Factor-rating system and the transportation method

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ADISA Group has a chain of five large Discount Department Store outlets. The firm’s stores locations are in cities A, B, C, D and E. The stores are presently being supplied out of an old and inadequate warehouse in City B, the site of the chain’s first store. Management has decided to find some “central” location in which to build a new warehouse. As a facility location consultant, you have been approached by the ADISA’s management to assist them determine where to site the new warehouse. Data on demand rates at each outlet and current store locations with its grid coordinates are provided in the table below: Store Location Coordinate (X, Y) Number of Containers Transported per Month (i.e. Volume) A B C D E 110, 50 120, 90 275, 100 170, 130 270, 160 2,500 1,250 500 750 5,000 It was assumed that there exist a linear relationship between volumes transported and the transportation costs (no premium charges). Required: (a) Using the Center of gravity methods and the information displayed in the above, i. Determine the best location for siting the new warehouse. ii. Assume that the estimated amounts of containers shipped monthly in each store are the same, determine the location for siting the new warehouse. (b) As a facility location consultant, your client has also tasked you to compare and contrast the factor-rating system and the transportation method of linear programming as used in facility location decisions.

Reference no: EM132154431

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