To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Chapter 9.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots East Asia. The Pacific Basin, including Japan, South Korea, China, Taiwan, and Singapore became the fastest-growing and foremost trading region in the world. Japan South Korea Taiwan Singapore Hong Kong Figure 9.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots Mexico. Thousands of plants have been built by firms across the world in the maquiladoras on Mexico's northern boarder. Figure 9.1 U.S. Sunbelt. The sunbelt is attracting many firms normally entrenched in the industrial heartland of the United States owing to lower labor costs, less unionism, and a more-attractive climate. NAFTA. The North American Free Trade Agreement makes trade easier between Canada, Mexico, and the United States. Other Latin American countries may follow suit.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots Europe. The European Union (EU) encompasses 15 member nations and special arrangements with most other European states. Figure 9.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Global Hot Spots Former Communist Countries. The population of 410 million promises huge market opportunities and attractive possibilities for joint ventures. Figure 9.1 Russia

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Managing Global Operations  Other Languages  Different Norms and Customs  Workforce Management  Unfamiliar Laws and Regulations  Unexpected Cost Mix

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Decisions - Manufacturing  Favorable Labor Climate  Proximity to Markets  Quality of Life  Proximity to Suppliers  Proximity to Parent Company  Utilities, Taxes, and Real Estate Costs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Decisions - Services  Proximity to Customers  Transportation Costs and Proximity to Markets  Location of Competitors  Site-Specific Factors

Location Health-Watch North Example 9.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 Weighted Score

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) Weighted Score

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) Weighted Score

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) + (20 x 3) Weighted Score

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) + (20 x 3) + (15 x 4) + (10 x 1) + (10 x 5) Weighted Score

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch North Example 9.1 Location FactorWeightScore Total patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=340 Weighted Score

Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) Euclidean distance d AB = ( x A – x B ) 2 + ( y A – y B ) 2 Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) Euclidean distance d AB = (50 – 175 ) 2 + (185 – 100 ) 2 Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) Euclidean distance d AB = 151.2 miles Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Rectilinear distance d AB = | x A – x B | + | y A – y B | Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Rectilinear distance d AB = | 50 – 175 | + | 185 – 100 | Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Rectilinear distance d AB = 210 miles Example 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Erie A (50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles 210 miles Figure 9.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Figure 9.3 Health-Watch Erie A (50, 185) North Enter the x and y coordinates of the two towns. xy Erie (Point A)50185 State College (Point B)175100 To find the Euclidian distance, subtract the second town’s x value from that of the first town, and square the result. Do the same with the two y values. Then add the two and compute the square root. (Erie x – State College x) 2 15.625Euclidian distance151.16 (Erie y – State College y) 2 7,225 To find the rectilinear distance, get the absolute value of the result of subtracting the second town’s x from the first town’s. Do the same with y. Then add the absolute distances together. (Erie x – State College x)125Rectilinear distance210 (Erie y – State College y)85 Tutor 9.2 - Distance Measures

Location Health-Watch North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)2 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)2 5.5 – 2.5 = 3 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)2 5.5 – 2.5 = 3 4.5 – 4.5 = 0 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)23 + 0 = 3 5.5 – 2.5 = 3 4.5 – 4.5 = 0 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 2 * 3 = 6 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)10 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)10 2.5 + 0.5 = 3 8 – 5.5 = 2.5 5 – 4.5 = 0.5 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)102.5 + 0.5 = 330 10 * 3 = 30 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x, y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)102.5 + 0.5 = 330 Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Tractld A6 B25 C0 D21 E30 F80 G77 Total239 Figure 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Tractld A14 B25 C40 D14 E40 F0 G35 Total168 Figure 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Alternative Locations North x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Example 9.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Alternative Locations North x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) 391 355 331 326 283 247 223 233 197 173 253 233 228 168 218 Figure 9.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)2 B(2.5, 2.5)5 C(5.5, 4.5)10 D(5, 2)7 E(8, 5)10 F(7, 2)20 G(9, 2.5)14 Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)25 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5) Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5) Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 x * = y * = Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 x * = y * = 453.5 68 205.5 68 Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x, y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 x * = 6.67 y * = 3.02 Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) x * = 6.67 y * = 3.02 Example 9.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 Example 9.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs Example 9.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs $62 (20,000) Example 9.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs $62 (20,000) = $1,240,000 Example 9.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38 C$500,000$24 D$600,000$30 for 20,000 units Total Variable Costs $62 (20,000) = $1,240,000 Example 9.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38$1,060,000 C$500,000$24$ 980,000 D$600,000$30$1,200,000 for 20,000 units Example 9.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) A best Break-evenpoint Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis B best Break-even point A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) A best 6.25 Break-even point Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) 14.3 Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis C best (20, 980) B best Break-even point A D B C (20, 1390) (20, 1200) (20, 1060) A best 6.25 Break-even point Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) 14.3 Example 9.5 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 A best B bestC best Break-even point 6.2514.3 A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) Annual cost (thousands of dollars) Break-even point Figure 9.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Break-Even Analysis Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 A best B bestC best Break-even point 6.2514.3 A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) Annual cost (thousands of dollars) Break-even point Example 9.5 (A)(B) $150,000+$62Q=$300,000 + $38Q Q=6,250 units $300,000+$38Q=$500,000 + $24Q Q=14,286 units (B)(C) Break-Even Quantities

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Example 9.6

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Plant Warehouse 1 2 3 Phoenix Atlanta Create a row for each plant and a column for each warehouse Example 9.6

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Add a column for plant capacities and a row for warehouse demand Plant Warehouse Capacity 1 2 3 Requirements Phoenix Atlanta 400 500 900 200 400 300 Example 9.6

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Setting up the Initial Tableau Plant Warehouse Capacity 1 2 3 Requirements Phoenix Atlanta 5.0 6.0 5.4 7.0 4.6 6.6 400 500 900 200 400 300 Figure 9.8 Insert costs into the shipping route option cells

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Location Transportation Method Interpreting the Optimal Solution Figure 9.9

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Mile-High Beer— Solved Problem 2 Boulder Break- even point Fort Collins 2.67 Break-evenpoint Barrels of beer per year (in hundred thousands) 10 8 6 4 2 0 123456123456 Location cost (in millions of dollars) Figure 9.10 Denver Golden

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Arid Company— Solved Problem 4 Figure 9.11 Source Destination Capacity $4.37 $4.25 $4.89 12,000 10,000 18,000 40,0006,000 22,000 12,000 $4.00 $5.00 $5.27 $4.13 $4.50 $3.75 Demand Battle Creek Cherry Creek Dee Creek 12,000 6,000 4,000 6,00012,000 Worchester Rochester Dorchester

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Chapter 9.

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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Chapter 9.

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Presentation on theme: "To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Chapter 9."— Presentation transcript:

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