Questions 4.
Critically criticize the three approaches above. Discuss the advantages and disadvantages of each approach. Summarize the results in one page document.
Factor rating method:
Advantages:
1. Decision is based on the minimum distribution costs
2. Most widely used location based technique
3. Useful for service and industrial locations
4. It rates the locations using the factors i.e. qualitative and quantitative factors.
Disadvantages:
1. They do not account for wide range of costs occur with each factor.
2. This method is not data intensive it’s useful where data is not available.
Centroid method:
Advantages:
1. Decision based on minimum distribution costs
2. It finds location of single distribution center serving several destinations
3. it’s used primarily for services.
4. Its takes various factors into consideration like volume to be shipped, shipping distance, and location of existing destinations.
5. Companies uses the Centroid method when building a new warehouse or storage facility to find the optimal location.
6. It uses formula to convert the location and volume number in to two dimensional criteria.
Disadvantages:
1. It doesn’t look for accurate location.
2. It doesn’t take constraints like water bodies, fields etc. into consideration.
3. It doesn’t take cost, distance between warehouses into consideration.
Linear Programming model:
Advantages:
1. it’s used to analyze economic, social, military problems
2. it’s used to solve complex problems
3. It’s make uses of available resources.
4. Improves quality of decisions.
5. Helps in productive management which gives better results.
6. More flexible than any other system.
Disadvantages:
1. It only applies to problems where the constraints and objective are linear.
2. Factors like emergency, weather conditions are not considered.
3. Assumptions made are unrealistic.
4. Change of variables is not