Submit Search
Upload
Chapter 8 Location Strategy.ppt
•
Download as PPT, PDF
•
0 likes
•
693 views
S
ssuser7d3776
Follow
Various Business Strategy
Read less
Read more
Business
Report
Share
Report
Share
1 of 44
Download now
Recommended
Heizer 01
Heizer 01
Rizwan Khurram
Operations management location strategies (lecture)
Operations management location strategies (lecture)
Jun Gonzales
Heizer om10 ch08
Heizer om10 ch08
ryaekle
Chapter 6 Managing Quality.ppt
Chapter 6 Managing Quality.ppt
ssuser7d3776
Location Strategy
Location Strategy
Joanmaines
Operations And Productivity
Operations And Productivity
Joanmaines
the global environment and operations strategy Operation management
the global environment and operations strategy Operation management
gharaibeh g
Heizer 11
Heizer 11
Rizwan Khurram
Recommended
Heizer 01
Heizer 01
Rizwan Khurram
Operations management location strategies (lecture)
Operations management location strategies (lecture)
Jun Gonzales
Heizer om10 ch08
Heizer om10 ch08
ryaekle
Chapter 6 Managing Quality.ppt
Chapter 6 Managing Quality.ppt
ssuser7d3776
Location Strategy
Location Strategy
Joanmaines
Operations And Productivity
Operations And Productivity
Joanmaines
the global environment and operations strategy Operation management
the global environment and operations strategy Operation management
gharaibeh g
Heizer 11
Heizer 11
Rizwan Khurram
Heizer 07
Heizer 07
Rizwan Khurram
Operations Strategy
Operations Strategy
Anand Subramaniam
Heizer 13
Heizer 13
Rizwan Khurram
David sm13 ppt_10
David sm13 ppt_10
Rizwanah Parwin
Kotler developing pricing strategies and programs
Kotler developing pricing strategies and programs
John Muriango
Heizer 06
Heizer 06
Rizwan Khurram
Heizer 04
Heizer 04
Rizwan Khurram
Forecasting - Operation Management
Forecasting - Operation Management
Bikram Adhikari
Operations Management (OM)
Operations Management (OM)
Uttar Tamang ✔
Heizer 02
Heizer 02
Rizwan Khurram
Heizer 09
Heizer 09
Rizwan Khurram
Heizer 05
Heizer 05
Rizwan Khurram
Process And Layout Strategies
Process And Layout Strategies
Joanmaines
Kotler mm 14e_04_ippt
Kotler mm 14e_04_ippt
Happy Haha
Services marketing 7e chapter1
Services marketing 7e chapter1
Jinan Khanfar
Pricing- Understanding & Capturing Customer Value
Pricing- Understanding & Capturing Customer Value
Akib Hasan Srabon
Kotler mm 14e_07_ippt
Kotler mm 14e_07_ippt
Beulah Heights University
Heizer 10
Heizer 10
Rizwan Khurram
operation management and operation strategy
operation management and operation strategy
Rohit Kumar
Strategic Management Slides - Chapter 3 "the External Assessment"
Strategic Management Slides - Chapter 3 "the External Assessment"
Rabia Rajput
pptchapter8locationstrategy-(1) 2.pptx
pptchapter8locationstrategy-(1) 2.pptx
SufianAhmadBajar
3BS. Location and Layout Strategies.ppt
3BS. Location and Layout Strategies.ppt
HafizMuhammadAbdulla4
More Related Content
What's hot
Heizer 07
Heizer 07
Rizwan Khurram
Operations Strategy
Operations Strategy
Anand Subramaniam
Heizer 13
Heizer 13
Rizwan Khurram
David sm13 ppt_10
David sm13 ppt_10
Rizwanah Parwin
Kotler developing pricing strategies and programs
Kotler developing pricing strategies and programs
John Muriango
Heizer 06
Heizer 06
Rizwan Khurram
Heizer 04
Heizer 04
Rizwan Khurram
Forecasting - Operation Management
Forecasting - Operation Management
Bikram Adhikari
Operations Management (OM)
Operations Management (OM)
Uttar Tamang ✔
Heizer 02
Heizer 02
Rizwan Khurram
Heizer 09
Heizer 09
Rizwan Khurram
Heizer 05
Heizer 05
Rizwan Khurram
