chapter8

chapter8 - 8-1Operations Operations...

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Unformatted text preview: 8-1Operations Operations ManagementManagementLocation StrategiesLocation StrategiesChapter 8Chapter 88-2OutlineOutlineStrategic 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 ExpressInvented 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 DecisionsLong-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 DecisionsCostfocus.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 DecisionsRevenuefocus.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/CustomersGovernment 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 MaterialsBy 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 DecisionGovernment rules, attitudes, stability, incentives.Labor availability, attitudes, productivity, cost.Availability of supplies, communications, energy....
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chapter8 - 8-1Operations Operations...

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