Factors Rating
Availability 90
Size 60
Industrial Relations 50
Tax benefits 30
Cheap Labour 30
Nearness to port 65

Rating of each locations against the factors is given below

Factors L1 L2 L3 L4 L5
Availability 20 40 60 35 55
Size 30 30 40 60 80
Industrial Relations 80 30 50 60 50
Tax benefits 80 20 10 20 20
Cheap Labour 70 70 45 50 50
Nearness to port 20 40 90 50 60

Sol: Location Factor rating method Ove

 Factors Rating Relative weights L1
Availability 90 0.2769230769231 41.23077
Size 60 0.1846153846154 Rank 4
Industrial Relations 50 0.1538461538462
Tax benefits 30 0.0923076923077
Cheap Labour 30 0.0923076923077
Nearness to port 65 0.2
total 325 1
 Overall Scores
L2 L3 L4 L5
37.53846 54.76923 46.46154 56.15385 41.23077 37.53846 54.76923 46.46154 56.15385
5 2 3 1
Center of gravity method

Wi(Annua
l Supply
xi yi in tonnes) xi*wi yi*wi
A 125 550 200 25000 110000
B 350 400 450 157500 180000
C 450 125 175 78750 21875
D 700 300 150 105000 45000
Total 1625 1375 975 366250 356875

Xc Yc
375.641 366.0256
Rounded
Values 376 366
 xi yi Wi xi*wi yi*wi
Zone1 15 22 200 3000 4400
Zone2 10 40 130 1300 5200
Zone3 35 15 80 2800 1200
Zone4 50 5 120 6000 600
Zone5 40 35 170 6800 5950
Total 150 117 700 19900 17350

Xc Yc
New Location 28.42857 24.78571
Rounded 28 25
A firm is considering three alternative locations for setting up its new factory. Each of these locations provides som
some method of assessing the attractiveness of each site be arrived at. Based on a survey of its top management,
appropriateness of a site for setting up the new factory. These factors and the score out of

Sl. No.

1
2
3
4
5
6
7

The company collected some data pertaining to each site that it is considering, and based on some criteria,
against a score of 100 against each factor. In some cases, actual data was estimated on the basis of some pr
these.

Factor for
Sl. No.
consideration

1 Nearness to port

Existence of supplier
2
infrastructure
 Availability of skilled
3
labour

Government policies
4
and local taxes

Projected cost of
5
operations (Rs)

Quality of road
6
infrastructure

Availability of
7 educational
infrastructure

Factor for
Sl. No.
consideration
1 Nearness to port
Existence of supplier
2
infrastructure
Availability of skilled
3
labour
Government policies
4
and local taxes
Projected cost of
5
operations (Rs)
Quality of road
6
infrastructure
Availability of
7 educational
infrastructure
 Factor for
consideration
Nearness to port
Existence of supplier infr
Availability of skilled lab
Government policies and l
Projected cost of operatio
Quality of road infrastruc
Availability of educationa

Overall Scores
Site 1
52.7828766664434
3

52.7828766664434
tting up its new factory. Each of these locations provides some advantages and some limitations. Therefore, it is necessary that
site be arrived at. Based on a survey of its top management, the company has identified seven factors that will determine the
etting up the new factory. These factors and the score out of 100 for each of them are shown in table.

Score
Factor for consideration
(out of 100)
Nearness to port 80
Existence of supplier infrastructure 70
Availability of skilled labour 90
Government policies and local taxes 50
Projected cost of operations 60
Quality of road infrastructure 70
Availability of educational infrastru 40

ch site that it is considering, and based on some criteria, was able to arrive at how each site rates
cases, actual data was estimated on the basis of some projections. Table has details pertaining to
these.

Site 1 Site 2 Site 3 Basis

Actual
70 Km 130Km 95Km
data

Score out
60 80 85
of 100
 Score out
50 70 85
of 100

Score out
70 45 60
of 100

Actual
20,000,000 18,000,000 17,000,000
data

Score out
80 90 70
of 100

Score out
60 80 80
of 100

Site 1 Site 2 Site 3

23.728813559322 44.06779661 32.20338983
60 80 85

50 70 85

70 45 60

36 33 31

80 90 70

60 80 80
 Score
(out of 100) Relative weights
80 0.1739130435
70 0.152173913
90 0.1956521739
50 0.1086956522
60 0.1304347826
70 0.152173913
40 0.0869565217
460 1

Site 2 Site 3
63.3457828096738 63.327862263
1 2

63.3457828096738 63.327862263
re, it is necessary that
at will determine the
 Consider question 2 of the previous document on Facility location. Assume that the
manufacturer came to know that there are constraints in locating the new facility. Based on
an initial survey of possible sites for the proposed facility, the manufacturer identified four
candidates ( numbered 1 to 4 ). What is the best location for the proposed new facility?

