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Location Planning and Analysis

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Australian forester finished ravaging their forests and now in BC. ... Ernie, ore and water. Location of Markets. Locate near customers ... – PowerPoint PPT presentation

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Title: Location Planning and Analysis


1
Chapter 8
  • Location Planning and Analysis

2
Need for Location Decisions
  • Marketing Strategy Penetration
  • Auto Industry
  • Developing counties require it. (China / Ont.
    Hydro)
  • Growth
  • Depletion of Resources
  • Australian forester finished ravaging their
    forests and now in BC.
  • Fish stocks off east and west coasts
  • Cost of Doing Business
  • Labour / taxes too high

3
Nature of Location Decisions
  • Importance
  • Long term commitment/costs
  • Objectives
  • Profit potential
  • Dylex
  • Options
  • Expand existing facilities- SBE -gt Segal building
  • Add new facilities Brad wafer production
  • Move eg. Local Catholic school closings

4
Location Decision Factors
Community Considerations
Regional Factors
Site-related Factors
Multiple Plant Strategies
5
Location Decision Factors
Regional Factors
  • Location of raw material
  • Ernie, ore and water.
  • Location of Markets
  • Locate near customers
  • Eg.Pawn and camera shops, auto-malls
  • Labour Factors
  • Why would you locate in Waterloo?
  • Does lower wages in countries mean labour
    savings?
  • Banking in Brazil.
  • Sending BU100 text to Taiwan for printing
  • Quality considerations
  • USR modems
  • Tolerances of parts in Mexico
  • Supplier location (JIT)

Community Considerations
Local taxes, housing, education, snowmobiling etc.
6
Location Decision Factors
Site-related Factors
  • Land costs parking, sewers, expansion
  • Transportation to site
  • Industrial parks (already set up)
  • Local incentives e.g., for doctors
  • Entrepreneurs locate near home

Multiple Plant Strategies
  • Product plant strategy
  • Market area plant strategy
  • Process plant strategy

7
Trends in Locations
  • Foreign producers locating in North America
  • Made in North America
  • Currency fluctuations
  • Just-in-time manufacturing techniques
  • Domestic producers moving back to North America
  • Information highway
  • Software production
  • located near knowledge
  • - Geoff testing firewalls

8
Criteria to make location Decision
  • E.G. Dylex

9
Evaluating Locations
  • Based on Demographics
  • Dylex model for its XX XY stores
  • Cost-volume Analysis
  • Determine fixed and variable costs
  • Plot total costs
  • Determine lowest total costs
  • Transportation Model
  • Decision based on movement costs of raw materials
    or finished goods.
  • Business 275.
  • Factor Rating
  • Decision based on quantitative and qualitative
    inputs.
  • Center of Gravity Method
  • Decision based on minimum distribution costs.

10
Example 1 Cost-Volume Analysis
  • Fixed and variable costs for four potential
    locations

Calculate and Plot the TC lines, eg. For Location
A TC 11Q 250,000
11
Example 1 Solution
12
Example 1 Solution
(000)
800 700 600 500 400 300 200 100 0
D
B
C
A
A Superior
C Superior
B Superior
8
10
12
14
16
6
4
2
0
Annual Output (000)
13
Evaluating Locations
  • Transportation Model
  • Decision based on movement costs of raw materials
    or finished goods.
  • Business 275.
  • Factor Rating
  • Decision based on quantitative and qualitative
    inputs.
  • Center of Gravity Method
  • Decision based on minimum distribution costs.

14
Center of gravity method
x
15
In Class Example 8-14
16
Factor Rating Method
17
In Class Example 8-9
18
Table 8-2
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