report on location planning

7/25/2019 Report on Location Planning

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The purpose of this term paper is to discover the planning of location of

Shwapno superstore in Bangladesh. We primed our term paper on Shwapno

Superstoreand found out the Location Planning in their company. This term

paper contains how Shwapno Superstore Plan their location for outlet,

method of choosing location, hypothetic example of choosing place for outlet

etc.

Shwapno Superstoreis a Dhaa !ased chain super shop. "t has a location

planning. But, here we assume some factors a!out Shwapno Superstore

and analy#ed four method of choosing location alternatives. $very method

gave di%erent outcome according to our assumptions. "t is a demonstration

of choosing location alternatives.

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EEXECUTIVEXECUTIVE


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Origin of the Term Paper

Location planning is one of the most important activity in an organi#ation.

'rom the time an organi#ation !eings !egan forming operations to

accomplish aims and o!(ectives they could not accomplish without a location

or outlet. "n addition, for a service)oriented organi#ation, for exampleShwapno Superstore, location planning and proper outlet selection are very

important activities.

*ere, we have shown the location planning methods for +Shwapno

Superstore with a hypothetical example. -ur course instructor otahar

*ossain assigned us to mae a standard term paper on Location Planning or

/apacity Planning or Process Selection and 'acility Layout of an -rgani#ation.

'or that, *e told us to choose organi#ation as our !ase institution for

analy#ing one of the processes. oreover, we selected the Location

Planning on Shwapno Superstoreto conduct our Term Paper.

Background of the Study

This Term Paper has !een made as a part of our course -perationsanagement (BUS !"#$%-ur course instructor Dr. d. otaher *ossain has

assigned us to develop a report !ased on + Location Planning of Shwapno

Superstore .

Location planning is very important for a service oriented organi#ation.

Shwapno superstore is a service oriented organi#ation and a popular

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INRODUCTION


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superstore. To accomplish their goal they have to do location planning for

their outlet. So, we have to consider three things1

What is Location Planning2

Whether the -rgani#ation has location planning2 *ow they can add a new location 3*ypothetical example42

O&'ectie of the Study

The o!(ectives of the study are as follows1

To now the location planning of an organi#ation.

To now the importance of location planning.To identify the proper method of selecting location plan.To now the various method of location planning.

)ethodology

To mae the term paper on location planning of Shwapno Superstore, we had

to give our full e%ort. "t is not an easy (o! to get all the proper information

and mae them 5ll survey paper. But we tried our !est.

Sources of data*We collected the most important information from the

internet a!out the term paper. -ur course instructor provided us with

all the helpful information to mae the term paper.

Secondary +ata*The secondary sources were)

We!site PD' 5les Brochures of the -rgani#ation

Limitations of Study

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/ollecting information from corporate level is very tough, so we faced

several pro!lems while preparing this term paper.

Time ,onstraint* The 5rst limitation was time constraint. We didn7t do

surveys among large num!er of managers !ecause of time constraints.

-ccuracy of the .nformation* We could not do any survey. So, we assume

data and analy#e them. 'or this reason, there is no accuracy in the

information.

Unaaila&ility of Secondary .nformation* The institutions that we

selected, their we!site were not very much informative.

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Location Planning

Location plays an important role for every !usiness whether new or existing.

Location planning decisions are not limited to one time strategic planning

decisions for !uilding a new manufacturing or service facility rather most of

the organi#ations face the challenge of increasing their capacity through

selection of new locations or extension of existing locations. "t is very

important for any organi#ation through various departments of theorgani#ation. 9ccounting, which prepares cost estimates for changing

locations as well as operating at new locations. Distri!ution, which sees

warehouse layouts to maes material handling easier and customer response

shorter. "mportance of Location $ngineering, considers the impact of product

or service location choices for the company. 'inance Department, which

helps to perform the 5nancial analysis for investing in new locations. *uman

:esources anagement, which hires and trains employees to support new

locations or relocations of operations. anagement "nformation Systems,

which provide information technologies that lin operations at di%erent

locations. "mportance of Location areting which assesses new locations

and revised locations that is popular with the customers. -perations

anagement, which sees and 5nali#es locations that create, sustains,

protect and pro(ect the !est performance criteria for the whole organi#ation.

