Facility Location
Example
Due to a significant sustained increase in demand, the ITM fastener manufacturing company has decided to build a new plant. After an initial study, it has narrowed its choices to four locations:
1.
2.
3.
4.
ITM also identified the following as being important factors in terms of the facility location decision:
1. Transportation costs
2. Construction/land costs
3. Labor climate
4. Availability of qualified labor
5. Production costs
On a five-point scale, the company has determined the following weights for these factors:
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FACTOR WEIGHTS |
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FACTORS |
WEIGHTS |
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Transportation costs |
5 |
|
Construction/land costs |
3 |
|
Labor climate |
1 |
|
Availability of qualified labor |
2 |
|
Production costs |
4 |
The decision factor ratings for each criteria is given in the following table:
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DECISION FACTOR RATINGS |
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FACTORS |
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MASON |
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1 |
3 |
8 |
6 |
1 |
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2 |
5 |
4 |
7 |
8 |
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3 |
3 |
5 |
2 |
9 |
|
4 |
8 |
7 |
6 |
2 |
|
5 |
4 |
5 |
6 |
7 |
Determine the factor scores for all four locations. What is the recommended site? If the first site is not available, what is the second choice?
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SOLUTION |
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FACTOR WEIGHTS |
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FACTORS |
WEIGHTS |
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Transportation
costs |
5 |
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Construction/land
costs |
3 |
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Labor climate |
1 |
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Availability of
qualified labor |
2 |
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Production costs |
4 |
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DECISION FACTOR
RATINGS |
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FACTORS |
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MASON |
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1 |
3 |
8 |
6 |
1 |
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2 |
5 |
4 |
7 |
8 |
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3 |
3 |
5 |
2 |
9 |
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4 |
8 |
7 |
6 |
2 |
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5 |
4 |
5 |
6 |
7 |
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SCORES |
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FACTORS |
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MASON |
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1 |
15 |
40 |
30 |
5 |
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2 |
15 |
12 |
21 |
24 |
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3 |
3 |
5 |
2 |
9 |
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4 |
16 |
14 |
12 |
4 |
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5 |
16 |
20 |
24 |
28 |
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TOTALS |
65 |
91 |
89 |
70 |
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