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OperationsManagement
LocationStrategies
Chapter81OutlineGLOBALCOMPANYPROFILE:FEDERALEXPRESSTHESTRATEGICIMPORTANCEOFLOCATIONFACTORSTHATAFFECTLOCATIONDECISIONSLaborProductivityExchangeRatesandCurrencyRisksCostsAttitudesProximitytoMarketsProximitytoSuppliersProximitytoCompetitors(Clustering)2Outline-ContinuedMETHODSOFEVALUATINGLOCATIONALTERNATIVESTheFactor-RatingMethodLocationalBreak-EvenAnalysisCenter-of-GravityMethodTheTransportationMethodSERVICELOCATIONSTRATEGYHowHotelChainsSelectSitesTheTelemarketingIndustryGeographicInformationSystems3LearningObjectivesWhenyoucompletethischapter,youshouldbeableto:IdentifyorDefine:
ObjectiveoflocationstrategyInternationallocationissuesClusteringGeographicInformationSystemsDescribeorexplain:ThreemethodsofsolvingthelocationproblemFactor-ratingmethodLocationalbreakevenanalysisCenter-of-gravitymethodDescribethefactorsaffectinglocationdecisions4FederalExpressStresses“hub〞conceptAdvantages:enablesservicetomorelocationswithfeweraircraftenablesmatchingofaircraftflightswithpackageloadsreducesmishandlinganddelayintransitbecausethereistotalcontrolofpackagesfrompickuptodelivery5ObjectiveofLocationStrategyMaximizethebenefitoflocationtothefirm6IndustrialLocationDecisionsCostfocusRevenuevarieslittle
betweenlocationsLocationisamajor
costfactorAffectsshipping&
productioncosts(e.g.,labor)Costsvarygreatlybetween
locations©1995CorelCorp.7ServiceLocationDecisionsRevenuefocusCostsvarylittlebetweenmarketareasLocationisamajor
revenuefactorAffectsamountof
customercontactAffectsvolumeof
business8InGeneral-LocationDecisionsLong-termdecisionsDifficulttoreverseAffectfixed&variablecostsTransportationcostAsmuchas25%ofproductpriceOthercosts:Taxes,wages,rentetc.Objective:Maximizebenefitoflocationtofirm9LocationDecisionSequenceCountry©1995CorelCorp.Region/Community©1995CorelCorp.Site©1995CorelCorp.10FactorsThatAffectLocationDecisions11FactorsAffectingCountryGovernmentrules,attitudes,politicalrisk,incentivesCulture&economyMarketlocationLaboravailability,attitudes,productivity,andcostAvailabilityofsupplies,communications,energyExchangeratesandcurrencyrisks©1995CorelCorp.12RegionLocationDecisionsCorporatedesiresAttractivenessofregion(culture,taxes,climate,etc.)Labor,availability,costs,attitudestowardsunionsCostsandavailabilityofutilitiesEnvironmentalregulationsofstateandtownGovernmentincentivesProximitytorawmaterials&customersLand/constructioncosts©1995CorelCorp.13FactorsAffectingSiteSitesizeandcostAir,rail,highway,andwaterwaysystemsZoningrestrictionsNearnessofservices/suppliesneededEnvironmentalimpactissues©1995CorelCorp.14LocationDecisionExampleBMWdecidedtobuilditsfirstmajormanufacturingplantoutsideGermanyinSpartanburg,SouthCarolina.©1995CorelCorp.15CountryDecisionFactorsMarketlocationU.S.isworld’slargestluxurycarmarketGrowing(babyboomers)LaborLowermanufacturinglaborcosts$17/hr.(U.S.)vs.$27(Germany)Higherlaborproductivity11holidays(U.S.)vs.
