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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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