FACILITY LOCATION MODELS

ACHMAD ANDRIYANTO, S.T., M.T.

Feat
IFA SAIDATUNINGTYAS, S.SI., MT.
 OUTLINE
• The Weighted-Factor Rating Model
• The Break-Even Model
• The Center-of-Gravity Model
 The Weighted-Factor Rating Model
• The weighted-factor rating model is a method used to compare the
attractiveness of several locations along a number of quantitative and
qualitative dimensions.
 The Weighted-Factor Rating Model
• Selecting a facility location using this approach involves the followong
steps:
1. Identify the factors that are considered important to the facility decision.
2. Assign weights to each factor in terms of their relative importance.
Typically, the weights sum to 1.
3. Determine a score for each factor and for each location considered.
Typically, the score varies from 1 to 100, although other scoring schemes
can be used.
4. Multiply the factor score by the weight associated with each factor and sum
the weighted scores across all factors.
5. The location with the highest total weighted score is the recommended
location
 The Weighted-Factor Rating Model (Example)
• The following factors have been identified as critical to making a
location decision among the three countries of China, Singapore and
Indonesia. A group of functional managers has determined the
factors, weights and scores to be used in the analysis.
 The Weighted-Factor Rating Model (Example)
Factor Weight Scores (Maximum 100)
China Singapore Indonesia
Labor cost 0,20 100 40 90
Proximity to market 0,15 100 60 80
Supply chain compatibility 0,25 80 80 60
Quality of life 0,30 70 90 60
Stability of government 0,10 80 100 50

• In which country should the new facility be located?

 The Weighted-Factor Rating Model (Example)
• The weighted scores for the three countries are calculated as follows:
• China = 0,20(100) + 0,15(100) + 0,25(80) + 0,30(70) + 0,10(80)
= 20 + 15 + 20 + 21 + 8 = 84.
• Singapore = 0,20(40) + 0,15(60) + 0,25(80) + 0,30(90) + 0,10(100)
= 8 + 9 + 20 + 27 + 10 = 74.
• Indonesia = 0,20(90) + 0,15(80) + 0,25(60) + 0,30(60) + 0,10(50)
= 18 + 12 + 15 + 18 + 5 = 68.
• Based on the total weighted score, China would be the recommended country in
which to locate the new facility.
 The Break-Even Model
• The break-even model is a useful location analysis technique when
fixed and variable costs can be determined for each potential
location.
 The Break-Even Model
• This method involves the following steps:
1. Identify the locations to be considered.
2. Determine the fixed cost for each facility. The components of fixed cost are
the costs of land, property taxes, insurance, equipment and buildings.
3. Determine the unit variable cost for each facility. The components of
variable cost are the costs of labor, material, utilities and transportation
costs.
4. Construct the total cost lines for each location on a graph.
5. Determine the break-even points on the graph. Alternatively, the break-
even points can be solved algebraically.
6. Identify the range over which each location has the lowest cost.
 The Break-Even Model (Example)
• Three locations have been identified as suitable candidates for
building a new factory. The fixed and unit variable costs for each of
three potential locations have been estimated and are shown in the
following table.
 The Break-Even Model (Example)
Location Annual Fixed Cost Unit Variable Cost
A $ 500.000 $ 300
B $ 750.000 $ 200
C $ 900.000 $ 100

