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.