Operations Management: An Integrated Approach, 5th Edition

LOCATION ANALYSIS

Location analysis

Techniques for determining location decisions.

You might have heard the old real estate adage: the three most important factors in the value of a property are location, location, location. Have you ever left a service provider that you liked—say, a doctor, barber, or tailor—because they were in a location that was difficult to get to or too far away? Look at the business locations in your own neighborhood. We have all seen facilities in certain locations that have a high turnover of businesses and owners. The types of businesses and owners may be completely different, yet something about the location does not make it successful. Why do most fast-food restaurants locate near one another? In order to draw customers to one location. Why are the large automakers centered in Michigan? To draw suppliers to one area. Why do many medical facilities locate near hospitals? To be accessible to patients. Why do retail stores typically locate near each other? To attract a higher volume of customers.

These examples illustrate the strategic importance of location decisions. All other aspects of a business can be designed efficiently, but if the location is selected poorly, the business will have a harder time being successful. Different types of businesses emphasize different factors when making location decisions. Service organizations such as restaurants, ...