Location Strategies in Operations Management

A set of flashcards covering key concepts in location strategies from operations management.

What are the seven major factors that affect location decisions?

1. Political risks and government rules 2. Cultural and economic issues 3. Location of markets 4. Labor talent and costs 5. Availability of supplies and utilities 6. Exchange rates and currency risks 7. Proximity to customers and raw materials.

What is the objective of location strategy?

To maximize the benefit of location to the firm.

What key points define the strategic importance of location?

1. It is one of the most important firm decisions. 2. It has significant impact on fixed and variable costs. 3. Decisions are made infrequently and are long-term.

What is the center-of-gravity method used for?

It is used for finding the optimal location by minimizing transportation costs.

What are tangible costs in location decisions?

Easily measured costs such as utilities, labor, materials, and taxes.

What is included in the factor-rating method?

1. Develop key success factors. 2. Assign weights. 3. Score each location based on factors. 4. Total the scores to make recommendations.

What does R2 represent in the context of regression analysis for site selection?

It is the coefficient of determination that indicates how well the independent variables explain the changes in the dependent variable.

What role do Geographic Information Systems (GIS) play in location analysis?

They enable complex demographic analysis by providing detailed census data, maps, utilities, and geographic features.

How does political risk affect location decisions?

Political risk can affect attitudes toward private property, zoning, employment stability, and overall business operations.

What are some key factors in service location strategy?

1. Purchasing power of the customer area 2. Compatibility with demographics 3. Competition levels 4. Quality of nearby facilities.