facility location
The process of determining geographic sites for a firm's operations.
distribution center
A warehouse or stocking point where goods are stored for subsequent distribution to manufacturers, wholesalers, retailers, and customers.
quality of life
A factor that considers the availability of good schools, recreational facilities, cultural events, and an attractive lifestyle.
critical mass
A situation whereby several competing firms clustered in one location attract more customers than the total number who would shop at the same stores at scattered locations.
load-distance method
A mathematical model used to evaluate locations based on proximity factors.
Euclidean distance
The straight-line distance, or shortest possible path, between two points.
rectilinear distance
The distance between two points with a series of 90-degree turns, as along city blocks.
center of gravity
A good starting point to evaluate locations in the target area using the load-distance model.
fixed costs
the portion of the total cost that remains constant regardless of output levels.
transportation method for location problems
A quantitative approach that can help solve multiple-facility location problems.
geographical information system (GIS)
A system of computer software, hardware, and data that the firm's personnel can use to manipulate, analyze, and present information relevant to a location decision.
centralized placement
Keeping all the inventory of a product at a single location such as at a firm's manufacturing plant or a warehouse and shipping directly to each of its customers.
inventory pooling
A reduction in inventory and safety stock because of the merging of variable demands from customers.
forward placement
Locating stock closer to customers at a warehouse, DC, wholesaler, or retailer.
quantitative factors
factors can also be measured in terms other than dollars, such as driving time and miles.
qualitative factor
one that cannot be evaluated in dollar terms, such as community attitudes, environmental factors, or quality of life.