Operations Management: Creating Value Along the Supply Chain, 7th Edition

Chapter S7. Operational Decision-Making Tools: Facility Location Models

In this supplement, you will learn about . . .

• Types of Facilities

• Site Selection: Where to Locate

• Global Supply Chain Factors

• Location Analysis Techniques

The physical location of business facilities can have a significant impact on the success of a company. In this supplement we will briefly discuss some of the factors that are impor-tant in locating facilities. We will focus on several quantitative methods for facility location, including location factor ratings, the center-of-gravity technique, and the load-distance technique.

TYPES OF FACILITIES

The type of facility is a major determinant of its location. The factors important in determining the location of a manufacturing plant are usually different from those important in locating a service facility or a warehouse. In this section we discuss the major categories of facilities and the different factors that are important in the location desired.

Heavy manufacturing facilities are plants that are large, require a lot of space, and are expensive to construct, such as automobile plants, steel mills, and oil refineries.

Factors in the location decision for plants include construction costs, land costs, modes of transportation for shipping heavy manufactured items and receiving bulk shipments of raw materials, proximity to raw materials, utilities, means of waste disposal, and labor availability. Sites for manufacturing plants are normally selected where construction ...