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Operations Management: Processes and Supply Chains, 12th Edition by Larry P. Ritzman, Manoj K. Malhotra, Lee J. Krajewski

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Transportation Method

When a firm with a network of existing facilities plans a new facility, one of two conditions exists: (1) Either the facilities operate independently (examples include a chain of restaurants, health clinics, banks, or retail establishments) or (2) the facilities interact by moving materials or products to each other or share in the servicing of particular customers (examples include component manufacturing plants, assembly plants, and warehouses). Independently operating units can be located by treating each as a separate single facility, as we assumed with the load–distance method and break-even analysis. When facilities are interactive, the location of a new facility affects the shipping pattern of other facilities in ...

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