Slide 1Learning ObjectivesDistribution Center, Warehouse, and Plant LocationDistribution Center, Warehouse, and Plant LocationFacility LocationSlide 6The Strategic Importance of Facility LocationSlide 8Annual Population Estimates: 2009Persons per Square Mile: 2009Slide 11Determining the Number of FacilitiesCapitals of all the Provinces Map of ChinaPopulation DensitySlide 15General Factors Influencing Facility LocationGeneral Factors Influencing Facility LocationFigure 8-4: Truck Distances from OklahomaGeneral Factors Influencing Facility LocationSpecialized Location CharacteristicsFinding the Lowest-Cost LocationSlide 22Table 8-1: Weighted Center-of-Gravity ExampleFacility Relocation and Facility ClosingFacility Relocation and Facility ClosingSlide 26Case 8-1 Aero Marine LogisticsSlide 28Slide 29Slide 30Slide 31Slide 32Slide 33Slide 34Slide 35Chapter 8Distribution Center, Warehouse, and Plant LocationLearning Objectives•To examine the screening or focusing concept of plant/warehouse location•To describe the major factors that influence location decisions•To explain the general process of determining the optimum number of facilities•To explain systems to determine the location that minimizes transportation costs•To examine a site’s specialized location characteristics•To learn about free trade zones© 2008 Prentice Hall 8-2Distribution Center, Warehouse, and Plant Location•Key Terms–Brownfields–Center-of-gravity approach–Empowerment zone–Expatriate workers–Facility closing–Facility location–Facility relocation–Free trade zone–Grid system–Intermodal competition© 2008 Prentice Hall 8-3•Key Terms–Intermodal competition–Inventory tax–Maquiladoras–Pure materials–Quality-of-life–Right-to-work laws–Supplier parks–Sweatshops–Weight-gaining products–Weight-losing productsDistribution Center, Warehouse, and Plant Location © Pearson Education, Inc. publishing as Prentice Hall9-4•Facility location refers to choosing the locations for distribution centers, warehouses, and production facilities to facilitate logistical effectiveness and efficiency.Facility Location•Accommodates the movement of inventories to customers•Near markets•Resource availability•Labor availability•Transportation system© 2008 Prentice Hall 8-5Figure 8-1: Advertisement Showing a Site’s Location as an Advantage in Reaching British and Continental European Markets© 2008 Prentice Hall 8-6The Strategic Importance of Facility Location© Pearson Education, Inc. publishing as Prentice Hall9-7•Factors that can influence facility location decisions include:–Cost considerations–Customer service expectations–Location of Customer or Supply MarketsFive Most Populous States in the United States – 1960, 1980, 20059-81960 1980 20051New York California California2California New York Texas3Pennsylvania Texas New York4Illinois Pennsylvania Florida5 OhioIllinois Illinoiswww.census.govAnnual Population Estimates: 2009California36,961,664Texas24,782,302New York19,541,453Florida18,537,969Illinois12,910,409Pennsylvania12,604,767Ohio11,542,645Michigan 9,969,727Georgia 9,829,211N Carolina 9,380,884New Jersey 8,707,739Virginia 7,882,590Washington 6,664,195Arizona 6,595,778Massachusetts 6,593,587Indiana 6,423,113Tennessee 6,296,254http://www.census.gov/popest/states/NST-ann-est.htmlMissouri 5,987,580Maryland 5,699,478Wisconsin 5,654,774Minnesota 5,266,214Colorado 5,024,748Alabama 4,708,708S Carolina 4,561,242Louisiana 4,492,076Kentucky 4,314,113Oregon 3,825,657Oklahoma 3,687,050Connecticut 3,518,288Iowa 3,007,856Mississippi 2,951,996Arkansas 2,889,450Kansas 2,818,747Utah 2,784,572Nevada 2,643,085New Mexico 2,009,671W Virginia 1,819,777Nebraska 1,796,619Idaho 1,545,801New Hampshire 1,324,575Maine 1,318,301Hawaii 1,295,178Rhode Island 1,053,209Montana 974,989Delaware 885,122S Dakota 812,383Alaska 698,473N Dakota 646,844Vermont 621,760Dist of Columbia 599,657Wyoming 544,270Persons per Square Mile: 2009http://factfinder.census.gov/leg2/23/172269323.gifShipment Characteristics by Origin Geography by Mode: 2007 and 2002http://factfinder.census.gov/leg2/96/172595396.gifDetermining the Number of Facilities•Facilities are generally added when service levels become unacceptable•Software packages exist to help in determining the number and location of facilities•Key issue—time it takes to get from facility to majority of the U.S. (or target) population–Moving from 2 to 5 facilities saves 1 day lead time–Moving from 5 to 10 facilities saves ½ day lead time© 2008 Prentice Hall 8-12Capitals of all the Provinces Map of China8-13http://www.panasianbiz.com/india/map-of-china-the-15-most-useful/Population Density8-14http://www.lib.utexas.edu/maps/middle_east_and_asia/china_population_83.jpg/Special economic zones and Economic and Technical Development Zones8-15http://www.lib.utexas.edu/maps/middle_east_and_asia/china_specialec_97.jpg/General Factors Influencing Facility Location•Natural Resources–Pure materials–Weight-losing products–Weight-gaining products•Population Characteristics—Market for Goods•Population Characteristics—Labor –Maquiladoras–Sweatshops –Right-to-work laws–Expatriate workers© 2008 Prentice Hall 8-16General Factors Influencing Facility Location•Taxes and Subsidies–Tax-free bonds–Empowerment zones–National competitive strategy•Transportation Considerations•Customer Considerations•Trade Patterns© 2008 Prentice Hall 8-17Figure 8-4: Truck Distances from OklahomaGeneral Factors Influencing Facility Location•Quality of Life Considerations•Locating in Other Countries•Specialized Location Characteristics–Free trade zone© 2008 Prentice Hall 8-19Specialized Location Characteristics•Current zoning of the land•Local unions•Title search•Engineers examine site for proper drainage, etc.•Brownfields – previous use of land•Weather•Free Trade ZoneFinding the Lowest-Cost Location•Grid systems•Center-of-gravity approach© 2008 Prentice Hall 8-21Figure 8-6: Center-of-Gravity Location for a Warehouse Serving Five Retail Stores© 2008 Prentice Hall 8-22Table 8-1: Weighted Center-of-Gravity ExampleStore North locationEast locationMo. volume (tons)North x volumeEast x volume1 3 1 3 (3x3)=9 (1x3)=32 3 3 5 (3x5)=15 (3x5)=153 2 4 4 (2x4)=8 (4x4)=164 1 2 2 (1x2)=2 (2x2)=45 3 6 6 (3x6)=18 (6x6)=36Total 20 52 74Weighted average 2.6 3.7Facility Relocation and Facility Closing© Pearson Education, Inc.
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