Chapter 8
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Created by:
kipbelcher on October 13, 2011
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17 terms
Terms | Definitions |
|---|---|
 Location Decisions | Closely tied to an organization's strategies. |
| Location Choices | Impact capacity and flexibility |
| Location Decision Factors | 1) long-term commitment - makes mistakes difficult to overcome. 2) poor choice - excessive transportation, shortage of qualified labor, loss of competitive advantage, inadequate supplies of raw material. 3) For services, poor location result in lack of customers and/or high operating costs. |
| Location Options | 1) Expand exisiting facility 2) add new locations whiile retaining exsisting ones 3) Shut down at one location and move to another. 4) Do nothing |
| Global Location Facilitating Factors | 1) Trade agreements 2) Technology |
| Global Location Benefits | 1) Markets 2) Cost savings 3) Legal and regulatory 4) Financial |
| Global Location Disadvantages | 1) Transportation Cost 2) Security Cost 3) Unskilled Labor 4) Import Restrictions 5) Criticisms |
| Global Location Risks | 1) Political 2) Terrorism 3) Economic 4) Legal 5) Ethical 6) Cultural |
| General Procedure For Making Location Decisions | 1) Decide on the criteria to use for evaluating location alternatives, such as incresed revenues or community service 2) Identify important factos, such as location of markets or raw materials 3) Develop location alternatives a) Identify a country or countries for location b) Identify the general region for a location c) Identify a small number of community alternatives d) Identify site alternatives among the community alternatives 4) Evaluate the alternatives and make a selection |
| Identifying a Country | see page 378 table 8.1 Government, Cultural differences, Customer preferences, labor, resources, financial, technological, market, safety. |
| Identify a Region | 1) Location of Raw Materials 2) Location of Markets a) Geographic information system (GIS) - A computer based tool for collecting, storing, retrieving, and displaying demographic data on maps. 3) Labor Factors 4) Other factors - Climate and taxes |
| Microfactory | Small factory witha narrow product focus, located near major markets. |
| Locational cost-profit-volume analysis | 1) Determine the fixed and variable cost associated with each location alternative. 2) Plot the total-cost line for all locations alternatives on the same graph 3) Determine which location will have the lowest total cost for the expected level of output. |
| Locational cost-profit-volume-analysis | Technique for evaluating location choices in economic terms. |
| Total Cost = | FC + v x Q |
| Factor Rating | General approach to evaluating locations that includes quantitative and qualitative inputs. |
| Center of gravity method | Method for locating a distribution center that minimizes distribution cost. |
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