Site Selection Process in Operations Management

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Questions and Answers

What is a reason for relocation focused on cost?

To attract new employees

To implement just-in-time inventory

To enter a new market

To produce in a location where it's cheaper (correct)

Why might a company relocate for political or social reasons?

To apply just-in-time manufacturing

To meet local legislation (correct)

To reduce transportation costs

To find new employees

What is one of the key factors when entering a new market?

To maintain existing production lines

To produce near the new market (correct)

To relocate on cost grounds

To increase inventory levels

What does the 'just-in-time' production strategy aim to eliminate?

Inventory levels Signup and view all the answers

Which of the following is a factor for attracting new employees?

Quality workplace environment Signup and view all the answers

What can make it difficult to locate enough employees?

Social and political conditions Signup and view all the answers

A focus on reducing inventory is mainly connected to which production approach?

Just-in-time Signup and view all the answers

Which statement is true regarding changes in location structure?

Market entry often necessitates location changes. Signup and view all the answers

What is a site in the context of operations management?

Any location where operational activities occur Signup and view all the answers

Which of the following is NOT a type of site mentioned?

Financial management site Signup and view all the answers

What is the first step in a multi-stage site selection process?

Discover potential interesting locations Signup and view all the answers

What determines if a location is selected in the site selection process?

Location-dependent profit calculation Signup and view all the answers

Which statement best reflects decision-making knowledge in site selection?

High certainty in knowledge leads to confident decisions Signup and view all the answers

What must occur before determining location-dependent costs and services?

Elimination of locations that do not meet minimum criteria Signup and view all the answers

What aspect is NOT considered in site selection related to costs?

Historical performance of previous sites Signup and view all the answers

In site selection, what is a decisive factor for making a choice?

Knowledge about the locations Signup and view all the answers

What aspect of regional cooperations is often considered unused potential?

Partnerships in the same industry Signup and view all the answers

Which of the following is a component of joint procurement activities?

Collaborative purchasing with other businesses Signup and view all the answers

What is a key criterion for selecting a site related to economic factors?

Attractiveness of the economic area Signup and view all the answers

Which factor is particularly important for the consumer goods industry when selecting a site?

Geographical proximity to sales markets Signup and view all the answers

What is one potential benefit of reciprocal capacity balancing in production?

Shared production capabilities for efficiency Signup and view all the answers

What role does infrastructure accessibility play in site selection criteria?

It influences operational costs and logistics. Signup and view all the answers

What is an example of a human resources measure in regional cooperation?

Workforce sharing and joint training activities Signup and view all the answers

Which of the following is not typically considered a criterion for site selection?

Diversity of local wildlife Signup and view all the answers

What is the primary purpose of the measure search grid in the evaluation of existing sites?

To simplify the representation of business reality Signup and view all the answers

Which of the following fields of modernization is NOT mentioned in the content?

Market Research Signup and view all the answers

What is the first step in the structuring of optimization measures according to the workshop concept?

Assessment of performance potential Signup and view all the answers

Which action pertains primarily to the cause-effect analysis as described in the content?

Applying the measure search grid Signup and view all the answers

What is assessed in the third step of the optimization measures structuring?

The desirability of modernization grids Signup and view all the answers

Participation of which group is crucial in the workshop concept for site evaluation?

Decision-makers from all areas of the company Signup and view all the answers

Which option reflects a goal of the benchmarking study described?

To identify causes of inefficiency Signup and view all the answers

What is one of the main focuses of the four fields of modernization?

Enhancing technological capabilities Signup and view all the answers

What is a primary reason for evaluating and optimizing existing sites?

To integrate the business into existing cooperation networks Signup and view all the answers

Which scenario involves planning new sites while retaining old sites?

Planning new sites Signup and view all the answers

What can systematically underestimate start-up times and costs for new sites?

Ignorance of quality and productivity requirements Signup and view all the answers

Which of the following is NOT a part of the benchmark analysis for evaluating existing sites?

Employee satisfaction Signup and view all the answers

What does the optimization of existing sites improve?

Productivity and production costs Signup and view all the answers

What is an essential factor considered in the benchmarking of existing sites?

Delivery times of raw materials Signup and view all the answers

Which of the following is an advantage of using existing sites over planning new ones?

Reduced startup costs and time Signup and view all the answers

What does productivity benchmarking typically compare?

Performance against the best-performing competitor Signup and view all the answers

What is NOT a benefit of evaluating existing sites?

Immediate closure of all sites Signup and view all the answers

Which of the following statements is true regarding the planning of new sites?

It should factor in overhead costs for better visualization. Signup and view all the answers

What is a significant challenge in site selection according to the given information?

Location-dependent costs and performances cannot be estimated with certainty. Signup and view all the answers

Why might a business need to adjust its site locations?

