Analysis of an Existing Facility Location and its Optimization Through Simulation

Abstract

To choose an ideal location for a facility is considered as the most important problem for the organizations seeking to locate or relocate their facilities. A facility can be defined as a building where people, material and machines work together for a specific purpose such as to produce a tangible product or provide a service. In addition, the problem to find an ideal location for a facility carries great significance for the organizations as it bears high costs, hard to return and carries long-term commitment. Moreover, it has strong influence on operating costs and revenues of the organization. An ideal location ensures adequate supply of raw materials, market, labor, service etc. and thus contribute largely to the overall success of the organization. While, the organizations which have chosen poor location for facilities might face increase in the costs of transportation, lack of skillful labor, poor supplies of raw materials, loss of competitive advantage or other similar conditions that are essential for operations. In previous studies, it has been found that different approaches, methods and criteria have been discussed which can provide guidelines to find a location for a facility but none of them fully solve this problem. Moreover, there is such approach or criteria been discussed in literature which can optimized the location of an existing facility. In our study, we find a list of comprehensive factors which should be considered to find an ideal location for the facility. Furthermore, a location of a facility which is already in operation has been optimized. For this, structured interviews have been conducted with the top management of the various organizations and find out the important factors to be considered for choosing locations for their facilities. After that, location of a facility already in operation is selected and analyzed to find the factors that could be optimized. Data and information related to the factors are collected. A simulation technique based on linear programming simplex method has been used to optimize the location of the existing facility.