Good day, now we will tackle the last lesson which is Evaluating Location Alternatives.

A variety of
methods can be used to evaluate different locations alternative. These are decision-making tools that
assist the organization in the decision-making process. Some of this help with subjective qualitative
elements such as quality of life. Others help with measurable quantitative elements such as distance.
Management may prefer to assess alternatives using numerous techniques before making a final decision.
Remember that a company's location decision will affect them for the rest of their lives. Therefore, it is a
vital that the organization will make the best decision.
The cost-volume-profit analysis, factor rating, the center of gravity approach, and the transportation
model are the four basic methods for analyzing location possibilities. These methods are very useful in
analyzing location alternatives, and we'll go over them individually.
The use of cost-profit-volume analysis can facilitate the economic comparison of location alternatives
where it can be done numerically and graphically. The graphical representation can enhance
understanding and indicates the ranges on each location alternatives that will be superior than other
alternatives. There are three steps in locational cost-profit volume analysis.

1. Determine the fixed and variable costs associated with each location alternative.
2. Plot the total-cost lines for all location alternatives on the same graph.
3. Determine which location will have the lowest total cost for the expected level of output. Alternatively,
determine which location will have the highest profit.
Moreover, there are assumptions in cost-profit-volume-analysis
1. Fixed costs are constant for the range of probable output.
2. Variable costs are linear for the range of probable output.
3. The required level of output can be closely estimated.
4. Only one product is involved.

The 2nd method in evaluating location alternatives is the factor rating method. It is the most extensively
utilized method of evaluating location alternatives. This method combines quantitative and qualitative
aspects assigns weights to factors based on relative importance and calculates a weight age score for each
site using a preference matrix. Factor rating method is effective for service and industrial locations. The
best option is determined by the location with the highest weighted score. There are six steps for factor
rating method:
1. Develop a list of relevant factors called key success factors.
2. Assign a weight to each factor.
3. Develop a scale for each factor.
4. Core each location for each factor.
5. Multiply the score by weights for each factor for each location.
6. Recommend the location with the highest point score
The third method in evaluating alternative location is the center of gravity method. his method is used to
determine where a facility should be located in order to save travel time or shipment expenses. The cost
of distribution is thought to be a linear function of distance and quantity transported. When calculating
averages, the Center of Gravity Method uses a visual map and a coordinate system, with the coordinate
points being treated as a set of numerical values. If the quantities transported to each place are equal, the
center of gravity is determined by averaging the x and y coordinates; if the quantities supplied to each
location are not equal, a weighted average must be used (the weights being the quantities shipped).
When you choose this method you need to consider these factors: First you need to to know the location
of the markets. It is important na alam natin kung gaano ba kalayo ang mga market na kailangan nating
deliveran ng goods. If sa tingin ba natin is kaya natin mag deliver sa ganung kalayong distance. The
second one is the volume of goods shipped to those markets, so it is important to consider kung gaano
karami ang goods na idedeliver natin sa market. If magiging viable ba na madeliver natin yung ganon
karaming goods sa ating market. Last one is the shipping cost for distribution center, so of course
mahalaga na malaman natin kung magkano nga ba ang gagastusin natin sa shipment ng distribution center
and dapat yung cost is naka align sa desired and allocated budget ng company.

The last method in evaluating location alternatives is the transportation model. The transportation model
is concerned with determining the best routes between supply and demand points in order to reduce
transportation costs while keeping supply and demand limitations in mind.
Transportation model is used in the following:
To determine how new resources will be transported from various locations to various manufacturing
sites. This is especially important in the event of a multi-plant business.
To determine how finished goods will be transported from various manufacturing sites to various
distribution centers. This is useful for a multi-plant, multi-market organization.
To determine how finished goods will be transported from various manufacturing sites to various
distribution centers. This is useful for a multi-plant, multi-market organization. These are the two
applications of the transportation model. The goal is to save money on transportation.