location analysis by ranjeet kumar
DESCRIPTION
location analysis logistic managementTRANSCRIPT
8-1 Location Planning and Analysis
CHAPTER5
Location Planning and Analysis
8-2 Location Planning and Analysis
Need for Location Decisions
Marketing Strategy
Cost of Doing Business
Growth
Depletion of Resources
8-3 Location Planning and Analysis
Nature of Location Decisions
Strategic Importance Long term commitment/costs Impact on investments, revenues, and operations Supply chains
Objectives Profit potential No single location may be better than others Identify several locations from which to choose
Options Expand existing facilities Add new facilities Move
8-4 Location Planning and Analysis
Making Location Decisions Decide on the criteria
Identify the important factors Develop location alternatives Evaluate the alternatives Make selection
8-5 Location Planning and Analysis
Location Decision Factors
Regional Factors
Site-related Factors
Multiple Plant Strategies
Community Considerations
8-6 Location Planning and Analysis
Regional Factors
Location of raw materials Location of markets Labor factors Climate and taxes
8-7 Location Planning and Analysis
Community Considerations
Quality of life Services Attitudes Taxes Environmental regulations Utilities Developer support
8-8 Location Planning and Analysis
Site Related Factors
Land Transportation Environmental Legal
8-9 Location Planning and Analysis
Multiple Plant Strategies
Product plant strategy Market area plant strategy Process plant strategy
8-10 Location Planning and AnalysisComparison of Service and Manufacturing Considerations
Manufacturing/Distribution Service/Retail
Cost Focus Revenue focus
Transportation modes/costs Demographics: age,income,etc
Energy availability, costs Population/drawing area
Labor cost/availability/skills Competition
Building/leasing costs Traffic volume/patterns
Customer access/parking
Table 8.2
8-11 Location Planning and Analysis
Trends in Locations
Foreign producers locating in INDIA“Made in INDIA”Currency fluctuations
Just-in-time manufacturing techniques Microfactories Information Technology
8-12 Location Planning and Analysis
ForeignGovernment
a. Policies on foreign ownership of production facilitiesLocal ContentImport restrictionsCurrency restrictionsEnvironmental regulationsLocal product standards
b. Stability issuesCulturalDifferences
Living circumstances for foreign workers / dependentsReligious holidays/traditions
CustomerPreferences
Possible buy locally sentiment
Labor Level of training and education of workersWork practicesPossible regulations limiting number of foreign employeesLanguage differences
Resources Availability and quality of raw materials, energy,transportation
Table 8.3
8-13 Location Planning and Analysis
Evaluating Locations
Cost-Profit-Volume AnalysisDetermine fixed and variable costs
Plot total costs
Determine lowest total costs
8-14 Location Planning and Analysis
Location Cost-Volume Analysis
AssumptionsFixed costs are constantVariable costs are linearOutput can be closely estimatedOnly one product involved
8-15 Location Planning and Analysis
Example 1: Cost-Volume Analysis
Fixed and variable costs for four potential locations
L o c a t i o n F i x e dC o s t
V a r i a b l eC o s t
ABCD
$ 2 5 0 , 0 0 01 0 0 , 0 0 01 5 0 , 0 0 02 0 0 , 0 0 0
$ 1 13 02 03 5
8-16 Location Planning and Analysis
Example 1: Solution
F i x e dC o s t s
V a r i a b l eC o s t s
T o t a lC o s t s
ABCD
$ 2 5 0 , 0 0 01 0 0 , 0 0 01 5 0 , 0 0 02 0 0 , 0 0 0
$ 1 1 ( 1 0 , 0 0 0 )3 0 ( 1 0 , 0 0 0 )2 0 ( 1 0 , 0 0 0 )3 5 ( 1 0 , 0 0 0 )
$ 3 6 0 , 0 0 04 0 0 , 0 0 03 5 0 , 0 0 05 5 0 , 0 0 0
8-17 Location Planning and Analysis
Example 1: Solution
800700600500400300200100
0
Annual Output (000)
$(000)
8 10 12 14 166420
A
BC
B SuperiorC Superior
A Superior
D
8-18 Location Planning and Analysis
Evaluating Locations
Transportation ModelDecision based on movement costs of raw
materials or finished goods
Factor RatingDecision based on quantitative and qualitative
inputs
Center of Gravity MethodDecision based on minimum distribution costs
8-19 Location Planning and Analysis
Design/Facility
STA04
Layout choices at St. Alexius Hospital
8-20 Location Planning and Analysis
Flow Charts/Assessment
BP3
Example, Tri State Industries
8-21 Location Planning and Analysis
Team/Visual/System
PI6
Interview at McDonalds