6 Location Analysis Flashcards
____ is determining the best geographic location for a company’s facility.
facility location
2 reasons why facility location is important
- they require long-term commitments in buildings and facilities
- these decisions require sizable financial investment and can have large impact on operating costs and revenue.
7 factors affecting location decisions
- proximity to sources of supply
- proximity to customers
- proximity to source of labor
- community consideration
- site considerations
- quality of life issues
- other considerations
_____ is the process of locating facilities around the world.
globalization
4 advantages of globalization
- take advantage of foreign markets
- reduction of trade barriers
- cheap labor in other countries
- growth in just-in-time manufacturing
4 disadvantages of globalization
- political risks can be large
- sharing of propriety technology to offshore suppliers
- local employees
- local infrastructure
3 issues to consider in locating globally
- different culture
- language barriers
- different laws and regulation
3 steps in making location analysis
- identiify dominant location factors
- develop location alternatives
- evaluate location alternatives
4 procedures for evaluating location alternatives (step 3)
- factor rating
- load-distance model
- center of gravity approach
- break-even analysis
____ can be used to evaluate multiple alternatives based on a number of selected factors.
factor rating
6 steps of factor rating
- identify dominant factors
- assign weight to factors
- select a scale
- evaluate each alternative relative to each factor
- for each factor and each location, multiply the weight of the factor by the score for that factor and sum the results for each alternative
- select the alternative with the highest score
______ is a procedure for evaluating location alternatives based on distance (proximity to market, proximity to suppliers or other resources, proximity to any other facility considered important).
load-distance model
A ____ represents the goods moved in or out of a facility or the number of movements between facilities.
load
3 steps of load-distance model
- identify distances
- identify loads
- calculate the load-distance score for each location
____ is used to find other locations that may give an even lower load-distance score.
center of gravity approach
_____ is a technique used to compute the amount of goods that must be sold just to cover costs.
break-even analysis
The ____ is the quantity of goods a company needs to sell to break even.
break-even point
4 steps of break-even analysis
- for each location, determine fixed and varaible costs
- plot the total costs for each location on one graph
- identify ranges for output with each location has the lowest total cost
- solve algebraically for the break-even pints over the identified ranges
