Ch 9 - Part 2 - Chapter9. FacilityLocation XunLi...

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Chapter 9.  Facility Location Xun Li
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2 Learning Objectives 1) Introduction* 2) Making Location Decisions* 1) The Load-Distance Model* 2) The Basic Center-of-Gravity  Method** 3) The Break-Even Analysis*
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LO1:  Introduction Why most fast-food restaurants locate near one another? Why are the large automakers centered in Michigan? Why do many medical facilities locate near hospitals? Why do retail stores typically locate near each other? The most important 3 factors in the value of a property 1. Location 2. Location 3. Location 3
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4 LO1:  Introduction Facility location is the process of identifying  the best geographic location  for a service or  production facility All other aspects of a business can be designed efficiently,  but if the location is selected poorly the business will have a  harder time being successful Service organizations (e.g. restaurants, movie theaters,  banks) focus on locating near their customers. Manufacturing organizations seek to be close to sources of  transportation, suppliers, and abundant resources (e.g. labor) Other factors
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5 LO1:  Introduction Factors Affecting Location Decisions Proximity to suppliers : Reduce transportation costs of perishable or bulky raw  materials  Proximity to customers : E.g.:  high population areas, perishable goods, close to  JIT partners Proximity to labor : Local wage rates, attitude, unions, availability of  special skills (e.g., silicon valley)
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6 LO1:  Introduction More factors Community considerations: Local community’s attitude toward the facility ( e.g .:  prisons, utility plants, nuclear facility, etc.) Site considerations: Local zoning & taxes, access to utilities, etc. Quality–of-life issues: Climate, cultural attractions, commuting time, etc. Other considerations: Options for future expansion, local competition, etc.
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LO1:  Introduction Globalization The process of locating facilities around the world Potential advantages Inside track to foreign markets, avoid trade barriers, gain access to cheaper  labor, JIT manufacturing Potential disadvantages Political risks may increase, loss of control of proprietary technology, local  infrastructure (roads & utilities) may be inadequate, high inflation, worker skills  and productivity. Other issues Language barriers, different laws & regulations, different business cultures 7
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8
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Review Location decisions are particularly  important because _____________.
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This note was uploaded on 10/17/2011 for the course MNGT 368 taught by Professor Curthurds during the Spring '08 term at Nicholls State.

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Ch 9 - Part 2 - Chapter9. FacilityLocation XunLi...

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