13- Location planning and analysis

What are the objectives and need for location decision?

• Location decisions are strategic system design decisions that require a long-term commitment of resources.

• The primary objective is to configure the supply chain network

Factors in Heavy vs Light Manufacturing

• Heavy manufacturing: Focuses on proximity to raw materials, access to heavy transportation and low energy costs

• Light manufacturing: Focuses on proximity to markets, availability of skilled labor and transport for finished goods

Locational Cost-Profit-Volume (CPV) analysis

• A method to evaluate location alternatives in economic terms by comparing fixed and variable costs

• Assumptions: Fixed costs are constant, variable costs are linear and only one product is involved

Explain the Centre of Gravity Method

A mathematical technique used to find the best location for a single distribution centre that services several geographical areas by minimizing distribution costs.

Define Geographic Information System (GIS)

A computer-based tool for capturing, storing and displaying data related to positions on Earth’s surface, used in OM to analyse demographic and geographic data for facility location.