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Copyright 2006 John Wiley Sons, Inc. Operational Decision-Making Tools: Facility Location Models Beni AsllaniUniversity of Tennessee at Chattanooga Outline Factor-Rating Method Location Rating Factor Center-of-Gravity Method Center-of-Gravity Method Transportation Model Load-Distance Technique Compute (Load x Distance) for each site Choose site with lowest (Load x Distance) Distance can be actual or straight-line * * Operations Management - 5th Edition Chapter 7 Supplement Roberta Russell Bernard W. Taylor, III Methods Of Evaluating Location Alternatives The Factor-Rating Method Center-of-Gravity Method Load Distance The Transportation Method Popular because a wide variety of factors can be included in the analysis Six steps in the method Develop a list of relevant factors called critical success factors Assign a weight to each factor Develop a scale for each factor Score each location for each factor Multiply score by weights for each factor for each location Recommend the location with the highest point score Identify important factors Weight factors (0.00 - 1.00) Subjectively score each factor (0 - 100) Sum weighted scores Finds location of distribution center that minimizes distribution costs Considers Location of markets Volume of goods shipped to those markets Shipping cost (or distance) Place existing locations on a coordinate grid Grid origin and scale is arbitrary Maintain relative distances Calculate X and Y coordinates for ‘center of gravity’ Assumes cost is directly proportional to distance and volume shipped Finds amount to be shipped from several points of supply to several points of demand Solution will minimize total production and shipping costs A special class of linear programming problems
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