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    362 - 44385 - ELO316 ALO316 - 2014 - 1 - 1 - 1 - Lec.10 (Location Decision)

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    Vivek Dwivedi
    Facility location decisions significantly impact inventory, transportation costs, and customer service. Key considerations include the location of raw materials, markets, labor, and regional factors. Multiple strategies must account for community characteristics, site attributes, and product or market focus. Service and retail locations emphasize revenue factors like demographics, traffic, and convenience over manufacturing costs. Globalization brings benefits like expanded markets but also disadvantages such as higher transportation costs and political risks.

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    362 - 44385 - ELO316 ALO316 - 2014 - 1 - 1 - 1 - Lec.10 (Location Decision)

    Uploaded by

    Vivek Dwivedi
    16 views21 pages
    Facility location decisions significantly impact inventory, transportation costs, and customer service. Key considerations include the location of raw materials, markets, labor, and regional factors. Multiple strategies must account for community characteristics, site attributes, and product or market focus. Service and retail locations emphasize revenue factors like demographics, traffic, and convenience over manufacturing costs. Globalization brings benefits like expanded markets but also disadvantages such as higher transportation costs and political risks.

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    362_44385_ELO316 ALO316_2014_1__1_1_lec.10( location decision)

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    Facility location decisions significantly impact inventory, transportation costs, and customer service. Key considerations include the location of raw materials, markets, labor, and regional factors. Multiple strategies must account for community characteristics, site attributes, and product or market focus. Service and retail locations emphasize revenue factors like demographics, traffic, and convenience over manufacturing costs. Globalization brings benefits like expanded markets but also disadvantages such as higher transportation costs and political risks.

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    © All Rights Reserved
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    16 views21 pages

    362 - 44385 - ELO316 ALO316 - 2014 - 1 - 1 - 1 - Lec.10 (Location Decision)

    Uploaded by

    Vivek Dwivedi
    Facility location decisions significantly impact inventory, transportation costs, and customer service. Key considerations include the location of raw materials, markets, labor, and regional factors. Multiple strategies must account for community characteristics, site attributes, and product or market focus. Service and retail locations emphasize revenue factors like demographics, traffic, and convenience over manufacturing costs. Globalization brings benefits like expanded markets but also disadvantages such as higher transportation costs and political risks.

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    of 21

    Facility Location

    Inventory Transport
    Customer
    Service

    Location
    1
    Importance of Location
    Gives structure to the network
    Significantly affects inventory and
    transportation costs
    Impacts on the level of customer
    service to be achieved

    2
    Facility location decisions
    Decisions
    Number of facilities
    Location of facilities
    Size of facilities
    Facilities
    Plants, ports, vendors, warehouses,
    DC, retail outlets, service centers

    3
    Classifying location
    decisions
    Driving force (critical factor :
    trafic,labor rate, transport cost,
    .etc )
    Number of facilities
    Discrete vs. Continous choices
    Data aggregation
    Time horizon.
    Webers Classification of
    Industries

    CR (2004) Prentice Hall, Inc. 13-6


    Hoovers (1957)
    tapered transportation rates
    minimum costs at either production point or
    market point
    Total Cost

    Outbound transportation cost

    Inbound transportation cost

    Material
    source Market
    Tapered transportation rates force location to the
    source of materials OR to the market 7
    Central questions
    How many warehouses (or other facilities)
    should there be in the logistics network?
    How large should they be, and where should
    they be located?
    Which customers should be assigned to a
    warehouse? Which warehouse should be
    assigned to each plant, vendor or port?
    Which products should be stocked in each
    warehouse? Which products should be
    shipped directly from plants, vendors, or
    ports to customers?

    8
    The need for logistics network
    redesign
    Changing customer service
    requirements
    Shifting locations of customer and/or
    supply markets
    Change in corporate ownership
    Cost pressures
    Competitive capabilities
    Corporate organizational change

    9
    Location Decision Factors
    Community
    Regional Factors Considerations

    Multiple Plant Site-related


    Strategies Factors

    8-10
    Regional Factors
    Location of raw materials
    Location of markets
    Labor factors
    Climate and taxes

    8-11
    Community Considerations
    Quality of life
    Services
    Attitudes
    Taxes
    Environmental regulations
    Utilities
    Developer support

    8-12
    Site Related Factors
    Land
    Transportation
    Environmental
    Legal

    8-13
    Multiple Plant Strategies
    Product plant strategy
    Market area plant strategy
    Process plant strategy

    8-14
    Service and Retail
    Locations
    Manufacturers cost focused
    Service and retail revenue focused
    Traffic volume and convenience most important
    Demographics

    Age

    Income

    Education
    Location, location, location
    Good transportation
    Customer safety

    8-15
    Comparison of Service and
    Manufacturing
    Table 8.2 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
    Trends in Locations
    Foreign producers locating in U.S.
    Made in USA
    Currency fluctuations
    Just-in-time manufacturing techniques
    Microfactories
    Information Technology

    8-17
    Global Locations
    Reasons for globalization
    Benefits
    Disadvantages
    Risks
    Global operations issues

    8-18
    Globalization
    Facilitating Factors
    Trade agreements
    Technology
    Benefits
    Markets
    Cost savings
    Legal and regulatory
    Financial
    8-19
    Globalization
    Disadvantages
    Transportation costs
    Security
    Unskilled labor
    Import restrictions
    Criticisms
    Risks
    Political
    Terrorism
    Legal
    Cultural

    8-20
    Table 8.3

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