• The forecasted demand is 3.000 units per year. What is the best
location?
 The Break-Even Model (Example)
• First, plot the three total cost curves, represented by:
• TCA = 500.000 + 300 Q
• TCB = 750.000 + 200 Q
• TCC = 900.000 + 100 Q
The Break-Even Model (Example)
 The Break-Even Model (Example)
• Determine the break-even points between Location A and Location B
as follows:
• TCA = TCB
• 500.000 + 300 Q = 750.000 + 200 Q
• 100 Q = 250.000
• Q = 2.500 units
• This indicates that producing less than 2.500 units per year would be cheaper at
Location A, while producing more than 2.500 units per year would be cheaper at
Location B.
 The Break-Even Model (Example)
• Next, determine the break-even points between Location B and
Location C as follows:
• TCB = TCC
• 750.000 + 200 Q = 900.000 + 100 Q
• 100 Q = 150.000
• Q = 1.500 units
• This indicates that producing less than 1.500 units per year would be cheaper at
Location B, while producing more than 1.500 units per year would be cheaper at
Location C.
 The Break-Even Model (Example)
• Finally, determine the break-even points between Location A and
Location C as follows:
• TCA = TCC
• 500.000 + 300 Q = 900.000 + 100 Q
• 200 Q = 400.000
• Q = 2.000 units
• This indicates that producing less than 2.000 units per year would be cheaper at
Location A, while producing more than 2.000 units per year would be cheaper at
Location C.
The Break-Even Model (Example)
 The Break-Even Model (Example)
• Based on the cost curves shown in figure:
• Location C has the lowest total cost when producing the forecasted quantity
of 3.000 units per year.
• If, however, the annual demand forecast was 1.000 units, then Location A a
would be preferred.
• Location B would never be preferred when comparing the costs of all three
locations simultaneously.
 The Center-of-Gravity Model
• The center-of-gravity model involves mapping all of the market
locations on an x,y-coordinate grid and then finding a central location
that is closest to the markets with the highest demand.
• This technique is useful for locating a manufacturing facility that will
serve a number of different markets, or for a distribution center
serving multiple facilities or markets.
 The Center-of-Gravity Model
• This model is based on the realization that markets with higher
demand will require greater numbers of product deliveries; thus, the
center-of-gravity model seeks to minimize total transportation costs.
• A weakness of this model is that it assumes that transportation costs
vary linearly with distance, which is not necessarily true.
 The Center-of-Gravity Model
• Assuming that a coordinate system is used placing all of the markets
in the positive x,y quadrant, the center-of-gravity location is
determined by the following:
σ𝑛
𝑖=1 𝑑𝑖𝑥𝑖
ത
• 𝑋 = x-coordinate of the center-of-gravity location = 𝑛 σ𝑖=1 𝑑𝑖

σ𝑛
𝑖=1 𝑑𝑖𝑦𝑖
• 𝑌ത = y-coordinate of the center-of-gravity location = σ𝑛
𝑖=1 𝑑𝑖
• Where:
• xi = x-coordinate of Location i
• yi = y-coordinate of Location i
• di = demand associated with Location i
 The Center-of-Gravity Model (Example)
• The XYZ Company would like to set up a distribution center to serve
several key supply chain customers in the area. The annual demands
and the x,y-coordinates for each customer are shown in the following
table:
The Center-of-Gravity Model (Example)
Customer x,y-Coordinates (km) Annual Demand (kg)
A (5,12) 2.000
B (7,8) 10.000
C (12,10) 4.000
D (3,9) 15.000
E (15,4) 6.000
F (7,15) 8.000
The Center-of-Gravity Model (Example)
 The Center-of-Gravity Model (Example)
σ𝑛
𝑖=1 𝑑𝑖𝑥𝑖
• 𝑋ത = x-coordinate of the center-of-gravity location = σ𝑛
𝑖=1 𝑑𝑖
5 2.000 +7 10.000 +12 4.000 +3 15.000 +15 6.000 +7(8.000)
ത
•𝑋=
(2.000+10.000+4.000+15.000+6.000+8.000)
319.000
• 𝑋ത = = 7,09 km
45.000
 The Center-of-Gravity Model (Example)
σ𝑛
𝑖=1 𝑑𝑖𝑦𝑖
• 𝑌ത = y-coordinate of the center-of-gravity location = σ𝑛
𝑖=1 𝑑𝑖
12 2.000 +8 10.000 +10 4.000 +9 15.000 +4 6.000 +15(8.000)
ത
•𝑌=
(2.000+10.000+4.000+15.000+6.000+8.000)
423.000
• 𝑌ത = = 9,40 km
45.000
 The Center-of-Gravity Model (Example)
• The desired x,y-coordinates for the distribution center are thus (7,09
km; 9,40 km) from the origin or (0,0) of the coordinate system.
The Center-of-Gravity Model (Example)
 Gravity Location Model
• Model ini menggunakan beberapa asumsi:
• Pertama, ongkos-ongkos transportasi diasumsikan naik
secara linier sebanding dengan volume yang dipindahkan.
• Kedua, baik sumber-sumber pasokan maupun pasar bisa
ditentukan lokasinya pada satu peta dengan koordinat x
dan y yang jelas.
• Beberapa data yang diperlukan dalam model ini adalah
ongkos transportasi per unit, beban per unit jarak dari
semua posisi pasokan ke kandidat lokasi fasilitas dan dari
kandidat lokasi fasilitas tersebut ke semua lokasi pasar,
volume yang akan dipindahkan, serta koordinat lokasi
pasokan maupun lokasi pasar.
 Notasi:
Ci = ongkos transportasi per unit beban per
kilometer antara kandidat lokasi fasilitas
dengan lokasi pasar atau lokasi sumber
pasokan.
Vi = beban yang akan dipindahkan antara
fasilitas-fasilitas dengan sumber pasokan
atau lokasi pasar.
(xi,yi) = koordinat x dan y untuk lokasi pasar atau
sumber pasokan i
Ji = Jarak antara lokasi fasilitas dengan sumber
pasokan atau pasar i
 Gravity Location Model
Jarak antara dua lokasi pada model ini dihitung sebagai jarak
geometris antara dua lokasi yang dihitung dengan formula
berikut:

