Professional Documents
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Operations Management
Management
Instructor:
Instructor: Dr.
Dr. Rizwan
Rizwan Ahmed
Ahmed
Lecture Outline
Types of facilities
Site selection: where to locate
Location analysis techniques
Types of Facilities
Heavy-manufacturing facilities
large, require a lot of space, and are expensive
Light-industry facilities
smaller, cleaner plants and usually less costly
Distribution centers
Need to be close to road/rail links, main
markets/customer segments; need big space
Back office
Proximity of customers
Number of customers
Raw material availability
Proximity to suppliers or
supply sources
Labor (availability,
education, cost, and
unions)
Available technology
Technical expertise
Culture
Local preferences
Climate
Infrastructure (e.g.,
roads, water, sewers)
Modes and quality of
transportation
Transportation costs
Commercial travel
Land / construction/
leasing costs
Availability of sites
Light Industry
Distribution
Centers
Retail &
Services
Back Office
Construction
costs
Land costs
High
Medium
Medium
Low/Medium
Low
High
Medium
Medium
Low/Medium
Very low
Transportation
cost
Utilities cost
Proximity to
required
transportation
modes
High
Medium
High
Low
Very low
Very High
High
High
Medium
Low
High
Medium
Low
Medium
Low
High
Medium
N/A
N/A
N/A
Medium
Medium/High
High
Very high
Very low
Low
Medium
Medium
Very High
Very Low
High
High
Medium
Medium
Medium
Proximity to Raw
Materials/supplier
Proximity to main
markets/segment
Proximity to
Customers
Proximity to
Labor
WEIGHT
Site 1
Site 2
Site 3
.30
.20
.15
.15
.10
.05
.05
80
100
60
75
65
85
50
65
91
95
80
90
92
65
90
75
72
80
95
65
90
Site 2
Site 3
24.00
20.00
9.00
11.25
6.50
4.25
2.50
77.50
19.50
18.20
14.25
12.00
9.00
4.60
3.25
80.80
27.00
15.00
10.80
12.00
9.50
3.25
4.50
82.05
Center-of-Gravity Technique
Locate facility at center of
geographic area w.r.t
Major suppliers or supply sources
Main customers or markets
Based on weight and distance
traveled
Identify coordinates and weights
shipped to/from each location
(based on estimates or historical
data)
Grid-Map Coordinates
y
y1
xW
i=1
2 (x2, y2), W2
y2
x=
i=1
i=1
y=
1 (x1, y1), W1
yW
i=1
where,
3 (x3, y3), W3
y3
x1
x2
x3
x, y = coordinates of new
facility at center of gravity
xi, yi = coordinates of
supplier i
Wi =
annual weight
shipped from facility i
Center-of-Gravity Technique:
Example
The Burger Doodle restaurant chain purchases ingredients
from four different food suppliers.
The company wants to construct a new central distribution
center to process and package the ingredients before
shipping them to their various restaurants.
The suppliers transport ingredient items in 40-foot truck
trailers, each with a capacity of 10 tons.
The locations of the four suppliers, A, B, C, and D, and the
annual number of trailer loads that will be transported to
the distribution center are shown in the following figure:
Center-of-Gravity Technique:
Example
y
700
600
Miles
500
C
(135)
B
(105)
400
300
200
x
y
Wt
D
(60)
A
(75)
100
0
A
200
200
75
B
100
500
105
C
250
600
135
D
500
300
60
Center-of-Gravity Technique:
Example (cont.)
n
xiWi
x=
i=1
n
Wi
= 238
i=1
n
y=
yiWi
i=1
n
Wi
i=1
Center-of-Gravity Technique:
Example (cont.)
y
700
600
Miles
500
C
(135)
B
(105)
400
300
200
x
y
Wt
B
100
500
105
(75)
100
0
A
200
200
75
C
250
600
135
D
500
300
60
Load-Distance Technique
Load-Distance Calculations
n
LD =
ld
i
i=1
where,
LD =
load-distance value
li
di
di
where,
(x,y) = coordinates of a proposed site
(xi , yi) = coordinates of a supplier location
Load-Distance: Example
Potential Sites
Site
X
Y
1
360
180
2
420
450
3
250
400
A
200
200
75
X
Y
Wt
Suppliers
B
C
100
250
500
600
105
135
D
500
300
60
dB =
dC = 434.2
dD = 184.4
dD = 269.3
Compute load-distance
LD =
l i di
i=1
* Choose site 3