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Location Planning and Analysis

as a operational manager, it is necessary to know the location planning of plant, every thing is mentioned in this project.

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shahbazahmad0057
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491 views

Location Planning and Analysis

as a operational manager, it is necessary to know the location planning of plant, every thing is mentioned in this project.

Uploaded by

shahbazahmad0057
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 15

8-1

Location Planning and Analysis

CHAPTER

Location Planning
and Analysis

8-2

Location Planning and Analysis

Need for Location Decisions

Marketing Strategy

Cost of Doing Business

Growth

Depletion of Resources

8-3

Location Planning and Analysis

Strategic Importance

Long term commitment/costs


Impact on investments, revenues, and operations

Objectives

Profit potential
No single location may be better than others

Options

Expand existing facilities


Add new facilities
Move

8-4

Location Planning and Analysis

Making Location Decisions


Decide on the criteria
Identify the important factors
Develop location alternatives
Evaluate the alternatives
Make selection

8-5

Location Planning and Analysis

Location Decision Factors


1. Regional Factors

4. Multiple Plant
Strategies

2. Community
Considerations

3. Site-related
Factors

8-6

Location Planning and Analysis

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

8-7

Location Planning and Analysis

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

8-8

Location Planning and Analysis

Site Related Factors


Land
Transportation
Environmental
Legal

8-9

Location Planning and Analysis

Multiple Plant Strategies


Product plant strategy
Market area plant strategy
Process plant strategy

8-10 Location Planning and Analysis

Comparison of Service and


Manufacturing 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

8-11 Location Planning and Analysis

Evaluating Locations

Cost-Profit-Volume Analysis

Determine fixed and variable costs

Plot total costs

Determine lowest total costs

8-12 Location Planning and Analysis

Example 1: Cost-Volume Analysis


Fixed and variable costs of four potential
locations for 10,000 units.

8-13 Location Planning and Analysis

Example 1: Solution

A
B
C
D

F ix e d
C o s ts

V a r ia b le
C o s ts

T o ta l
C o s ts

$ 2 5 0 ,0 0 0
1 0 0 ,0 0 0
1 5 0 ,0 0 0
2 0 0 ,0 0 0

$ 1 1 (1 0 ,0 0 0 )
3 0 (1 0 ,0 0 0 )
2 0 (1 0 ,0 0 0 )
3 5 (1 0 ,0 0 0 )

$ 3 6 0 ,0 0 0
4 0 0 ,0 0 0
3 5 0 ,0 0 0
5 5 0 ,0 0 0

8-14 Location Planning and Analysis

Example 1: Solution
$(000)
800
700
600
500
400
300
200
100
0
0

D
B
C
A
A Superior
C Superior
B Superior

10

Annual Output (000)

12

14

16

8-15 Location Planning and Analysis

Location Cost-Volume Analysis

Assumptions
Fixed costs are constant
Variable costs are linear
Output can be closely estimated
Only one product involved

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