PREPARED BY:

CADORNA, CAMILLE O.

CALAWOD, JANICA V.

BELA-ONG, MARY GRACE P.

SAWIT, ANDRIA V.

LOCATING FACILITIES- MEANING

IMPORTANCE OF LOCATION

LOCATION DECISION

CHOOSING THE GEOGRAPHIC REGION

- is the process of identifying the best

geographic location for the services or

production facilities of the firm.

Facilities Location

finds the best

geographic locations

for the different

elements in the

supply chain

Right Location

provides adequate

access to customers,

suppliers, skilled

labors, etc.

Right Location

ensures success of

the organization in

current global

environment.

starting new business

insufficient capacity

changes in technology

mergers

end of a lease on existing

premises

changes in location of

customers or suppliers

Efficiency and

effectiveness

Long-term commitment

Fixed cost

Revenues

Variable cost

CHOOSING GEOGRAPHIC REGION

Business

Strategy

Culture,

costs,

customers,

suppliers, etc

Local

Conditions

Available

Sites

Geographical

regions for

locations

Countries

and areas

Cities and

towns

Individual

Sites

HIERARCHY

OF DECISION

FOR

LOCATIONS

1.National

2.Regional

3.Community

Considerations

4.Site-Related Factors

FACTORS AFFECTING LOCATION DECISION

1. Location of raw materials

2. Location of markets

3. Labor Factors

4. Legal and Political Community

Considerations

5. Quality of Life

6. Services

7. Attitudes

REGIONAL FACTORS

FACTORS TO CONSIDER8. Environmental Regulations

9. Utilities

10.Developer

11.Developer Support Site-Related

Factors

12.Land

13.Transportation

14.Environment

15.Legal

INFINITES E T A P P R O A C H

FEASIBLESET APPROACH

INFINITES E T A P P R O A C H

uses geometric arguments to find the

best location, assuming that there are

no restrictions on site availability.

FEASIBLESET APPROACH

where there are only small number of

feasible sites, and an organization has

to choose the best.

INFINITES E T A P P R O A C H

LOCATION FACTOR

RATING METHOD

INFINITES E T A P P R O A C H

- may be used when many sites

are available, and each site has

some appealing characteristics

INFINITES E T A P P R O A C H

CENTER-OF-GRAVITY

TECHNIQUE METHOD

-can be used when multiple

suppliers or customers bases exist

on different geographic locations

and it is economically sensible to

locate centrally to service all of

them.

INFINITES E T A P P R O A C H

THE EUCLIDEAN

MODEL

- concerned with the

selection of the best

location(s) for establishing

facilities based on cost or

other criteria

INFINITES E T A P P R O A C H

S I M P L E M E T H O D S

NEAR TO CUSTOMERS

C

C

C

S

S

S

INFINITES E T A P P R O A C H

S I M P L E M E T H O D S

NEAR TO SUPPLIERS

C

C

C

S

S

S

INFINITES E T A P P R O A C H

S I M P L E M E T H O D S

COMPROMISE POSITION

C

C

C

S

S

S

FEASIBLESET APPROACHES

- identify available

sites, compare them,

and find the best

TWO MODELS

• Costing model

• Scoring model

COSTING MODEL

- calculates the total cost of working from

each location and find the cheapest

total variable cost = operating cost

+ inward transport cost + outward

transport cost

SCORING MODEL

- emphasizes the factors that are important

for locations but which cannot easily put cost

or quantified

Region or Country

City or Area

Site

SCORING MODEL

5 STEPS

decide the relevant factors in a decision1

2

3

4

5

give each factor a maximum possible score

that shows its importance

consider each location in turn and give an

actual score for each factor, up to the

maximum

add the scores for each location and

find the highest Step

discuss the result and make a final

decision

5. government policies

toward industries

4. closeness of suppliers and services

6. quality of infrastructure

3. environment and quality

of life for employees

1. availability of a workforce

with appropriate skills

2. labor relations and

community attitudes

Important Factors for

Manufacturing Business

1. population density

3. location of competitors

4. location of other attractions

6. ease of access and

convenient parking

7. visibility of sites

5. convenience for passing traffic

and public transport

Important Factors for

Services

2. socio-economic

characteristics of the nearby

population

ALTERNATIVES IN

LOCATING FACILITIES

Licensing or franchising

Exporting

Local distribution and sales

Local assembly and finishing

Full local production

Network Models