Procedure of making Location +ecision

Location decisions play an integral part of the strategic planning process of

every organi#ation. "t is important to learn a!out the need and nature of

location decisions. 9s a part of his routine responsi!ilities a senior -perations

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THEORETICAL BACKROUND


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anager often carries out the evaluation of di%erent availa!le locations. By

following steps location decision can !e made.

Decide on the criteria

"dentify the important factors

Develop location alternatives

$valuate the alternatives

$valuate and mae selection

/eed for making Location +ecision

s move to a host country with a lot of hype and propagandaof !ringing (o!s to thelocal la!or !ut the reality is its own need to increaseits revenue and pro5ts. ost of the time the need for location decisionfocuses on

areting Strategy/ost of Doing Business?rowthDepletion of :esource

0actors that -1ect Location +ecision

The process of determining a geographic site for 5rms operations taes into

account !oth manufacturing and mareting aspects. We (ust focus on themanufacturing aspects as it7s more closely related to -perationsanagement. 'ollowing factors can a%ects the location decision1

:egional factors./ommunity consideration.ultiple plan strategiesSite)related factors

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2aluating Location -lternaties

There are three speci5c analytical techniAues availa!le to aid in evaluating

location alternatives1

3% Location ,ostPro4t5olume -nalysis*

The /ost)olume)Pro5t 3/P4 9nalysis can !e represented either

mathematically or graphically. "t involves following three steps1

'or each location alternative, determine the 5xed and varia!le costs,

'or all locations, plot the total)cost lines on the same graph, andCse the lines to determine which alternatives will have the highest and

lowest total costs for expected levels of output.

9dditionally, there are four assumptions one must eep in mind when using

this method1

&. 'ixed costs are constant.

0. aria!le costs are linear.

6. :eAuired level of output can !e closely estimated.

8. There is only one product involved.

Total cost 6 0, 6 5 (7$

Where, '/'ixed /ost, varia!le /ost per Cnit, transplanting> something, lie

taing a hole from one place and inserting it in another without change. 'irst,

it assumes that to distur! or change the idea !eing transported in any way

will damage and reduce it somehow. "t also assumes that it is possi!le to

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tae an idea from one person>s mind into another person>s so that the two

people will then understand in exactly the same way.

The model reAuires a few eys pieces of information, which include the

following1

-rigin of the supply

Destination of the supply

Cnit cost to ship

The transportation model can also !e used as a comparative tool providing

!usiness decision maers with the information they need to properly !alance

cost and supply. The use of this model for capacity planning is similar to the

models used !y engineers in the planning of waterways and highways.

9% 0actor :ating*

This method involves Aualitative and Auantitative inputs, and evaluates

alternatives !ased on comparison after esta!lishing a composite value for

each alternative. 'actor :ating consists of following six steps1

Determine relevant and important factors

9ssign a weight to each factor, with all weights totaling &.FF

Determine common scale for all factors, usually F to &FF

Score each alternative.

9d(ust score using weightsG add up scores for each alternative

The alternative with the highest score is considered the !est

option

inimum scores may !e esta!lished to set a particular standard, though this

is not necessary.

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;% The ,enter Of

-P/O in the form of

retail chain in 0FFH. "t opened the 5rst outlet in Postogola Dhaa in 0H

-cto!er 0FFH. =ow, Shwapno has ;I outlets in &@ districts 3Dhaa,

=arayangon(, ymensing, /hittagong, 'eni, Sylhet, oulvi !a#ar, Bogra,

=ator, :angpur, Jhulna, Kessore, Khinaidah, =arshingdi, Barishal, Pa!na4.

ore than &6FF people are woring in this retail chain shop. They are maing

varieties of products day !y day that we call it little Walmart in Bangladesh.

