By Ram Naresh Roy

ISBN-10: 8122416276

ISBN-13: 9788122416275

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Manufacturing firms find it useful to be close to customers when transporting finished goods is expensive or difficult (perhaps because they are bulky, heavy, or fragile). Further, with the trend toward JIT production, suppliers want to locate near users to speed up deliveries. Availability of Suitable Land and Land Cost Cost of land is usually a minor factor in the location of a plant. In the communities that are interested in attracting new plants, land may be offered at a reduced price or at no cost, which may influence some plants to locate there.

8d, Path: BZ – CZ – CY – BY – BZ Cost = + 12 – 10 + 12 – 10 = + 4 (cost increase). Thus, we will make no change. 8d Production Plants X Y [10] A 20 B 20 [12] [14] 10 [08] C Demand (units) 40 Supply (units) Z [10] + [12] 20 20 30 20 [08] 20 [12] 30 [10] 40 90 32 A Modern Approach to Operations Management Summary of evaluation: AY = + 6, CX = – 6, AZ = + 2, and BZ = + 4 Therefore, cell CX presents the best opportunity for improvement. For each unit from C reallocated to X and from B reallocated to Y, a $6 savings results.

The cell with the zero entry is then considered to be an occupied and potentially usable cell. If a cell evaluation reveals an improvement potential in a given cell, but no units are available because of a zero entry in the path to that cell, the zero (zero units) should be transported to the vacant cell, just as any other units would be shipped. Then the matrix should be reevaluated. Improvements may still be possible until the zero entries are relocated to where evaluations of all vacant cells are greater than or equal to 0.

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