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LOCATION ANALYSIS
Discussant
NPTEL
DEPARTMENT OF MANAGEMENT STUDIES
Discussant
Professor D.K.Banwet
B.E (Mech), M.E (Indl. Engg.),
Ph.D (Indl. Engg / Production Operations Mgt.) [IITD], FIE
Some Aspects of
FACILITIES LOCATION PLANNING
Key decisions in the LIFE of a Production system
Birth of
system
Product design
& Process
Selection
Product design
& Process
Selection
Manning of
the system
Revision
Start up of
the system
Termination
System in
steady state
Quality
Control
Maint. Cost
Repl. & Control
Rel.
Continual
Operating/
Controlling
Facilities planning
It is complex & broad subject that cuts
across several disciplines
It is the composite of facilities location &
facilities design
Facilities
System Design
Layout
Design
Facilities
Deign
Handling
System Design
HIERARCHY OF LOCATION
PROBLEMS
Location of Plant
Plant Layout (Location of Depts)
Physical Arrangements of M/cs
Work Place Layout
(Location of tools or raw materials)
Strategic importance of
location decision
To become the low cost producer of final
products.
To increase profits by planning to capture
the increased market share.
To base location of the facilities based on
customer convenience.
To base location of a facility based on
where it fits in the entire supply chain.
(Beginning, Middle or end of the chain)
SOME FACTORS
GOVERNING LOCATION
Economic Reasons (Cost,profit,raw
materials, labor, power, transportation,
marketability etc.)
Social Reasons (Employee welfare,
employment, opportunities, public needs,
sanitation, community attitude)
Political Reasons (Govt Policies of
decentralization regional & development
planning)
IMPORTANT FACTORS IN
LOCATION
MARKET
RAW MATERIALS
TRANSPORTATION
POWER
CLIMATE AND FUEL
LABOUR AND WAGES
LAWS AND TAXATION
COMMUNITY SERVICES
WATER AND WASTE
GOVT. INCENTIVES
17
Location options
Doing nothing
Factors influencing
Location Decision
Regional Factors
Multiple Plant
Strategies
Community
Considerations
Site-related
Factors
Regional Factors
Community Considerations
Quality of life
Services (Medical, police, fire services
etc.)
Attitudes of the people
Taxes
Environmental regulations
Utilities
(cost and availability)
Service/Retail
Revenue focus
Population/drawing area
Labor cost/availability/skills
Competition
Building/leasing costs
Traffic volume/patterns
Customer access/parking
Evaluating Locations
Transportation Model
Decision based on movement costs of raw
materials or finished goods
Cost-Profit-Volume Analysis
- Decision based on fixed cost, variable cost and the
level of output produced at a particular location.
Center of Gravity (or Centroid) Method
Decision based on minimum distribution costs
Factor Rating
Decision based on quantitative and qualitative
inputs
Multi Criteria /Analytic Hierarchy Process based FLP
Evaluating Locations
Cost-Profit-Volume Analysis
Example 1: Solution
F ix e d
C o s ts
A
B
C
D
$2
1
1
2
5
0
5
0
0
0
0
0
,0
,0
,0
,0
0
0
0
0
V a r ia b le
C o s ts
0
0
0
0
$1
3
2
3
1
0
0
5
(1
(1
(1
(1
0
0
0
0
,0
,0
,0
,0
0
0
0
0
0
0
0
0
T o ta l
C o s ts
)
)
)
)
$3
4
3
5
6
0
5
5
0
0
0
0
,0
,0
,0
,0
0
0
0
0
0
0
0
0
Example 1: Solution
$(000)
800
700
600
500
400
300
200
100
D
B
C
A
A Superior
0
C Superior
B Superior
0
10
12
14
16
d V
V
ix
Cy =
d V
V
iy
Where:
Cx = X coordinate of centroid
Cy = Y coordinate of centroid
dix = X coordinate of the ith location
diy = Y coordinate of the ith location
Vi = volume of goods moved to or from ith location
Q
(790,900)
D
(250,580)
A
(0,0) (100,200)
S ho wro o m
No o f Z-Mo b ile s
s o ld p e r mo nth
1250
1900
Q
2300
X
Question:
Question:What
Whatisisthe
thebest
bestlocation
locationfor
foraanew
newZ-Mobile
Z-Mobile
warehouse/temporary
warehouse/temporarystorage
storagefacility
facilityconsidering
consideringonly
only
distances
distancesand
andquantities
quantitiessold
soldper
permonth?
month?
