facilty location tn 10

8/8/2019 Facilty Location TN 10

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Facility Location

Issues in Facility Location

Various Plant Location Methods


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Competitive Imperatives:

Impacting Location

The need to produce close to the customerdue

to time-based competition, trade agreements,

and shipping costs.

The need to locate near the appropriate laborpoolto take advantage of low wage costs

and/or high technical skills.


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Issues in Facility Location

Proximity to Customers

Business Climate

Total Costs

Infrastructure

Quality of Labor

Suppliers Other Facilities

Free Trade Zones

Political Risk

Government Barriers

Trading Blocs

Environmental

regulations

Host Community

Competitive Advantage


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PLANT LOC

ATION METHODSMajor Decision Categories are:

1. Market Region

2. Sub-region

3. Community

4. Site

Evaluation of Alternatives:1. Macro Analysis

2. Micro Analysis


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MAC

RO ANALYSIS TEC

HNIQUES

Factor Rating Systems

Linear Programming

Center of Gravity

Detailed Cost Analysis

Analytic Delphi Method


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CENTER OF GRAVITY METHOD

This method is a technique for locating single facilities

that considers the existing facilities, the distance

between them, and the volumes of goods to be shipped.

This method assumes that inbound and outbound

transportation costs are equal, and it does not include

special shipping costs for less than full loads.

This method begins by placing the existing locations

on a co-ordinate grid system. This purpose is to

establish relatives distance between locations


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Determining the Coordinates

The Formula:

C =d V

Vx

ix i

i

!

i

iiy

yV

VdC

Cx = X coordinate of center of gravity

Cy = Y coordinate of center of gravity

dix = X coordinate of the ith location

diy = Y coordinate of the ith location

Vi = volume of goods moved to or from ith

location


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Center of gravity method: example

Several automobile showrooms are located according to the following gridwhich represents coordinate locations for each showroom.

X

Y

A

(100,200)

D(250,580)

Q

(790,900)

(0,0)

Showroom No of Z-Mobiles

sold per month

A 1250

D 1900

Q 2300

Determine the best location for a Z-Mobile warehouse.


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Determining the Coordinates

C 100(1250) + 250(1900) + 790(2300)

1250 + 1900 + 2300

2,417,000

5,450x 443.49

C 200(1250) + 580(1900) + 900(2300)1250 + 1900 + 2300

3,422,0005,450

y 627.89

Showroom No of Z-Mobiles

sold per month

A 1250

D 1900

Q2

300X

Y

A

(100,200)

D(250,580)

Q

(790,900)

(0,0)

Z(444, 628)


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Analytic Delphi Method

This Method address the more complex location decision byincorporating tangible and intangible factors into the decision

making process.

This method involves using a combination of three Teams:

1. A Coordinating Team

2. The Forecasting Team

3. A Strategic Team

Each of the teams take on different roles in the decision-making

process.


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Steps of Delphi Model

1. Form two Delphi panels.

2. Identify threats and opportunities.

3. Determine direction and strategic goals of the

organization.

4. Develop alternatives.

5. Prioritize alternatives (Value-judgment)

This systematic approach identifies trends, developments,

and opportunities, while considering the organizations

strengths and weaknesses. In addition, this approach

brings the firms strategic goals and objectives into this

important decision process.

facilty location tn 10

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