MGT2070: Operations Management October 24, 2012
Chapter 8: Location Planning and Analysis
o Point to point system
No guarantee of arrival of package or time of delivery
o Hub-and-spoke technology
Match plane types to size of loads for each route
Location break-even analysis example
o First calculate break-even point (BEP) to rule out options
o Then calculate total cost (TC)
o When determinate figures are not available, we reach a range to see what is the best
Between 1-1000, choose Akron. Between 1000-2500, choose Bowling Green. Over
2500, choose Chicago.
o POM-QM use Location module
File New Cost-Volume Analysis
Factor Rating Example
o Weights do not need to add up to 1, but is useful.
o Weighted scores are very close, so we should test the extremes in a real world example.
Center of Gravity method
o Finds location of single distribution center serving several destinations.
Use primarily for services
Cannot be used for large distances (not ac