To respond to shifts in demand for their products. Signup and view all the answers

What does the term 'capacity expansion/reduction' imply in site planning?

Adjusting production based on market demand. Signup and view all the answers

What can trigger a site merger in operations management?

An increase in the number of workers wanting to work at multiple locations. Signup and view all the answers

What does the term 'shifting focus of demand' indicate in site selection?

Demand patterns may change, impacting transportation decisions. Signup and view all the answers

Why is future deviation from expected values a concern in site selection?

It can lead to location becoming suboptimal due to unforeseen changes. Signup and view all the answers

How might 'relocation of raw material sources' impact site planning?

It could necessitate the movement of production sites closer to new material locations. Signup and view all the answers

In the context of site selection, what does 'modernization of buildings and technical facilities' signify?

Upgrading existing structures and techniques to enhance operational efficiency. Signup and view all the answers

Which factor is least likely to impact site selection decisions?

Company tradition and legacy. Signup and view all the answers

What does the term 'cost analyses in the context of business strategy' refer to?

Understanding costs versus benefits to align with strategic goals. Signup and view all the answers

Study Notes

Operating Site

Site is the location of operational premises (administrative building, production areas, stores, branches, warehouses)
An operation can have one or more sites.
Types of sites include: research and development, production, administration, warehouse, and sales locations.

Site Selection as a Decision-Making Problem

Site selection is a multi-stage decision-making process, often considering cost factors.
Initial step involves identifying potential locations, removing unsuitable ones based on minimum criteria (e.g., cost).
Location-dependent costs and services are then evaluated for remaining options.
The location with the highest expected profit (considering both location-dependent performance and costs) is finally selected.

When is a Decision Needed?

Decision making depends on the degree of knowledge.
A fully informed decision is based on complete knowledge, leading to a conclusive outcome.
A decision made with incomplete knowledge involves uncertainty, and a degree of guessing.

Problems with the Site Selection Approach

Accurate estimations of location-dependent costs and performance are difficult due to inherent unpredictability and changeability.
Future deviations (e.g., market fluctuations) can make the selected location suboptimal.
This approach should be viewed as making difficult decisions.
Site selection is a complex decision-making problem.
Evaluating using pessimistic and optimistic scenarios is an approach.
Costs are analyzed within the context of business strategy, considering the time horizon.

Reasons for Location Changes

Adjustment of strategies and product portfolio changes.
Changes in production capacity (expansion/reduction).
Modernization of buildings and facilities.
Merging of sites or relocation of plants to bring workers together.
Demand and raw material sources shift.
Relocation due to cost, political, and social factors.

Entering New Markets and "Just-in-Time"

Relocation for cost savings or for political reasons.
Entry into new markets requires suitable locations.
Transitioning to a "just-in-time" inventory system might change the strategic location.

Site Planning Scenarios

Using existing sites involves optimization and adaptation.
Planning new sites occurs in two main manners: start-ups and expanding by building new sites and/or combining them with existing ones.
Planning new sites often combined with closure (or reduced use) of old sites.

Reasons for Optimizing Existing Sites

Integrating the business into existing networks.
Overcoming significant start-up times and costs to attain necessary quality & productivity.
Visualizing cost centers relating to site overhead costs.
Improving comparability of different sites by incorporating optimization potential.

Evaluating Existing Sites Using Benchmarks

Benchmarking against best competitors is used, identifying key performance factors.
Key factors for evaluation include productivity, production costs, lead times, capabilities, production flexibility, and product quality.
This approach also uses a measure search grid to look at organization, technology, human resources, and product design for analysis.

Benchmarking Study (Workshop Concept)

Participants from all departments are involved to identify areas for potential optimization.
Measures already implemented by the business are structured and analyzed.
Cause-and-effect analysis uses a grid to identify optimization measures and potential improvements.
An evaluation of potential modernization measures is undertaken.
Possible performance improvements are assessed that are not currently being used.

Evaluation of Regional Cooperations

Location factors are not pre-determined, but can be influenced by local business activity.
Using regional cooperation with other businesses, (e.g., co-locating).
Potential partnerships with customers, suppliers, and service providers can be leveraged to improve profitability.

Fields and Measures of Cooperating

Merging purchasing activities (e.g., bulk buying).
Collaboration on workforce resources (e.g., training).
Balancing production capacities among businesses.
Using other sites' infrastructure to share resources.

Criteria for Site Selection

Favorable economic conditions in the area.
Proximity to market areas and suppliers.
Access to necessary raw materials.
Stable government and favorable policies (e.g., environmental protection).
Regulations that meet the needs of the business and local labor availability.
Regional economic development and subsidies.

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Description

Explore the multi-stage decision-making process involved in site selection for operational premises. This quiz covers the criteria for identifying potential locations, evaluating costs, and making informed decisions based on expected profit. Test your understanding of operational site management and decision-making.