31(Germany)OtherLowershippingcost($2,500/carless)Newplant&equipmentwouldincreaseproductivity(lowercost/car$2,000-3000)16Region/CommunityDecisionFactorsLaborLowerwagesinSouthCarolina(SC)Governmentincentives$135millioninstate&localtaxbreaksFree-tradezonefromairporttoplantNodutiesonimportedcomponentsoronexportedcars17CSFinLocationAnalysisCriticalSuccessFactorsCountry1Country2Country3Country4Technology
Rateoftechnologychange
Innovationsinprocessdesign35532115Levelofeducation
Numberofskilledworkers
Nationaleducationrate54413142PoliticalandLegalAspects
Stabilityofgovernment
Productliabilitylaws
Exportrestrictions54453323355118CSFinLocationAnalysis-ContinuedCriticalSuccessFactorsCountry1Country2Country3Country4TotalRatingPoints50433548SocialandCulturalAspects
Similarityinlanguage
Workethic54125341Economicfactors
Taxrates
Inflation
Availabilityofraw
materials
Interestrates332335442532555519GlobalCompetitivenessofCountriesFinland…..……….UnitedStates………………..….Netherlands……...Germany….….….Canada………….…Japan……..….….…Brazil…………..………………..…Russia……….….…Ecuador…….....…Bangladesh……...Honduras………..Bolivia………..…...123411153558727374752001Ranking20RankingCorruptionRankScore1Finland9.92Denmark9.53NewZealand9.44Singapore9.216Israel&U.S.A(Tied)7.621Japan7.157China3.579Russia2.390Nigeria1.091Bangladesh0.4Ascoreof10representscorruptionfree21OrganizationsThatNeedToBeClosetoMarketsGovernmentagenciesPolice&firedepartmentsPostOfficeRetailSalesandServiceFastfoodrestaurants,supermarkets,gasstationsDrugstores,shoppingmallsBakeriesServicesDoctors,lawyers,accountants,barbersBanks,autorepair,motels22LocationEvaluationMethodsFactor-ratingmethodLocationalbreak-evenanalysisCenterofgravitymethodTransportationmodel©1995CorelCorp.23Factor-RatingMethodMostwidelyusedlocationtechniqueUsefulforservice&industriallocationsRateslocationsusingfactorsTangible(quantitative)factorsExample:Short-run&long-runcostsIntangible(qualitative)factorsExample:Educationquality,laborskills24FactorsAffectingLocationSelectionLaborcosts(includingwages,unionization,productivity)Laboravailability(includingattitudes,age,distribution,andskills)ProximitytorawmaterialsandsuppliersProximitytomarketsGovernmentfiscalpolicies(includingincentives,taxes,unemploymentcompensation)25FactorsAffectingLocationSelection-ContinuedEnvironmentalregulationsUtilities(includinggas,electric,water,andtheircosts)Sitecosts(includingland,expansion,parking,drainage)Transportationavailability(includingrail,air,water,andinterstateroads)26FactorsAffectingLocationSelection-ContinuedQuality-of-lifeissuesinthecommunity(includingalllevelsofeducation,costofliving,healthcare,sports,culturalactivities,transportation,housing,entertainment,religiousfacilities)ForeignexchangeIncludingratesandstabilityQualityofgovernment(includingstability,honesty,attitudestowardnewbusiness-whetheroverseasorlocal)27StepsinFactorRatingMethodListrelevantfactorsAssignimportanceweighttoeachfactor(suchas0–1)Developscaleforeachfactor(suchas1–100)ScoreeachlocationusingfactorscaleMultiplyscoresbyweightsforeachfactor&totalSelectlocationwithmaximumtotalscore28加权评分:考虑在某城市的高速开展区域新开设一医疗诊所,其相关因素及权重如下表,求该选址的加权评分。