Process And Layout Strategies
Process And Layout Strategies
Joanmaines
Kotler mm 14e_04_ippt
Kotler mm 14e_04_ippt
Happy Haha
Services marketing 7e chapter1
Services marketing 7e chapter1
Jinan Khanfar
Pricing- Understanding & Capturing Customer Value
Pricing- Understanding & Capturing Customer Value
Akib Hasan Srabon
Kotler mm 14e_07_ippt
Kotler mm 14e_07_ippt
Beulah Heights University
Heizer 10
Heizer 10
Rizwan Khurram
operation management and operation strategy
operation management and operation strategy
Rohit Kumar
Strategic Management Slides - Chapter 3 "the External Assessment"
Strategic Management Slides - Chapter 3 "the External Assessment"
Rabia Rajput
What's hot
(20)
Heizer 07
Heizer 07
Operations Strategy
Operations Strategy
Heizer 13
Heizer 13
David sm13 ppt_10
David sm13 ppt_10
Kotler developing pricing strategies and programs
Kotler developing pricing strategies and programs
Heizer 06
Heizer 06
Heizer 04
Heizer 04
Forecasting - Operation Management
Forecasting - Operation Management
Operations Management (OM)
Operations Management (OM)
Heizer 02
Heizer 02
Heizer 09
Heizer 09
Heizer 05
Heizer 05
Process And Layout Strategies
Process And Layout Strategies
Kotler mm 14e_04_ippt
Kotler mm 14e_04_ippt
Services marketing 7e chapter1
Services marketing 7e chapter1
Pricing- Understanding & Capturing Customer Value
Pricing- Understanding & Capturing Customer Value
Kotler mm 14e_07_ippt
Kotler mm 14e_07_ippt
Heizer 10
Heizer 10
operation management and operation strategy
operation management and operation strategy
Strategic Management Slides - Chapter 3 "the External Assessment"
Strategic Management Slides - Chapter 3 "the External Assessment"
Similar to Chapter 8 Location Strategy.ppt
pptchapter8locationstrategy-(1) 2.pptx
pptchapter8locationstrategy-(1) 2.pptx
SufianAhmadBajar
3BS. Location and Layout Strategies.ppt
3BS. Location and Layout Strategies.ppt
HafizMuhammadAbdulla4
© 2006 Prentice Hall, Inc.8 – Location StrategyOne of.docx
© 2006 Prentice Hall, Inc.8 – Location StrategyOne of.docx
LynellBull52
3 Chapter 5 facilities location.ppt
3 Chapter 5 facilities location.ppt
DemekeChimdessa1
Location plgg
Location plgg
Aijaz Ahmed
location111.ppt
location111.ppt
aliihsansonmez
ch08_Location.pptx
ch08_Location.pptx
puspapameswari
chapter 8 classrohgughghhjhhhhjjom ppt.ppt
chapter 8 classrohgughghhjhhhhjjom ppt.ppt
contactme11
Location strategies ppt @ bec doms
Location strategies ppt @ bec doms
Babasab Patil
location strategy, operation management
location strategy, operation management
FAST NUCES
Loc Plan Ch08
Loc Plan Ch08
Waqar Butt Vicky
Plant Location Decision
Plant Location Decision
Vasantkumar Parakhiya
8a. location planning 8 a
8a. location planning 8 a
Sudipta Saha
Location analysis by ranjeet kumar
Location analysis by ranjeet kumar
Ranjeet Shah
location strategies
location strategies
MD.NAEEM ISLAM NUR
TDL & Exports Regional Intermediary Design II
TDL & Exports Regional Intermediary Design II
Translinked
Final1[1]
Final1[1]
santoshdharwar
Chapter 8.pptx
Chapter 8.pptx
waelselim6
Location Planning and Analysis
Location Planning and Analysis
Iza Marie
LocationPlanningMush.pptx
LocationPlanningMush.pptx
mushtaque61
Similar to Chapter 8 Location Strategy.ppt
(20)
pptchapter8locationstrategy-(1) 2.pptx
pptchapter8locationstrategy-(1) 2.pptx
3BS. Location and Layout Strategies.ppt
3BS. Location and Layout Strategies.ppt
© 2006 Prentice Hall, Inc.8 – Location StrategyOne of.docx
© 2006 Prentice Hall, Inc.8 – Location StrategyOne of.docx
3 Chapter 5 facilities location.ppt
