To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Chapter 9 - Location
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots East Asia. The Pacific Basin, including Japan, South Korea, China, Taiwan, and Singapore became the fastest-growing and foremost trading region in the world. Japan South Korea Taiwan Singapore Hong Kong Figure 9.1
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots Mexico. Thousands of plants have been built by firms across the world in the maquiladoras on Mexico's northern boarder. Figure 9.1 U.S. Sunbelt. The sunbelt is attracting many firms normally entrenched in the industrial heartland of the United States owing to lower labor costs, less unionism, and a more-attractive climate. NAFTA. The North American Free Trade Agreement makes trade easier between Canada, Mexico, and the United States. Other Latin American countries may follow suit.
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots Europe. The European Union (EU) encompasses 15 member nations and special arrangements with most other European states. Figure 9.1
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots Former Communist Countries. The population of 410 million promises huge market opportunities and attractive possibilities for joint ventures. Figure 9.1 Russia
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Managing Global Operations Other Languages Different Norms and Customs Workforce Management Unfamiliar Laws and Regulations Unexpected Cost Mix
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Decisions - Manufacturing Favorable Labor Climate Proximity to Markets Quality of Life Proximity to Suppliers Proximity to Parent Company Utilities, Taxes, and Real Estate Costs
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Decisions - Services Proximity to Customers Transportation Costs and Proximity to Markets Location of Competitors Site-Specific Factors
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch
Location Health-Watch North Example 9.1
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 Weighted Score
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) Weighted Score
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) Weighted Score
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) + (20 x 3) Weighted Score
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) + (20 x 3) + (15 x 4) + (10 x 1) + (10 x 5) Weighted Score
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=340 Weighted Score
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch
Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) Euclidean distance d AB = ( x A – x B ) 2 + ( y A – y B ) 2 Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) Euclidean distance d AB = (50 – 175 ) 2 + (185 – 100 ) 2 Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) Euclidean distance d AB = (50 – 175 ) 2 + (185 – 100 ) 2 Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) Euclidean distance d AB = miles Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) miles Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) miles Rectilinear distance d AB = | x A – x B | + | y A – y B | Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) miles Rectilinear distance d AB = | 50 – 175 | + | 185 – 100 | Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) miles Rectilinear distance d AB = | 50 – 175 | + | 185 – 100 | Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) miles Rectilinear distance d AB = 210 miles Example 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North y (miles) x (miles) East State College B (175, 100) miles 210 miles Figure 9.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Figure 9.3 Health-Watch Erie A (50, 185) North Enter the x and y coordinates of the two towns. xy Erie (Point A)50185 State College (Point B) To find the Euclidian distance, subtract the second town’s x value from that of the first town, and square the result. Do the same with the two y values. Then add the two and compute the square root. (Erie x – State College x) Euclidian distance (Erie y – State College y) 2 7,225 To find the rectilinear distance, get the absolute value of the result of subtracting the second town’s x from the first town’s. Do the same with y. Then add the absolute distances together. (Erie x – State College x)125Rectilinear distance210 (Erie y – State College y)85 Tutor Distance Measures
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch
Location Health-Watch North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)2 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)2 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)2 5.5 – 2.5 = 3 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)2 5.5 – 2.5 = – 4.5 = 0 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5) = – 2.5 = – 4.5 = 0 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5) = 36 2 * 3 = 6 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5) = 36 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5) = 36 E(8, 5)10 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5) = 36 E(8, 5) = 3 8 – 5.5 = – 4.5 = 0.5 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5) = 36 E(8, 5) = * 3 = 30 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5) = 36 E(8, 5) = 330 Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Tractld A6 B25 C0 D21 E30 F80 G77 Total239 Figure 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Tractld A14 B25 C40 D14 E40 F0 G35 Total168 Figure 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Alternative Locations North x (miles) East y (miles) Example 9.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Alternative Locations North x (miles) East y (miles) Figure 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)2 B(2.5, 2.5)5 C(5.5, 4.5)10 D(5, 2)7 E(8, 5)10 F(7, 2)20 G(9, 2.5)14 Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)25 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5) Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5) Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5) Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2)73514 E(8, 5) F(7, 2) G(9, 2.5) Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2)73514 E(8, 5) F(7, 2) G(9, 2.5) Totals Totals Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2)73514 E(8, 5) F(7, 2) G(9, 2.5) Totals Totals x * = y * = Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2)73514 E(8, 5) F(7, 2) G(9, 2.5) Totals Totals x * = y * = Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2)73514 E(8, 5) F(7, 2) G(9, 2.5) Totals Totals x * = y * = Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2)73514 E(8, 5) F(7, 2) G(9, 2.5) Totals Totals x * = 6.67 y * = 3.02 Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East y (miles) x * = 6.67 y * = 3.02 Example 9.4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach Figure 9.6
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 Example 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs Example 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs $62 (20,000) Example 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs $62 (20,000) = $1,240,000 Example 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs $62 (20,000) = $1,240,000 Example 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs $62 (20,000) = $1,240,000 Example 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38$1,060,000 C$500,000$24$ 980,000 D$600,000$30$1,200,000 for 20,000 units Example 9.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) Annual cost (thousands of dollars) Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) Annual cost (thousands of dollars) A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) A best Break-evenpoint Q (thousands of units) Annual cost (thousands of dollars) Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis B best Break-even point A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) A best 6.25 Break-even point Q (thousands of units) Annual cost (thousands of dollars) 14.3 Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis C best (20, 980) B best Break-even point A D B C (20, 1390) (20, 1200) (20, 1060) A best 6.25 Break-even point Q (thousands of units) Annual cost (thousands of dollars) 14.3 Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) A best B bestC best Break-even point A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) Annual cost (thousands of dollars) Break-even point Figure 9.7
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) A best B bestC best Break-even point A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) Annual cost (thousands of dollars) Break-even point Example 9.5 (A)(B) $150,000+$62Q=$300,000 + $38Q Q=6,250 units $300,000+$38Q=$500,000 + $24Q Q=14,286 units (B)(C) Break-Even Quantities
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Example 9.6
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Plant Warehouse Phoenix Atlanta Create a row for each plant and a column for each warehouse Example 9.6
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Add a column for plant capacities and a row for warehouse demand Plant Warehouse Capacity Requirements Phoenix Atlanta Example 9.6
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Plant Warehouse Capacity Requirements Phoenix Atlanta Figure 9.8 Insert costs into the shipping route option cells
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Interpreting the Optimal Solution Figure 9.9
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Mile-High Beer— Solved Problem 2 Boulder Break- even point Fort Collins 2.67 Break-evenpoint Barrels of beer per year (in hundred thousands) Location cost (in millions of dollars) Figure 9.10 Denver Golden
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Arid Company— Solved Problem 4 Figure 9.11 Source Destination Capacity $4.37 $4.25 $ ,000 10,000 18,000 40,0006,000 22,000 12,000 $4.00 $5.00 $5.27 $4.13 $4.50 $3.75 Demand Battle Creek Cherry Creek Dee Creek 12,000 6,000 4,000 6,00012,000 Worchester Rochester Dorchester