Evaluating Primary Site Locations Techniques

Location Alternatives

• Evaluating location alternatives involves common techniques such as factor rating, center of gravity method, and transportation model.

Factor Rating

• Factor rating is a general approach to evaluating locations that includes quantitative and qualitative inputs.
• The procedure involves determining relevant factors, assigning weights to each factor, deciding on a common scale, scoring each location alternative, and choosing the alternative with the highest composite score.

Center of Gravity Method

• The center of gravity method is used to locate a distribution center that minimizes distribution costs.
• This method treats distribution costs as a linear function of distance and quantity shipped.
• The method involves using a map to show destination locations and a coordinate system to determine relative locations.
• If quantities to be shipped to each location are equal, the coordinates of the center of gravity can be obtained by finding the average of the x-coordinates and the average of the y-coordinates.

The Transportation Method

• The transportation method can be used to solve specific location problems and evaluate the cost impact of adding new locations to the network of existing facilities.
• It can also be used to evaluate adding multiple new sites or completely redesigning the network.

Capacity Planning and Facility Location

• Decisions about capacity and location are highly dependent on forecasts of demand.
• Capacity is also affected by operations strategy, which is a key element of organizational structure.
• Other operations decisions affected by capacity and location include job design and labor skills, choice of labor and technology, and technology and automation.

Importance of Capacity Planning and Location Analysis

• Capacity planning and location analysis affect operations management and are important to many others, including finance and marketing.
• Capacity planning involves deciding on the maximum output rate of a facility, while location analysis involves deciding on the best location for a facility.

Tools for Location Analysis

• Factor rating helps evaluate qualitative factors.
• The load-distance model and center of gravity approach evaluate the location decision based on distance.
• Break-even analysis is used to evaluate location decisions based on cost values.
• The transportation method is excellent for evaluating the cost impact of adding sites to the network of current facilities.
• Quality-of-life issues, such as climate, cultural attractions, and commuting time, are also important considerations.
• Other considerations include options for future expansion, local competition, transportation access, and congestion.

Learn about evaluating primary site locations and the common techniques used, such as factor rating, center of gravity method, and transportation model. Understand the factor rating procedure including determining relevant factors and assigning weights.