ji  ( xo  xi)  ( yo  yi)
2 2
 Gravity Location Model
Dimana (xo,yo) adalah kandidat koordinat fasilitas yang
dipertimbangkan. Tujuan dari model ini adalah mendapatkan
lokasi fasilitas yang meminimumkan total ongkos-ongkos
pengiriman yang bisa diformulasikan sebagai berikut:

n
TC   CiViJi
i 1
Untuk mendapatkan nilai (x0, y0) yang optimal, yakni
yang meminimumkan total ongkos pengiriman TC,
diperlukan tiga langkah berikut:

1. Hitung jarak ji untuk semua i (yakni antara lokasi kandidat

fasilitas dan lokasi sumber pasokan atau pasar i)
2. Tentukan koordinat lokasi dengan rumus berikut:
CiVii CiViyi
 
ji ji
x on
 y 
CiVi CiVi
 on

Ji Ji
Dimana xon dan yon masing-masing adalah koordinat x dan y
yang dihasilkan pada iterasi ini.
3. Apabila 2 iterasi yang berurutan menghasilkan
koordinat yang hampir sama, stop iterasi tersebut
dan pilih koordinat tersebut sebagai lokasi fasilitas.
Jika tidak, ulangi lagi iterasinya mulai langkah 1
 Contoh-1
Sebuah perusahaan memiliki 6 cabang pemasaran dimana
masing-masing cabang tersebut merupakan gudang-gudang lokal.
Perusahaan ingin mendirikan 1 gudang regional yang akan
melayani ke 6 gudang lokal tersebut sedemikian sehingga biaya-
biaya transportasi secara keseluruhan minimum. Lokasi ke 6
gudang tersebar seperti pada gambar berikut:

14

12

10

8
Series1
6

0
0 5 10 15 20
Contoh-1
Disamping mengetahui posisi masing-masing gudang
lokal, perusahaan juga memiliki perkiraan biaya
transportasi maupun beban yang akan dipindahkan ke
masing-masing gudang lokal tersebut. Datanya
ditunjukkan pada tabel berikut:

xi yi Vi Ci
5 1 100 1.5
4 6 700 1.8
8 12 200 2.5
12 5 150 1.9
5 9 400 1.7
15 3 200 2.1
Dengan menggunakan titik (0,0) sebagai koordinat
awal dari lokasi fasilitas maka iterasi 1 bisa dikerjakan.
Keseluruhan iterasi bisa dikerjakan dengan bantuan
tabel dan angka-angka tersebut akan mudah
diperoleh dengan menggunakan EXCEL.
Tabel-2

xi yi Ji Vi Ci ViCixi/Ji ViCiyi/Ji ViCi/Ji

5 1 5.1 100 1.5 147.3477 29.46955 29.46955
4 6 700 1.8
8 12 200 2.5
12 5 150 1.9
5 9 400 1.7
15 3 200 2.1
Dengan demikian maka diperoleh nilai x dan y yang
baru sebagai berikut:
Xon = 2128.5 / 354.2 = 6.0
Yon = 2280.2 / 354.2 = 6.4

