1. Issues in Facility Location
   1. Free Trade Zone Defined
   2. Trading Blocs Defined
      
      
2. Plant Location Methods
   1. Factor-Rating Systems
      1. Factor-Rating Systems Defined
   2. Transportation Method of Linear Programming
      1. Transportation Method Defined
   3. Centroid Method
      1. Centroid Method Defined
         
         
3. Locating Service Facilities
   
   
4. Conclusion

Case: Applichem—The Transportation Problem

Case: The Plant Location Puzzle

The problem of facility location is faced by both new and existing businesses. Criteria that influence facility location include proximity to customers, business climate, total costs, availability and quality of infrastructure, quality of labor, suppliers, other available facilities, free trade zones, political risk, government barriers, trading blocs, environmental regulations, the host community and finally competitive advantage.

Factor-rating systems are the most widely used location techniques as they combine diverse factors in an easy-to-understand format. The transportation method is a special linear programming method while the center of gravity methods is another popular location solution method that focuses on minimizing shipping costs and distances.

While it is usually less expensive to establish a service facility than a manufacturing facility, service facilities have unique issues to consider. When choosing a location for a service facility it is important to maintain close contact with the customer. Frequently, regression models are used to assist with site selection.

The criteria for selecting appropriate locations have evolved beyond the singular focus on minimizing cost or distance. Today a number of quantitative and qualitative issues impact location decisions. A company's long-term success depends on its managers' ability to make a comprehensive synthesis of the various dimensions of the multifaceted location problem.