Facility Location Models
Facility Location Models
Facility Location Models
Facility Location
Models
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Types Of Facilities
Heavy manufacturing
Auto plants, steel mills, chemical plants
Light industry
Small components mfg, assembly
Warehouse & distribution centers
Retail & service
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Factors in Heavy
Manufacturing Location
Construction costs
Land costs
Raw material and finished goods
shipment modes
Proximity to raw materials
Utilities
Labor availability
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Factors in Light
Industry Location
Construction costs
Land costs
Easily accessible
geographic region
Education & training capabilities
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Factors in
Warehouse Location
Transportation costs
Proximity to markets
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Factors in Retail Location
Proximity to
customers
Location is
everything
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Global Location Factors
Government stability Raw material availability
Government regulations Number and proximity of
suppliers
Political and economic
Transportation and
systems
distribution system
Economic stability and Labor cost and education
growth
Available technology
Exchange rates Commercial travel
Culture Technical expertise
Climate Cross-border trade
Export import regulations, regulations
duties and tariffs Group trade agreements
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Regional Location Factors
Labor (availability, Incentive packages
education, cost and Governmental
unions) regulations
Proximity of Environmental
customers regulations
Number of customers Raw material
Construction/leasing availability
costs Commercial travel
Land costs Climate
Modes and quality of Infrastructure
transportation Quality of life
Transportation costs
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Regional Location Factors
Community Availability of sites
government Financial Services
Local business Community
regulations inducements
Government services Proximity of suppliers
Business climate Education system
Community services
Taxes
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Site Location Factors
Customer base Zoning restrictions
Construction/ Traffic
leasing cost Safety/security
Land cost Competition
Site size Area business
Transportation climate
Utilities Income level
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Location Incentives
Tax credits
Relaxed government
regulation
Job training
Infrastructure
improvement
Money
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Location Analysis
Techniques
Location rating factor
Center-of-gravity
Load-distance
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Location Rating Factor
Identify important factors
Weight factors (0.00 - 1.00)
Subjectively score each factor (0 - 100)
Sum weighted scores
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Location Factor Rating
SCORES (0 TO 100)
LOCATION FACTOR WEIGHT Site 1 Site 2 Site 3
Labor pool and climate .30 80 65 90
Proximity to suppliers .20 100 91 75
Wage rates .15 60 95 72
Community environment .15 75 80 80
Proximity to customers .10 65 90 95
Shipping modes .05 85 92 65
Air service .05 50 65 90
Example S5.1
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Location Factor Rating
WEIGHTED
SCORES SCORES
(0 TO 100)
LOCATION FACTOR WEIGHT Site 1 Site 2 Site 3
Labor pool and climate .30 24.00
80 19.50
65 27.00
90
Proximity to suppliers .20 20.00
100 18.20
91 15.00
75
Wage rates .15 9.00
60 14.25
95 10.80
72
Community environment .15 11.25
75 12.00
80 12.00
80
Proximity to customers .10 6.50
65 9.00
90 9.50
95
Shipping modes .05 4.25
85 4.60
92 3.25
65
Air service .05 2.50
50 3.25
65 4.50
90
77.50 80.80 82.05
Example S5.1
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Center-of-Gravity Technique
Locate facility at center of geographic area
Based on weight and distance traveled
Establish grid-map of area
Identify coordinates
and weights shipped
for each location
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Grid-Map Coordinates
y n n
∑ xW i i ∑ yiWi
2 (x2, y2), W2 i=1 i=1
y2 x= n y= n
∑W i ∑W i
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Center-of-Gravity Technique
y A B C D
700 x 200 100 250 500
C y 200 500 600 300
600 (135)
B Wt 75 105 135 60
500 (105)
Miles
400
D
300
A (60)
200 (75)
100
400
D
300n
A (60)
∑ yiWi
200
i=1 (75)
(200)(75) + (500)(105) + (600)(135) + (300)(60)
y= n
= = 444
100 75 + 105 + 135 + 60
∑ Wi
i=1
0 100 200 300 400 500 600 700 x
Miles
Example S5.2
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Center-of-Gravity Technique
y A B C D
700 x 200 100 250 500
C y 200 500 600 300
600 (135)
B Wt 75 105 135 60
500 (105)
Center of gravity (238, 444)
Miles
400
D
300
A (60)
200 (75)
100
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Load-Distance Calculations
n
LD = ∑ ld i i
i=1
where,
LD = the load-distance value
li = the load expressed as a weight, number of trips or units
being shipped from the proposed site and location i
di = the distance between the proposed site and location i
di = (xi - x)2 + (yi - y)2
where,
(x,y) = coordinates of proposed site
(xi , yi) = coordinates of existing facility
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Load-Distance Example
Potential Sites Suppliers
Site X Y A B C D
1 360 180 X 200 100 250 500
2 420 450 Y 200 500 600 300
3 250 400 Wt 75 105 135 60
dC = 434.2 dD = 184.4
Example S5.3
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Load-Distance Example
Site 2 dA = 333 dB = 323.9 dC = 226.7 dD = 170
Site 3 dA = 206.2 dB = 180.4 dC = 200 dD = 269.3
Compute load-distance
n
LD = ∑ l i di
i=1
Site 1 = (75)(161.2) + (105)(412.3) + (135)(434.2) + (60)(434.4) = 125,063
Site 2 = (75)(333) + (105)(323.9) + (135)(226.7) + (60)(170) = 99,789
Site 3 = (75)(206.2) + (105)(180.3) + (135)(200) + (60)(269.3) = 77,555*