1. Service Facility Location Attracting customers Chap. 8 第七章

2. Strategic location considerations Flexibility – Ability to react to changing economic situations Facility is capital-intensive long term commitment Reduce risk from regional economic downturns Competitive position – Establish itself relative to competitors Multiple locations – Market awareness Acquire prime location before market developed

3. Demand management – Ability to control quality, quantity, and timing of demand Hotel – Fixed nature of the facility – Locate near a diverse set of market generators Focus – Offering the same narrowly defined service at many location Cookie-cutter approach

4. Competitive Clustering – Reaction to observed consumer behavior Comparison before purchase Motor mile – Cluster of dealers Motel chains – Occupancy is higher if locate with many competitors

5. Saturation marketing – Group outlets of the same firm tightly In urban and other high-traffic areas – Au Bon Pain, Café Clustered about 25 cafés in the Boston area Some of them fewer than 100 yards apart Advantages – Reduce advertising, easier supervision, customer awareness – Intercept impulse customers with little time to shop or eat

6. Marketing Intermediaries – Service is created and consumed simultaneously Not suitable for “channel-of-distribution” concept » Make lots of shoes and sell thru many channel – 美國前總統柯林頓演講費為 30 萬美元一場 – Insurance products can use intermediaries 旅行平安險在機場或業務代表都可以買 – Bank Credits Credit cards are distributed thru many different channels

7. Substitution of communication for travel – Paramedics and nurse practitioners Use communication with distance hospital – Save patients’ trip to hospitals – Direct payroll deposit Save employee’s trip to banks for deposits Free bank’s office from congestion

8. Separation of front from back office – Front office closed to customers – Back office near the available cheap labors

9. Impact of the Internet on service location – Websites are virtual locations for e-tailers Customers’ physical travel becomes irrelevant – Products shipping Still a concern Easy to access overnight shippers – 24/7 call centers Strategically locate around the world – India, Ireland, and Jamaica – Operate normal daylight shift – Educated English literate low-wage labor

10. – “Competitive clustering” around a website Small off-Broadway theaters – Southern New Jersey – No central theatre district exist – Scatter across eight counties Shared website – Allow potential patron to browse available plays – Direct link to theatre for ticket

11. Site consideration

12. Geographic Information Systems – Capture. Store, manipulate, analyze, manage, and present all type of spatial or geographical data Stanford Geospatial Center

13. – Water main ruptured Level of storage tank lowering dramatically – To locate a leak » Explore 2000 acres » Stopping periodically and listen for leaking water GIS – Show geographical coordinates of each water line and valve – Pressure-sensitive valves and data logic control – Locate the leak precisely from the office

14. – Immediate-response team Wildfire, earthquake, and tsunami – Data Bird populations, plant diseases, fuel management – Use GIS to find ideal location

15. Facility location modeling considerations Geographic presentation – Travel distance

16. – Number of facilities One – Easy, ex. Travel distance Many – Service capacity – Level of service – Area served

17. – Optimization criteria Maximize some measure of benefit Private sector criteria – Cost of building and operating facilities – Cost of transportation Public sector criteria – Lack of agreement on goals – Difficult to measure benefit » Travel distance » Demand created

18. – Effects of optimization criteria on location

19. Facility location techniques Minimize the average walk – Concession along beach of Waikiki

20. Cross-median approach for a single facility – Minimize the total travel distance

21. Huff model for a retail outlet – Maximize profit – Gravity model Mass (estimate customer demand) / (distance) 2

22. Location set covering for multiple facilities – Minimal number and location of facilities – Serve all demand points – Within some specified maximal service distance

23. Regression analysis in location decision Forecast the performance of a standard location Several independent variables – Size, competitors nearby, traffic, …

24. Minicase – Case 8.1 Health Maintenance Organization – Case 8.2 Athol furniture, Inc. – No local cases needed. Show your reasoning in solving problems