FacilitiesLocation

FacilitiesLocation - Facilities Location The Global...

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Facilities Location The Global Business Game
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Overview The objective is to deliver the firm’s products to its customers from a location or locations that meet certain criteria such as low shipping costs, least damaged goods and/or low manufacturing costs. Three methods presented Factor Rating Model Locational Break-Even Analysis Center-of-Gravity Method The optimal solution, regardless of the method used, will vary depending on the number of countries in play, the costs of creating and maintaining the facilities contemplated, the variable costs associated with each facility and the expected sales volumes associated with each country.
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The Factor Rating Method This is a method that attempts to quantify a number of factors that are more or less subjective but are of importance to the success of the firm. Much of its value lies in bringing out the perceptions and judgements about the company’s situation held by its management group. Procedure Create a list of all factors that have an impact on the firm’s success. Weight each factor so that the total weight sums to 1.00 Rate each Country on a scale of 1-10 on each factor. A rating of 10 denotes a highly favorable condition and a 1 indicates the Country presents a very unfavorable situation for the company. Multiply each Country’s rating by the factor’s weight and sum.
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Decision The United States is the “best” country in which to build or expand its capacity. Mexico is a close second.
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Observations The firm doing this analysis puts great emphasis on the firm’s human resources components. Both the United States and Mexico rate highly due to their proximity to the American television set market. Japan and Germany have very skilled workers but they are very
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This note was uploaded on 03/30/2012 for the course BUS M 490 taught by Professor Robbjense during the Winter '11 term at BYU.

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FacilitiesLocation - Facilities Location The Global...

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