TOPIC 2 PLANT LOCATION STRATEGIES (1)

The factor rating technique is a systematic method used to evaluate and compare different location options based on various weighted factors that are important to the decision-making process.

32 (Baling)

Sg. Petani

Rank the locations by assigning the highest ranking to the highest total score.

Choose the best location, which is the one with the highest total score.

Labor cost per day divided by production (units per day) equals cost per unit.

Manufacturers need to be close to customers due to Just-In-Time (JIT) systems or high transportation costs associated with bulky, heavy, and fragile products.

The factor rating technique is used to evaluate different locations based on various factors, assigning weights and scores to determine the best option.

Labor availability is the highest-ranking intangible factor.

National, state, and local government attitudes towards private and intellectual property, zoning, pollution, and employment stability can be in flux and affect location decisions.

The quality of life in Baling is rated as Poor.

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By multiplying the factor's weight with its rating's value for each location.

Locations are ranked by assigning the highest ranking to the highest total score.

Sg. Petani with 375 RM'000.

Factors that are hard to measure in monetary value, such as labor availability, proximity to market, and facilities availability.

Recommend the location with the highest point score.

Kodiang with 745.5 RM'000.

The needs for location decision include proximity to markets, access to suppliers, labor availability, and cost considerations.

The factor rating technique is a method used to evaluate and compare different location alternatives based on various factors that are important to the decision-making process. Each factor is assigned a weight based on its importance, and locations are scored against these factors to determine the best option.

Tangible factors are scored based on measurable criteria, while intangible factors are scored based on subjective assessments.

Calculate the total cost for each alternative location.

A weight of 1 is assigned to intangible factors.

Political risks, cultural and economic issues, location of markets, labor talent, and availability of supplies.

Quality of life is assigned a weight of 2.

Site size and cost, transportation systems, zoning restrictions, and proximity of services.

Location affects both fixed and variable costs of the organization.

The factor rating technique is used to evaluate different location options based on weighted criteria.

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Kodiang

A location method that instills objectivity in evaluating hard-to-evaluate costs, allowing managers to use weighting to make the decision process more objective.

Clustering is found in both manufacturing and service industries.

Companies like to locate near competitors to benefit from shared resources and market dynamics.

Companies face expensive inbound transportation costs for heavy and bulky raw materials.

Facilities need to be near raw materials to minimize transportation costs and ensure efficiency in production.

1. Determine fixed and variable costs for each location 2) Plot the cost for each location 3) Select location with lowest total cost for expected production volume.

To find the best location for a distribution center that minimizes distribution costs.

The highest-ranking location should be assigned the highest merit, for example, a merit of 3.

i) Fixed cost (FC) ii) Variable cost (VC) iii) Selling Price (SP)

Transportation quality has a rank of 2 and a weight of 3.

Assign weights to tangible and intangible factors.

It affects costs, attitudes towards unions, and overall productivity.

Environmental impact issues must be assessed to ensure compliance with regulations.

Clustering refers to the location of competing companies near each other, often due to a critical mass of information, talent, venture capital, or natural resources.

Lower production may increase total cost, so management considers both wage rates and productivity.

In Connecticut, the cost is $1.25 per unit; in Juarez, it is$1.17 per unit.

Operations managers face significant challenges due to differing cultural attitudes towards punctuality, legal issues, and ethical considerations.

A higher total score indicates a more favorable location based on the evaluated factors.

Score each location for each factor.

To determine the quantity to be produced so that the firm can break even.

Both tangible and intangible costs, including measurable costs like utilities and labor, as well as less quantifiable aspects like community attitude and employee quality.

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Analyze the intangible factors, rank them by importance, convert the rank into weight, check the ratings, convert ratings into numerical values, calculate the total score for each location, rank the locations by total score, assign merit to each location, and choose the best location.

The highest-ranking factor should be given the highest rank (e.g., rank 1) and the highest weight (e.g., weight of 3).

EXCELLENT = 5 and VERY GOOD = 4.

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Exchange rates can have a significant impact on cost structure as they change over time, and unfavorable rates may negate any savings.

