Chapter 8

1
Chapter 8 Location Planning

• Location decision factors, multi-plant
  strategies, cost-profit-volume analysis

2
Location Decision Factors

• What are some factors that you think are
  important in making a location decision?

3
Regional Location Factors

• Close to suppliers
• Quick delivery
• Close to raw materials
• Major raw material
• Close to customers
• Tradeoffs with supplier proximity
• Labor supply
• Right skills, sufficient amount

4
Community Location Factors - 1

• Taxes
• Property, income, sales
• Development support
• Infrastructure, loans, tax abatement
• Regulations
• Environmental air, water, hazardous material
• Other building codes, restrictions, requirements
• Utilities
• Electricity, natural gas, water, phones, cable,
  satellite

5
Community Location Factors - 2

• Acceptance
• Community support
• Services
• Police, fire, medical
• Quality of life
• Schools, recreation, COL, housing, shopping,
  transportation, religious institutions
• Universities
• Research facilities and higher education

6
Site Location Factors

• Land
• Purchase/lease costs
• Geological, flood control
• Transportation
• Air, rail, highway
• Environmental/legal
• Toxic cleanups
• Zoning regulations

7
Multiple Plant Strategies

• Organize by product
• Organize by market
• Organize by process (or component)
• Combination

8
Examples

• Tin can manufacturer (peaches)
• Refrigerator manufacturer
• Automobile assembly
• Car dealer
• Fast food franchise (McDonald's)
• Fast food franchise (Taco Bell)
• Electronic test equipment manufacturer
• MRP II Consultant

9
Cost-Profit-Volume Analysis

• Mathematical or graphical
• Procedure
• Determine fixed variable costs
• Plot costs for all considered locations
• Determine lowest total cost for expected output
  (volume)
• Note that at different volumes other alternatives
  may be preferable