1. Production and Operations Management: Manufacturing and Services
Eighth Edition
Production and Operations Management: Manufacturing and Services
Ó Irwin/McGraw-Hill, A Division of the McGraw-Hill Companies
PowerPoint Supplement developed by:
William E. Youngdahl
World Business Department
Thunderbird, The American Graduate School of International Management
PowerPoint Presentation for Chapter 9
Facility Location
Chase
Aquilano
Jacobs
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998 1

2. Competitive Imperatives Impacting Location
The need to produce close to the customer due to time-based competition, trade agreements, and shipping costs.
The need to locate near the appropriate labor pool to take advantage of low wage costs and/or high technical skills. 3 3

3. Issues in Facility Location
Proximity to Customers
Business Climate
Total Costs 4 4

4. Issues in Facility Location
Infrastructure
Quality of Labor
Suppliers 5 5

5. Issues in Facility Location
Other Facilities
Free Trade Zones
Political Risk 6 6

6. Issues in Facility Location
Government Barriers
Trading Blocs
Environmental Regulation 7 7

7. Issues in Facility Location
Host Community
Competitive Advantage 8 8

8. Facility Location Center of gravity method example
Several automobile showrooms are located according to the following grid which represents coordinate locations for each showroom. X Y A
(100,200) D
(250,580) Q
(790,900)
(0,0)
Determine the best location for a Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per month 11 11

9. Determining the CoordinatesX Y A
(100,200) D
(250,580) Q
(790,900)
(0,0)
Cx = X coordinate of center of gravity
Cy = X coordinate of center of gravity
dix = X coordinate of the ith location
diy = Y coordinate of the ith location
Vi = volume of goods moved to or from ith
location 12 12

10. Determining the CoordinatesX Y A
(100,200) D
(250,580) Q
(790,900)
(0,0) 13 13

11. Ardalan Heuristic (Example 9.3)
(11)(10)(1.1)
Step 1 16 16

12. Ardalan Heuristic: Selecting the First-Choice Location
Choose the community with the lowest cost 17 17

13. Ardalan Heuristic: Selecting the Second-Choice Location
Cost > Selected Site Cost?
If yes, replace.
Second Choice
Replaced
Not Replaced 18 18

14. Ardalan Heuristic: Selecting the Third-Choice Location19 19

15. Ardalan Heuristic: And the least desirable alternative is20 20