativePlot the total-cost lines for all alternatives on the same graphDetermine the location that will have the lowest total cost (or highest profit) for the expected level of output8-*Student SlidesFactor RatingGeneral approach to evaluating locations that includes quantitative and qualitative inputsProcedure:Determine which factors are relevantAssign a weight to each factor that indicates its relative importance compared with all other factors.Weights typically sum to 1.00Decide on a common scale for all factors, and set a minimum acceptable score if necessaryScore each location alternativeMultiply the factor weight by the score for each factor, and sum the results for each location alternativeChoose the alternative that has the highest composite score, unless it fails to meet the minimum acceptable score8-*Student SlidesCenter of Gravity MethodMethod for locating a distribution center that minimizes distribution costsTreats distribution costs as a linear function of the distance and the quantity shippedThe quantity to be shipped to each destination is assumed to be fixedThe method includes the use of a map that shows the locations of destinationsThe map must be accurate and drawn to scaleA coordinate system is overlaid on the map to determine relative locations8-*Student Slides8-*Student Slides