factor rating method of plant location

1. J.N. GOVT. ENGG.
COLLEGE
SUNDERNAGAR
Presentation
Mill Management and Maintenance
TE-704
ABHISHEK RANA
10BTD5090001
Textile Engineering
Factor Rating Method

2. FACTOR RATING
METHOD
 Most widely used method?
 Useful for service or industrial facilities: can include intangible,
qualitative factors.
 List relevant factors, assign a weight
 Develop a scale for each factor
 Score each factor using the scale
 Multiply scores by weights, add up
 Choose location with highest total score
 Kind of like “Miss America”
 Lots of work for each location, consider small list of candidates
 Use centroid to find an area, factor rating for town

3. FACTOR RATING
EXAMPLE
 We need to decide where to build new coffee roasting plant. There
are two possible locations. Dallas and Denver.
 We consider the following factors:
 Transportation
Annual trucking costs in $K
 Lease
Annual cost in $K
 Labour Availability
Scale 1 – 10, unemployment, related industries
 Quality of Life
1 – 10 outdoor activities, cultural, sports and education

4. FACTOR RATING
EXAMPLE
 Using a scoring system we have we following:
Factor Weight TX CO
Transportation 0.4 900 1023
Plant lease cost 0.3 45 39
Labor availability 0.2 10 8
Quality of life 0.1 7 9.5

5. NORMALIZING
SCORES
 All factors must be scored on the same scale like 1-10 or 0-1.0 etc.
 Costs need to be re-scaled
 Lowest cost site gets a 10
 More expensive site gets
 Plant lease:
39
45
× 10 = 8.7
 Transportation:
900
1023
× 10= 8.8
 Multiply these raw scores b weights for weighted scores.

6. FACTOR RATING
EXAMPLE
TX CO
Factor Weight Raw Wtd Raw Wtd
Transportation 0.4 10 4.00 8.80 3.52
Plant 0.3 8.7 2.61 10 3.00
Labor 0.2 10 2.00 8 1.60
Quality Life 0.1 7 0.70 9.5 0.95
TOTAL 9.31 9.07
TX is best, but not by a huge amount.

7. SUMMARY
 Factor Rating Method
 Can include non-quantitative considerations.
 A weight for each category must assigned.
 System for awarding points to each candidate has to be worked
out.
 Sum the weighted scores in each category.
 Coming up with weights and scoring system can be political.

8. ANY QUESTION

9. THANK
YOU