Intended learning outcomes: Disclose a procedure for systematic reduction of possible locations / partners. Present factors for location selection. Produce an overview on steps in location selection and evaluation of a concrete case, namely a joint venture partner in China.
The first topic is the choice of location for a production network. Instead of a purely theoretical treatment, a concrete case is discussed below, namely the evaluation of a joint venture in China by a European company active in plant construction.
It is best to conceive of location selection as a project, with the associated tasks of project initiation, project management, and project realization. Figure 3.2.1.1 shows the steps in the concrete case mentioned above. Noticeable in this specific case is the long time period for location selection. Almost two years were required for the evaluation.
Fig. 3.2.1.1 Steps in location selection and evaluation of a joint venture partner in China.
In practice, there are many location factors critical to success, and each factor has criteria. For a comprehensive view, a complete set of factors with individual criteria is required. Evaluating the degree to which the criteria are fulfilled is then dependent on the strategy chosen in the specific case. Figure 3.2.1.2 shows the location factors examined in this case.
Fig. 3.2.1.2 Factors for location selection.
In addition to four factors that relate to the actual location, three factors are shown that relate to the contemplated joint venture partner. The individual criteria in these three factors can implicitly also characterize — although not only — the location of the partner.
To proceed effectively and also efficiently, whereas as many locations as possible are considered, they are reduced as rapidly as possible to a few candidates through examination of an appropriate sequence of location factors. One model for this is shown in Figure 3.2.1.3.
Fig. 3.2.1.3 Systematic reduction of possible locations / partners.
This funnel was based on an idea in [AbNu08]. The location factors are considered in an order that allows systematic reduction of locations.
Continuation in next subsection (3.2.1b).
Course section 3.2: Subsections and their intended learning outcomes
3.2 Location Selection and Location Configuration
Intended learning outcomes: Differentiate between location selection and location configuration. Explain location selection using qualitative methods and factor rating. Describe location selection and location configuration with linear programming.
3.2.1 Location Selection: Systematic Reduction of Possible Locations / Partners
Intended learning outcomes: Disclose a procedure for systematic reduction of possible locations / partners. Present factors for location selection. Produce an overview on steps in location selection and evaluation of a concrete case, namely a joint venture partner in China.
3.2.1b Location Selection: Factors Used for Identifying a Joint Venture Partner in China
Intended learning outcomes: Present in detail factors for location selection of a concrete case, namely a joint venture partner in China.
3.2.1c Location Selection: Cost-Benefit Analysis Using a Qualitative Method (Factor Rating)
Intended learning outcomes: Identify cost-benefit analysis using a qualitative method. Explain the results of factor rating and the sensitivity analysis in this case.
3.2.2 Location Selection and Location Configuration with Linear Programming
Intended learning outcomes: Produce an overview on linear programming (LP). For the design option of “in part decentralized production for the global market”, explain the use of mixed-integer linear programming (MILP).
