8 1 Location Planning and Analysis CHAPTER 8

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8 -1 Location Planning and Analysis CHAPTER 8 Location Planning and Analysis

8 -1 Location Planning and Analysis CHAPTER 8 Location Planning and Analysis

8 -2 Location Planning and Analysis Need for Location Decisions · Marketing Strategy ·

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 ·

8 -3 Location Planning and Analysis Nature of Location Decisions · Strategic Importance · · Objectives · · Long term commitment/costs Impact on investments, revenues, and operations Supply chains 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 ·

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 Community Considerations Multiple

8 -5 Location Planning and Analysis Location Decision Factors Regional Factors Community Considerations Multiple Plant Strategies Site-related Factors

8 -6 Location Planning and Analysis Regional Factors Location of raw materials · Location

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 ·

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

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

8 -9 Location Planning and Analysis Multiple Plant Strategies Product plant strategy · Market area plant strategy · Process plant strategy ·

8 -10 Location Planning and Analysis Table 8. 2 Comparison of Service and Manufacturing

8 -10 Location Planning and Analysis Table 8. 2 Comparison 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

8 -11 Location Planning and Analysis Trends in Locations · Foreign producers locating in

8 -11 Location Planning and Analysis Trends in Locations · Foreign producers locating in U. S. · · · “Made in USA” Currency fluctuations Just-in-time manufacturing techniques Microfactories Information Technology

8 -12 Location Planning and Analysis Table 8. 3

8 -12 Location Planning and Analysis Table 8. 3

8 -13 Location Planning and Analysis Evaluating Locations · Cost-Profit-Volume Analysis · Determine ·

8 -13 Location Planning and Analysis Evaluating Locations · Cost-Profit-Volume Analysis · Determine · Plot fixed and variable costs total costs · Determine lowest total costs

8 -14 Location Planning and Analysis Location Cost-Volume Analysis · Assumptions Fixed costs are

8 -14 Location Planning and Analysis Location Cost-Volume Analysis · Assumptions Fixed costs are constant · Variable costs are linear · Output can be closely estimated · Only one product involved ·

8 -15 Location Planning and Analysis Example 1: Cost-Volume Analysis Fixed and variable costs

8 -15 Location Planning and Analysis Example 1: Cost-Volume Analysis Fixed and variable costs for four potential locations

8 -16 Location Planning and Analysis Example 1: Solution

8 -16 Location Planning and Analysis Example 1: Solution

8 -17 Location Planning and Analysis Example 1: Solution $(000) 800 700 600 500

8 -17 Location Planning and Analysis Example 1: Solution $(000) 800 700 600 500 400 300 200 100 0 D B C A A Superior C Superior B Superior 0 2 4 6 8 10 Annual Output (000) 12 14 16

8 -18 Location Planning and Analysis Evaluating Locations · Transportation Model · Decision based

8 -18 Location Planning and Analysis Evaluating Locations · Transportation Model · Decision based on movement costs of raw materials or finished goods · Factor Rating · Decision based on quantitative and qualitative inputs · Center of Gravity Method · Decision based on minimum distribution costs

8 -19 Location Planning and Analysis Design/Facility STA 04 Layout choices at St. Alexius

8 -19 Location Planning and Analysis Design/Facility STA 04 Layout choices at St. Alexius Hospital

8 -20 Location Planning and Analysis Flow Charts/Assessment BP 3 Example, Tri State Industries

8 -20 Location Planning and Analysis Flow Charts/Assessment BP 3 Example, Tri State Industries

8 -21 Location Planning and Analysis Team/Visual/System PI 6 Interview at Mc. Donalds

8 -21 Location Planning and Analysis Team/Visual/System PI 6 Interview at Mc. Donalds