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,#,Contemporary Logistics,Twelfth,Edition,Chapter,9,Family,Location,Contemporary LogisticsTwelfth,1,Learning Objectives,(1 of 2),9.1,To examine the strategic importance of facility,location,9.2,To explain the general process of determining,the optimum,number,of facilities,9.3,To describe the major factors that influence,facility,location,9.4,To examine a sites specialized location,characteristics,Learning Objectives(1 of 2)9.,2,Learning Objectives,(2 of 2),9.5,To explain location decisions using simple grid,systems,9.6,To learn about facility relocation and facility,closing,Learning Objectives(2 of 2)9.,3,Facility Location,Facility location,Refers to choosing the locations for distribution centers,warehouses,and production facilities to facilitate logistical effectiveness and,efficiency,Facility LocationFacility loca,4,The Strategic Importance of Facility Location,(1 of 3),Factors that can influence facility location decisions include:,Cost considerations,Consumers sensitized to buy only when prices are low,Low price/low cost framework led companies to operate in countries with low-cost labor,In recent years,organizations are reexamining the low-cost labor paradigm,The Strategic Importance of F,5,The Strategic Importance of Facility Location,(2 of 3),Factors that can influence facility location decisions include:,Customer service expectations,Expectations continue to increase over time,Customers looking for faster and more reliable order cycles,The Strategic Importance of Fa,6,The Strategic Importance of Facility Location,(3 of 3),Factors that can influence facility location decisions include:,Location of customer or supply markets,Population shift,Economic growth,Sustainability,The Strategic Importance of Fa,7,Table 9.1:Five Most Populous States in the United States1970,1990,and 2014,Rank,1970,1990,2014,1,California,California,California,2,New York,New York,Texas,3,Pennsylvania,Texas,Florida,4,Illinois,Pennsylvania,New York,5,Texas,Illinois,Illinois,Source:,Derived from data at and ,Table 9.1:Five Most Populous,8,Determining 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 issuetime it takes to get from facility to majority of the U.S.(or target)population,Moving from 1 to 3 facilities saves 1 day lead time,Moving from 3 to 10 facilities saves day lead,time,1,1,www.chicago-,Determining the Number of Faci,9,Figure 9.1:Chicago Consultings 10 Best Warehouse Networks,Source,:Courtesy of Terry Harris,Managing Partner of Chicago Consulting,.,Figure 9.1:Chicago Consulting,10,General Factors Influencing Facility Location,(1 of 7),Influences on location of manufacturing,processing,or assembly facility,Raw materials,Component parts,Labor,Markets,Location of warehouses,distribution centers,and cross-docking facilities are influenced by locations of plants whose products they handle and markets they,serve,General Factors Influencing Fa,11,General Factors Influencing Facility Location,(2 of 7),Natural resources,Pure materials,Weight-losing products,Weight-gaining products,Population characteristicsmarket for goods,Population characteristicslabor,Maquiladora,Sweatshops,Right-to-work laws,Expatriate,workers,General Factors Influencing Fa,12,General Factors Influencing Facility Location,(3 of 7),Taxes and incentives,Inventory tax,Incentive packages,Transportation considerations,Availability,Refers to the number of transportation modes(intermodal competition)and,The number of carriers within each mode(intramodal competition),Cost,General Factors Influencing Fa,13,Figure 9.2:Truck Distances from Nebraska,Source:,Reprinted with permission from Inbound,Logistics magazine,(September 2011)., Inbound Logistics 2014,.,Figure 9.2:Truck Distances fr,14,General Factors Influencing Facility Location,(4 of 7),Proximity to industry clusters,Agglomeration concept,better known today as the industry cluster concept,Differ in shape and,size,One,type focused on a particular,industry,Another,type offers organizations proximity to key suppliers,Catalyst in the development of supplier,parks,General Factors Influencing Fa,15,General Factors Influencing Facility Location,(5 of 7),Trade patterns,Commodity flow data studied to determine changes occurring in the movement of raw materials and semiprocessed goods,How much is being produced?,Where is it being shipped?,Trade agreements(e.g.,NAFTA,),General Factors Influencing Fa,16,General Factors Influencing Facility Location,(6 of 7),Quality-of-life considerations,Cost of living,Educational opportunities,Crime rates,Employment opportunities,Weather,Cultural amenities,Others,General Factors Influencing Fa,17,General Factors Influencing Facility Location,(7 of 7),Locating in other countries,Relevant legal system,Political stability,Bureaucratic red tape,Corruption,Protectionism,Nationalism,Privatization,Expropriation(confiscation),Treaties and trade,agreements,General
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