Facility Location Where should a plant or service facility be located? Need to produce close to supplier as well as customer due to time-based competition, trade agreements and shipping costs Need to locate near the appropriate labor pool to take advantage of low wage and high technical skills Profit-oriented organization Make decision on profit potential Non-profit organization Balance between cost and level of customer service

Facility Location Factors Affecting Location Decisions Proximity to suppliers Total costs Proximity to customers Business climate Infrastructure Government barriers Trade blocks

Facility Location Plant Location Methods Factor Rating System: most widely used -- can provide a mechanism to combine diverse factors Center of Gravity Method: locating a single facility that considers the existing facility, distance between them and the volume of goods to be shipped Service Location Method Have multiple sites to maintain close contact with customers Location decision is closely tied to the market selection decision

Facility Location A company needs to locate an intermediate holding facility between its plant and major distributors. Locations and amounts of product are as follows: Center of Gravity Method

Facility Location Plant : (325,75) Dist A: (25,450) Dist B: (350,400) Dist C: (400,150) Dist D: (450,350)

Facility Location Location of Intermediate holding facility

Facility Location Plant : (325,75) Dist A: (25,450) Dist B: (350,400) Dist C: (400,150) Dist D: (450,350) Facility : (308,217)

Facility Location Locating Service Facility Find the locations of two clinics at the lowest weighted travel-distance cost