meljun cortes - operations management 8th lecture (marketing strategy)

8/9/2019 MELJUN CORTES - Operations Management 8th Lecture (MARKETING STRATEGY)

1/19


2/19

MELJUN CORTES,MBA,MPA,BSCS,ACSMELJUN CORTES,

MBA,MPA,BSCS,ACS

H

APTER

8

Location Planningand Analysis

MELJUNELJUN


3/19


MBA,MPA,BSCS,ACS

Need for Location DecisionsNeed for Location Decisions

Marketing Strategy Cost of Doing Business

Growth Depletion of Resources


4/19


MBA,MPA,BSCS,ACS

Nature of Location DecisionsNature of Location Decisions

Strategic Importance Long term commitment/costs

Impact on investments, revenues, and operations

Supply chains

Objectives Profit potential

No single location may be better than others

Identify several locations from which to choose

Options

Expand existing facilities Add new facilities

Move


5/19


MBA,MPA,BSCS,ACS

Making Location DecisionsMaking Location Decisions

Decide on the criteria Identify the important factors

Develop location alternatives

Evaluate the alternatives Make selection


6/19


MBA,MPA,BSCS,ACS

Location Decision FactorsLocation Decision Factors

Regional Factors

Site-relatedFactors

Multiple PlantStrategies

CommunityConsiderations


7/19

MELJUN CORTES,MBA,MPA,BSCS,ACSMELJUN CORTES,MBA,MPA,BSCS,ACS

Location of raw materials Location of markets

Labor factors

Climate and taxes

Regional FactorsRegional Factors


8/19


Quality of life Services

Attitudes

Taxes Environmental regulations

Utilities

Developer support

Community ConsiderationsCommunity Considerations


9/19


Land Transportation

Environmental

Legal

Site Related FactorsSite Related Factors


10/19


Product plant strategy Market area plant strategy

Process plant strategy

Multiple Plant StrategiesMultiple Plant Strategies

CO S

SCS CS


11/19

MELJUN CORTES,MBA,MPA,BSCS,ACSMELJUN CORTES,MBA,MPA,BSCS,ACSComparison of Service andComparison of Service and

Manufacturing ConsiderationsManufacturing Considerations

Manufacturing/Distribution Service/Retail

Cost Focus Revenue focus

Transportation modes/costs Demographics: age,income,etc

Energy availability, costs Population/drawing area

Labor cost/availability/skills Competition

Building/leasing costs Traffic volume/patterns

Customer access/parking

Table 8.2

MELJUN CORTES

MBA MPA BSCS ACS


12/19


Trends in LocationsTrends in Locations

Foreign producers locating in U.S. Made in USA

Currency fluctuations

Just-in-time manufacturing techniques

Microfactories

Information Technology

MELJUN CORTES MBA MPA BSCS ACSMELJUN CORTES

MBA MPA BSCS ACS


13/19


ForeignGovernment

a. Policies on foreign ownership of production facilitiesLocal ContentImport restrictionsCurrency restrictionsEnvironmental regulationsLocal product standards

b. Stability issuesCulturalDifferences

Living circumstances for foreign workers / dependentsReligious holidays/traditions

CustomerPreferences

Possible buy locally sentiment

Labor Level of training and education of workersWork practicesPossible regulations limiting number of foreign employeesLanguage differences

Resources Availability and quality of raw materials, energy,transportation

Table 8.3


MBA MPA BSCS ACS


14/19


Evaluating LocationsEvaluating Locations

Cost-Profit-Volume Analysis Determine fixed and variable costs

Plot total costs

Determine lowest total costs


MBA MPA BSCS ACS


15/19


Location Cost-Volume AnalysisLocation Cost-Volume Analysis

Assumptions Fixed costs are constant

Variable costs are linear

Output can be closely estimated Only one product involved


MBA MPA BSCS ACS


16/19


Example 1: Cost-Volume AnalysisExample 1: Cost-Volume Analysis

Fixed and variable costs forfour potential locations

L o c a t i o n F i x e d

C o s t

V a r i a b l e

C o s tA

BC

D

$ 2 5 0 , 0 0 0

1 0 0 , 0 0 01 5 0 , 0 0 0

2 0 0 , 0 0 0

$ 1 1

3 02 0

3 5


MBA MPA BSCS ACS


17/19


Example 1: SolutionExample 1: Solution

F i x e dC o s t s

V a r i a b l eC o s t s

T o t a lC o s t s

ABCD

$ 2 5 0 , 0 0 01 0 0 , 0 0 01 5 0 , 0 0 02 0 0 , 0 0 0

$ 1 1 ( 1 0 , 0 0 0 )3 0 ( 1 0 , 0 0 0 )2 0 ( 1 0 , 0 0 0 )3 5 ( 1 0 , 0 0 0 )

$ 3 6 0 , 04 0 0 , 03 5 0 , 05 5 0 , 0


MBA MPA BSCS ACS


18/19


Example 1: SolutionExample 1: Solution

800700600

500400300200100

0

Annual Output (000)

$(000)

8 10 12 14 166420

A

B

C

B SuperiorC Superior

A Superior

D


MBA MPA BSCS ACS


19/19


Evaluating LocationsEvaluating Locations

Transportation Model Decision based on movement costs of raw

materials or finished goods

Factor Rating Decision based on quantitative and qualitative

inputs

Center of Gravity Method Decision based on minimum distribution costs

meljun cortes - operations management 8th lecture (marketing strategy)

Documents