Existing Supply Points Candidates for Proposed Facility

Xi Yi Wi Xi Yi
A 125 550 200 1 300 500
B 350 400 450 2 200 500
C 450 125 175 3 500 350
D 700 300 150 4 400 200

DA1 182.0027 DC1 403.8874

DA2 90.13878 DC2 450.6939
DA3 425 DC3 230.4886 LD1 224474.4 224474.4064
DA4 445.1123 DC4 90.13878 LD2 258801.6
DB1 111.8034 DD1 447.2136 LD3 227410
DB2 180.2776 DD2 538.5165 LD4 245000.8
DB3 158.1139 DD3 206.1553
DB4 206.1553 DD4 316.2278

182.0027
111.8034
403.8874
447.2136
Matrix manufacturing is considering where to locate its warehouse in order to service its four
Ohio stores located in Cleveland, Cincinnati, Columbus and Dayton. Two sites are being
considered; Mansfield and Springfield, Ohio. Use the Load Distance model to make the
decision.

Existing Supply Points

Xi Yi Wi Candidates for Proposed Facility
Cleveland 11 22 15 Xi Yi
Cincinnati 4 1 10 Mansfield 11 14
Columbus 10 7 12 Springfield 6 6.5
Dayton 3 6 4

DA1 8
DA2 16.2865
DB1 14.76482
DB2 5.85235 LD1 397.7559
DC1 7.071068 LD2 363.36
DC2 4.031129
DD1 11.31371
DD2 3.041381
es for Proposed Facility
A Chain of store trading in a host of retail goods for urban customers is planning to set up
operations in one of the metropolitan cities in the country. The exact location for the new
outlet is to be decided. In order to do that, the company conducted a market survey and
found five pockets of consumption in the city. The distance coordinates of these five
pockets from a reference point in the grid map pertaining to the city are as follows: Zone
1(15,22), Zone 2(10,40),Zone 3(35,15), Zone 4(50,5) and Zone 5(40,35). The annual
demand for the goods(in tonnes) in the five zones is 200,130,80,170 and 120
respectively.

xi yi wi xi*wi yi*wi
Zone 1 15 22 200 3000 4400
Zone 2 10 40 130 1300 5200
Zone 3 35 15 80 2800 1200
Zone 4 50 5 170 8500 850
Zone 5 40 35 120 4800 4200
total 150 117 700 20400 15850

Xc Yc
29.14286 22.64286
Rounded 29 23

D1P 14.03567 LD 13576.92

D2P 25.4951 Cost 4073077
D3P 10
D4P 27.65863
D5p 16.27882
 The chain stores officials found that locating the operations in the centre of gravity point
as obtained in the previous problem would cost them a lot. The operational cost of renting
and maintaining the site will be Rs 25,00,000 per annum. In view of this , they are now
considering other options. They have identified three other candidate location whose cost
of operations will be less than the centre of gravity location by 10,25 and 18 percent
respectively. The locational coordinates for these three are (20,40),(40,50) and(35,45).
What should the chain store do in this case. Does it make sense to set up operations in
any of these three alternative locations.

x y W
Zone 1 15 22 200
Zone 2 10 40 130 Centroid 29 23
Zone 3 35 15 80 1 20 40
Zone 4 50 5 170 2 40 50
Zone 5 40 35 120 3 35 45

Distance Values
Centroid 1 2 3
Zone 1 14.03567 18.68154 37.53665 30.4795
Zone 2 25.4951 10 31.62278 25.4951
Zone 3 10 29.15476 35.35534 30
Zone 4 27.65863 46.09772 46.09772 42.72002
Zone 5 16.27882 20.61553 15 11.18034

Centroid 1 2 3
LD Values 13576.92 17679.17 24083.33 20414.31

LD Cost 4073077 5303750 7224999 6124292

Opn Cost 2500000 2250000 1875000 2050000
Total Cost 6573077 7553750 9099999 8174292
 An Operations manager narrowed the search for a new facility for four communities. The annual fixed
costs(land, property taxes, insurance, equipment and buildings) and the variable costs(labor, materials,
transportation and variable overhead) are as follows.

Variable
Fixed Costs per
Community Costs per
year
unit

A $150,000 $62

B $300,000 $38

C $500,000 $24

D $600,000 $30

Notice that no community dominates the set of alternatives; that is no community has both
lowest fixed costs and lowest variable costs per unit. If that were so, that community would
be best location.

Volume TC(A) TC(B) TC© TC(D)

0 $150,000 $300,000 $500,000 $600,000
3000 $336,000 $414,000 $572,000 $690,000
6000 $522,000 $528,000 $644,000 $780,000
9000 $708,000 $642,000 $716,000 $870,000
12000 $894,000 $756,000 $788,000 $960,000
15000 $1,080,000 $870,000 $860,000 $1,050,000
16000 $1,142,000 $908,000 $884,000 $1,080,000
18000 $1,266,000 $984,000 $932,000 $1,140,000
19000 $1,328,000 $1,022,000 $956,000 $1,170,000

Chart Title
1400000

1200000

1000000

800000

600000

400000

200000

0
1000000

800000

600000

400000

200000

0
1 2 3 4 5 6 7 8

Volume TC(A) TC(B) TC© TC(D)

munities. The annual fixed
ble costs(labor, materials,
.

[11:19 AM]
Vineeth
Bharadwaj

A B B C C D
150000 300000 300000+ 500000+ 500000+ 600000+
+62V +38V 38v 24v 24v 30v

v 6250 v 14285.71 v 16666.67