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29982776 Operations Management

# 29982776 Operations Management

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03/31/2015

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The process of selecting a new facility location involves a series of following steps:
1.Identify the important location factors.
2.Rate each factor according to its relative importance, i.e., higher the ratings is indicative
of prominent factor.
3.Assign each location according to the merits of the location for each factor.
4.Calculate the rating for each location by multiplying factor assigned to each location with
basic factors considered.
5.Find the sum of product calculated for each factor and select best location having highest

total score.

ILLUSTRATION 1: Let us assume that a new medical facility, Health-care, is to be
located in Delhi. The location factors, factor rating and scores for two potential sites are
shown in the following table. Which is the best location based on factor rating method?

74

Operations Management

Sl. No.

Location factor

Factor

Rating

rating

Location 1

Location 2

1.

Facility utilization

8

3

5

2.

Total patient per month

5

4

3

3.

Average time per emergency trip

6

4

5

4.

Land and construction costs

3

1

2

5.

Employee preferences

5

5

3

SOLUTION

Sl. No.

Location

Factor

Location 1

Location 2

factor

rating

(Rating)

Total=

(Rating)

Total

(1)

(2)

(1) . (2)

(3)

=(1).(3)

1.

Facility utilization

8

3

24

5

40

2.

Total patient per

5

4

20

3

15

month

3.

Average time per

6

4

24

5

30

emergency trip

4.

Land and

3

1

3

2

6

construction costs

5.

Employee

5

5

25

3

15

preferences

Total

96

Total

106

The total score for location 2 is higher than that of location 1. Hence location 2, is the best

choice.

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