Facility location models ppt @ DOMS
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Transcript of Facility location models ppt @ DOMS
Facility Location Models
Lecture Outline
• Types of Facilities
• Site Selection: Where to Locate
• Global Supply Chain Factors
• Location Analysis Techniques
Supplement 7-2
Types of Facilities
• Heavy-manufacturing facilities• large, require a lot of space, and are expensive
• Light-industry facilities• smaller, cleaner plants and usually less costly
• Retail and service facilities• smallest and least costly
Supplement 7-3
Factors in Heavy Manufacturing Location
Supplement 7-4
• Construction costs• Land costs• Raw material & finished goods shipment modes• Proximity to raw materials• Utilities• Means of waste disposal• Labor availability
Factors in Light Industry Location
• Land costs
• Transportation costs
• Proximity to markets• depending on delivery requirements including
frequency of delivery required by customer
Supplement 7-5
Factors in Retail Location
Supplement 7-6
• Proximity to customers• Location is everything
Site Selection: Where to Locate
Infrequent but important• being “in the right place at the
right time” Must consider other factors,
especially financial considerations
Location decisions made more often for service operations than manufacturing facilities
Location criteria for service• access to customers
Location criteria for manufacturing facility• nature of labor force• labor costs• proximity to suppliers and
markets• distribution and transportation
costs• energy availability and cost• community infrastructure• quality of life in community • government regulations and taxes
Copyright 2011 John Wiley & Sons, Inc. Supplement 7-7
Global Supply Chain Factors
• Government stability
• Government regulations
• Political & economic systems
• Economic stability & growth
• Exchange rates
• Culture
• Export/import regulations, duties & tariffs
• Raw material availability
• Climate • Number & proximity of
suppliers• Transportation & distribution
system• Labor cost & education• Available technology• Commercial travel• Technical expertise• Cross-border trade
regulations• Group trade agreements
Supplement 7-8
Regional and Community Location Factors in U.S.
Labor (availability, education, cost, and unions)
Proximity of customers Number of customers Construction/leasing costs Land cost
Modes and quality of transportation
Transportation costs Community government
Local business regulations Government services (e.g.,
Chamber of Commerce)
Supplement 7-9
Regional and Community Location Factors in U.S.
Business climate Community services Incentive packages Government regulations Environmental regs. Raw material availability Commercial travel Climate
Infrastructure (road & utilities)
Quality of life Taxes Availability of sites Financial services Community inducements Proximity of suppliers Education system
Supplement 7-10
Location Incentives
Supplement 7-11
• Tax credits• Relaxed government regulation• Job training• Infrastructure improvement• Money
Geographic Information Systems (GIS)
• Computerized system for storing, managing, creating, analyzing, integrating, and digitally displaying geographic, i.e., spatial, data
• Specifically used for site selection
• Enables users to integrate large quantities of information about potential sites and analyze these data with many different, powerful analytical tools
Supplement 7-12
GIS Diagram
Supplement 7-13
Location Analysis Techniques
Supplement 7-14
• Location factor rating
• Center-of-gravity
• Load-distance
Location Factor Rating
Supplement 7-15
