Point Rating Method
Companies have several objectives of various importance levels while selecting a site or location. Companies assign weightage to these objectives in the form of points. The potential sites are evaluated with respect to every factor a company is looking for and points are allotted accordingly to each factor. The superior site is the one that ends up with more points. However, the drawback of this method is that a high score in any factor can overcome a low score in any other factor.
The significance of point rating method is the relative importance of tangible cost factors when compared to intangible cost factors. Only intangible factors are assigned points.
A manufacturer decided to compare two potential sites A & B, which are approximately equal when evaluation was done based on cost. Therefore, the manufacturer wants to evaluate the two sites considering intangible factors using point rating method. Comparative ratings for major intangible locations factors and the points assigned to them are given in the table below.
From the data, it is clear that location A has an advantage over location B.
|
Points assigned to alternative locations
|
|
Factors rated
|
Maximum
possible points
|
Points assigned to
|
|
Location A
|
Location B
|
|
Availability of fuel in future
|
600
|
400
|
500
|
|
Availability of labor
|
500
|
440
|
400
|
|
Water supply
|
200
|
160
|
140
|
|
Transportation facility
|
300
|
250
|
150
|
|
Topography of the site
|
100
|
80
|
90
|
|
Living conditions
|
400
|
300
|
310
|
|
|
Total
|
1630
|
1590
|
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