Bài giảng Operations Management - Chapter 8 Location Planning and Analysis

Location Planning and AnalysisChapter 8Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.You should be able to:LO 8.1 Identify some of the main reasons organizations need to make location decisionsLO 8.2 Explain why location decisions are importantLO 8.3 Discuss the options that are available for location decisionsLO 8.4 Give examples of the major factors that affect location decisionsLO 8.5 Outline the decision process for making these kinds of decisionsLO 8.6 Use the techniques presented to solve typical problemsChapter 8: Learning ObjectivesThe Need for Location DecisionsLocation decisions arise for a variety of reasons:Addition of new facilitiesAs part of a marketing strategy to expand marketsGrowth in demand that cannot be satisfied by expanding existing facilitiesDepletion of basic inputs requires relocationShift in marketsCost of doing business at a particular location makes relocation attractiveLO 8.1Location decisions:Are closely tied to an organization’s strategiesLow-costConvenience to attract market shareEffect capacity and flexibilityRepresent a long-term commitment of resourcesEffect investment requirements, operating costs, revenues, and operationsImpact competitive advantageImportance to supply chainsLocation Decisions:Strategically ImportantLO 8.2Location: OptionsExisting companies generally have four options available in location planning:Expand an existing facilityAdd new locations while retaining existing facilitiesShut down one location and move to anotherDo nothingLO 8.3Global Location: BenefitsA wide range of benefits have accrued to organizations that have globalized operations:MarketsCost savingsLegal and regulatoryFinancialOtherLO 8.4There are a number of disadvantages that may arise when locating globally:Transportation costsSecurity costsUnskilled laborImport restrictionsCriticism for locating out-of-countryGlobal Location: DisadvantagesLO 8.4Global Location: RisksOrganizations locating globally should be aware of potential risk factors related to:Political instability and unrestTerrorismEconomic instabilityLegal regulationEthical considerationsCultural differencesLO 8.4Steps:Decide on the criteria to use for evaluating location alternativesIdentify important factors, such as location of markets or raw materialsDevelop location alternativesIdentify the country or countries for locationIdentify the general region for locationIdentify a small number of community alternativesIdentify the site alternatives among the community alternativesEvaluate the alternatives and make a decisionLocation Decision: General ProcedureLO 8.5Locational Cost-Profit-Volume AnalysisTechnique for evaluating location choices in economic termsSteps:Determine the fixed and variable costs for each alternativePlot the total-cost lines for all alternatives on the same graphDetermine the location that will have the lowest total cost (or highest profit) for the expected level of outputLocational Cost-Profit-Volume AnalysisLO 8.6For a cost analysis, compute the total cost for each alternative location:Locational Cost-Profit-Volume AnalysisLO 8.6Factor RatingGeneral approach to evaluating locations that includes quantitative and qualitative inputsProcedure:Determine which factors are relevantAssign a weight to each factor that indicates its relative importance compared with all other factors.Weights typically sum to 1.00Decide on a common scale for all factors, and set a minimum acceptable score if necessaryScore each location alternativeMultiply the factor weight by the score for each factor, and sum the results for each location alternativeChoose the alternative that has the highest composite score, unless it fails to meet the minimum acceptable scoreFactor RatingLO 8.6Center of Gravity MethodMethod for locating a distribution center that minimizes distribution costsTreats distribution costs as a linear function of the distance and the quantity shippedThe quantity to be shipped to each destination is assumed to be fixedThe method includes the use of a map that shows the locations of destinationsThe map must be accurate and drawn to scaleA coordinate system is overlaid on the map to determine relative locationsCenter of Gravity MethodLO 8.6If quantities to be shipped to every location are equal, you can obtain the coordinates of the center of gravity by finding the average of the x-coordinates and the average of the y-coordinatesCenter of Gravity MethodLO 8.6When the quantities to be shipped to every location are unequal, you can obtain the coordinates of the center of gravity by finding the weighted average of the x-coordinates and the average of the y-coordinatesCenter of Gravity MethodLO 8.6