FACTORS AFFECTING FACILITY LOCATION TO SERVICE INDUSTRY
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Transcript of FACTORS AFFECTING FACILITY LOCATION TO SERVICE INDUSTRY
NAME: DHEERAJ AGRAWAL NAME: DEVANGI DHINGANI
DIV.: C DIV.: C
ROLL NO.: 11 ROLL NO.: 12
ENROLL NO.: 147110592023 ENROLL NO.: 147110592024
SUBJECT
PRODUCTION & OPERATION MANAGEMENT
PARUL INSTITUTE OF MANAGEMENT &
RESEARCH
A right location of business ensures success of the
organization in current global competitive environment so
every business firm are requires to choose a location which
can very suitable to business.
A right location provides adequate access to customers, skilled
labours, transportation, etc.
objective of an organization is to satisfy and delight customers
with its product and services.
Facility Location requires large investment that can not be
recovered in short time.
Facility Location decisions affect the competitive capacity of
the company.
The facility location decisions affect not only costs but the
company’s income:
Regarding costs, facility location affects a great variety of
them:
Land costs.
Labor costs.
Raw materials.
Transportation and distribution
An expanding market.
Change in other resources
Mergers and acquisitions.
The pressure of the competence.
Introduction of new products or services.
The exhaustion of raw materials in a certain area.
A contracting demand, or changes in the location of the
demand.
Obsolescence of a manufacturing facility due to the
appearance of new technologies.
I) Deciding On Domestic Or International Location.
II) Selection Of Region
III) Selection Of Locality
IV) Selection Of Exact Site
Critical ScoresSuccess (out of 100) Weighted ScoresFactor Weight France Denmark France Denmark
Labor availabilityand attitude .25 70 60 (.25)(70) = 17.5 (.25)(60) = 15.0
People-tocar ratio .05 50 60 (.05)(50) = 2.5 (.05)(60) = 3.0
Per capitaincome .10 85 80 (.10)(85) = 8.5 (.10)(80) = 8.0
Tax structure .39 75 70 (.39)(75) = 29.3 (.39)(70) = 27.3
Educationand health .21 60 70 (.21)(60) = 12.6 (.21)(70) = 14.7
Totals 1.00 70.4 68.0
Table 8.3
N/S
E/O
Origen arbitrario
30 60 90 120 150
30
60
90
120
150
1.000
1.0002.000
2.000
V
V d = C
i
iix
x
Cx , Cy = Gravity Center
dix , diy = coordinates de la ubicación i
Vi = Volume of goods moved from/to i
i
iiy
yV
V d = C
Tra
nsp
ort
co
st a
re r
ela
ted
to
vo
lum
e
Three locations:
Akron $30,000 $75 $180,000
Bowling Green $60,000 $45 $150,000
Chicago $110,000 $25 $160,000
Selling price = $120
Expected volume = 2,000 units
Fixed Variable TotalCity Cost Cost Cost
Total Cost = Fixed Cost + Variable Cost x Volume
–$180,000 –
–$160,000 –$150,000 –
–$130,000 –
–$110,000 –
––
$80,000 ––
$60,000 –––
$30,000 ––
$10,000 ––
An
nu
al co
st
| | | | | | |
0 500 1,000 1,500 2,000 2,500 3,000
Volume
Akron lowest cost
Bowling Green lowest cost
Chicago lowest cost
Proximity to Customers Business Climate Total Costs Infrastructure Quality of Labour Suppliers Other Facilities Political Risks Government Barriers Trading Blocks Environmental Regulation Host Community Competitive Advantage
Customer Proximity.
Suppliers.
Owner Preference.
Technology.
Near To Other Businesses.
Rent.
Security.
Customer Parking
Available/Nearby.
Availability Of Suitable
Vacant Premises.
Avaibility Of Infrastructure
Facility.
Transport Facility.
Low Cost Of Construction.
So for establishing of any service unit taking into
consideration of all the previous factors which can affecting
to the business unit & according to that select the location
which can satisfy our most of the needs to run a service unit.
So the business can achieve its objective & goal of
the company easily in a competitive market & able to stand
in market for a longer time period.