3 Chapter 5 facilities location.ppt
Location plgg
Location plgg
location111.ppt
location111.ppt
ch08_Location.pptx
ch08_Location.pptx
chapter 8 classrohgughghhjhhhhjjom ppt.ppt
chapter 8 classrohgughghhjhhhhjjom ppt.ppt
Location strategies ppt @ bec doms
Location strategies ppt @ bec doms
location strategy, operation management
location strategy, operation management
Loc Plan Ch08
Loc Plan Ch08
Plant Location Decision
Plant Location Decision
8a. location planning 8 a
8a. location planning 8 a
Location analysis by ranjeet kumar
Location analysis by ranjeet kumar
location strategies
location strategies
TDL & Exports Regional Intermediary Design II
TDL & Exports Regional Intermediary Design II
Final1[1]
Final1[1]
Chapter 8.pptx
Chapter 8.pptx
Location Planning and Analysis
Location Planning and Analysis
LocationPlanningMush.pptx
LocationPlanningMush.pptx
Recently uploaded
FULL ENJOY Call girls in Paharganj Delhi | 8377087607
FULL ENJOY Call girls in Paharganj Delhi | 8377087607
dollysharma2066
(Best) ENJOY Call Girls in Faridabad Ex | 8377087607
(Best) ENJOY Call Girls in Faridabad Ex | 8377087607
dollysharma2066
Tech Startup Growth Hacking 101 - Basics on Growth Marketing
Tech Startup Growth Hacking 101 - Basics on Growth Marketing
Shawn Pang
Marketing Management Business Plan_My Sweet Creations
Marketing Management Business Plan_My Sweet Creations
nakalysalcedo61
VIP Kolkata Call Girl Howrah 👉 8250192130 Available With Room
VIP Kolkata Call Girl Howrah 👉 8250192130 Available With Room
divyansh0kumar0
Call Girls In Sikandarpur Gurgaon ❤️8860477959_Russian 100% Genuine Escorts I...
Call Girls In Sikandarpur Gurgaon ❤️8860477959_Russian 100% Genuine Escorts I...
lizamodels9
Call Girls In Radisson Blu Hotel New Delhi Paschim Vihar ❤️8860477959 Escorts...
Call Girls In Radisson Blu Hotel New Delhi Paschim Vihar ❤️8860477959 Escorts...
lizamodels9
Kenya’s Coconut Value Chain by Gatsby Africa
Kenya’s Coconut Value Chain by Gatsby Africa
ictsugar
Call Girls in DELHI Cantt, ( Call Me )-8377877756-Female Escort- In Delhi / Ncr
Call Girls in DELHI Cantt, ( Call Me )-8377877756-Female Escort- In Delhi / Ncr
dollysharma2066
Organizational Structure Running A Successful Business
Organizational Structure Running A Successful Business
Seta Wicaksana
Pitch Deck Teardown: NOQX's $200k Pre-seed deck
Pitch Deck Teardown: NOQX's $200k Pre-seed deck
HajeJanKamps
Call US-88OO1O2216 Call Girls In Mahipalpur Female Escort Service
Call US-88OO1O2216 Call Girls In Mahipalpur Female Escort Service
callgirls2057
Lowrate Call Girls In Sector 18 Noida ❤️8860477959 Escorts 100% Genuine Servi...
Lowrate Call Girls In Sector 18 Noida ❤️8860477959 Escorts 100% Genuine Servi...
lizamodels9
8447779800, Low rate Call girls in Shivaji Enclave Delhi NCR
8447779800, Low rate Call girls in Shivaji Enclave Delhi NCR
ashishs7044
Cash Payment 9602870969 Escort Service in Udaipur Call Girls
Cash Payment 9602870969 Escort Service in Udaipur Call Girls
Apsara Of India
8447779800, Low rate Call girls in Uttam Nagar Delhi NCR
8447779800, Low rate Call girls in Uttam Nagar Delhi NCR
ashishs7044
RE Capital's Visionary Leadership under Newman Leech
RE Capital's Visionary Leadership under Newman Leech
Newman George Leech
Case study on tata clothing brand zudio in detail
Case study on tata clothing brand zudio in detail
Ariel592675
Annual General Meeting Presentation Slides
Annual General Meeting Presentation Slides
KeppelCorporation
Call Girls In Connaught Place Delhi ❤️88604**77959_Russian 100% Genuine Escor...
