CHAPTER 9
LOCATION
THE CONCEPT

the most important trend in location pattern :
globalization
 reflecting particular strategy that has significant
impacts on company’s cost, pricing and ability to
compete in marketplaces
THE GLOBALIZATION
The reasons for globalization :
 improved transportation and communication technology
 opened financial system
 increased demand for imports
 reduced import quota and other trade barriers
The disadvantages :
 political risk
 employee skills
 response time can be longer
FACTORS AFFECTING LOCATION DECISION
Dominant factors which are derived from competitive
priorities :
 favorable labor climate
 proximity to markets
 quality of life
 proximity to suppliers and resources
 proximity to the parent company’s facilities
 utilities, taxes and real estate costs
FACTORS AFFECTING LOCATION DECISION
Dominant factors in services :
 proximity to customers
 transportation costs and proximity to customers
 location and competitors
 site-specific-factors
LOCATING A SINGLE FACILITY

selection on-site-expansion, new location or relocation
 comparing several sites (identify the important factors,
consider alternative regions, collect data, analyze the
collected data, bring the qualitative factors pertaining
to each site into evaluation)
THE QUANTITATIVE METHODS

Weighted Score in a Preference Matrix
 Load Distance Method : based on proximity factors,
either distance or time
 Center of Gravity
 Break Even Analysis
LOCATING A FACILITY
WITHIN A NETWORK OF FACILITIES
The issues :
 location
 allocation
 capacity
which have to be solved simultaneously - in
transportation method