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Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
Facility location models ppt @ DOMS
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Facility location models ppt @ DOMS

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Facility location models ppt @ DOMS

Facility location models ppt @ DOMS

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  • 1. Facility Location Models
  • 2. Lecture Outline <ul><li>Types of Facilities </li></ul><ul><li>Site Selection: Where to Locate </li></ul><ul><li>Global Supply Chain Factors </li></ul><ul><li>Location Analysis Techniques </li></ul>Supplement 7-
  • 3. Types of Facilities <ul><li>Heavy-manufacturing facilities </li></ul><ul><ul><li>large, require a lot of space, and are expensive </li></ul></ul><ul><li>Light-industry facilities </li></ul><ul><ul><li>smaller, cleaner plants and usually less costly </li></ul></ul><ul><li>Retail and service facilities </li></ul><ul><ul><li>smallest and least costly </li></ul></ul>Supplement 7-
  • 4. Factors in Heavy Manufacturing Location Supplement 7- <ul><li>Construction costs </li></ul><ul><li>Land costs </li></ul><ul><li>Raw material &amp; finished goods shipment modes </li></ul><ul><li>Proximity to raw materials </li></ul><ul><li>Utilities </li></ul><ul><li>Means of waste disposal </li></ul><ul><li>Labor availability </li></ul>
  • 5. Factors in Light Industry Location <ul><li>Land costs </li></ul><ul><li>Transportation costs </li></ul><ul><li>Proximity to markets </li></ul><ul><ul><li>depending on delivery requirements including frequency of delivery required by customer </li></ul></ul>Supplement 7-
  • 6. Factors in Retail Location Supplement 7- <ul><li>Proximity to customers </li></ul><ul><li>Location is everything </li></ul>
  • 7. Site Selection: Where to Locate <ul><li>Infrequent but important </li></ul><ul><ul><li>being “in the right place at the right time” </li></ul></ul><ul><li>Must consider other factors, especially financial considerations </li></ul><ul><li>Location decisions made more often for service operations than manufacturing facilities </li></ul><ul><li>Location criteria for service </li></ul><ul><ul><li>access to customers </li></ul></ul><ul><li>Location criteria for manufacturing facility </li></ul><ul><ul><li>nature of labor force </li></ul></ul><ul><ul><li>labor costs </li></ul></ul><ul><ul><li>proximity to suppliers and markets </li></ul></ul><ul><ul><li>distribution and transportation costs </li></ul></ul><ul><ul><li>energy availability and cost </li></ul></ul><ul><ul><li>community infrastructure </li></ul></ul><ul><ul><li>quality of life in community </li></ul></ul><ul><ul><li>government regulations and taxes </li></ul></ul>Copyright 2011 John Wiley &amp; Sons, Inc. Supplement 7-
  • 8. Global Supply Chain Factors <ul><li>Government stability </li></ul><ul><li>Government regulations </li></ul><ul><li>Political &amp; economic systems </li></ul><ul><li>Economic stability &amp; growth </li></ul><ul><li>Exchange rates </li></ul><ul><li>Culture </li></ul><ul><li>Export/import regulations, duties &amp; tariffs </li></ul><ul><li>Raw material availability </li></ul><ul><li>Climate </li></ul><ul><li>Number &amp; proximity of suppliers </li></ul><ul><li>Transportation &amp; distribution system </li></ul><ul><li>Labor cost &amp; education </li></ul><ul><li>Available technology </li></ul><ul><li>Commercial travel </li></ul><ul><li>Technical expertise </li></ul><ul><li>Cross-border trade regulations </li></ul><ul><li>Group trade agreements </li></ul>Supplement 7-
  • 9. Regional and Community Location Factors in U.S. <ul><li>Labor (availability, education, cost, and unions) </li></ul><ul><li>Proximity of customers </li></ul><ul><li>Number of customers </li></ul><ul><li>Construction/leasing costs </li></ul><ul><li>Land cost </li></ul><ul><li>Modes and quality of transportation </li></ul><ul><li>Transportation costs </li></ul><ul><li>Community government Local business regulations </li></ul><ul><li>Government services (e.g., Chamber of Commerce) </li></ul>Supplement 7-
  • 10. Regional and Community Location Factors in U.S. <ul><li>Business climate </li></ul><ul><li>Community services </li></ul><ul><li>Incentive packages </li></ul><ul><li>Government regulations </li></ul><ul><li>Environmental regs. </li></ul><ul><li>Raw material availability </li></ul><ul><li>Commercial travel </li></ul><ul><li>Climate </li></ul><ul><li>Infrastructure (road &amp; utilities) </li></ul><ul><li>Quality of life </li></ul><ul><li>Taxes </li></ul><ul><li>Availability of sites </li></ul><ul><li>Financial services </li></ul><ul><li>Community inducements </li></ul><ul><li>Proximity of suppliers </li></ul><ul><li>Education system </li></ul>Supplement 7-
  • 11. Location Incentives Supplement 7- <ul><li>Tax credits </li></ul><ul><li>Relaxed government regulation </li></ul><ul><li>Job training </li></ul><ul><li>Infrastructure improvement </li></ul><ul><li>Money </li></ul>