Q
(790,900)
D
(250,580)
(0,0)
A
(100,200)
S ho wro o m
You
Youmust
mustalso
alsohave
have
the
thevolume
volumeinformation
information
on
onthe
thebusiness
business
activity
activityat
atthe
theexisting
existing
facilities.
facilities.
X
No o f Z-Mo b ile s
s o ld p e r mo nth
1250
1900
2300
New
New
location
locationofof
facility
facilityZZ
about
about
(443,627)
(443,627)
Q
(790,900)
ZZ
D
(250,580)
A
(100,200)
(0,0)
S ho wro o m
No o f Z-Mo b ile s
s o ld p e r mo nth
1250
1900
2300
Rm
R2
P
R1
2
M1
1
m+1
m
M2
m+2
Mn
m+n
MULTI-OBJECTIVE CONSIDERATIONS
IN LOCATION DECISIONS
FACTORS AFFECTING LOCATION ARE :
SUBJECTIVE / OBJECTIVE (labour attitudes)
(eg. Costs)
INTANGIBLE / TANGIBLE INCOMMENSURATE
UNITS
41
OF
i
1
C
i C
i
Site
1
2
3
248
211
230
181
202
165
74
82
90
16
8
21
519*
503
506
*519 = 248+181+74+16
1
1
1
1
C = 519 + 503 + 506 = 0.005891
i
OF1 = 519 * 0.005891 = 0.3271; OF2 = 503 * 0.005891 = 0.3374
-1
-1
ik
These two ratings are combined to obtain a subjective
factors (SF) ranking for each site as
SFi = Ik .Sik
Comparison Sum of
Factor
Decision
preferences rating
(IK)
1
2
3
A (Housing)
2/4=0.5
B (Recreation) 0
=0.25
C. competition -
=0.25
sum
Factor A: Housing
Site
Decisions
Rating
(SAK)
0.33
0.67
Factor B: Recreation
Site
Decisions
Rating
(SBK)
0.67
0.33
Factor C: Competition
Site
Decisions
Rating
(SCK)
0.25
0.25
0.50
Site rating
Impact
factor
0.33
0.67
0.5
0.67
0.33
0.25
0.25
0.25
0.50
0.25
TAXONOMY OF FLP
1. No. of fac. [single, multiple, Loc Alloc]
2. Siting restrictions [Anywhere in plane
planar /infinite set /discrete /finite set;
Constr./Unconstrained]
3. Ancilliary fac. characteristics [static, dynamic,
deter/sto]
4. Weight /Interaction [w 0, unrestr., fixed
parameter /random with some assoc. disturb.]
5. Capacity Constr. [Capacitated, uncapacitated]
6. Planning horizon [finite /infinite]
7. Commodities handled [single, multiple]
Crit.
/Obj.
Dist.
Norm
s
Restr.
/Constr
MS
MM
UN
Prob Music
Repr. Remar
ks
P
MMO
Minisum Objective
Here location analyst attempts minimizing
the handling effort viz.the sum total of the
weighted appropriate distance between the
reference points (applications-factories, whose
components in network etc.)
Minisum gives an Average(!!) effect
56
Minimax Objective
In some cases the minisum
criteria may not be appropriate (an
exaggerated eq. of 499 students
walk 1 to school whereas 1student
walks 100 km to school)
Perhaps the mini-max objective
would be more appropriate. Here
one may wish to minimize the
maximum weighted distance.
57
58
61
(x, y)
d E
1/ 2
2
2
( x a i ) ( y b i )
RECTILINEAR MODE
RECTILINEAR MODE : also called Manhattan norm
y
(ai, bi)
c
(x, y)
x
dr = [ | x ai | + | y bi | ]
Generalised lp norm
In real life perhaps more of lp norms exist.
y
p = 1.2
p = 1.8
(ai, bi)
p=2
p<2
(x, y)
Genl. lp = [ |x ai |p + |y bi |p ]p/p
x
MIXED MODE
A fac. Could be fed matls. through conveyors/pipes
(Eucl) while other matls. supplied by fork truck(Rect)
lpi = [ | x ai |pi + |y bi|pi ]pi
(ai, bi)
y
p = 1.8
p=1
(x, y)
p = 0.5
p=2
GEODESIC NORM
Forbidden
region
(ai, bi)
(x, y)
x
Through which no travel permissible and where new fac.
