Discussing the main plant location models used in operations management

1. PLANT LOCATION
MODELS
27 November,
2019

2. GROUP MEMBERS
MOSES KOLLEH SESAY LY20191199
HAILU DESBELE HAGOS LY2019206
KIPROTICH EVANS LY2019192
2

3. INTRODUCTION
3
Various models are available which help to identify
the ideal location. Some of the popular models are:
1. Factor rating method
2. Weighted factor rating method
3. Load-distance method
4. Centre of gravity method
5. Break even analysis

4. FACTOR RATING
METHOD
Locating a Fabric manufacturing site using
Factor Rating Method
4
Rating
No Location Factors Factor Rating Location 1 Location 2
1 Demand 10 5 6
2 Material 8 7 6
3 Labour 5 4 4
4 Transport 5 4 3

5. FACTOR RATING METHOD
Solution to the factor rating
Method Question
5
RATING
NO LOCATION
FACTORS
FACTOR
RATING
LOCATION 1 TOTAL
SCORE
LOCATION
2
TOTAL
SCOR
E
1 Demand 10 5 50 6 60
2 Material 8 7 56 6 48
3 Transport 5 4 20 4 20
4 Labour 5 4 20 3 15
5 TOTAL 146 Total 143

6. WEIGHTED FACTOR RATING METHOD
Choosing A Warehouse Location For Shop At Home Using Weighted Factor
Rating Method
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NO LOCATION FACTORS WEIGHT
SCORE OUT OF 100
LOCATION A LOCATION B LOCATION C
1 Easy Access 0.15 86 72 80
2 Parking Facilities 0.2 72 77 90
3 Display Area 0.15 86 90 80
4 Walking Traffic 0.1 94 86 76
5 Transportation Cost 0.15 99 89 98
6 Operation Cost 0.25 96 85 90

7. WEIGHTED FACTOR RATING
METHOD
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NO LOCATION FACTORS WEIGHT
SCORE OUT OF 100 WEIGHTED SCORE
LOCATION A LOCATION B LOCATION C LOCATION A LOCATION B LOCATION C
1 Easy Access 0.15 86 72 80 12.9 10.8 12
2 Parking Facilities 0.2 72 77 90 14.4 15.4 18
3 Display Area 0.15 86 90 80 12.9 13.5 12
4 Walking Traffic 0.1 94 86 76 9.4 8.6 7.6
5 Transportation Cost 0.15 99 89 98 14.85 13.35 14.7
6 Operation Cost 0.25 96 85 90 24 21.25 22.5
TOTAL 88.45 82.9 86.8

8. 8
LOAD-DISTANCE METHOD

9. LOAD-DISTANCE METHOD
A Load-Distance Model Example: Matrix Manufacturing
is considering where to locate its warehouse in order to
service its four Ohio stores located in Cleveland,
Cincinnati, Columbus, Dayton. Two sites are being
considered; Mansfield and Springfield, Ohio. Use the
load-distance model to make the decision.
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LOCATIONS SPRINGFIELD MANSFIELD
CITY LOAD (X,Y)
Cleveland 15 11,22
Columbus 10 10,7
Cincinnati 12 4,1
Dayton 4 3,6

10. LOAD-DISTANCE METHOD
CALCULATING THE LOAD-DISTANCE SCORE FOR SPRINGFIELD VS. MANSFIELD
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City Load (X ,Y)
SPRINGFIELD (6,6.5) MANSFIELD(11,14)
Distance Load Distance Distance Load Distance
Cleveland 15 11,22 20.5 307.5 8 120
Columbus 10 10,7 4.5 45 8 80
Cincinnati 12 4,1 7.5 90 20 240
Dayton 4 3,6 3.5 14 16 64
456.5 504

11. LOAD-DISTANCE METHOD
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The Load-distance Score For Mansfield Is Higher Than For
Springfield. The Warehouse Should Be Located In Springfield.

12. 12
CENTER OF GRAVITY
CITY LOAD LI COORDINATES (XI,YI)
Cleveland 15 11,22
Columbus 10 10,7
Cincinnati 12 4,1
Dayton 4 3,6
41
This Approach Requires That The Analyst Find The Center Of Gravity
Of The Geographic Area Being Considered

13. 13
CENTER OF GRAVITY
CITY LOAD LI (XI,YI) LIXI LIYI
Cleveland 15 11,22 165 330
Columbus 10 10,7 100 70
Cincinnati 12 4,1 48 12
Dayton 4 3,6 12 24
41 325 436
𝑙𝑜𝑐𝑎𝑡𝑖𝑜𝑛 𝑥 =
∑LiXi
∑𝐿𝑖
=325/41= 7.9
𝑙𝑜𝑐𝑎𝑡𝑖𝑜𝑛 𝑦 =
∑LiYi
∑𝐿𝑖
=436/41=10.6
Computing the Center of Gravity for Matrix Manufacturing

14. 14
BREAK-EVEN ANALYSIS
Example Using Break-Even Analysis
CLEAN-CLOTHES CLEANERS IS CONSIDERING FOUR POSSIBLE SITES FOR ITS NEW
OPERATION. THEY EXPECT TO CLEAN 10,000 GARMENTS. THE TABLE AND GRAPH
BELOW ARE USED FOR THE ANALYSIS.

15. 15
BREAK-EVEN ANALYSIS
Break Even Graph For Clean Cloth Cleaners
Most Suitable

16. 16
BREAK-EVEN ANALYSIS
 Location C is suitable up to 4,500 units;
 Location B is suitable up to between 4,500 to 9,000 units;
 Location A is suitable if the demand is more than 9,000 units.