CHAPTER 9

SAMPLE ACTIVITIES/ASSESSMENTS

1. How important are location decisions in operations management? What are the
consequences of a bad location decision?

By lowering the company's overall cost of production, a smart location choice enhances
performance by preventing waste of all expenditures made in machinery and other
equipment. The right location can significantly improve a company's long-term performance.
Poor location decisions can cost millions in lost talent, productivity, and capital. Location
plays a huge role in luring and keeping the best employees, many of whom closely monitor
where they're based to optimize work-life balance.

When the management or company is located too far from the intended target market, it
will be challenging to match the market's expectations. A poor site selection might result in
low sales and output.

2. What factors drive the globalization of operations? Do these have any bearing on the
location decision that an operations manager makes?

Globalization has been facilitated by economic, financial, political, technical, and social
factors. Economic considerations primarily include fewer trade and investment barriers. Aside
from that factors such as the following also influence globalization which includes: (1) Historical
(2) Economy (3) Resources and Markets (4) Production Issues (5) Political (6) Industrial
Organization (7) Technologies. The potential of a country to offer more economic and
commercial value than current national locations is what attracts enterprises to relocate there. It
is important to consider the quality of these resources as well as the cost of the inputs to
production.

3. Will the choice of factors for selecting an appropriate location vary with the
geographical spread of the potential candidates for location? Why?

In operations management, facilities, competitiveness, logistics, labor, community and site,

political risk, and incentives are the seven elements that influence a location selection. Yes, the
choice of factors for selecting an appropriate location vary with the geographical spread of the
potential candidate for location because location will play a huge role in attracting and retaining
the best customers as well as the employees since they will also look for an organization that
focuses on having a good work-life balance.

4. Identify three important factors that a location planner may consider with respect to
each of the following:

a) A super-specialty intensive care unit

 1. Other issue: Accessibility and convenience
2. Market-related issue: Proximity to other health care facilities
3. Cost-related Issue: Land purchase cost

b) A thermal power plant operating with coal as its fuel

c) 1. Market-related Issue:
Access to market for raw
materials
d) 2. Cost-related Issue:
Transportation cost
e) 3. Other issue: Availability of
water and power
1. Market-related Issue: Access to market for raw materials
2. Cost-related Issue: Transportation cost
3. Other issue: Availability of water and power

c) A state-of-the-art design
center for automobile
manufacturing
1. Cost-related Issue: Logistics
and Transportation
2. Market-related Issue:
Availability of raw materials
3. Regulatory and Policy Issue:
Labour law and industrial
regulation
d) A multi-cuisine restaurant
1. Market-related issue:
Visibility to customers
2. Regulatory and Policy Issue:
Safety and low-crime rate area
3. Other issue: Parking space
e) An agro-based handicrafts
manufacturing unit
1. Market-related issue: Access
to raw materials and supplies
2. Cost-related Issue:
Distribution cost
3. Other issue: storage facility
and condition
c) A state-of-the-art design center for automobile manufacturing
1. Cost-related Issue: Logistics and Transportation
2. Market-related Issue: Availability of raw materials
3. Regulatory and Policy Issue: Labour law and industrial regulation

d) A multi-cuisine restaurant
1. Market-related issue: Visibility to customers
2. Regulatory and Policy Issue: Safety and low-crime rate area
3. Other issue: Parking space

e) An agro-based handicrafts manufacturing unit

1. Market-related issue: Access to raw materials and supplies
2. Cost-related Issue: Distribution cost
3. Other issue: storage facility and condition

5. What are the pros and cons of using the location factor analysis method for location
planning? Do you have any recommendations on how to use this method for location
planning?

There are benefits and drawbacks to using the location factor analysis approach. The
benefit of this approach is that it allows for the inclusion of any component in the analysis as
long as the decision-maker can gauge its relative relevance. Calculating and understanding it is
straightforward. The drawback of this approach is that it can only be utilized for preliminary
screening and wide ranking. I highly recommend this four major methods that can be use for
solving location problems: the factor-rating method, locational cost–volume analysis, the center-
of-gravity method, and the transportation model.

6. A manager intending to use the location planning model for analysis is not sure about
which of the two models, the center-of-gravity method, and the load–distance method,
should be used for his analysis. Prepare a one-page note that will help him identify an
appropriate model for his consideration.
7. What are the key differences between using a transportation model and a load–
distance method for solving a location problem?

Both the transportation problem and the assignment problem entail figuring out a means
to solve a problem. In the transportation dilemma, a person must figure out how to go from one
place to another. Finding a solution to the assignment dilemma requires finding a mechanism to
distribute duties among many persons.