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Topic-7

Topic-7. Facility Location. Facility Location. Basic questions: How many facility to be located? (single vs. multiple) What is demand nature? (deterministic vs. stochastic) Where to locate/expand/relocate?. Facility Location (II). Decision level: Macro-level: What region/country/city?

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Topic-7

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  1. Topic-7 Facility Location

  2. Facility Location • Basic questions: • How many facility to be located? (single vs. multiple) • What is demand nature? (deterministic vs. stochastic) • Where to locate/expand/relocate?

  3. Facility Location (II) • Decision level: • Macro-level: What region/country/city? • Micro-level: What site/depot/..? • Facility nature: 1. Manufacturing 2. Service

  4. Factors in Location Decision • A. Macro vs. Micro: 1.Macro-level: economical/political/demand potential/ culture/government regulations /resource availability/…. 2.Micro-level: competition/transportation/demand growth/ Local tax/cost of land or building/labor availability/…

  5. The Facility Location Decision The Location Decision Sequence Factors affecting decisions:

  6. Factors in Location Decision (II) • B: manufacturing vs. service: 1.manufacturing : more concern on Cost/distribution /RM supply/ 2. service: primary concern not cost/nearness to customers/ potential sales/ accessibility/ • C: tangible vs. intangible: 1.tangible: transportation/labor/energy /taxes/ construction/… 2.intangible: legal/pollution law/community attitude

  7. Some Reasons the Facility Location Decision Arises 1.Changes in the market 2.Expansion/contraction 3.Geographic shift 4. Changes in inputs/labor skills and/or costs 5. Materials costs and/or availability/utility costs 6. Changes in the environment 7. Regulations and laws 8. Attitude of the community 9. Changes in technology 10……more

  8. Qualitative Factors in Location Decisions Housing; Climate; Community activities; Education and health services; Recreation; Churches; Union activities; Community attitudes (Quality of Life)

  9. When companies look at various sites to locate or relocate, quality of life is one of the factors considered. Of the issues included in the quality of life, a 2002 survey ranked these issues as follows: Low crime rates, health facilities, rating of public schools, housing availability, housing cost, colleges and universities in the area, cultural opportunities, climate Quality of Life

  10. Location Selection Examples • Fast food restaurant • Textile plant • Aluminum can plant • Paper plant • Teller machine • ……………..

  11. Location Decision Techniques • Location decision problem are in general very difficult and complex, due to the impacts of consequence , the number of variables and factors considered and the degree of uncertainty involved. • Qualitative techniques: (subjective) * Factor rating * Gravity model (“quick and dirty” method)

  12. Location Decision Techniques (II) • Quantitative techniques: (objective) 1. Optimization: cost analysis/mathematical programming (LP/IP/GP)/transportation model/…….. 2. Non-optimization: heuristics/computer simulation 3. AHP Model Non-optimization methods are widely used in real world problems.

  13. Factor-Rating System Rating System: excellent (10), very good(8), good(6), fair(4), poor(2)

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