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CHA= PTER 11 TN:  FACILITY LOCATION PRIVATE

 

Loc= ation decisions are strategic because:

 

=      1.  Long Term Consequences.=

=      2.  Impact on Costs and Revenues<= /o:p>

 

OBJECTIVE: Select the best location given your objectives and constraints.<= /b>

 

OPTIONS:

=      1. Existing--->Bigger

 

=      2. Existing + New

 

=      3. Existing--->New

 

=      4. Existing (Unchanged).

 

 

GENERAL PROCEDURE FOR LOCATION DECISIONS

 

1. Determine Criteria for Evalua= tion (Maximize, Minimize, etc.).

 

2. Identify Important Factors influencing decision like potential impact on sales (thus revenues), impact= on cost (total cost), company image, regulations, management preferences, competitive pressures/opportunities.

 

3. Develop Alternatives:

 

     a. Identify Country

 

     b. Identify Region

 

     c. Identify Community

 

     d. Identify Site

 

4. Evaluate Alternatives:

 

     a. Quantitative approaches.

 

     b. Qualitative approaches.

 

5. Select Alternative(s).

 

6. Implement Alternative(s)

 

7. Follow up for control.

 

 

WHAT COUNTRY?

 

=      1. Market potential

 

=      2. Political Climate

 

=      3. Workforce

 

=      4. Cultural factors

 

=      5. Access to resources

 

=      6. Costs

 

=      7. Infrastructure

 

=      8. Climate

 

=      9. Overall impact on company (sales in other countries and image).<= /b>

 

WHAT REGION OF THE COUNTRY?

 

=      1. Proximity to markets

 

     2. Relationship to other facilities

 

=      3. Access to material and vendors

 

=      4. Transportation and Communication facilities

 

=      5. Concentration of skilled labor, work ethic, unions.

 

=      6. Competition

 

=      7. Climate

 

=      8. Provision for waste disposal and environmental concerns.

 

 

WHAT COMMUNITY?

 

=      1. Labor supply and demand.

 

=      2. Managerial Preferences

 

=      3. Community facilities and living conditions (quality of life).

 

=      4. Laws and Taxes

 

=      5. Availability of suitable sites.

 

=      6. Attitudes.

 

=      7. Inducements (tax incentives, etc.)

 

=      8. Transportation and communication facilities

 

=      9. Provision for waste disposal and environmental concerns.

 

WHAT SITE?

 

=      1. Size of site

 

=      2. Physical characteristics (drainage, soil conditions, etc.)

 

=      3. Purchase cost + Development costs

 

=      4. Utilities

 

=      5. Transportation facilities

 

=      6. Provision for waste disposal and environmental concerns.

 

=      7. Amenities (parking, public transportation access, etc.)

 

=      8. Type of locale (city/industrial park/rural)

 

 

EVALUATING LOCATION ALTERNATIVES: tools and approaches.

 

=      1. Location Cost-Volume Analysis

 

=      2. Centroid Method

 

=      3. Transportation Model

 

=      4. Factor Rating

 

 = ;    5. GIS based systems

 

=      6. Simulation

 

 

LOCATION COST-VOLUME ANALYSIS

 

=      1. Determine FC and VC associated with each alternative.

 

=      2. Plot TC line for each on same graph.

 

=      3. Determine which has lowest TC for expected level of output.<= /p>

 

=      4. Use data in decision making process.

 

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