chapter8

chapter8 - 8-1Operations Operations StrategiesLocation...

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Unformatted text preview: 8-1Operations Operations ManagementManagementLocation StrategiesLocation StrategiesChapter 8Chapter 88-2OutlineOutline♦Strategic Importance of Location.♦Factors That Affect Location Decisions.♦Methods of Evaluating Location Alternatives.♦The Factor-Rating Method.♦Locational Break-Even Analysis.♦Center-of-Gravity Method.♦The Transportation Model.♦Integer Programming.♦Service Location Strategy.8-3Federal ExpressFederal Express♦“Invented” overnight delivery.♦Uses “hub” concept.♦Enables service to more locations with fewer aircraft.♦Concentrates package flows to exploit transportation economies of scale.♦Enables sorting economies of scale.♦Key issue: Where to locate hubs??8-4Location DecisionsLocation Decisions♦Long-term strategic decisions.♦Usually expensive & difficult to reverse.♦Affect fixed & variable costs.♦Transportation cost is up to 25% of product price.♦Other costs: Taxes, wages, rent etc.♦Objective: Maximize benefit of location to firm.8-5Industrial Location DecisionsIndustrial Location Decisions♦Costfocus.♦Revenue varies little between locations.♦Production separate from consumption.♦Location is major cost factor.♦Costs vary greatly between locations. ♦Shipping costs.♦Production costs (e.g., labor).8-6Service Location DecisionsService Location Decisions♦Revenuefocus.♦Costs vary little between market areas.♦Production/service together with consumption.♦Location is a major revenue factor.♦Affects amount of customer contact.♦Affects volume of business.8-7Organizations That Locate Close Organizations That Locate Close to Markets/Customersto Markets/Customers♦Government agencies.♦Police & fire departments, post offices, public libraries.♦Retail sales and Services.♦Fast food restaurants, supermarkets, gas stations.♦Doctors, lawyers, barbers, banks, auto repair, etc.♦When transporting finished goods is more expensive than transporting materials.♦Bottling plants, breweries.♦Electricity production.8-8Organizations That Locate Close Organizations That Locate Close to Suppliers or Materialsto Suppliers or Materials♦By necessity.♦Mining, fishing, farming, etc.♦When transporting materials is more expensive than transporting finished goods.♦Perishable raw materials.♦Seafood processing.♦Heavy or bulky raw materials.♦Steel producers.♦Processing reduces bulk.♦Lumber mills, paper production.8-9Location Decision SequenceLocation Decision SequenceCountryRegion/CommunitySite8-10Factors Affecting Country DecisionFactors Affecting Country Decision♦Government rules, attitudes, stability, incentives.♦Labor availability, attitudes, productivity, cost.♦Availability of supplies, communications, energy....
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chapter8 - 8-1Operations Operations StrategiesLocation...

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