Location of Service Facilities

Services can be distinguished into two categories for location analysis: fixed services and delivered services. The fixed services are consumed at the facilities where they are supplied. Some examples of fixed services are those supplied by health service, banks, theaters, and food outlets. In contrast, the delivered services, such as sanitation and emergency services (police, fire, and ambulance), are consumed where they are demanded.

There are often multiple objectives that must be considered simultaneously in determining the location of a service facility. In operations research based approaches, the total access often represents the objective function for the fixed services and the total delivery cost for the delivered services. The costs can be expressed in money, time, distance, or some other appropriate units.

In delivered services, both the location and the designation of response areas for each facility need to be determined. Emergency services such as ambulances, fire protection, and police protection, require rapid response. The random nature of the timing and frequency of calls for service in combination with varying times for response and service place the problem within the general framework of a waiting line situation. But the managers of such systems would have to provide an extremely large and expensive capacity in order to meet the response standards imposed if facilities were provided for peak demand. These facilities would necessarily be idle most of the time. Since queuing of calls to any great extent is not acceptable, deployment strategies have been used to provide service at reasonable cost. Thus, locations become mobile for ambulances and police protection through two-way communication systems. Instead of always returning to a home base, ambulances and patrol cars may be redeployed in transit. In fire protection systems, units may be relocated (redeployed) when a major fire occurs in order to minimize expected response time if another major fire were to break out.

Implications for the manager:

The emphasis in industrial plant location is to minimize costs; however, we are speaking of lower run costs, and many intangible factors may influence future costs. Thus a manager is faced with making trade-offs between tangible costs in the present and a myriad of subjective that may influence costs. The multi-attribute model provides a framework for the integration of objective and subjective factors using preference theory to assign weights to factors in a consistent manner.

Multi-plant location is influenced by existing locations because each location considered must be placed in economic perspective with the existing plants ad market areas. Each alternative location considered results in a different allocation of capacity to markets, and the manager’s objective is to minimize costs for the system as a whole.

Although it is often true that plant location particularly the location of individual versus multiple plants is dominated by the owner’s or manager’s personal preference for location, warehouse location is dominated by the cost criterion. Here, the managerial objective of minimizing distribution costs can be enhanced considerably though the use of well-developed computer-assisted distribution planning systems.

Services are produced and consumed simultaneously. This is not with physical products. The latter are manufactured at one point of time and location, and consumed at another point of time and location; they are stored somewhere and transported to places where customers are located. Services, on the contrary, are produced and consumed simultaneously at the same point of time and location. Second, services are also inseparable from their providers. The latter are an integral part of the services.

The very nature of service operations requires a manager to seek locations based on an analysis of the location of users. Thus, warehouses and many industrial plant locations are distribution oriented, the location of service operations is user oriented. Service facilities must be decentralized and relatively local in nature in order to bring the service rendered to the users. The bases on which locations in relation to users are chosen depend largely on the nature of the system. —