The Center of Gravity Method

Francisco J. Rebollo Pascual

Marriott School
Brigham Young University
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Agenda
Definition
Steps and Formulas
Choosing The Best Location
The Center of Gravity Method in Your
Organization (example)
Solved problem (using Excel)


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Definition
The Center of Gravity Method is a tool that
seeks to compute geographic coordinates
for a potential single new facility that will
minimize costs.

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Definition
The Center of Gravity Method takes many
factors into account including:
Markets
Volume of goods shipped
Shipping costs

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Center of Gravity Method Steps (I)
Place existing locations in a coordinate grid
Place the grid on an ordinary map (example provided below)
The relative distances must be noted

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Center of Gravity Method Steps (II)
Calculate X and Y coordinates using the
following equations:

Cx= dix Vi/ Vi
Cy= diy Vi/ Vi

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Center of Gravity Method Steps (III)
Once you have obtained the X and Y
coordinates place that location on the
previously described map.


Note: If that particular location does not fall directly on a city, simply
locate the nearest city and place the new facility there.
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The Center of Gravity Method in
Your Organization
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Choosing The Best Location
Choosing an optimal location for your new
facility is vital to your companys success.
Some factors you should consider include:
Transportation
Labor
Quality of Life
State and Local Government
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Choosing The Best location
Transportation
Access to interstate highway systems
Access to major carriers and terminals
Transportation cost and service

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Choosing The best Location
Labor
Availability of qualified workers
Prevailing labor costs
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Choosing The Best Location
Quality of Life
Educational facilities
Housing and community appearance
Crime rate
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Choosing The Best Location
State and Local Government
Training incentives
Building construction codes and restrictions
Planning and zoning
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How can The Center of Gravity
Method Help My Company Choose
The Best Location?
Simple to compute
Considers existing facilities
Minimizes costs

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Example
Your company wants to locate a new facility
within a network of three existing facilities. Given
the following variables and the grid provided in
the next slide, what are the coordinates for the new
location?
Facility 1 has a daily goods volume of 2,500 units
Facility 2 has a daily goods volume of 1,300 units
Facility 3 has a daily goods volume of 5,000 units
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Miles
Y
X
150
100
50
100 200 300 400
(100, 150) Facility 3
(200, 50) Facility 1
(300, 100) Facility 2
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d1x= 200
d2x= 300
d3x= 100
d1y= 50
d2y= 100
d3y= 150

V1= 2,500
V2= 1,300
V3= 5,000
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Cx= (200 x 2,500) + (300 x 1,300) + (100 x 5,000)
(2,500 + 1,300 + 5,000)


Cy= (50 x 2,500) + (100 x 1,300) + (150 x 5,000)
(2,500 + 1,300 + 5,000)
= 158
= 114
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Miles
Y
X
150
100
50
100 200 300 400
(100, 150) Facility 3
(200, 50) Facility 1
(300, 100) Facility 2
(158, 114)
New Facility
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Solved Problem (using Excel)
Wal-Mart is trying to determine where to
locate a new warehouse. The new facility is
expected to serve four cities in the state of
Utah. Calculate the center of gravity for the
new warehouse based on the information
provided in the next slide.
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City X Coordinate Y Coordinate Number of Households (in thousands)
Logan 4 2 1.4
Ogden 3 3 2.1
Vernal 1 4 3.3
Provo 5 1 4.9
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First, input all the information given to you on a worksheet.
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Remember the formulas

Cx= dix Vi/ Vi
Cy= diy Vi/ Vi

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Second, Calculate the X Coordinate
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Third, calculate the Y Coordinate
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Lastly, once you have obtained an x and y-coordinate, place that location on the
map. If that particular location does not fall directly on a city, simply locate the
nearest city and place the new Wal-Mart warehouse there.
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Summary
The Center of Gravity Method
Seeks to compute geographic coordinates
for a potential single new facility that will
minimize costs.
Is easy to compute
Takes into account existing facilities

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Summary (Cont)
Other factors you should consider before
making a final decision include:
Transportation
Labor
Quality of Life
State and Local Government
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Suggested Reading
Marc J. Schniederjans. International Facility Acquisition and Location
Analysis. New York: Quorum Books, 1999.
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References
Marc J. Schniederjans. International Facility Acquisition and Location Analysis. New York:
Quorum Books, 1999.

Cecil C. Bozarth, Robert B. Handfield. Introduction to Operations and Supply Chain
Management. New Jersey: Prentice Hall, 2005.

Bostedo, John. "Facilities Location." . . . 23 Nov. 2005
<http://www.snc.edu/socsci/chair/333/facloc98.htm>.

"The Center of Gravity Method." . . . 21 Nov. 2005
<http://online.uis.edu/spring2000/bus322/lectures/chap08/sld027.htm>