Selanjutnya posisi x dan y yang baru ini akan dijadikan

input pada iterasi kedua. Dengan menggunakan cara
yang sama diperoleh koordinat baru (5.4, 6.9).
Lakukan iterasi berikutnya sehingga menghasilkan
titik yang sama yaitu (5.0,6.8) sehingga titik itulah
dianggap posisi gudang regional yang optimal.
Iterasi 1
X0 0

Y0 0

NO X0 Y0 Xi Yi Ji Vi Ci ViCiXi/Ji ViCiYi/Ji ViCi/Ji TC

1 0 0 5 1 5,1 100 1,5 147,1 29,4 29,4 764,9

2 0 0 4 6 7,2 700 1,8 698,9 1.048,4 174,7 9.086,0
3 0 0 8 12 14,4 200 2,5 277,4 416,0 34,7 7.211,1
4 0 0 12 5 13,0 150 1,9 263,1 109,6 21,9 3.705,0
5 0 0 5 9 10,3 400 1,7 330,2 594,4 66,0 7.001,0
6 0 0 15 3 15,3 200 2,1 411,8 82,4 27,5 6.424,8
Jumlah 2.128,5 2.280,2 354,2 34.192,7

X1 6,0

Y1 6,4
Iterasi 2
X1 6,0

Y1 6,4

NO X1 Y1 Xi Yi Ji Vi Ci ViCiXi/Ji ViCiYi/Ji ViCi/Ji TC

1 6,0 6,4 5 1 5,5 100 1,5 136,6 27,3 27,3 823,8

2 6,0 6,4 4 6 2,0 700 1,8 2.471,1 3.706,6 617,8 2.569,9
3 6,0 6,4 8 12 5,9 200 2,5 672,7 1.009,0 84,1 2.973,2
4 6,0 6,4 12 5 6,2 150 1,9 555,1 231,3 46,3 1.755,9
5 6,0 6,4 5 9 2,8 400 1,7 1.220,5 2.197,0 244,1 1.894,3
6 6,0 6,4 15 3 9,6 200 2,1 654,8 131,0 43,7 4.040,7
Jumlah 5.710,8 7.302,1 1.063,2 14.057,8

X2 5,4

Y2 6,9
Iterasi 3
X2 5,4

Y2 6,9

NO X2 Y2 Xi Yi Ji Vi Ci ViCiXi/Ji ViCiYi/Ji ViCi/Ji TC

1 5,4 6,9 5 1 5,9 100 1,5 127,5 25,5 25,5 882,3

2 5,4 6,9 4 6 1,6 700 1,8 3.059,5 4.589,2 764,9 2.075,7
3 5,4 6,9 8 12 5,8 200 2,5 695,3 1.043,0 86,9 2.876,4
4 5,4 6,9 12 5 6,9 150 1,9 498,6 207,7 41,5 1.954,9
5 5,4 6,9 5 9 2,2 400 1,7 1.567,5 2.821,5 313,5 1.474,9
6 5,4 6,9 15 3 10,4 200 2,1 608,7 121,7 40,6 4.347,0
Jumlah 6.557,1 8.808,7 1.272,9 13.611,2

X3 5,2

Y3 6,9
Iterasi 4
X3 5,2

Y3 6,9

NO X3 Y3 Xi Yi Ji Vi Ci ViCiXi/Ji ViCiYi/Ji ViCi/Ji TC

1 5,2 6,9 5 1 5,9 100 1,5 127,0 25,4 25,4 885,5

2 5,2 6,9 4 6 1,5 700 1,8 3.360,0 5.040,0 840,0 1.890,0
3 5,2 6,9 8 12 5,8 200 2,5 687,5 1.031,3 85,9 2.909,0
4 5,2 6,9 12 5 7,1 150 1,9 484,4 201,8 40,4 2.012,2
5 5,2 6,9 5 9 2,1 400 1,7 1.611,8 2.901,2 322,4 1.434,5
6 5,2 6,9 15 3 10,5 200 2,1 597,3 119,5 39,8 4.430,0
Jumlah 6.868,0 9.319,1 1.353,9 13.561,2