Call Girls In Connaught Place Delhi ❤️88604**77959_Russian 100% Genuine Escor...
lizamodels9
Recently uploaded
(20)
FULL ENJOY Call girls in Paharganj Delhi | 8377087607
FULL ENJOY Call girls in Paharganj Delhi | 8377087607
(Best) ENJOY Call Girls in Faridabad Ex | 8377087607
(Best) ENJOY Call Girls in Faridabad Ex | 8377087607
Tech Startup Growth Hacking 101 - Basics on Growth Marketing
Tech Startup Growth Hacking 101 - Basics on Growth Marketing
Marketing Management Business Plan_My Sweet Creations
Marketing Management Business Plan_My Sweet Creations
VIP Kolkata Call Girl Howrah 👉 8250192130 Available With Room
VIP Kolkata Call Girl Howrah 👉 8250192130 Available With Room
Call Girls In Sikandarpur Gurgaon ❤️8860477959_Russian 100% Genuine Escorts I...
Call Girls In Sikandarpur Gurgaon ❤️8860477959_Russian 100% Genuine Escorts I...
Call Girls In Radisson Blu Hotel New Delhi Paschim Vihar ❤️8860477959 Escorts...
Call Girls In Radisson Blu Hotel New Delhi Paschim Vihar ❤️8860477959 Escorts...
Kenya’s Coconut Value Chain by Gatsby Africa
Kenya’s Coconut Value Chain by Gatsby Africa
Call Girls in DELHI Cantt, ( Call Me )-8377877756-Female Escort- In Delhi / Ncr
Call Girls in DELHI Cantt, ( Call Me )-8377877756-Female Escort- In Delhi / Ncr
Organizational Structure Running A Successful Business
Organizational Structure Running A Successful Business
Pitch Deck Teardown: NOQX's $200k Pre-seed deck
Pitch Deck Teardown: NOQX's $200k Pre-seed deck
Call US-88OO1O2216 Call Girls In Mahipalpur Female Escort Service
Call US-88OO1O2216 Call Girls In Mahipalpur Female Escort Service
Lowrate Call Girls In Sector 18 Noida ❤️8860477959 Escorts 100% Genuine Servi...
Lowrate Call Girls In Sector 18 Noida ❤️8860477959 Escorts 100% Genuine Servi...
8447779800, Low rate Call girls in Shivaji Enclave Delhi NCR
8447779800, Low rate Call girls in Shivaji Enclave Delhi NCR
Cash Payment 9602870969 Escort Service in Udaipur Call Girls
Cash Payment 9602870969 Escort Service in Udaipur Call Girls
8447779800, Low rate Call girls in Uttam Nagar Delhi NCR
8447779800, Low rate Call girls in Uttam Nagar Delhi NCR
RE Capital's Visionary Leadership under Newman Leech
RE Capital's Visionary Leadership under Newman Leech
Case study on tata clothing brand zudio in detail
Case study on tata clothing brand zudio in detail
Annual General Meeting Presentation Slides
Annual General Meeting Presentation Slides
Call Girls In Connaught Place Delhi ❤️88604**77959_Russian 100% Genuine Escor...
Call Girls In Connaught Place Delhi ❤️88604**77959_Russian 100% Genuine Escor...
Chapter 8 Location Strategy.ppt
1.
© 2006 Prentice
Hall, Inc. 8 – 1 Operations Management Chapter 8 – Location Strategies © 2006 Prentice Hall, Inc. PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e
2.
© 2006 Prentice
Hall, Inc. 8 – 2 Outline Global Company Profile: Federal Express The Strategic Importance Of Location
3.
© 2006 Prentice
Hall, Inc. 8 – 3 Outline – Continued Factors That Affect Location Decisions Labor Productivity Exchange Rates and Currency Risks Costs Attitudes Proximity to Markets Proximity to Suppliers Proximity to Competitors (Clustering)
4.
© 2006 Prentice
Hall, Inc. 8 – 4 Outline – Continued Methods Of Evaluating Location Alternatives The Factor-Rating Method Locational Break-Even Analysis Center-of-Gravity Method The Transportation Method
5.
© 2006 Prentice
Hall, Inc. 8 – 5 Outline – Continued Service Location Strategy How Hotel Chains Select Sites The Telemarketing Industry Geographic Information Systems
6.
© 2006 Prentice
Hall, Inc. 8 – 6 Learning Objectives When you complete this chapter, you should be able to: Identify or Define: Objective of location strategy International location issues Clustering Geographic information systems
7.
