As with capacity planning, managers need to follow a three-step procedure when making facility location decisions. These steps are as follows:
Step 1 Identify Dominant Location Factors. In this step managers identify the location factors that are dominant for the business. This requires managerial judgment and knowledge.
Step 2 Develop Location Alternatives. Once managers know what factors are dominant, they can identify location alternatives that satisfy the selected factors.
Step 3 Evaluate Location Alternatives. After a set of location alternatives have been identified, managers evaluate them and make a final selection. This is not easy because one location may be preferred based on one set of factors, whereas another may be better based on a second set of factors.
A number of procedures can help in evaluating location alternatives. These are decision-support tools that help structure the decision-making process. Some of them help with qualitative factors that are subjective, such as quality of life. Others help with quantitative factors that can be measured, such as distance. A manager may choose to use multiple procedures to evaluate alternatives and come up with a final decision. Remember that the location decision is one that a company will have to live with for a long time. It is highly important that managers make the right decision.
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