Businesses should consider that unfavorable exchange rates may negate any savings and that they can take advantage of favorable exchange rates by relocating to a foreign country.

Worker values, such as attitudes towards turnover, unions, and absenteeism, can influence the offers made to current workers if a firm relocates.

Develop a list of relevant factors called critical success factors.

1. Location of markets 2) Volume of goods shipped to those markets 3) Shipping cost.

The most important factor is given the highest rank, followed by other factors accordingly.

The factor rating technique is used to evaluate location options.

Baling: RM 350, Kodiang: RM 360, Sg. Petani: RM 375, Kulim: RM 380.

Transportation quality is rated as Good in all locations: Baling, Kodiang, Sg. Petani, and Kulim.

They can influence the attractiveness of a region and affect costs and availability of utilities.

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The total score is calculated by multiplying the factor's weight with its rating's numerical value.

Baling, with the highest total score of 32.

Locating near customers is crucial for services like drugstores, restaurants, post offices, or barbers.

Firms locate near their raw materials and suppliers due to perishable goods, high transportation costs, and bulky perishable raw materials.

Businesses like bakeries, dairy plants, and frozen seafood processors typically need to be located near their suppliers.

A mathematical technique used for finding the location of a distribution center that minimizes distribution costs.

Community acceptance is assigned a weight of 1.

The location with the lowest total cost is assigned the highest rank, followed by other locations.

Multiply the weight with the merits of every location for both tangible and intangible factors, then sum the results.

Location affects fixed and variable costs, overall risk, and profit. A new location may be necessary if demand exceeds current production capacity, and changes in labor productivity, exchange rates, costs, or community attitudes can also influence this decision.

Factors include proximity to markets and suppliers, labor availability, transportation costs, and local regulations.

It is a method used to evaluate location alternatives by assigning weights to various factors and scoring each location based on those factors.

A new location is necessary if demand has exceeded the current production capacity.

Changes in labor productivity, exchange rates, costs, community attitudes, shifts in demographics, and customer demand.

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The highest-ranking location is assigned the highest merit, with rank 1 given a merit of 4.

It is popular because a wide variety of factors, both quantitative and qualitative, can be included in the analysis.

The factors included are called tangible and intangible factors, respectively.

Labor availability is the most important intangible factor.

Community acceptance is considered the least important intangible factor.

Selecting a country to operate.

Less easy to quantify costs, including quality of education, public transportation facilities, community attitude, and quality/attitude of prospective employees.

To reflect the importance of each factor in the overall evaluation.

A method used to evaluate location alternatives based on various factors.

Choose the best location, which is the one with the highest merit.

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Baling: RM 10, Kodiang: RM 10.5, Sg. Petani: RM 11.5, Kulim: RM 11.

Factor rating technique.

Labor availability

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Factors to consider include transportation costs, utility availability, local regulations, and environmental impact.

The factor rating technique is a method used to evaluate potential locations by assigning weights and scores to various factors.

Location can be evaluated by scoring each potential site against the identified factors and calculating a weighted total to determine the best option.

A weight of 2 is assigned to tangible factors.

Readily identifiable costs that can be measured with precision, such as utilities, labor, materials, taxes, depreciation, and transportation of raw materials and finished goods.

The ranking helps to identify the best location among the options evaluated based on their total scores.

Location decisions are crucial for optimizing operational efficiency, reducing costs, and enhancing market access.

Baling: 760, Kodiang: 745.5, Sg. Petani: 781.5, Kulim: 759

Factors that can be measured in monetary value, such as labor, transportation, and raw material costs.

Baling: RM 400, Kodiang: RM 375, Sg. Petani: RM 395, Kulim: RM 368.

1. Kodiang, 2. Kulim, 3. Baling, 4. Sg. Petani

Baling: 10, Kodiang: 10.5, Sg. Petani: 11.5, Kulim: 11 (in RM'000).

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Break-even analysis is a financial calculation to determine the point at which total revenues equal total costs, indicating no profit or loss.