The opening hours of this superstores outlets varies place to place. ou can

get the idea of opening hours from our listing information of outlets.

Shwapno Ltd. is an enterprise that com!ines industry and trade, mainly

engages in retailing the Auality products at the most lowest price in the

maret. The management of Shwapno, was an enthusiastic advocate of

trading stamps as an inducement for shoppers to patroni#e their stores1 They

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OVERVIW OF THE ORGANIZATION


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signed up with all types

of Auality products

manufacturer, and

!ecame one of the company7s largest clients. But the management was a fan

of pile it high and sell it cheap, and in the mid)0FFF Shwapno faced many

cost pro!lems associated with not properly integrating its purchased chains

of stores. When the 5rm overstretched itself opening few more outlets

throughout the city, management consultants were called in to sort out the

mess.

"n 0FF& Shwapno launched -peration /hecout, an across the !oard price

cutting campaign aimed at countering the threat from the new !reed of

discounters such as Auic Save.

'acing the world and looing !eyond, Shwapno will always maintain the pure)

hearted, enterprising, Auality and struggling spirit mae e%orts to

scrupulously a!ide !y our goodwill, create splendid future together with you

in management vision of (oint development, (oint prosperity and mutual

!ene5ts.

We choose some assumption to easily analy#e those methods of location)

planning. 'ollowing assumptions can !e made for the analysis1

=um!er of customers visit in Shwapno in a month1

Location =ame of Branch Selling price per unit 3t4

Cttara Cttara Branch &FFDhanmondi Dhanmondi Branch &FF

&F

ASSUMPTIONS


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irpur irpur Branch &FF?ulshan ?ulshan Branch &FF

'ixed /ost and aria!le /ost of Shwapno per year1

Location =ame of the

Branch

'ixed /ost

3t4

aria!le /ost

3t4

=o. of unit3per yr4

Cttara Cttara Branch &,;F,FFF 6F &F,;FFDhanmon

di

Dhanmondi Branch 0,FF,FFF 0F &F,;FF

irpur irpur Branch &,FF,FFF ;F &F,;FF?ulshan ?ulshan Branch &,HF,FFF 0; &F,;FF

Shwapno Superstore is introducing a new !ranch in Bashundhara and

Banani.

*ypothetically taen some data lie factor, weight and scores1

0actors >eight Scores (Out of 3##$Bashundhara Banani

/ustomer isit .6; &FF EF

TraMc olume .F; HF @;

:ental /ost .6F IF ;;

Si#e .;F E; HF

Layout .&; @; EF

-perating /ost .&F ;F @F

*ypothetically taen some data to analy#e the center of gravity

method1

+estination ? @ )onthly

7uantityD& 0 @ EFF

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D0 6 0 E;FD6 E 6 IFFD8 8 I HFF

3150

$very 5rm must use location planning techniAues. There are many options

for location planning. /orporations choose from expanding an existinglocation, shutting down one location and moving to another, adding new

locations while retaining existing facilities, or doing nothing. There are a

variety of methods used to decide the !est location or alternatives for the

corporation. ethods are such as identifying the country, general region,

small num!er of community alternatives, and site alternatives. Several

factors that inNuence location positioning include the location of raw

materials, proximity to the maret, climate, and culture. odels for

evaluating whether a location is !est for an organi#ation consist of cost)pro5t

analysis for locations, the center of gravity model, the transportation model,

and factor rating.

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LOCATION PLANNING


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9s an operations management student, we can focus on the importance of

location for any organi#ation through various departments of the

organi#ation. We got di%erent results from the four methods and we interpret

these results according to our assumptions.

Procedure of making Location +ecision of Shwapno

Superstore

We assume that Shwapno Superstore is going to introduce a new layout at

Boshundhora or Banani. They need to follow 5ve steps to choose one place.

By following steps they can mae the decision1

&. They need to setup the criteria. What type of layout they want, target

customers, transportation facility, others facilities could !e considered20. They have to 5nd out the important factor. What factor would !e

a%ecting the layout of the Shwapno superstore26. We assume they develop two alternatives. -ne is Basundhara and

another is Banani.8. They need to evaluate the alternatives. Whether Bashundhara is !etter

or Banani is !etter.;. Lastly they need to choose one location for their layout.