© 2006 Prentice
Hall, Inc. 8 – 7 Learning Objectives When you complete this chapter, you should be able to: Describe or Explain: Three methods of solving the location problem Factor-rating method Locational breakeven analysis Center-of-gravity method Describe the factors affecting location decisions
8.
© 2006 Prentice
Hall, Inc. 8 – 8 Federal Express Central hub concept Enables service to more locations with fewer aircraft Enables matching of aircraft flights with package loads Reduces mishandling and delay in transit because there is total control of packages from pickup to delivery
9.
© 2006 Prentice
Hall, Inc. 8 – 9 Location Strategy One of the most important decisions a firm makes Increasingly global in nature Long term impact and decisions are difficult to change The objective is to maximize the benefit of location to the firm
10.
© 2006 Prentice
Hall, Inc. 8 – 10 Location and Innovation Cost is not always the most important aspect of a strategic decision Four key attributes when strategy is based on innovation High-quality and specialized inputs An environment that encourages investment and local rivalry A sophisticated local market Local presence of related and supporting industries
11.
© 2006 Prentice
Hall, Inc. 8 – 11 Location Decisions Long-term decisions Decisions made infrequently Decision greatly affects both fixed and variable costs Once committed to a location, many resource and cost issues are difficult to change
12.
© 2006 Prentice
Hall, Inc. 8 – 12 Location Decisions Country Decision Critical Success Factors 1. Political risks, government rules, attitudes, incentives 2. Cultural and economic issues 3. Location of markets 4. Labor availability, attitudes, productivity, costs 5. Availability of supplies, communications, energy 6. Exchange rates and currency risks Figure 8.1
13.
© 2006 Prentice
Hall, Inc. 8 – 13 Location Decisions Region/ Community Decision Critical Success Factors 1. Corporate desires 2. Attractiveness of region 3. Labor availability, costs, attitudes towards unions 4. Costs and availability of utilities 5. Environmental regulations 6. Government incentives and fiscal policies 7. Proximity to raw materials and customers 8. Land/construction costs MN WI MI IL IN OH Figure 8.1
14.
© 2006 Prentice
Hall, Inc. 8 – 14 Location Decisions Site Decision Critical Success Factors 1. Site size and cost 2. Air, rail, highway, and waterway systems 3. Zoning restrictions 4. Nearness of services/ supplies needed 5. Environmental impact issues Figure 8.1
15.
© 2006 Prentice
Hall, Inc. 8 – 15 Factors That Affect Location Decisions Labor productivity Wage rates are not the only cost Lower productivity may increase total cost Labor cost per day Productivity (units per day) = cost per unit Connecticut = $1.17 per unit $70 60 units Juarez = $1.25 per unit $25 20 units
16.
© 2006 Prentice
Hall, Inc. 8 – 16 Factors That Affect Location Decisions Exchange rates and currency risks Can have a significant impact on cost structure Rates change over time Costs Tangible - easily measured costs such as utilities, labor, materials, taxes Intangible - less easy to quantify and include education, public transportation, community, quality-of-life
17.
© 2006 Prentice
Hall, Inc. 8 – 17 Factors That Affect Location Decisions Attitudes National, state, local governments toward private and intellectual property, zoning, pollution, employment stability Worker attitudes towards turnover, unions, absenteeism Globally cultures have different attitudes towards punctuality, legal, and ethical issues
18.
© 2006 Prentice
Hall, Inc. 8 – 18 Factors That Affect Location Decisions Proximity to markets Very important to services JIT systems or high transportation costs may make it important to manufacturers Proximity to suppliers Perishable goods, high transportation costs, bulky products
19.
© 2006 Prentice
Hall, Inc. 8 – 19 Factors That Affect Location Decisions Proximity to competitors Called clustering Often driven by resources such as natural, information, capital, talent Found in both manufacturing and service industries
20.
© 2006 Prentice
Hall, Inc. 8 – 20 Growth Competitiveness Index of Countries Country 2004 Rank 2003 Rank Finland 1 1 USA 2 2 Sweden 3 3 Taiwan 4 5 Japan 9 11 UK 11 15 Germany 13 13 Canada 15 16 New Zealand 18 14 France 27 26 Russia 70 70
21.