  • 12. Geographic Information Systems (GIS) <ul><li>Computerized system for storing, managing, creating, analyzing, integrating, and digitally displaying geographic, i.e., spatial, data </li></ul><ul><li>Specifically used for site selection </li></ul><ul><li>Enables users to integrate large quantities of information about potential sites and analyze these data with many different, powerful analytical tools </li></ul>Supplement 7-
  • 13. GIS Diagram Supplement 7-
  • 14. Location Analysis Techniques Supplement 7- <ul><li>Location factor rating </li></ul><ul><li>Center-of-gravity </li></ul><ul><li>Load-distance </li></ul>
  • 15. Location Factor Rating Supplement 7- <ul><li>Identify important factors </li></ul><ul><li>Weight factors (0.00 - 1.00) </li></ul><ul><li>Subjectively score each factor (0 - 100) </li></ul><ul><li>Sum weighted scores </li></ul>
  • 16. Location Factor Rating Supplement 7- Labor pool and climate Proximity to suppliers Wage rates Community environment Proximity to customers Shipping modes Air service LOCATION FACTOR .30 .20 .15 .15 .10 .05 .05 WEIGHT 80 100 60 75 65 85 50 Site 1 65 91 95 80 90 92 65 Site 2 90 75 72 80 95 65 90 Site 3 SCORES (0 TO 100) Weighted Score for “Labor pool and climate” for Site 1 = (0.30)(80) = 24
  • 17. Location Factor Rating Supplement 7- 24.00 20.00 9.00 11.25 6.50 4.25 2.50 77.50 Site 1 19.50 18.20 14.25 12.00 9.00 4.60 3.25 80.80 Site 2 27.00 15.00 10.80 12.00 9.50 3.25 4.50 82.05 Site 3 WEIGHTED SCORES Site 3 has the highest factor rating
  • 18. Location Factor Rating With Excel Supplement 7-
  • 19. Location Factor Rating With OM Tools Supplement 7-
  • 20. Center-of-Gravity Technique Supplement 7- <ul><li>Locate facility at center of movement in geographic area </li></ul><ul><li>Based on weight and distance traveled; establishes grid-map of area </li></ul><ul><li>Identify coordinates and weights shipped for each location </li></ul>
  • 21. Grid-Map Coordinates Supplement 7- where, x , y = coordinates of new facility at center of gravity x i , y i = coordinates of existing facility i W i = annual weight shipped from facility i  n W i i = 1  x i W i i = 1 n x =  n W i i = 1  y i W i i = 1 n y = x 1 x 2 x 3 x y 2 y y 1 y 3 1 ( x 1 , y 1 ), W 1 2 ( x 2 , y 2 ), W 2 3 ( x 3 , y 3 ), W 3
  • 22. Center-of-Gravity Technique Supplement 7- A B C D x 200 100 250 500 y 200 500 600 300 W 75 105 135 60 y 700 500 600 400 300 200 100 0 x 700 500 600 400 300 200 100 A B C D (135) (105) (75) (60) Miles Miles
  • 23. Center-of-Gravity Technique Supplement 7- x = = = 238 n  W i i = 1  x i W i i = 1 n  n W i i = 1  y i W i i = 1 n y = = = 444 (200)(75) + (500)(105) + (600)(135) + (300)(60) 75 + 105 + 135 + 60 (200)(75) + (100)(105) + (250)(135) + (500)(60) 75 + 105 + 135 + 60
  • 24. Center-of-Gravity Technique Supplement 7- A B C D x 200 100 250 500 y 200 500 600 300 W 75 105 135 60 y 700 500 600 400 300 200 100 0 x 700 500 600 400 300 200 100 A B C D (135) (105) (75) (60) Miles Miles Center of gravity (238, 444)
  • 25. Center-of-Gravity With Excel Supplement 7- Formula for x coordinate
  • 26. Center-of-Gravity With OM Tools Supplement 7- Copyright 2011 John Wiley &amp; Sons, Inc.
  • 27. Load-Distance Technique <ul><li>Compute (Load x Distance) for each site </li></ul><ul><li>Choose site with lowest (Load x Distance) </li></ul><ul><li>Distance can be actual or straight-line </li></ul>Copyright 2011 John Wiley &amp; Sons, Inc. Supplement 7-
  • 28. Load-Distance Calculations Supplement 7- LD = load-distance value l i = load expressed as a weight, number of trips or units being shipped from proposed site and location i d i = distance between proposed site and location i d i = ( x i - x ) 2 + ( y i - y ) 2 ( x,y ) = coordinates of proposed site ( x i , y i ) = coordinates of existing facility where, where,  l i d i i = 1 n LD =
  • 29. Load-Distance Supplement 7- Potential Sites Site X Y 1 360 180 2 420 450 3 250 400 Suppliers A B C D X 200 100 250 500 Y 200 500 600 300 Wt 75 105 135 60 Compute distance from each site to each supplier = (200-360) 2 + (200-180) 2 d A = (x A - x 1 ) 2 + (y A - y 1 ) 2 Site 1 = 161.2 = (100-360) 2 + (500-180) 2 d B = (x B - x 1 ) 2 + (y B - y 1 ) 2 = 412.3 d C = 434.2 d D = 184.4
  • 30. Load-Distance Supplement 7- Site 2 d A = 333 d C = 226.7 d B = 323.9 d D = 170 Site 3 d A = 206.2 d C = 200 d B = 180.3 d D = 269.3 Compute load-distance i = 1 n  l i d i LD = Site 1 = (75)(161.2) + (105)(412.3) + (135)(434.2) + (60)(434.4) = 125,063 Site 2 = (75)(333) + (105)(323.9) + (135)(226.7) + (60)(170) = 99,789 Site 3 = (75)(206.2) + (105)(180.3) + (135)(200) + (60)(269.3) = 77,555* * Choose site 3
  • 31. Load-Distance With Excel Supplement 7- =B7*C11+C7*C12+D7*C13+E7*C14
  • 32. Load-Distance With OM Tools Supplement 7-

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