Location Planning

Location Planning 

 INTRODUCTION

Every firm must use location planning techniques. There are many options for location planning. Corporations choose from expanding an existing location, shutting down one location and moving to another, adding new locations while retaining existing facilities, or doing nothing. 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. 

Several factors that influence location positioning include the location of raw materials, proximity to the market, climate, and culture. Models for evaluating whether a location is best for an organization consist of cost-profit analysis for locations, the centre of gravity model, the transportation model, and factor rating. 

The main factors that affect location decisions include regional factors, community considerations, and site-related factors. Community factors consist of quality of life, services, attitudes, taxes, environmental regulations, utilities, and development support.

IDENTIFYING REGION- 4 major considerations

·         Location to Raw Materials: The three most important reasons for a firm to locate in a particular region include raw materials, perishability, and transportation cost. This often depends on what business the firm is in. 

·          Location to Markets: Profit maximizing firms locate near markets that they want to serve as part of their competitive strategy. A Geographic information system (GIS) is a computer based tools for collecting, storing, retrieving, and displaying demographic data on maps. 

·         Labour Factors: Primary considerations include labour availability, wage rates, productivity, attitudes towards work, and the impact unions may have. 

·         Other: Climate is sometimes a consideration because bad weather can disrupt operations. Taxes are also an important factor due to the fact that taxes affect the bottom line in some financial statements.

IDENTIFYING A SITE

The main considerations in choosing a site are land, transportation, zoning and many others. When identifying a site it is important to consider to see if the company plans on growing at this location. If so, the firm must consider whether or not location is suitable for expansion. There are many decisions that go into choosing exactly where a firm will establish its operations. First, a company must determine the driving factors that will influence which areas are suitable locations. After these factors have been determined, the company will identify potential countries and examine the pros and cons of establishing operations in these countries. After looking at pro and cons of the different countries and deciding on a country, then decision makers will identify a region within the country. When identifying a region, decision makers must take the four major factors explained above into consideration. The last two stages of the search include choosing a community and a site.

Method used for calculating the location of the Distribution Centre and the regional warehouses- 

Centre of Gravity Method:

This technique is used in determining the location of a facility which will either reduce travel time or lower shipping costs. Distribution cost is seen as a linear function of the distance and quantity shipped. The Centre 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 centre 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 (the weights being the quantities shipped)

 Calculation:

1.      Calculation of No of items in shipment: 

The semi-trailers can hold up to 33 pallets

Each pallet can hold how many cartons:

One Pallets dimension =800 x 1200 Cm

One carton will be occupying an area of =60 x 40 Cm

Therefore, the no: of cartons loaded (as in first layer) =800 x 1200/(60  x 40) =400 Cartons

No: of layers (wrt height) = 240/30= 8 layers

No: of cartons in semitrailers(shipped)= 400 x 8 x 33 = 105600 Cartons

There are 4 warehouses for 4 respective factories 

so the actual cartons shipped = 4 x 105600=422400 Cartons             

2.      Items in Circulation:

No of items in circulation= regional + shipped

There are 4 regional warehouse for each factory, so the no: of items in circulation for each factory =4 x 500=20000                                                                                            

For 4 factories =20000 x 4= 80000

.: the total items in circulation = 422400+80000=502400

Assumptions:

1.      The Demands for one particular date 01-2019 04-is considered.

2.      The demands of all the customers are met.

3.      The regional warehouses are located near the place where there is more demand

4.      If the city with more demand is met, then the demand in the surrounding places can be met accordingly.

5.      The values applied on demand are approximated to some degree.

Lorsch

Each central warehouse need to meet 82678 items/month.

Buttenheim: 1794/500= 4 trucks

Hamburg: 1776/500= 4 trucks

Berlin: 1608/500= 4 trucks

Köln: 1191/500= 3 trucks            

Mannheim              

Each central warehouse need to meet 172159 items/month.

Mönchengladbach: 5823/500= 12 trucks

Lüdwigshafen: 1447/500= 3 trucks

Braunswick: 1456/500= 3 trucks

Berlin: 1696= 4 trucks

Vechta

Each central warehouse need to meet 63154 items/month.

