Card Set Information
Location Planning Operations
Location Planning Q3
Drivers for Location Planning?
1. Viewed as a marketing/operations strategy
2. Growth in demand
3. Depletion of basic inputs
4. A shift in the market
5. Closts of doing business at a particular location
Why are location decisions so important?
They are long term committments with large costs.
What are the objectives of Location Decisions?
1. Profit Potential
2. Balance cost and customer service
What options are there for Location Decisions?
1. Expand existing facilities
2. Add new facilities
Give two short-term reasons NOT to make a location decision?
1. wage rates
2. exchange rates
Best approach to location decision?
Consider how location impacts development of long-term capabilities.
Six Step Process for Location Decision?
1. Identify sources of value
2. Identify capabilities needed (for a competitive advantage)
3. Assess implications of location decision on development of capabilites (quality coils)
4. Identify potential locations
5. Evaluate locations
6. Develop strategy for building network of locations
Levels of location decisions?
2. Region within a country
3. Community / Locality
4. Specific site
Factors affecting Regional & Country Level Decision?
1. Minimize transportation costs and provide acceptable service
2. Proper supply of labor
3. Wage rates
5. Regional taxes, regulations, trade barriers
6. Political stability
Factors affecting Community Level Location Decision?
1. Availability of acceptable sites
2. Local government attitudes
3. Regulations, zoning, taxes, labor supply
4. Tax incentives
5. Community's attitude
Factors affecting Site Level Decision?
2. Adjoining land
6. Availability of water, sewers, utilities
7. Development costs
List the considerations of manufacturing/distribution for location planning?
1. Cost focus
2. Transportation modes/costs
3. Energy availability costs
4. Labor cost/availability/skills
5. Building/leasing costs
List the considerations Service/Retail for location planning?
1. Revenue focus
2. Demographics, age, income, etc.
3. Population/drawing area
5. Traffic volume/patterns
6. Customer access/parking
Cost volume profit analysis in evaluating locations?
1. Determine fixed and variable costs
2. Plot total costs
3. Determine lowest total costs
Cost Volume Profit Analysis:
Lower volumes are best with lower _______Cost
Higher volumes are best wtih lower _________Cost
Three methods for evaluation Locations?
1. Transportation Model
-Decision based on movement costs of raw materials of finished goods
2. Factor Rating (most popular)
- Decision based on quantitative and qualitative inputs
3. Center of Gravity Method
Decision based on minimum distribution costs
Using the Factor Rating Method for Location decisions, the best alternative is the one with?
Higher composit score