The document discusses using green field analysis (GFA) to determine the optimal location for a distribution center. GFA, also known as center-of-gravity analysis, finds the location that minimizes total transportation costs based on customer locations and demands. The analysis identifies the center of gravity point that minimizes the sum of weighted distances from suppliers/customers. The output is an approximate optimal location for a new facility.
The document discusses using green field analysis (GFA) to determine the optimal location for a distribution center. GFA, also known as center-of-gravity analysis, finds the location that minimizes total transportation costs based on customer locations and demands. The analysis identifies the center of gravity point that minimizes the sum of weighted distances from suppliers/customers. The output is an approximate optimal location for a new facility.
The document discusses using green field analysis (GFA) to determine the optimal location for a distribution center. GFA, also known as center-of-gravity analysis, finds the location that minimizes total transportation costs based on customer locations and demands. The analysis identifies the center of gravity point that minimizes the sum of weighted distances from suppliers/customers. The output is an approximate optimal location for a new facility.
The document discusses using green field analysis (GFA) to determine the optimal location for a distribution center. GFA, also known as center-of-gravity analysis, finds the location that minimizes total transportation costs based on customer locations and demands. The analysis identifies the center of gravity point that minimizes the sum of weighted distances from suppliers/customers. The output is an approximate optimal location for a new facility.
Learning Objectives 1. Develop the analytical and management skills to use the center-of- gravity method and simulation to select the optimal locations for your company’s facilities 2. Develop the technical skills you need to use anyLogistix to create two-stage supply chain models, perform experiments and measure performance 3. Understand the major trade-offs in facility location planning that affect the number of sites, lead time and demand uncertainty 4. Understand the areas of simulation and optimization Theoretical background • The objective of the green field analysis (GFA) is to determine the best location for our distribution center. We want to find the location that allows us to fulfill our customer demands at the lowest total transportation cost. • GFA, also known as center-of-gravity analysis, is a common method for determining optimal locations for new facilities (Ivanov et al. 2017). The issues we need to consider during a green field analysis are our customers’ locations, the distances from our warehouse(s) to our customers, and our customers’ demands for our products. • The GFA is used to find the optimal location within a network to setup a new production facility or warehouse, while a “brown” field analysis, utilizing the same technique, can be used to adjust existing networks (Ivanov et al. 2017, p. 235). • Identifying the optimal location for a production or warehousing facility is determined by finding the point at which: • the sum of the distances from all suppliers to the factory (demand point) • weighted by the volume of product flow between each supplier and the potential factory, is minimal. • Likewise, to determine the optimal location for a warehouse, the distances from the customers to the warehouse, weighted by their respective demands, are calculated. • To conduct the GFA, a high level of abstraction with a minimum number of details is used. Existing data, such as customer locations, demand per customer, the number and location of DCs, and/or service distances, are used as inputs to the analysis. • Program parameters for the GFA include how many possible results the program should calculate and whether the program should use real roads. • The output of the analysis is an approximate, optimal location for a production or warehousing facility (Ivanov 2017). This optimal point is called the “center or gravity” (Ivanov et al. 2017). As explained, these so called “Gravity models” determine the location at which the cost of all in- and outbound transportation is minimized (Chopra and Meindl, 2016).