0actors that a1ect ShwapnoAs Location Planning +ecision

9 !usiness will have to consider many factors when determining where to

locate a new !ranch or operation. Csually, it will have to !alance several

factors in maing a decision.

3% :egional 0actor*

a$ Location of :aw )aterials* Shwapno, a retail chain superstore in

Bangladesh. 9s Shwapno is a retail chain, it does not need to purchase

raw materials for further production or for sell. "n the case of Shwapno,

its raw materials are +suppliers. "t is a crucial point for Shwapno to

choose a favora!le location where it can get its entire supplier closely

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and operate !usiness smoothly as there are di%erent products in

Shwapno and most of those have di%erent suppliers. To get Auality

products Shwapno chose to esta!lish their outlet near the geographical

center of the !usiness.

&$ Location of )arkets1 Location of maret is one of the, ma(or factor for

us. Shwapno chose their maret on the !asis of their customer

response. 9s we saw the outlet situated in the place from where they

can easily capture the whole maret and develops their own existing

maret.

c$ La&or 0actor* 9s Shwapno is one of the !est retail chains in our

country, it needs more la!or to operate the !usiness smoothly. Theyneed to !usiness. Per day Shwapno need at least 8F sales persons.

d$ 7uality of life*Shwapno will set in such a place where it can gets all

the suppliers who provide fresh 5sh, egeta!les, handy)craft etc, 9s

long as they are fresh, it will !e sold at a nominal price, and customers

will !e satis5ed. "f the place is not near of the suppliers than it would

!e diMcult for Shwapno to provide +Aualitiful products as most of the

products are perisha!le.

8% Site related factors*

Shwapno is very eMcient in their supply chain. 9nd they are very much

concern a!out it. 'or this reason they consider the fact of choosing the site of

outlet. They prefer to tae the outlet at ground Noor !ecause of customer7s

concern. Csually Shwapno chose those locations where the roads have

enough space, Buildings are well constructed with enough paring space.

Besides that they eep some space for further expansion.

Utility factors of the location* "n Bangladesh Load)shedding

pro!lem is at its pea. "n every area there is this pro!lem. Lie other super

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shop Shwapno mitigate this pro!lem !y installing generators with high

capacity. 9nd for that they chose the !uilding with installed generator.

2nironment factor* 9ll of Shwapno7s location is chose !y

considering the external and internal environment of the area. 9s the

maximum customers of Shwapno are from upper)middle class to higher class

3in terms of income4 people, Shwapno chose pleasant and little !it glamorous

area where customers can satisfy themselves.

4. SEVERAL METHODS OF LOCATION

PLANNING FOR SHWAPNO

SUPERSTORE

=ypothetical 2ample for selecting locationplanning

method for Shwapno Superstore*

8.& Location ,ostPro4t5olume -nalysis*We assumefollowing data to analy#e the location cost)pro5t)volume analysis.

'rom the ta!le we can calculate /ost)olume !y 3'ixed /ost O aria!le /ost

Total /ost4

Location Initial Fixed

Cost (tk)

Variable Cost

Per Unit(tk)

No. of

unit(per yr)

Variable Cost Per

Year

otal Cost

(FC!VC)

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cost eAuations eAual and solve for s own vehicles to its

several outlets. There is no intermediary !etween warehouse of Shwapno

and its manufacturing companies lie Cnilever. =o product directly comes to

the outlet without !eing at the warehouse. Some perisha!le goods are

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especially taen care of in the transportation process. Shwapno has contract

with some agricultural 5rms, hatchery, poultry farms, mushroom 5rms, dairy

and meat 5rms 3!eef, mutton, etc.4. These 5rms supply fresh agricultural

items as daily, 0 days, 6 days, weely, fortnightly or even on a monthly !asis

to Shwapno. *uge Auantities of goods are !eing taen. The transportation

cost is taen !y the producers. 9ll the products are 5rst taen to the

warehouse, then to the outlets. Though all the products at 5rst are ept in

their warehouse, still Shwapno have very low transportation cost. *ence, the

nearer the warehouse "S !etter for them.