FactorRatingMethod1006060601050433415252020151010每人病人公里设施利用率紧急出诊平均往返时间高速交通易到达程度土地费用与建造本钱员工的偏好程度加权评分(a×b)评分(b)权重(a)地理位置因素340选址的加权评分29Methodofcost-volumeanalysisusedforindustriallocationsStepsDeterminefixed&variablecostsforeachlocationPlottotalcostforeachlocation(Costonverticalaxis,AnnualVolumeonhorizontalaxis)SelectlocationwithlowesttotalcostforexpectedproductionvolumeMustbeabovebreak-evenLocationalBreak-EvenAnalysis30LocationalBreak-EvenAnalysisExampleYou’reananalystforACDelco.You’reconsideringanewmanufacturingplantinAkron,BowlingGreen,orChicago.Fixedcostsperyearare$30k,$60k,&$110krespectively.Variablecostspercaseare
$75,$45,&
$25respectively.Thepricepercaseis$120.Whatisthebestlocationforanexpectedvolumeof2,000casesperyear?©1995CorelCorp.31LocationalBreak-EvenCrossoverChart050000100000150000200000050010001500200025003000VolumeAnnualCostAkronChicagoBowlingGreenBowlingGreenlowestcostChicagolowestcostAkronlowestcost32CenterofGravityMethodFindslocationof
singledistributioncenterservingseveraldestinationsUsedprimarilyforservicesConsidersLocationofexistingdestinations
Example:Markets,retailersetc.VolumetobeshippedShippingdistance(orcost)Shippingcost/unit/mileisconstant
33CenterofGravityMethodStepsPlaceexistinglocationsonacoordinate(坐标〕gridGridhasarbitraryorigin&scaleMaintainsrelativedistancesCalculateX&Ycoordinatesfor‘centerofgravity’GiveslocationofdistributioncenterMinimizestransportationcost34CenterofGravityMethodEquationsdix =xcoordinateoflocationiWi = Volumeofgoodsmovedtoorfromlocationidiy =ycoordinateoflocationiXCoordinateYCoordinate35CoordinateLocationsofFourQuain’sDepartmentStoresandtheCenterofGravity36TransportationModelFindsamounttobeshippedfromseveral
sourcestoseveraldestinationsUsedprimarilyforindustriallocationsTypeoflinearprogrammingmodelObjective:Minimizetotalproduction
&shippingcostsConstraintsProductioncapacityatsource(factory)Demandrequirementatdestination37WorldwideDistributionofVolkswagensandParts38ComponentsofVolumeandRevenueforaServiceFirm1.
Purchasingpowerofcustomerdrawingarea2.Serviceandimagecompatibilitywithdemographicsofthecustomerdrawingarea3.Competitioninthearea4.Qualityofthecompetition5.Uniquenessofthefirm’sandcompetitor’slocations6.Physicalqualitiesoffacilitiesandneighboringbusinesses7.Operatingpoliciesofthefirm8.Qualityofmanagement39LocationStrategies–Servicevs.IndustrialService/Retail/ProfessionalRevenueFocusVolume/revenueDrawingarea,purchasingpowerCompetition;advertising/pricingPhysicalqualityParking/access;security/lighting;appearance/imageCostdeterminantsRentManagementcaliber〔水平〕Operationspolicies(hours,wagerates)Goods-ProducingLocationCostFocusTangiblecostsTransportationcostofrawmaterialsShipmentcostoffinishedgoodsEnergyandutilitycost;labor;rawmaterial;taxes,etc.IntangibleandfuturecostsAttitudetowardunionQualityoflifeEducationexpendituresbystateQualityofstateandlocalgovernment40LocationStrategies–
Servicevs.IndustrialService/Retail/ProfessionalTechniquesRegressionmodelstodetermineimportanceofvariousfactorsFactor-ratingmethodTrafficcountsDemographicanalysisofdrawingareaPurchasingpoweranalysisofdrawingareaCenterofgravitymethodGeographicinformationsystemsGoodsProducingLocationTechniquesLinearProgramming(Transportationmethod)Factor-ratingmethodLocationalbreakevenanalysisCrossovercharts41LocationStrategies–
Servicevs.IndustrialService/Retail/ProfessionalAssumptionsLocationisamajordeterminateofrevenueHighcu
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