X4 5,1

Y4 6,9
Iterasi 5
X4 5,1

Y4 6,9

NO X4 Y4 Xi Yi Ji Vi Ci ViCiXi/Ji ViCiYi/Ji ViCi/Ji TC

1 5,1 6,9 5 1 5,9 100 1,5 127,1 25,4 25,4 885,1

2 5,1 6,9 4 6 1,4 700 1,8 3.546,1 5.319,2 886,5 1.790,8
3 5,1 6,9 8 12 5,9 200 2,5 681,8 1.022,7 85,2 2.933,4
4 5,1 6,9 12 5 7,2 150 1,9 477,9 199,1 39,8 2.039,7
5 5,1 6,9 5 9 2,1 400 1,7 1.617,2 2.911,0 323,4 1.429,6
6 5,1 6,9 15 3 10,6 200 2,1 592,1 118,4 39,5 4.469,0
Jumlah 7.042,2 9.595,8 1.399,9 13.547,7

X5 5,03

Y5 6,9
Iterasi 6
X5 5,0

Y5 6,9

NO X5 Y5 Xi Yi Ji Vi Ci ViCiXi/Ji ViCiYi/Ji ViCi/Ji TC

1 5,0 6,9 5 1 5,9 100 1,5 128,1 25,6 25,6 878,2

2 5,0 6,9 4 6 1,3 700 1,8 3.831,5 5.747,3 957,9 1.657,4
3 5,0 6,9 8 12 6,0 200 2,5 671,6 1.007,4 83,9 2.978,1
4 5,0 6,9 12 5 7,2 150 1,9 472,3 196,8 39,4 2.063,8
5 5,0 6,9 5 9 2,1 400 1,7 1.584,8 2.852,6 317,0 1.458,9
6 5,0 6,9 15 3 10,7 200 2,1 587,8 117,6 39,2 4.501,2
Jumlah 7.276,1 9.947,2 1.462,9 13.537,6

X6 5,0

Y6 6,8
Iterasi 7
X6 5,0

Y6 6,8

NO X6 Y6 Xi Yi Ji Vi Ci ViCiXi/Ji ViCiYi/Ji ViCi/Ji TC

1 5,0 6,8 5 1 5,8 100 1,5 129,3 25,9 25,9 870,0

2 5,0 6,8 4 6 1,3 700 1,8 3.935,6 5.903,4 983,9 1.613,6
3 5,0 6,8 8 12 6,0 200 2,5 666,3 999,4 83,3 3.001,7
4 5,0 6,8 12 5 7,2 150 1,9 473,2 197,2 39,4 2.059,9
5 5,0 6,8 5 9 2,2 400 1,7 1.545,5 2.781,8 309,1 1.496,0
6 5,0 6,8 15 3 10,7 200 2,1 588,9 117,8 39,3 4.493,0
Jumlah 7.338,7 10.025,4 1.480,8 13.534,2

X7 5,0

Y7 6,8
 Task
1. The Soft Toys Company has collected information on fixed and
variable costs for four potential plant locations.
Location Annual Fixed Cost Unit Variable Cost
A $ 200.000 $ 50
B $ 300.000 $ 45
C $ 400.000 $ 25
D $ 600.000 $ 20
a. Plot the total cost curves for the four plant locations on a single graph
b. Compute the range of demand for which each location has a cost advantage
c. Which plant location is best if demand is 30.000 units?
 Task
2. The Bruhaha Brewery is planning to expand internationally. The
company has identified six critical location factors and their relative
weights. The scores for each of the three potential sites are shown
in the following table. Which site should be selected?
Factor Weight Scores (Maximum 100)
A B C
Proximity of market 0,25 100 90 80
Quality of life 0,30 90 60 60
Supplier base 0,20 80 100 70
Labor costs 0,15 70 90 50
Taxes 0,10 60 80 90
 Task
3. The Running Rebels Manufacturing Company is planning to locate a
central facility relative to its three suppliers and two customers. The
x,y-coordinates of the supplier and customer locations are shown in
the following table, along with the annual volumes shipped. Use the
center-of-gravity approach to determine the location for the new
facility.
Location x,y-Coordinates (Miles) Volume Shipped (Tons)
Supplier A (4,8) 5.000
Supplier B (9,12) 8.000
Supplier C (1,10) 7.000
Customer 1 (5,2) 9.000
Customer 2 (10,4) 2.000