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Introduction to Operations Management

Location Planning and AnalysisLocation Planning and Analysis(Ch.8, 8s)(Ch.8, 8s)

Hansoo Kim ( 金翰秀 )Dept. of Management Information

Systems, YUST

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OM Overview

Class Overview(Ch. 0)

Project Management

(Ch. 17)

Strategic Capacity Planning(Ch. 5, 5S)

Operations, Productivity, and Strategy

(Ch. 1, 2)

Mgmt of Quality/Six Sigma Quality

(Ch. 9, 10)

Supply Chain Management

(Ch 11)

Location Planning and Analysis

(Ch. 8)

Demand MgmtForecasting

(Ch 3)

Inventory Management

(Ch. 12)

Aggregated Planning

(Ch. 13)

Queueing/ Simulation

(Ch. 18)

MRP & ERP (Ch 14)

JIT & Lean Mfg System

(Ch. 15)

Term Project

Process Selection/

Facility Layout; LP(Ch. 6, 6S)X X X X X

XX X

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Today’s Outline Location Strategy ( 위치선정 )

Objectives ( 목적 ) Factors ( 요소 ) Considerations ( 고려사항 ) Methods ( 방법 )

Transportation Problem

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Need for Location DecisionsWhere to build factory or Warehouse?What factors should be considered?

•Marketing Strategy•Cost of Doing Business•Growth•Depletion of Resources

Nature of Location Decisions

Strategic Importance of location decisions Long term commitment/costs Impact on investments, revenues, and operations Supply chains

Objectives of location decisions Profit potential No single location may be better than others Identify several locations from which to choose

Location Options Expand existing facilities Add new facilities Move

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Location Strategy

설비를 어디에 위치시키는 가를 결정하는 문제 (Problem to decide the location of facility)

장기적 의사결정 문제 (Long-term decisions) 되돌리기가 어렵다 (Difficult to reverse) 의사결정시 고정비와 변동비가 주요 고려사항

(Affect fixed & variable costs) Transportation cost

As much as 25% of product price Other costs: Taxes, wages, rent etc.

Objective: Maximize benefit of location to firm

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Location Strategy [Purpose]

이익을 최대화 이익을 최대화 (To maximize the benefits)(To maximize the benefits) 하기 위해서 , 어디에어디에 (Where to build) 공장 및 창고와 같은 설비 (Facility) 를 위치 시켜야 하는가 ?

위치와 비용 /수익간에 관계성이 있다 !There are relations between location and benefit

산업별 고려사항이 차이가 있다 (Different considering factors depending on industry)

Industrial Location Decision ( 생산 설비의 위치결정 문제 ) Service Location Decision ( 서비스 설비의 위치결정 문제 )

Maximize the benefit of location Maximize the benefit of location

to the firmto the firm

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Industrial Location Decision( 생산설비의 위치결정 문제 )

비용절감에 촛점 (CostCost Focus) 공산품의 가격 (Revenue) 은 위치에 따라 변동폭이 작다

설비의 위치설비의 위치는 중요한 비용요소 (Cost Factor) 이다

Service Location Decision( 서비스설비의 위치결정 문제 )

수익증대에 촛점 (RevenueRevenue Focus) 비용 (Cost) 의 변동은 상대적으로 작은 반면 , 수익성의

폭이 넓다 설비의 위치설비의 위치는 중요한 수익요소 (Revenue Factor) 이다

Making Location Decisions

Decide on the criteria Identify the important factors Develop location alternatives Evaluate the alternatives

Identify general region Identify a small number of community

alternatives Identify site alternatives

Evaluate and make selection

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Factors of Location Problem

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Factors Affecting Country Government rules,

attitudes, political risk, incentives

Culture & economy Market location Labor availability, attitudes,

productivity, and cost Availability of supplies,

communications, energy Exchange rates and

currency risks

© 1995 Corel Corp.

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Region Location Decisions Corporate desires Attractiveness of region

(culture, taxes, climate, etc.) Labor, availability, costs,

attitudes towards unions Costs and availability of

utilities Environmental regulations of

state and town Government incentives Proximity to raw materials &

customers Land/construction costs © 1995 Corel Corp.

