Model Optimisation

Question 1

What is Optimisation?

Answer 1

How do existing stores compare with the optimal stores? i.e. a store in every location

Question 2

What is the issue with optimisation?

Answer 2

Combinational Problem - e.g. want 5 new stores in 100 zones gives 50 mil. solutions - too large for SIMs to compute

Question 3

What are the two scenarios for optimisation?

Answer 3

Ideal Representational Plan (IRP)

Mergers and Acquisitions

Question 4

How does the IRP work?

Answer 4

1. Create 100 zones and try a store in every zone for max. revenue. Example answer = zone 56
2. Fix location in 56 and try other 99 locations for next best. E.g. answer = 27
3. Fix locations 56 and 27 - repeat until have 5 stores

Question 5

What is the difference between a Full IRP and a Rationalised IRP?

Answer 5

Full: maintains all existing no. stores but relocates them to the ideal locations to increase sales and max. revenue

Rationalised: reduces the no. stores to reduce costs whilst maintaining or increasing sales - the ideal locations with the fewest sites

Question 6

What is the ideal IRP?

Answer 6

RATIONALISED - gives the ideal blueprint for growth

However, as more companies get hold of the tech. they can all create their ideal blueprint

Question 7

What are the 3 optimisation methods for mergers?

Answer 7

1. Pre-merger planning - who’s the optimal partner?
2. Check competition commission - by acquiring/merging, what’s the impact on local competition?
3. Post-merger planning - optimising new/combined networks

Question 8

What went wrong with Barclay’s acquisition of Woolwich in 2000?

Answer 8

Acquired for £5.3bn

Barclay’s plan: close any Woolwich store within 100m of existing Barclay’s branches - 100 closures of 400 stores

Sold the 100 off

BUT didn’t research success of Woolwich stores, therefore ended up shutting some of the most successful ones

Question 9

What did Clarke et al. (2003) create in response to the Barclay’s failure?

Answer 9

8 scenario optimisation model for the financial services sector in order to give each town a geographically unique scenario

Question 10

How can GIS be used to find optimal locations?

Answer 10

Location-Allocation Models by finding the optimal supply point and then trying to minimise the euclidean distance - but this method is limited, therefore argue that GIS is not best suited for optimal location (BIRKIN ET AL., 1999)