Location Planning

1

• Location Planning
• and Analysis

2
Need for Location Decisions

• Marketing Strategy
• Growth
• Depletion of Resources
• Cost of Doing Business

3
Nature of Location Decisions

• Importance
• Long term commitment/costs
• Objectives
• Profit potential
• Options
• Expand existing facilities
• Add new facilities
• Move

4
Types of Facilities

• Heavy manufacturing
• Light industry
• Warehouses distribution centers
• Retail service

5
Comparison of Service and Manufacturing
Considerations
6
Location Decision Factors
Regional Factors
Community Considerations
Site-related Factors
Multiple Plant Strategies
7
What makes a region attractive?
8

• Located along state-75 corridor
• Located within 1-day truck delivery of 60 of
  U.S. population
• Has good base of skilled unskilled workers
• Has residents with strong work ethic
• Has a large mass of industry (which spawns other
  businesses)
• Establishes good business incentive programs
• Has other attractive factors quality health
  services, low crime rates, solid infrastructure,
  quality education

What makes Ohio attractive?
9
How important is infrastructure?
10
What makes a community attractive?
?
?
?
?
11

• Right to work laws
• Wooded seclusion, rolling topography
• Good roads utilities
• Favorable tax structure
• Favorable environmental policies
• Solid educational programs
• Attractive incentives

?
What makes Richmond attractive?
12
How much did they offer?
Depart Seattle
Arrive CHICAGO
Dallas? Denver?
13
Trends in Locations

• Foreign producers locating in U.S.
• Made in USA
• Currency fluctuations
• Just-in-time manufacturing techniques
• Microfactories
• Information highway
• Supply-chain management

14
Supply Considerations

• Supplier location
• Supply system
• Centralized/
• decentralized

15
Evaluating Locations

• Cost-volume Analysis
• Determine fixed and variable costs
• Plot total costs
• Determine lowest total costs

16
Evaluating Locations

• Transportation Model
• Decision based on movement costs of raw materials
  or finished goods
• Factor Rating
• Decision based on quantitative and qualitative
  inputs
• Center of Gravity Method
• Decision based on minimum distribution costs

17
Transportation Method of Linear Programming
4
7
7
1
9
4
8
8
4
9
6
5
450
450
18
9.5 ?
7.5 ?
8 ?
What factors are most important?
9 ?
7.5 ?
What weights do they receive?
10 ?
19
Center of Gravity Method
Y
D2
D4
?
?
D3
?
Center of Gravity
N
D1
?
W
E
S
0
X
20
Global Considerations