DISTRIBUTION CENTER, WAREHOUSE, AND PLANT LOCATION（DOC 23）.doc

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 8: DISTRIBUTION CENTER, WAREHOUSE, AND PLANT LOCATION How can advances in technology and communication influence the facility location decision? The text cites an example of a manufacturer that used the Internet to gather the relevant data for choosing a new production facility to serve their customers east of the Rocky Mountains. Advances in technology and communication allow companies the ability to collect data inexpensively and relatively quickly. Discuss the factors that influence the number of facilities that a firm chooses to operate. Rather than asking, “Where should a new facility be located?” organizations should be thinking about the optimal number of facilities in the system. The need for additional facilities often arises when an organization’s service performance from existing facilities drops below “acceptable” levels. The general trend in recent years has been for companies to reduce the number of facilities in their distribution networks. Briefly describe the general factors influencing facility location. The cost and availability of natural resources may be a factor, particularly for manufacturing facilities. An area’s population is also important; population serves as a market for goods as well as a source of labor. Taxes and subsidies are yet another general factor, as is the cost and availability of transportation. Customer considerations may also influence facility location; quality of life considerations, such as cost of living and crime rates, can be important, too. Trade patterns, such as commodity flows, can be studied to determine changes occurring in the movement of raw materials and finished goods. How does a raw material’s status as pure, weight-losing, or weight-gaining influence the facility location decision? A pure raw material is one that loses no weight in manufacturing, and because of this, the processing point can be anywhere near the raw material source and the market. Weight-