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OP MANAGEMENT > Location Strategy > Flashcards

Location Strategy Flashcards

1
Q
  • Enables service to more locations
  • Reduces mishandling and delays in transit
A

Central Hub Concept

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2
Q
  • Significant impact on fixed and variable costs
  • Decisions made relatively infrequently
A

Strategic Importance of Location

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3
Q
  • Once committed to a location
  • Many resource and cost issues are difficult to change
A

Strategic Importance of Location

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4
Q

The objective of the location strategy is

A
  • Maximize the benefit of location to the firm
  • Expanding existing facilities
  • Maintain existing and add sites
  • Closing existing and relocating
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5
Q

Based on low cost require careful consideration

A

Location Decisions

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6
Q

Once in place, __________ costs are fixed in place and difficult to reduce

A

Location-Related

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7
Q

Determining optimal facility location is a bad investment. (T or F)

A

False, good investment

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8
Q

Factors That Affect Location Decisions

A

Market economics
Communication
Rapid, reliable transportation
Ease of capital flow
Differing labor costs

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9
Q

Country Decisions Key Success Factors

A
  • Political risks, government rules, attitudes, incentives
  • Cultural and economic issues
  • Location of markets
  • Labor talent, attitudes, productivity, costs
  • Availability of supplies, communications, energy
  • Exchange rates and currency risks
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10
Q

Region/Community Decisions Key Success Factors

A
  • Corporate desires
  • Attractiveness of region
  • Labor availability and costs
  • Costs and availability of utilities
  • Environmental regulations
  • Government incentives and fiscal policies
  • Proximity to raw materials and customers
  • Land/construction costs
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11
Q

Site Decisions Key Success Factors

A
  • Site size and cost
  • Air, rail, highway, and waterway systems
  • Zoning restrictions
  • Proximity of services/ supplies needed
  • Environmental impact issues
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12
Q

Labor Productivity

A
  • Lower productivity may increase total cost
  • Labor Cost Per Day / Productivity (Unit Per Day) = Cost per Unit
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13
Q

Rates change over time
Can have significant impact on costs

A

Exchange Rates and Currency Risks

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14
Q

Costs easily measured costs such as utilities, labor, materials, and taxes.

A

Tangible Costs

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15
Q

Costs less easy to quantify and include education, public transportation, community, and quality-of-life.

A

Intangible Costs

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16
Q
  • Very important to services
  • JIT systems or high transportation costs may make it important to manufacturers
A

Proximity to Markets

17
Q

Perishable goods, high transportation costs, bulky products

A

Proximity to Suppliers

18
Q
  • Often driven by resources such as natural, information, capital, talent
  • Found in both manufacturing and service industries
A

Proximity to Competitors or also called Clustering

19
Q

Factor-Rating Method

A
  • Develop a list of relevant factors called key success factors
  • Assign a weight to each factor
  • Develop a scale for each factor
  • Score each location for each factor
  • Multiply score by weights for each factor for each location
  • Make a recommendation based on the highest point score
20
Q

Popular because a wide variety of factors can be included in the analysis

A

Factor-Rating Method

21
Q

Factor-Rating Formula

A

Summation of
= [(Weight) x (Score)]

22
Q

An economic comparison of location alternatives

A

Locational Cost-Volume Analysis

23
Q

Locational Cost-Volume Analysis Steps

A
  • Determine fixed and variable costs for each location
  • Plot the cost for each location
  • Select location with lowest total cost for expected production volume
24
Q

Locational Cost-Volume Analysis Formula

A

Total Cost = Fixed Cost + (Variable Cost x Volume)

25
Q

Finds location of distribution center that minimizes distribution costs that considers:
- Location of markets
- Volume of goods shipped to those markets
- Shipping cost (or distance)

A

Center-of-Gravity Method

26
Q

Finds amount to be shipped from several points of supply to several points of demand

A

Transportation Model

27
Q
  • Solution will minimize total production and shipping costs
  • A special class of linear programming problems
A

Transportation Model

28
Q
  • Purchasing power of customer-drawing area
  • Service and image compatibility with demographics of the customer-drawing area
A

Service Location Strategy

29
Q
  • Competition in the area
  • Quality of the competition
  • Uniqueness of the firm’s and competitors’ locations
A

Service Location Strategy

30
Q
  • Physical qualities of facilities and neighboring businesses
  • Operating policies of the firm
  • Quality of management
A

Service Location Strategy

31
Q
  • Important tool to help in location analysis
  • Enables more complex demographic analysis
A

Geographic Information Systems (GIS)

OP MANAGEMENT (2 decks)

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