week 6 Flashcards
(26 cards)
is a critical process for organizations aiming to optimize their operations and achieve strategic goals.
Location planning and analysis
The primary goal is to select the optimal location that maximizes feasibility, economic efficiency, and future sustainability while meeting customer requirements
Objective
Various factors must be evaluated, including fixed and variable costs, total costs, production levels, and strategic objectives
Factors to Consider
Common methods include cost-volume-profit (CVP) analysis, center of gravity method, and multi-criteria decision analysis
Methods and Tools
Steps in Location Planning and Analysis
Identify the fixed and variable costs associated with each potential location
Determine Fixed and Variable Costs
Draw the total cost lines for each location on a single graph to visualize cost differences
Plot Total Cost Lines
Determine which location has the lowest total cost at various production levels
Analyze Costs at Expected Production Levels
Evaluate strategic factors such as market access, transportation networks, and future growth potential
Consider Strategic Factors
-Utilize tools like the center of gravity method to minimize total network costs and optimize service areas.
-It considers the locations of markets, volumes shipped to each market, and shipping distances/costs.
Use Analytical Tools
is a structured process that helps decision-makers choose the best option from multiple choices with conflicting criteria.
It’s similar to a cost-benefit analysis, but it considers many criteria instead of just cost
Conduct Multi-Criteria Analysis
is used in many fields, including business, government, engineering, science, and everyday life.
MCDA
involves selecting the optimal geographical area to establish a facility such as a plant, factory, or manufacturing unit. It is also known as facility location or site selection.
Location decision
: Aim to minimize costs associated with production, transportation, and distribution.
Cost Reduction
Maximize the potential revenue from the chosen location
Revenue Potential
Ensure proximity to raw materials and labor supply.
Resource Availability
Facilitate easy access to customers and markets
Customer Accessibility
Minimizes transportation costs and ensures a steady supply of materials.
Proximity to Raw Materials
Reduces delivery times and costs.
Proximity to Market
Access to multiple modes of ———– (road, rail, waterway) is crucial.
Transportation
Availability of skilled and unskilled labor.
Labor
Continuous supply of power, fuel, and water.
Utilities
: Strategic location can provide a competitive advantage by reducing costs and improving service delivery.
Competition
Favorable government policies and tax benefits can influence location decisions
Regulatory and Policy Issues
Suitable climatic conditions for production processes.
Climate Conditions