;%9 0actor :ating*We assume following data to analy#e factor ratingmethod of Shwapno Superstore.

0actors >eight Scores (Out of 3##$ >eighted Scores

Bashundh

ara

Banani Bashundhar

a

Banani

/ustomer isit .6; &FF EF &FF3.6;46; EF3.6;408.;

TraMc olume .F; HF @; HF3.F;48 @;3.F;46.0;

:ental /ost .6F IF ;; IF3.6F40E ;;3.6F4&@.;

Si#e .;F E; HF E;3.;F46E.; HF3.;F48FLayout .&; @; EF @;3.&;4I.E; EF3.&;4&F.;

-perating /ost .&F ;F @F ;F3.&F4; @F3.&F4@

Total &.FF &&H.0; &F0.E;

.nterpretation*

*ere Shwapno Superstore7s manager may prefer to esta!lish maximum thresholds.

So, alternative & 3Bashundhora4 is !etter !ecause it has higher composite score.

;%; The ,enter Of


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&F > 2S

I

D4(4,9)

H

E

@ +33&,@4

; Banani

Bashundhara 8

6 +93E,64

0 +836,04

&

F & 0 6 8 ; @ E H I &F && &0

&6 &; Q

&&

&F

I D8H

&I

+estination ? @

D& 0 @D0 6 0D6 E 6D8 8 I

3" 8#

R xi

Q ))))))) &;86.E;

n

R yi

))))))) 0F8;

n

+36)irpur

+86+hanmo

ndi

+96


20/23

E

@D&

; D5 (3.75, 5)

D@86 D60

D0&

F & 0 6 8 ; @ E H I &F && &0

&6 &8 &; Q

.nterpretation*

'rom this graph it can !e derived that center of gravity of all four of our locations is

36.E;, ;4. 9nd D; is the Banani. 9s per this graph they should go for location Banani.

"f there is monthly Auantities varies, the center of gravity will results

di%erent. We assume that.

+estination ? @ )onthly7uantity

D& 0 @ EFF

D0 6 0 E;F

D6 E 6 IFF

D8 8 I HFF

6&;F

R xi


21/23


22/23

income dependent. They need to evaluate a!ove discussed four methods of

choosing the !est location for their outlet and warehouse.

'rom this report we can state some recommendation of choosing appropriate

location for Shwapno superstore. 'ollowing recommendation can !e made

from our assumption !ased report1

'rom the cost)pro5t)

volume analysis, we

can say, they should

go for Location Dhanmondi, if they have increased their sales. Pro5t is

also generated more from location Dhanmondi. "n factor rating analysis, we can recommend to go for Bashundhara for

their new outlet. Because, location Bashundhara has higher composite

score. 'rom the center of gravity method, we can recommend to go for

Banani. "f there is a variation in monthly Auantity or same Auantity, as

per center of gravity method location Banani is the !est place for new

outlet.

REFERENCES

00

RECOMMENDATION


23/23

K. Stevenson, W. 3n.d.4. Location planning and analysis. "n Operations

Management3Hth ed., p.HE04. =ew or, &00& 9venue of the 9mericas, =ew

or1 c?raw)*ill"rwin.

:etrieved from http1ids6;;.wiispaces.com/h.OHsOTransportationOodel

:etrieved from http1ids6;;.wiispaces.com/h.

OHOLocationOPlanningOandO9nalysis

:etrieved from http1www.report!d.comarticles&8I&Shwapno)))

Supermaret)/hain)amp)

Superstore)in)BangladeshPage&.html

:etrieved from http1www.#eepedia.comread.php2

locationUplanningUandUanalysisUmanagingUglo!alUoperat

ionsUregionalUfactorsUproductionUoperationsUmanagementV!;;Vc00

06
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