can not be located
wi di
i 1
wij dij
i 1 j 1
jk d jk
1 j k n
B. MINIMAX CASE
i. Single FLP : Min Fx,y (p) = Max1 i m [wi di]
ii. Multi FLP : Min xj, yi = F(xi, yi)
Max [wij dij], Max [jk djk] 1 j < k n
= Max
1im
1jn
WT 1 wi di WT 2 Max ui di 1 i m
i 1
Mini sum
Mini Max
WT 1
wij dij
i 1 j 1
( jk d jk )
1 j k n
WT 2 Max
Max wij dij ; Max ( jk d jk )
1 i m
1 j k n
1 j n
(Xj, Yi) FR
wij dij
i 1 j 1
(Xj, Yi) FR
1 j k n
( jk d jk )
m=4
(a1, b1)
(a2, b2)
(a3, b3)
(a4, b4)
(0, 0)
1/4
w1
(0, 10)
1/4
w2
(5, 0)
1/4
w3
(12, 6)
1/4
w4
wi ai
x* i 1
(1/ 4 0) (1/ 4 0)
(1/ 4 5) (1 / 4 12)
4.25
wi
1/ 4 1/ 4 1/ 4 1/ 4
i 1
Gravity Solution :
i i
*
y
4
b i 1/ 4 1/ 4 1/ 4 1/ 4
Median Soln.
(ai, bi)
wi
Rectilinear
(0,0) (3,16)
5
22
(18,2)
41
60
34
x*
ai (wts. cum. wi in ascending order)
0
3
x* = 8
18
20
5
22
60
41
34
5
27 < 81
87 > 81
128
162
1/2 162 = 81
y*
bi
wi
Cum.wts
0
2,2
y* = 16
18
5
41+34
22
60
5
80 < 81
102 > 81
162
1/2 162 = 81
(4,2)
(8,5)
(11,8)
(13,2)
wi
1/6
1/3
1/3
1/6
Rel.
M 0 C j wi
N 0 D i wi
M1 M 0 2C1
N1 N 0 2 D1
N 2 N1 2 D2
i 1
M 2 M1 2C2
Mj
Sij
Ni
i 1
N3 = +1
D3 = 1/3
+1
3
-3
-2
N2 = 1/3
D2 = 1/3
N1 = -1/3
D1 = (1/6)+
(1/6) = 1/3
N0 = -1
2/3
-1
M0 = -1
(4 ,
2)
-2/3
0
0
(8 ,
5)
0
0
(11 ,
8)
-2/3
-1
-2
-3
2/3 (13 , 1
2)
M2 = 0
M3 = 2/3 M4 = +1
M1 = -2/3
C3 =
C1=
C4=
C2=
1/3
1/6
1/6
1/3
N3 = +1
D3 = 1/3
+1
3
-3
-2
N2 = 1/3
D2 = 1/3
N1 = -1/3
D1 = (1/6)+
(1/6) = 1/3
N0 = -1
2/3
-1
M0 = -1
(4 ,
2)
-2/3
0
0
(8 ,
5)
0
0
(11 ,
8)
-2/3
-1
-2
-3
2/3 (13 , 1
2)
M2 = 0
M3 = 2/3 M4 = +1
M1 = -2/3
C3 =
C1=
C4=
C2=
1/3
1/6
1/6
1/3
Characteristics of MH EQPT.
Materials (bulk & packaged.)
Movement (vertically{V}, horizontally{H} &
combination of {V + H})
Supervision (close, little, Eqpt. automatic or
semi automatic.)
Path followed (variable, fixed & fixed area.)
Speed (variable, fixed, either fixed or variable.)
Power required for operation of Eqpt
(electricity, internal comb. Eng., manual, & gravity)
Classification of MH Eqpt.
A. Industrial Trucks flexible, versatile & most
extensively used
a. Manual
i. 2 wheeled excellent
ii. 3 wheeled for intermillent
iii. 4 wheeled small distance movements.
b. Powered
i.
Flat troughed
Fixed /portable
b. Roller gravity
i.
ii.
Spiral portable
Fixed
c. Roller line
i.
ii.
Chain drive
Belt drive
d. Bucket
e. Chain or cable
f. Pipe line (pneumatic)
E. Monorail
a. Trolley
b. Carrier