Case Analysis - Location, Location Location

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Summary This paper discusses a solution to the facility location problem at Tool Works, an automotive tooling company. A major goal in the strategic planning for a manufacturing firm is finding the most suitable facility location. The solution to the facility location problem is critical to the company’s success. A well-conducted decision making process can lead to the implementation of the decision alternatives that allow not only to locate a number of new units in a competitive environment, but also for the formulation of scenarios. Consequently, the decision makers can check the viability of their investment on long-term. 1. Planning a New Production Facility Facility location decisions are key elements in any firm’s overall strategic plan. The top management team at Tool Works has the major challenge of defining the strategic plan to find the most suitable location for a new production facility. The company’s long-term success depends on its managers’ ability to make a comprehensive synthesis of the various dimensions of the multi-criteria location problem. Management knows that within two years the existing production capacity will be over-utilized and will not satisfy the customer demand. The long-term strategic plan laid over several years provides a framework to locate a new automotive tool production plant. The plan strategy [2] links company’s environment to two competitive imperatives:  Need to manufacture close to the customer due to time-based competition, trade agreements, and shipping costs.  Need to locate production facility near labor pool to take advantage of low wage costs and high technical skills. The strategic plan establishes the overall objectives for the new production facility. These ensure the facility should be located where it will be the most competitive; it should be able to satisfy the production demands
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