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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加權評分:考慮在某城市的高速開展區(qū)域新開設一醫(yī)療診所,其相關因素及權重如下表,求該選址的加權評分。

FactorRatingMethod1006060601050433415252020151010每人病人公里設施利用率緊急出診平均往返時間高速交通易到達程度土地費用與建造本錢員工的偏好程度加權評分(a×b)評分(b)權重(a)地理位置因素340選址的加權評分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(坐標〕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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