F08 Facility Location

# F08 Facility Location - Facility Location Facility Location...

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Unformatted text preview: Facility Location Facility Location 8-2 Network Design (redesign) Changing Customer Service Requirements Shifting Locations of Customer and/or Supply Material Change in Ownership Cost Pressures Competitive Capabilities Corporate Organizational Change Natural Resources &amp; Suppliers Weight-losing products Weight-gaining products 8-3 Network Design (redesign) Population Labor and markets Taxes and Subsidies Operational Costs Transportation Blanket Rates Tapering Rates pulls the location to the raw materials or markets Other FTZ 8-4 Gravity Models (Grid System) Facility or Plant Location based on least-cost position for moving inbound materials and outbound product within a geographic grid. Idea is to find the geographic point where transportation costs are minimized. Tends to pull the location of a facility toward the higher rated areas. 8-5 The Grid Technique (Gravity Models) Summary Advantages Simple Starting point for further analysis Can accommodate what if questions Limitations Static approach Linear rates No consideration of topography Does not consider direction of movement 8-6 Gravity Model Formula Most Complex Form C= center of mass (ton mile or \$ / ton mile) Di = distance from point 0 to location of finished good i. di = distance from point 0 to location of material i. Mi = weight of finished goods sold in market Si = weight of raw material purchased at source Ri = finished good transportation rate / distance of finished good I ri = raw material rate/ distance unit of raw material i + + = m m i i i i m m i i i i i i y x M R S r M D R S d r C 1 1 1 1 ) , ( 8-7 What if we just had this? C= center of mass (ton mile or \$ / ton mile) Di = distance from point 0 to location of finished good i....
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## This note was uploaded on 03/05/2010 for the course LSCM 360 taught by Professor Martins during the Fall '08 term at Iowa State.

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F08 Facility Location - Facility Location Facility Location...

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