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and Analysis
Growth:
Growth in demand for products/services which cannot be satisfied by
reasons:
Necessity:
E.g. Mining operations, Farming, Forestry, Fishing etc.
Perishability:
E.g. Canning of Freezing of Fruits and Vegetables, Processing of Dairy
products, Baking etc.
Transportation Costs: (bulk
E.g. Paper production, Steel production etc.
Prepared By: Gurpreet Singh
Regional Factors…
Location of markets:
Profit oriented firms locate near markets.
Close customer contact: E.g. Tailor shops, Lawn & Garden service etc.
Labor productivity
Environmental/Legal:
Zoning restrictions.
plants.
Each plant supplies to entire domestic market.
another.
segment of market.
Operating costs are higher.
process.
E.g. Automobile manufacturers use this approach with different
Economies of scale.
Prepared By: Gurpreet Singh
Service and Retail Locations
Manufacturers: Cost focused concerned with Labor, Energy, Material
costs, Availability and Distribution costs.
Convenience to customers
Good transportation
Customer access/parking
Technology:
Technological advances in communication and IT like: Fax, E-mail,
Cell phones, Teleconferencing, Internet.
Where
FC = Fixed cost
v = Variable cost per unit
Q = Quantity/Volume of O/P
Prepared By: Gurpreet Singh
Example 1: Cost-Volume Analysis
Fixed and variable costs for four potential locations
700
600 B
500 C
400 A
300 A Superior
200 C Superior
100 B Superior
0
0 2 4 6 8 10 12 14 16
5. Multiply the factor weight by the score for each factor, and sum the