Köln: 1395/500= 3 trucks

Hamburg: 1382= 3 trucks

Frankfurt am Main: 483= 1 truck

Dresden= 143/500= 1 Truck

Mönchengladbach

Each central warehouse need to meet 276286 items/month.

Köln: 13912/500= 28 trucks

München: 3475/500= 7 trucks

Berlin: 3524/ 500= 8 trucks

Hamburg: 5409/500= 11 trucks

S.No	Central Warehouse	Regional Warehouse	Percentage demand/ regional Warehouse	Trucks needed per Regional warehouse
1	Lorsch	Büttenheim	49.2	4
		Berlin	27.8	4
		Hamburg	25.2	4
		Köln	18.7	3
2	Mannheim	Mönchengladbach	55.8	12
		Lüdwigshafen	13.8	3
		Brunswick	13.9	3
		Berlin	16.2	4
3	Vechta	Köln	48.8	3
		Hamburg	43.3	3
		Frankfurt am Main	15.1	1
		Dresden	4.4	1
4	Mönchengladbach	Köln	52.8	28
		München	13.2	7
		Berlin	13.3	8
		Hamburg	20.5	11

The no: of items in circulation:

The No. of items in circulation for a single day (04-01-2019) is calculated,

S.No	Central Warehouse	Demand on the selected day
1	Lorsch	1200
2	Mannheim	7181
3	Vechta	4500
4	Mönchengladbach	13431

Locations:

The location of the customers, location of the factory, location of the central warehouse and location of the regional warehouses are calculated according the given Longitudinal and Latitudinal positions and they are marked in Google maps for better understanding and reference.

Locations of the Factories:

S. No	Representation of the factories	Latitudinal value	Longitudinal Value
1	Mannheim	49.494034128078000	8.45711420315853
2	Lorsch	49.6409044696465000	8.56493556447512
3	Mönchengladbach	51.1963658241177000	6.43379455120694
4	Vechta	52.7428116120401000	8.2836006861168300

Location of the Central Warehouses:

Sample Calculation for Central Warehouse location for Lorsch: 

Total Sum of Demand = 82678

∑ Lat X Demand = 4207211.115

∑ Long X Demand = 782148.4652

Lat for Central Warehouse (x) =782148.4652/82678 = 9.46017641

Long for Central Warehouse (y) = 4207211.115/82678= 50.8867064

S. No	Representation of the Central warehouses	Latitudinal value	Longitudinal Value
1	Mannheim	50.16541035	7.742670888
2	Lorsch	50.8867643	9,46017641
3	Vechta	50.07490742	7.924501258
4	Mönchengladbach	51.0761371,	7.981192811

Location of the regional warehouses:

Lorsch

S.No	Representation of the Regional Warehouses	Latitudinal value	Longitudinal Value
1	Buttenheim	49.82950824	11.07254563
2	Berlin	52.5729887447053000	13.443301207034300
3	Hamburg	53.5878682327500	9.734921306135
4	Köln	50.92480502	6.950127682

Vechta:

S.No	Representation of the Regional Warehouses	Latitudinal value	Longitudinal Value
1	Frankfurt am main	50.0238419217	8.84232127
2	Dresden	51.009786542	13.31715272
3	Hamburg	53.572472791	10.151723147
4	Köln	50.8724347619	6.8714321719

Mannheim:

S. No.	Representation of Regional Warehouse	Latitude	Longitude
1.	Mönchengladbach	51.203457971	6.741327154
2.	Lüdwigshafen	49.497254721	8.347291274
3.	Braunschweig	52.2864327	10.433217900
4.	Berlin	52.427134171	13.541297524

Mönchengladbach:

S. No.	Representation of Regional Warehouse	Latitude	Longitude
1.	Köln	50.8724347619	6.8714321719
2.	Hamburg	53.572472791	10.151723147
3.	Frankfurt	50.0238419217	8.81232127
4.	Dresden	51.009786542	13.31715272