LOCATION PLANNING AND ANALYSIS

CASE STUDY
TO BE ANSWER BY MY CLASSMATE UNDER OPERATION MANAGEMENT CLASS
1. The Mumbai baking company currently has four retail locations within the metropolitan
area of a major city. Currently each retail outlet makes all of its own breads and pastries
from scratch. In order to reduce costs and ensure consistency of the firm’s products across
all locations, the management has decided to build a central commissary where the
products will be prepared and subsequently distributed to the four retail stores. The
question now is where to locate the commissary given the data below.

Store Location X Co-ordinate Y Co-ordinate Qty. of Product

Sold (pounds)

A 125 100 1250

B 250 75 3000
C 450 300 2750
D 200 350 1500

Solution:

Step 1: Locate each of the existing facilities on an X and Y coordinate grid map.

Step 2: Find out the X and Y coordinates of the new plant by taking up the weighted average of
the x and y coordinates of all the existing facilities.
CASE STUDY NO. 2

Let’s suppose your company wants to expand its logistics network and locate a facility within a
network of three existing facilities. Given the following assumptions below, what are the
coordinates for the new potential location?

Let’s assume the following:

 Warehouse 1 has a daily outbound goods volume of 2,500 units
 Warehouse 2 has a daily outbound goods volume of 1,300 units
 Warehouse 3 has a daily outbound goods volume of 5,000 units

And the current coordinates of the existing facilities:

Given the assumptions and grid coordinates above, we get the following:
 d1x= 200
 d2x= 300
 d3x= 100
 d1y= 50
 d2y= 100
 d3y= 150
And,
 V1= 2,500
 V2= 1,300
 V3= 5,000

Which gives us,

 Cx= (200 x 2,500) + (300 x 1,300) + (100 x 5,000) / (2,500 + 1,300 + 5,000) = 158
 Cy= (50 x 2,500) + (100 x 1,300) + (150 x 5,000) / (2,500 + 1,300 + 5,000) = 114

If we were to plot the new suggested warehouse coordinates on the grid, we would get:
CASE STUDY NO. 3

Five Flags over Florida, a U.S. chain of 10 family-oriented theme parks, has decided to expand
overseas by opening its first park in Europe. It wishes to select France and Denmark.

Key Weight Scores (out of 100)

Success Factor France Denmark
Labor availability and .25 70 60
attitude
People-to-car ratio .05 50 60
Per capita income .10 85 80
Tax structure .39 75 70
Education and Health .21 60 70
Totals 1.00

Key Weighted Scores

Success Factor France Denmark
Labor availability and attitude (.25)(70) = 17.5 (.25)(60) = 15.0
People-to-car ratio (.05)(50) = 2.5 (.05)(60) = 3.0
Per capita income (.10)(85) = 8.5 (.10)(80) = 8.0
Tax structure (.39)(75) = 29.3 (.39)(70) = 27.3
Education and Health (.21)(60) = 12.6 (.21)(70) = 14.7
Totals 70.4 68.0
CASE STUDY NO. 4

Three locations:

Selling price = $120

Expected volume = 2,000 units

City Fixed Cost Variable Cost Total Cost

Athens $30,000.00 $75 $180,000.00
Brussels $60,000.00 $45 $150,000.00
Libon $110,000.00 $25 $160,000.00

Total Cost = Fixed Cost + (Variable Cost x Volume)

Crossover point – Athens/Brussels

30,000 + 75(x) = 60,000 + 45(x)

30(x) = 30,000
(x) = 1,000

Crossover point – Brussels/Lisbon

60,000 + 45(x) = 110,000 + 25(x)

20(x) = 50,000
(x) = 2,500
CASE STUDY NO. 5

Three automobile showrooms (Bowling Green, Elizabethtown, and Morehead) are located
according to the following grid which represents coordinate locations for each showroom in
Kentucky. Monthly demand of Z-Mobiles at each showroom is also given below.