© 2006 Prentice
Hall, Inc. 8 – 21 Clustering of Companies Industry Locations Reason for clustering Wine makers Napa Valley (US) Bordeaux region (France) Natural resources of land and climate Software firms Silicon Valley, Boston, Bangalore (India) Talent resources of bright graduates in scientific/technical areas, venture capitalists nearby Race car builders Huntington/North Hampton region (England) Critical mass of talent and information Table 8.3
22.
© 2006 Prentice
Hall, Inc. 8 – 22 Clustering of Companies Industry Locations Reason for clustering Theme parks Orlando A hot spot for entertainment, warm weather, tourists, and inexpensive labor Electronic firms Northern Mexico NAFTA, duty free export to US Computer hardware manufacturers Singapore, Taiwan High technological penetration rate and per capita GDP, skilled/educated workforce with large pool of engineers Table 8.3
23.
© 2006 Prentice
Hall, Inc. 8 – 23 Clustering of Companies Industry Locations Reason for clustering Fast food chains Sites within one mile of each other Stimulate food sales, high traffic flows General aviation aircraft Wichita, Kansas Mass of aviation skills Table 8.3
24.
© 2006 Prentice
Hall, Inc. 8 – 24 Factor-Rating Method Popular because a wide variety of factors can be included in the analysis Six steps in the method 1. Develop a list of relevant factors called critical success factors 2. Assign a weight to each factor 3. Develop a scale for each factor 4. Score each location for each factor 5. Multiply score by weights for each factor for each location 6. Recommend the location with the highest point score
25.
© 2006 Prentice
Hall, Inc. 8 – 25 Factor-Rating Example Critical Scores Success (out of 100) Weighted Scores Factor Weight France Denmark France Denmark Labor availability and attitude .25 70 60 (.25)(70) = 17.5 (.25)(60) = 15.0 People-to car ratio .05 50 60 (.05)(50) = 2.5 (.05)(60) = 3.0 Per capita income .10 85 80 (.10)(85) = 8.5 (.10)(80) = 8.0 Tax structure .39 75 70 (.39)(75) = 29.3 (.39)(70) = 27.3 Education and health .21 60 70 (.21)(60) = 12.6 (.21)(70) = 14.7 Totals 1.00 70.4 68.0 Table 8.3
26.
© 2006 Prentice
Hall, Inc. 8 – 26 Locational Break-Even Analysis Method of cost-volume analysis used for industrial locations Three steps in the method 1. Determine fixed and variable costs for each location 2. Plot the cost for each location 3. Select location with lowest total cost for expected production volume
27.
© 2006 Prentice
Hall, Inc. 8 – 27 Locational Break-Even Analysis Example Three locations: Akron $30,000 $75 $180,000 Bowling Green $60,000 $45 $150,000 Chicago $110,000 $25 $160,000 Selling price = $120 Expected volume = 2,000 units Fixed Variable Total City Cost Cost Cost Total Cost = Fixed Cost + Variable Cost x Volume
28.
© 2006 Prentice
Hall, Inc. 8 – 28 Locational Break-Even Analysis Example – $180,000 – – $160,000 – $150,000 – – $130,000 – – $110,000 – – – $80,000 – – $60,000 – – – $30,000 – – $10,000 – – Annual cost | | | | | | | 0 500 1,000 1,500 2,000 2,500 3,000 Volume Akron lowest cost Bowling Green lowest cost Chicago lowest cost Figure 8.2
29.
© 2006 Prentice
Hall, Inc. 8 – 29 Center-of-Gravity Method Finds location of distribution center that minimizes distribution costs Considers Location of markets Volume of goods shipped to those markets Shipping cost (or distance)
30.
© 2006 Prentice
Hall, Inc. 8 – 30 Center-of-Gravity Method Place existing locations on a coordinate grid Grid origin and scale is arbitrary Maintain relative distances Calculate X and Y coordinates for ‘center of gravity’ Assumes cost is directly proportional to distance and volume shipped
31.
© 2006 Prentice
Hall, Inc. 8 – 31 Center-of-Gravity Method x - coordinate = ∑dixQi ∑Qi i i ∑diyQi ∑Qi i i y - coordinate = where dix = x-coordinate of location i diy = y-coordinate of location i Qi = Quantity of goods moved to or from location i
32.