• Identify important factors• Weight factors (0.00 - 1.00)• Subjectively score each factor (0 - 100)• Sum weighted scores
Location Factor Rating
Supplement 7-16
Labor pool and climateProximity to suppliersWage ratesCommunity environmentProximity to customersShipping modesAir service
LOCATION FACTOR
.30
.20
.15
.15
.10
.05
.05
WEIGHT
80100
6075658550
Site 1
65919580909265
Site 2
90757280956590
Site 3
SCORES (0 TO 100)
Weighted Score for “Labor pool and climate” for Site 1 = (0.30)(80) = 24
Location Factor Rating
Supplement 7-17
24.0020.00
9.0011.25
6.504.252.50
77.50
Site 1
19.5018.2014.2512.00
9.004.603.25
80.80
Site 2
27.0015.0010.8012.00
9.503.254.50
82.05
Site 3
WEIGHTED SCORES
Site 3 has the highest factor rating
Location Factor Rating With Excel
Supplement 7-18
Location Factor Rating With OM Tools
Supplement 7-19
Center-of-Gravity Technique
Supplement 7-20
• Locate facility at center of movement in geographic area
• Based on weight and distance traveled; establishes grid-map of area
• Identify coordinates and weights shipped for each location
Grid-Map Coordinates
Supplement 7-21
where,x, y =coordinates of new facility at center of gravityxi, yi =coordinates of existing facility iWi =annual weight shipped from facility i
n
Wi
i = 1
xiWi
i = 1
n
x =
n
Wi
i = 1
yiWi
i = 1
n
y =
x1 x2 x3 x
y2
y
y1
y3
1 (x1, y1), W1
2 (x2, y2), W2
3 (x3, y3), W3
Center-of-Gravity Technique
Supplement 7-22
A B C D
x 200 100 250 500y 200 500 600 300W 75 105 135 60
y
700
500
600
400
300
200
100
0 x700500 600400300200100
A
B
C
D
(135)
(105)
(75)
(60)
Miles
Mile
s
Center-of-Gravity Technique
Supplement 7-23
x = = = 238n
Wii = 1
xiWii = 1
n
n
Wii = 1
yiWii = 1
n
y = = = 444(200)(75) + (500)(105) + (600)(135) + (300)(60)
75 + 105 + 135 + 60
(200)(75) + (100)(105) + (250)(135) + (500)(60)
75 + 105 + 135 + 60
Center-of-Gravity Technique
Supplement 7-24
A B C D
x 200 100 250 500y 200 500 600 300W 75 105 135 60
y
700
500
600
400
300
200
100
0 x700500 600400300200100
A
B
C
D
(135)
(105)
(75)
(60)
Miles
Mile
s Center of gravity (238, 444)
Center-of-Gravity With Excel
Supplement 7-25
Formula for x coordinate
Center-of-Gravity With OM Tools
Supplement 7-26Copyright 2011 John Wiley & Sons, Inc.
Load-Distance Technique
• Compute (Load x Distance) for each site
• Choose site with lowest (Load x Distance)
• Distance can be actual or straight-line
Copyright 2011 John Wiley & Sons, Inc. Supplement 7-27
Load-Distance Calculations
Supplement 7-28
li di
i = 1
n
LD =
LD = load-distance value
li = load expressed as a weight, number of trips or unitsbeing shipped from proposed site and location i
di = distance between proposed site and location i
di = (xi - x)2 + (yi - y)2
(x,y) = coordinates of proposed site
(xi , yi) = coordinates of existing facility
where,
where,
Load-Distance
Supplement 7-29
Potential SitesSiteX Y1 3601802 4204503 250400
SuppliersA B C D
X 200100250500Y 200500600300Wt 75 10513560
Compute distance from each site to each supplier
= (200-360)2 + (200-180)2dA = (xA - x1)2 + (yA - y1)2Site 1 = 161.2
= (100-360)2 + (500-180)2dB = (xB - x1)2 + (yB - y1)2 = 412.3
dC = 434.2 dD = 184.4
Load-Distance
Supplement 7-30
Site 2 dA = 333 dC = 226.7dB = 323.9 dD = 170
Site 3 dA = 206.2 dC = 200dB = 180.3 dD = 269.3
Compute load-distance
i = 1
n
li diLD =
Site 1 = (75)(161.2) + (105)(412.3) + (135)(434.2) + (60)(434.4) = 125,063
Site 2 = (75)(333) + (105)(323.9) + (135)(226.7) + (60)(170) = 99,789
Site 3 = (75)(206.2) + (105)(180.3) + (135)(200) + (60)(269.3) = 77,555*
* Choose site 3
Load-Distance With Excel
Supplement 7-31
=B7*C11+C7*C12+D7*C13+E7*C14
Load-Distance With OM Tools
Supplement 7-32