Facility Location

OPS 370

Where Would You Locate?

Amusement Park

Pharmacy Distribution Center

Chemical Plant

Facility Location

Types of Facilities

• 1. Heavy Manufacturing– Ex. Auto plants, steel mills, chemical plants

• 2. Light Manufacturing– Ex. Electronics assembly

• 3. Warehouse & Distribution Centers• 4. Retail & Service Facilities

Factors for Heavy & Light Manufacturing

Factors for Warehouse & DC

Factors for Retail & Service

Location Analysis Techniques

• 1. Center-of-Gravity Heuristic– A. Identify a point that achieves low transportation cost

based on straight line distances

• 2. Location Factor Rating– A. Compare and rate specific sites based on various

factors

Center-of-Gravity Heuristic

Center-of-Gravity Heuristic Formulas

where,x, y = coordinates of the new facility at center of gravityxi, yi = coordinates of supplier or customer iVi = annual load weight shipped from supplier or to customer i

n

Vi

i = 1

xi Vi

i = 1

n

x =n

Vi

i = 1

yiVi

i = 1

n

y =

x1 x2 x3 x

y2

y

y1

y3

1 (x1, y1), l1

2 (x2, y2), l2

3 (x3, y3), l3

Center-of-Gravity Example

CustomerA B C D

xi 200 100 250 500yi 200 500 600 300Vi 75 105 135 60

y

700

500

600

400

300

200

100

0 x700500 600400300200100

A

B

C

D

(135)

(105)

(75)

(60)

Miles

Mil

es

Center-of-Gravity Example

x = = =n

Vii = 1

xiVii = 1

n

n

Vii = 1

yilii = 1

n

y = = = (200 x 75) + (500 x 105) + (600 x 135) + (300 x 60)

75 + 105 + 135 + 60

(200 x 75) + (100 x 105) + (250 x 135) + (500 x 60)

75 + 105 + 135 + 60

Center-of-Gravity Example

A B C D

xi 200 100 250 500yi 200 500 600 300Vi 75 105 135 60

y

700

500

600

400

300

200

100

0 x700500 600400300200100

A

B

C

D

(135)

(105)

(75)

(60)

Miles

Mil

es

Location Factor Rating

Location Factor Rating Example

Factor WeightSite Scores Weighted Score

1 2 3 1 2 3

Labor Market 30 4 3 5 120 90 150

Utilities 20 5 4 4 100 80 80

Road Access 20 3 5 4 60 100 80

Rail Access 15 4 4 4 60 60 60

Community 15 3 4 5 45 60 75

Total 385 390 445

• Evaluate three different sites