University:
Cameron University
Course:
MGMT 3613 | Operations Management
Academic year:

2024
Views:

72

Pages:

2
Author:

Maverick Martin

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. Albany, New York 2. Indianapolis, Indiana 3. Akron, Ohio 4. Mason, Georgia 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: FACTOR WEIGHTS FACTORS WEIGHTS 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: DECISION FACTOR RATINGS FACTORS ALBANY INDIANAPOLIS AKRON MASON 1 3 8 6 1 2 5 4 7 8 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? SOLUTION FACTOR WEIGHTS FACTORS Transportation costs Construction/land costs WEIGHTS 5 Labor climate Availability of qualified labor 1 2 Production costs 4 3 FACTORS 1 2 3 4 5 FACTORS 1 2 3 4 5 TOTALS DECISION FACTOR RATINGS ALBANY INDIANAPOLIS AKRON MASON 3 8 6 1 5 4 7 8 3 5 2 9 8 7 6 2 4 5 6 7 SCORES ALBANY INDIANAPOLIS AKRON MASON 15 40 30 5 15 12 21 24 3 5 2 9 16 14 12 4 16 20 24 28 65 91 89 70