Beruflich Dokumente
Kultur Dokumente
Purpose:
Advantages
1.Simple
2.Enables bringing diverse locational considerations
in to the evaluation process
3.Foster consistency of judgment about location
alternatives
Procedure
1.
2.List the most relevant factors in the location decision.
3.Rate each factor (say from 1 very low and to 5 for every
high) according to its relative importance, i.e., a factor
rating is given to each factor, based on its importance,
the higher the ratings the more important is the factor.
4.Rate each locations (say 1 for very low and 10 for very
high) according to its merits on each factor .
5.Compute the product ratings by multiplying the factor
rating by the location rating of the each factor.
6.Compute the sum of the product ratings for each location
Factor ratings and location ratings for location alternatives
Factor Factor Location Rating Product of rating
Rating Locatio Location Location Location
1. Tax advantage 4 n8 A B
6 A
32 B
24
2. Suitability of labour 3 2 3 6 9
skill
3. Proximity to customers 3 6 5 18 15
4. Proximity to suppliers 5 2 4 10 20
5. Adequacy of water 1 3 3 3 3
6. Receptivity of 5 4 3 20 15
community
7. Quality of educational 4 1 2 4 8
system
8. Access to rail and air 3 10 8 30 24
transportation
9. Suitability of climate 2 7 9 14 18
10. Availability of power 2 6 4 12 8
Total score 149 144
Point rating method
•Assigning points to the various sites based on
the
importance given by the organization .
•At first maximum points for each factor is
decided and then points are decided for each
site.
•Thus the site with the highest point is considered
to be the superior of all the sites.
•One disadvantage of this method is both tangible
and intangible costs are rated at the same time
Points assigned to alternative locations
Factors rated Maximum Points assigned to
possible points locations
Location A Location B
Future availability of fuel 300 200 250
Transportation flexibility 200 150 150
and growthof water supply 100
Adequacy 100 100
Labour availability 250 220 200
Pollution regulations 30 20 20
Site topography 50 40 30
Living conditions 150 100 125
Total 830 875
Locational Break-Even Analysis
a)Determine all relevant costs that vary with each location
b)Categorize the costs for each location into annual fixed
costs(FC) and variable cost per unit(VC) and calculate the
total cost(TC) for the desired volume of production per
annum, for each location.
c)Plot the total costs associated with each location on a single
chart or graph of annual cost versus annual production
volume
d)Select the location with the lowest total annual cost(TC) at
the expected production volume per annum(Q)
Qualitative Factor analysis Method
a)Develop a list of relevant factors