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Explain the need for suitable location

Explain the need for suitable location

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Explain the need for suitable location

17:55 | 1.4MB/s O 70 ): Find.. maximize gains. identiryıng an ideai Iocation is very cruciai, it snouid always maximize the net advantage, must minimize the unit cost of production and distribution. Plant location decisions are very important because once the plant is located at a particular site then the organization has to face the pros and cons of that initial decision (myventurepad, n.d.). Lesson 2. The Need for Selecting a Suitable Location (Kumar & Suresh, 2008) The need for selecting a suitable location arises because of three situations: I. When starting a new organization II. In case of existing organization I. In case of globalization I. In case of Location Choice for the First Time or New Organization Factors to be considered: 1. Identification of region The organizational objectives along with the various long-term considerations about marketing, technology, internal organizational strengths and weaknesses, region-specific resources and business 26 environment, legal-governmental environment, social environment and geographical environment suggest a suitable region for locating the operations facility. 2. Choice of a site within a region Once the suitable region is identified, the next step is choosing the best site from an available set. Choice of a site is less dependent on the organization's long-term strategies. Evaluation of alternative sites for their tangible and intangible costs will resolve facilities-location problem. 3. Dimensional analysis Since both tangible and intangible costs need to be considered for a selection of a site, dimensional analysis is used. Dimensional analysis consists in computing the relative merits (cost ratio) for each of the cost items for two alternative sites. The existing firms will seek new locations in order to expand the capacity or to place the existing facilities. When the demand for product increases, it will give rise to following decisions: Whether to expand the existing capacity and facilities; Whether to look for new locations for additional facilities:
Transcribed Image Text:17:55 | 1.4MB/s O 70 ): Find.. maximize gains. identiryıng an ideai Iocation is very cruciai, it snouid always maximize the net advantage, must minimize the unit cost of production and distribution. Plant location decisions are very important because once the plant is located at a particular site then the organization has to face the pros and cons of that initial decision (myventurepad, n.d.). Lesson 2. The Need for Selecting a Suitable Location (Kumar & Suresh, 2008) The need for selecting a suitable location arises because of three situations: I. When starting a new organization II. In case of existing organization I. In case of globalization I. In case of Location Choice for the First Time or New Organization Factors to be considered: 1. Identification of region The organizational objectives along with the various long-term considerations about marketing, technology, internal organizational strengths and weaknesses, region-specific resources and business 26 environment, legal-governmental environment, social environment and geographical environment suggest a suitable region for locating the operations facility. 2. Choice of a site within a region Once the suitable region is identified, the next step is choosing the best site from an available set. Choice of a site is less dependent on the organization's long-term strategies. Evaluation of alternative sites for their tangible and intangible costs will resolve facilities-location problem. 3. Dimensional analysis Since both tangible and intangible costs need to be considered for a selection of a site, dimensional analysis is used. Dimensional analysis consists in computing the relative merits (cost ratio) for each of the cost items for two alternative sites. The existing firms will seek new locations in order to expand the capacity or to place the existing facilities. When the demand for product increases, it will give rise to following decisions: Whether to expand the existing capacity and facilities; Whether to look for new locations for additional facilities:
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