Chapter08 - MSB 354 8 Location Planning and Analysis 8-1...

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MSB 354 8 Location Planning and Analysis 8-1
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System Design Area Product and Service Design Strategic Capacity Planning Process Selection Facility Layout Design of Work Systems Location Planning and Analysis Decision making area with Strategic Significance Entire business organization , ability to achieve its mission Long-term effects to an organization , even to supply chain 8-2
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8-3 Learning Objectives List some of the main reasons organizations must make location decisions. Explain why location decisions are important . Discuss the options that are available for location decisions. Describe some of the major factors that affect location decisions. Outline the decision process for making these kinds of decisions. Use the techniques presented to solve typical problems.
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Introduction Facility Location refers to the location of a service or manufacturing facility with respect to customers, suppliers and other existing facilities such that it allows the company to gain a competitive and/or strategic edge. In making a location decision, both tangible costs such as the cost of operating the facility, cost of land (if it applies), cost of labor, taxes, utilities and the cost of inbound and outbound transportation , and intangible costs such as availability of qualified labor, and labor climate must be considered. Since location decision usually involves making a large capital investment, it not only impacts the firm’s ability to compete but also has long-term strategic implications . In making the location decision, we should consider issues related to marketing, production, transportation and other relevant costs as well as the strategy of the organization. T he importance of various factors in relation to the location decision will vary between service and manufacturing organizations but also from Industry to industry as well . 8-4
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8-5 Need for Location Decisions Marketing Strategy : banks, fast-food chains, retail stores Cost of Doing Business: depletion of basic inputs such as fishing, logging, mining, and petroleum ops Growth in Demand : expansion addition of new location Environmental changes: Dep, infrastructure, legal, social, cultural ** Major sources of location decisions - Input, Process (water/energy/humidity/noise), Environments
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8-6 Nature of Location Decisions Strategic importance of location decisions Long-term commitment of huge amount of resources (Capital) Constraints ( social, legal, political restrictions) are fixed Competitive advantage in terms of cost, market, supply chains Objectives of location decisions Potential Profit (profit-oriented private organizations), Balance between cost and the level of service (public organization) No single location may be better than the others , too many options .
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Chapter08 - MSB 354 8 Location Planning and Analysis 8-1...

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