© 2006 Prentice
Hall, Inc. 8 – 32 Center-of-Gravity Method North-South East-West 120 – 90 – 60 – 30 – – | | | | | | 30 60 90 120 150 Arbitrary origin Chicago (30, 120) New York (130, 130) Pittsburgh (90, 110) Atlanta (60, 40)
33.
© 2006 Prentice
Hall, Inc. 8 – 33 Center-of-Gravity Method Number of Containers Store Location Shipped per Month Chicago (30, 120) 2,000 Pittsburgh (90, 110) 1,000 New York (130, 130) 1,000 Atlanta (60, 40) 2,000 x-coordinate = (30)(2000) + (90)(1000) + (130)(1000) + (60)(2000) 2000 + 1000 + 1000 + 2000 = 66.7 y-coordinate = (120)(2000) + (110)(1000) + (130)(1000) + (40)(2000) 2000 + 1000 + 1000 + 2000 = 93.3
34.
© 2006 Prentice
Hall, Inc. 8 – 34 Center-of-Gravity Method North-South East-West 120 – 90 – 60 – 30 – – | | | | | | 30 60 90 120 150 Arbitrary origin Chicago (30, 120) New York (130, 130) Pittsburgh (90, 110) Atlanta (60, 40) Center of gravity (66.7, 93.3) +
35.
© 2006 Prentice
Hall, Inc. 8 – 35 Transportation Model Finds amount to be shipped from several points of supply to several points of demand Solution will minimize total production and shipping costs A special class of linear programming problems
36.
© 2006 Prentice
Hall, Inc. 8 – 36 Worldwide Distribution of Volkswagens and Parts Figure 8.4
37.
© 2006 Prentice
Hall, Inc. 8 – 37 Service Location Strategy 1. Purchasing power of customer-drawing area 2. Service and image compatibility with demographics of the customer-drawing area 3. Competition in the area 4. Quality of the competition 5. Uniqueness of the firm’s and competitors’ locations 6. Physical qualities of facilities and neighboring businesses 7. Operating policies of the firm 8. Quality of management
38.
© 2006 Prentice
Hall, Inc. 8 – 38 Location Strategies Service/Retail/Professional Location Goods-Producing Location Revenue Focus Cost Focus Volume/revenue Drawing area; purchasing power Competition; advertising/pricing Physical quality Parking/access; security/lighting; appearance/image Cost determinants Rent Management caliber Operations policies (hours, wage rates) Tangible costs Transportation cost of raw material Shipment cost of finished goods Energy and utility cost; labor; raw material; taxes, and so on Intangible and future costs Attitude toward union Quality of life Education expenditures by state Quality of state and local government Table 8.4
39.
© 2006 Prentice
Hall, Inc. 8 – 39 Location Strategies Service/Retail/Professional Location Goods-Producing Location Techniques Techniques Regression models to determine importance of various factors Factor-rating method Traffic counts Demographic analysis of drawing area Purchasing power analysis of area Center-of-gravity method Geographic information systems Transportation methods Factor-rating method Locational break-even analysis Crossover charts Table 8.4
40.
© 2006 Prentice
Hall, Inc. 8 – 40 Location Strategies Service/Retail/Professional Location Goods-Producing Location Assumptions Assumptions Location is a major determinant of revenue High customer-contact issues are critical Costs are relatively constant for a given area; therefore, the revenue function is critical Location is a major determinant of cost Most major costs can be identified explicitly for each site Low customer contact allows focus on the identifiable costs Intangible costs can be evaluated Table 8.4
41.
© 2006 Prentice
Hall, Inc. 8 – 41 How Hotel Chains Select Sites Location is a strategically important decision in the hospitality industry La Quinta started with 35 independent variables and worked to refine a regression model to predict profitability The final model had only four variables Price of the inn Median income levels State population per inn Location of nearby colleges r2 = .51 51% of the profitability is predicted by just these four variables!
42.
© 2006 Prentice
Hall, Inc. 8 – 42 Telemarketing/Internet Industries Require neither face-to-face contact nor movement of materials Have very broad location options Traditional variables are no longer relevant Cost and availability of labor may drive location decisions
43.
© 2006 Prentice
Hall, Inc. 8 – 43 Geographic Information Systems (GIS) New tool to help in location analysis Enables more complex demographic analysis Available data bases include Detailed census data Detailed maps Utilities Geographic features Locations of major services
44.
© 2006 Prentice
Hall, Inc. 8 – 44 Geographic Information Systems (GIS)
Download now