T RANSPORTATION MODEL - LOCATION PLANNING AND ANALYSIS

The transportation model is a valuable tool in analyzing and modifying existing transportation systems or the implementation of new ones. In addition, the model is effective in determining resource allocation in existing business structures.

The model requires a few keys pieces of information, which include the following: Origin of the supply Destination of the supply Unit cost to ship

This model will help decide what the optimal shipping plan is by determining a minimum cost for shipping from numerous sources to numerous destinations.The major assumptions of the transportation model are the following :

1. Items are homogeneous 2. Shipping cost per unit is the same no matter how many units are shipped 3. Only one route is used from place of shipment to the destination

Transportation costs play an important role in location decision. The transportation problem involves finding the lowest-cost plan for distributing stocks of goods or supplies from multiple origins to multiple destinations that demand the goods.

It also determines how to allocate the supplies available form the various factories to the warehouses that stock or demand those goods, in such a way that total shipping cost is minimized.

L OCATION PLANNING Every firm must use location planning techniques. There are many options for location planning. There are a variety of methods used to decide the best location or alternatives for the corporation. Methods such as identifying the country, general region, small number of community alternatives, and site alternatives.

How can we evaluate location alternatives? There are several ways that are very helpful in evaluating location alternatives, such as locational cost-profit- volume analysis, factor rating, and the center of gravity method.

L OCATION C OST -V OLUME -P ROFIT A NALYSIS : The procedure for locational cost-profit-volume analysis involves these steps: 1. Determine the fixed and variable costs associated with each location alternative. 2. Plot the total-cost lines for all location alternatives on the same graph. 3. Determine which location will have the lowest total cost for the expected level of output. Alternatively, determine which location will have the highest profit.

F ACTOR R ATING Determine relevant and important factors. Assign a weight to each factor, with all weights totaling Determine common scale for all factors, usually 0 to 100. Score each alternative. Adjust score using weights add up scores for each alternative. The alternative with the highest score is considered the best option.

C ENTER OF G RAVITY M ETHOD : The Center of Gravity Method involves the use of a visual map and a coordinate system; the coordinate points being treated as the set of numerical values when calculating averages. If the quantities shipped to each location are equal, the center of gravity is found by taking the averages of the x and y coordinates; if the quantities shipped to each location are different, a weighted average must be applied

Thank you for your attention MERVE ÖZMUTLU ÖZGÜN SARIŞIN SERKAN MENTEŞE