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Factors Affecting Site Site size and cost Air, rail, highway,

and waterway systems

Zoning restrictions Nearness of

services/supplies needed

Environmental impact issues

© 1995 Corel Corp.

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Location Decision Example

BMWBMW decided to build its first major manufacturing plant outside Germany in Spartanburg, South Carolina, USA. © 1995 Corel Corp.

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Country Decision Factors Market location

U.S. is world’s largest luxury car market

Growing (baby boomers) Labor

Lower manufacturing labor costs$17/hr. (U.S.) vs. $27

(Germany) Higher labor productivity

11 holidays (U.S.) vs. 31 (Germany)

Other Lower shipping cost

($2,500/car less) New plant & equipment

would increase productivity (lower cost/car $2,000-3000)

USAUSA

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Region/Community Decision Factors

Labor Lower wages in South Carolina (SC)

Government incentives $135 million in state & local tax breaks Free-trade zone from airport to plant

No duties on imported components or on exported cars

Spartanburg, SCSpartanburg, SC

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Global Competitiveness of Countries [GCI] (2010-2011)

Japan 6 위Korea Rep. 22 위China 27 위

출처 : http://www.weforum.org

국가경쟁력지수국가경쟁력지수

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국가부패지수Corruption Index (2010)

출처 :http://www.transparency.org/

국가부패지수국가부패지수

Japan: 17Korea: 39China: 78

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위치선정에 영향을 주는 요소들Factors influencing location

노동생산성 (Labor Productivity) 환율 , 화폐 안정성 (Exchange Rate and Currency Risk) 비용 (Costs) 기업에 대한 태도 (Attitude) 시장에 대한 접근성 (Proximity to Markets) 공급자에 대한 접근성 (Proximity to Suppliers) 경쟁자들에 대한 접근성 (Proximity to Competitors,

Clustering)

Clustering: 관련 분야가 한곳에 모여있는 단지 . 공동상승효과 기대

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위치 선정 평가방법Methods for facility location

Factor-rating method ( 요소평가법 )

Locational break-even analysis( 손익분기 분석 )

Center of gravity method( 무게중심법 )

Transportation model( 운송모델 )

© 1995 Corel Corp.

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요소 평가법 (Factor-Rating Method)

가장 일반적인 위치 선정 방법 평가 요소를 선정한 후 , 각 대상 위치를 평가함

Decide evaluation factors, and evaluate locations with the factors 정량적인 평가요소 (Quantitative Evaluation Factors)

장기 /단기 비용 , 세율 등 .. 정성적인 평가요소 (Qualitative Evaluation Factors)

노동의 품질 , 교육수준 각 요소에 중요성을 반영한 가중치를 부여한 후에 ,

위치별로 가중평균하여 최고치를 선정한다 .Set weights for each factors and find best location with weighted average score for each location

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Example

Eval. Factors Weight

평가점수 (100 점 만점 )

( 중국 말레이지아 )

가중평가점수 ( 중국 말레이지아 )

노동가용성 및 태도자동차 /인구 비율

인당자산소득과세구조

교육및 의료

총합

25%5%

10%39%21%

100%

7050857560

6060807070

17.52.58.5

29.312.6

70.4

15.03.08.0

27.314.7

68.0>>

Example 2: Factor Rating

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손익분기법 (Location Break-Even Analysis) 생산설비 위치결정 방법 (Location for production facility) 비용과 생산량을 대비하여 분석

Method of cost-volume analysis used for industrial locations

방법 위치에 따라 고정비와 변동비를 결정한다

(Determine fixed & variable costs for each location) 년간 생산량에 따른 비용을 계산한다

(Plot total cost for each location (Cost on vertical axis, Annual Volume on horizontal axis))

예상되는 생산량에 대한 최소 비용의 위치를 결정한다(Select location with lowest total cost for expected production volume) 선정된 위치는 적어도 손익 분기점은 넘어야 한다

(Must be above break-even)

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예제 )

북경현대 자동차에서 , 새로운 자동차 점화 플러그 생산 설비를 세우려 한다 .세 지역 ( 중경 , 연변 , 청도 ) 이 후보 대상이다 .이 지역에 대한 각각의 고정비는 $30k, $60k 와 $110k 이며 , 변동비는 $75, $45 와 $25 이다 . 제품 한개 판매가격은 $120 이라고 한다 . 이 제품에 대한 년간 수요가 2000 개 라고 할때 어디가 최적의 위치인가 ? © 1995 Corel Corp.

