Workshop on Facility Location and Layout
1. Why does selecting an appropriate location of a warehouse is important to a firm
operations?
2. A manufacturing company preparing to build a new plant is considering three potential
locations for it. The fixed and variable costs for the three alternative locations are
presented below.
a. Complete a numeric locational cost-volume analysis.
b. Indicate over what range each of the alternatives A, B, C is the low-cost choice.
Costs
Fixed ($)
Variable ($ per unit)
A
2,500,000
21
9
B
2,000,000
25
C
3,500,000
15
3. Location Factor Rating
The administration at Burapha University wants to construct a new student athletic, shopping,
and dining complex on campus. The university planning office is considering possible sites
around the campus. They have studied a number of factors related to the location of the
complex and they have scored the most important ones for each site as follows.
Location Factors
1.
2.
3.
4.
5.
6.
7.
Auto traffic flow
Student/dorm concentration
Parking availability
Utilities
Proximity to local merchants
Drainage
Aesthetic considerations
Weight
0.25
0.20
0.15
0.15
0.10
0.10
0.05
Site 1
70
65
100
87
69
50
86
Score (0 to 100)
Site 2 Site 3
75
84
91
85
83
90
96
80
85
80
68
92
100
95
Site 4
68
96
92
85
95
77
80
Site 1
Weighted Score
Site 2 Site 3
Site 4
Determine the best site using the factor rating method.
Location Factors
Weight
1. Auto traffic flow
0.25
2. Student/dorm concentration
0.20
3. Parking availability
0.15
4. Utilities
0.15
5. Proximity to local merchants
0.10
6. Drainage
0.10
7. Aesthetic considerations
0.05
Total Score
10
4. Center –of-Gravity Technique
A Communications Company owns and operates cable television systems in five communities
in the southwestern part of Thailand. They want to construct a centralized service facility
from which to send out their service teams for repair and installations. The communities have
the following sets of location coordinates and annual number of repair truck visits.
A
xA = 20
yA = 20
wA = 420
B
xB = 55
yB = 30
wB = 610
C
xC = 25
yC = 60
wC = 505
D
xD = 10
yD = 40
wD = 370
E
xE = 60
yE = 50
wE = 570
Using the center-of-gravity method to determine the possible locations for the central service
facility.
Y
90
80
70
60
50
40
30
20
10
0
0
10
20
30
40
50
11
60
70
80
90
X
5. Load-Distance Technique
Ann Food Market owns grocery stores in four communities in a three-county area. They
want to construct a centrally-located warehouse to process, package, and distribute produce
and other food items for their four stores. The items are transported in 40-foot trailer trucks.
The stores have the following set of coordinates and annual shipments.
A
xA = 60
yA = 130
wA = 145
B
xB = 110
yB = 40
wB = 210
C
xC = 35
yC = 90
wC = 160
D
xD = 70
yD = 50
wD = 95
Three sites are being considered for the warehouse with the following coordinates:
Site 1: x1 = 50, y1 = 60
Site 2: x2 = 100, y2 = 70
Site 3: x3 = 40, y3 = 90
Using the load-distance technique, determine the best location for the warehouse.
Y
130
120
110
100
90
80
70
60
50
40
30
20
10
0
0
10
20
30
40
50
60
70
12
80
90
100
110
120
130
X