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Locational Break-Even Crossover ChartCrossover Chart

0

50000

100000

150000

200000

0 500 1000 1500 2000 2500 3000

Volume

Ann

ual C

ost

중경

청도

연변

연변 lowest cost

청도lowest cost

중경 lowest cost

Example 1: Cost-Profit-Volum Analysis

Fixed and variable costs for four potential plant locations are shown below:

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무게중심법 (Center for Gravity Method)

여러곳을 배송하는 물류센타의 위치를 결정할때 (Finds location of single distribution center serving several destinations)

주로 서비스 설비 위치 결정에 사용(Used primarily for services)

고려사항 배송되는 설비들의 위치 (Location of existing destinations)

Example: Markets, retailers etc. 배송되는 양 (Volume to be shipped) 배송 거리 ( 혹은 비용 ) (Shipping distance (or cost))

물건 개당 거리당 배송 비용은 상수로 가정(Shipping cost/unit/mile is constant)

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Coordinate Locations of Four Quain’s Department Stores and the Center of Gravity

운송량Chicago: 2000 개

Pittsburgh: 1000 개New York: 1000 개Atlanta: 2000 개

Cx= {30(2000)+90(1000)+130(1000)+60(2000)}/(2000+1000+1000+2000) = 66.7Cy={120(2000)+110(1000)+130(1000)+40(2000)}/(2000+1000+1000+2000) = 93.3

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방법 ) 기존의 설비들의 위치와 거리를 구한다

Place existing locations on a coordinate grid Grid has arbitrary origin & scale Maintains relative distances

그 위치들의 무게 중심을 구한다 Calculate X & Y coordinates for

‘center of gravity’ Gives location of distribution center Minimizes transportation cost

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Center of Gravity Method Equations

dix = x coordinate of location i

Wi = Volume of goods moved to or from location i

diy = y coordinate of location i

X Coordinate

Y Coordinate

ii

iiix

x W

WdC

ii

iiiy

y W

WdC

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Using ExcelFacility Location using Center-Of-Gravity MethodOBJECTIVE:Given the volume associated with each location,this template will calculate the Center-Of-Gravity

INPUT:LOCATION Volume-Wi x-coord. y-coord. xiWi yiWiLong Beach 1500 325 75 487500 112500Anaheim 250 400 150 100000 37500LaHabra 450 450 350 202500 157500Glendale 350 350 400 122500 140000Thousand Oaks 450 25 450 11250 202500

3000 923750 650000

C(x) = 307.92C(y) = 216.67

Example 4: 무게중심법

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Transportation Model

Finds amount to be shipped from several sources to several destinations

Used primarily for industrial locationsType of linear programming (LP)

modelObjective: Minimize total production

& shipping costsConstraints

Production capacity at source (factory)Demand requirement at destination

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Example: Transportation Model

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LP Formulation

Decision Variables Xij = i 에서 j 로 옮기는 물건의 양

Objective Function Min CijXij

Constraints j Xij = Si,

i Xij = Dj

Xij >= 0

LP Formulation

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Minimize 4x1A + 7x1B + 7x1C + 1x1D + 12x2A + 3x2B + 8x2C + 8x2D

+ 8x3A + 10x3B + 16x3C + 5x3D

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Excel Solver

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Location Strategy

The ideal location for many companies in the future will be a floating factory ship that will go from port to port, from country to country – wherever cost

per unit is lowest. © 1995 Corel Corp.

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Announcement

HW: Solve all examples and solved problems

covered in class (Ch. 8, 8s) Problem 8.3, 8.9, 8.12

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Good Bye!