PlANT LocATION - A CASE Sruoy:
THE VALUE OF NON-QUANIIlFlED VARIABLES FOR SITE SElECIlON

Myron 1. Peskin
David Halpern
lona College

New Rochelle, New York

Introduction

It has long been considered by management that the three most important consider-
ations in plant location decisions are the delivered cost of materials and supplies, the cost
of production and the cost of outbound finished goods transportation. The primary
objective of management is to increase the wealth of the stockholders through improve-
ment in the corporate bottom line. The principal method used by production manage-
ment to accomplish this objective is to minimize the total delivered cost of the product
to the final destination [1] - and to most management this total delivered cost is merely
the sum of the factory door cost for producing the product and the transportation cost
for delivering the product from the point of manufacture to the customer.

Quite often those responsible for plant location decisions use the classical linear pro-
gramming "transportation problem" model to determine the most cost effective area of
all those under consideration [2] - and then this "most cost effective area" is the one
selected for further superficial study. But is cost the one overriding factor [3]1 And
how does management know that cost, by itself, will really provide the optimal area?

The authors of this paper have been intimately involved with several plant location
studies performed by a Fortune 100 corporation. It is our opinion that microanalysis,
using the transportation model method with or without the additional superficial site selec-
tion studies generally considered necessary for selecting the optimal facility location,
ignores a multitude of important factors.

These additional meaningful, but generally non--quantifiable, factors must be fully investi-
gated and evaluated, along with traditional site selection quantitative analyses, in order to
determine as accurately as possible the probability of success or failure of a specific area
toward reaching the corporate objective of being in a "quality" location. Costs can be
and generally are accurately measured and optimized, but it is our opinion that many
intangible and not easily quantifiable factors must also be quantified and considered by
the organization in order to predict success. 1\venty-two of these additional, generally
non-quantifiable, variables are descn"bed in detail in this paper.

The purpose of this paper is to describe a "total" area location and site selection study
performed by a major corporation. As part of the overall study, this corporation went
far beyond the usual economic analysis in order to identify locations totally satisfactory
for both the near and long term. The "total" study did accomplish the organization's
objective of avoiding a disastrous location - and this corporation's management truly
believes this objective is far more important than merely finding the location which is
just the ''most cost effective."

Fall 1991 Peskin & Halpern: Plant Location 107

Frequently other organizations identify what they deem to be suitable areas for new
facilities through use of the traditional economic approach - they first determine break-
even volume points for the various locations under consideration and then select the
location which will generate the lowest total costs for the volumes selected. The break:-
even chart below is an example of this approach.

Figurel

Break-Even Analysis of Facility-Location Decisions

500100 200 300 400o

9.------------.".....--.."....----.

4
3
2

66.7 333.3

Annual Units of Output (thousands)

Results of Break-Even Analysis
When output is less than 66.667 units/year. Location A is best.
When output is between 66.667 and 333.333 units/year. Location B is best
When output is greater than 333.333 units/year. Location C is best.

This break~ven chart merely adds the fixed costs to the variable costs in order to obtain
total costs at various volumes for each of the locations under consideration. The break-
even approach is a variation of the classical linear programming transportation model in
that it analyzes costs from a different perspective - it also considers labor and fixed
costs while the transportation model considers only transportation costs. The break-even
model, in addition, provides sensitivity of a particular site to changes in production
volumes.

The site selection technique which is reviewed in this paper is used by several major
corporations. In order to properly employ this technique, the organization must first select
the three or four (or more) most cost effective locations from all those under consider-
ation through use of traditional site selection methodology - be it break-even, trans-
portation model, or some other cost comparison method. It must then compare each of
these pre-selected locations - one against the others - on a checklist of various non-

108 Journal of Business Strategies Vol. 8, No.2

quantified intangible but identifiable variables such as labor and business climate, living
conditions, ecology, educational opportunities, political and financial stability, police and
fire protection, etc. Each factor is then mted on a scale of 1 to 10, with each variable
bearing its exclusive subjective weighting in comparison to the other variables. Each
evaluated location, then, is milked against each other - and the location with the most
favomble moking is recommended.

Using this approach, Hewlett-Packard recently selected Boise, Idaho as a new plant
location based upon such subjective factors as:

An attmctive place to live.
A graduate engineering school nearby.
Two hours by air to San Francisco.
An adequate supply of available labor.
Good freight service.
An enlightened community leadership.
A community that wants Hewlett-Packard.

Using this same "logistics chain" approach, Kraft-General Foods selected both Mason
City, Iowa in 1986 as a site for production of its new family of shelf stable ready-to-eat
prepared food products and Jonesboro, Arkansas in 1988 as a new site for production of
breakfast cereals; Fuji-Isuzu chose Lafayette, Indiana in 1986 for Isuzu automobile pro-
duction; Chrysler-Mitsubishi located its new automobile plant in Bloomington, minois in
1986; and Lockheed decided to build a new automated AS/RS warehouse adjacent to its
existing California facility mther than locate the warehouse at an alternate site. These
are six specific examples of successful companies that have employed the method we
will describe in detail for successful plant location selections.

With the new united European Economic Community concept, many American corpo-
mtions are now actively considering the establishment of European facilities so that they
might be in a position to take advantage of the benefits of this united European commu-
nity. When evaluating foreign locations however, many of these organizations have found
that additional factors also require careful study. For example, language and cultural
differences immediately become apparent, and these differences can present opemting and
control difficulties overseas. All existing policies, procedures, and instructions which will
be used in these foreign facilities must be tmnslated into the language of the land, and
local customs must be recognized and observed.

"Cheap foreign labor" is generally no longer a major factor to American industry since
many foreign industrialized countries now. enjoy wage and benefit mtes equal to, and in
some cases greater than, those in the United States. In those foreign societies where these
mtes are substantially below those in America, such as in many of the third world
countries, the productivity of the worker is also substantially lower.

Governmental stability is also of great concern when it comes to guaranteeing the safety
of overseas industrial investment. We have all recently been made aware of the impor-
tance of the relationship between overseas industrial investment and government stability
by the August 1990 invasion of Kuwait by Iraq, the June 1989 events in China and the

Fall 1991 Peskin & Halpern: Plant Location 109

August 1991 events in Russia. This is especially true. as reported in Tune. Business Week
and Newsweek for those organmttions such as Texaro which lost millions of dollars worth
of petroleum in Kuwait, and by Occidental Petroleum. Chrysler. and Wmdmere which
had invested in excess of $2 billion in mainland China prior to the violence and massacre
in Beijing's TIaIlanmen Square and subsequent political clampdown throughout China.

Plant Location: A Case Study

This paper discusses the procedure used by a consumer products manufacturer that is
a member of the Fortune 100 to select a site for a new manufacturing facility. To con-
ceal the name of this client company. we will refer to it in this paper as "A" Corpora-
tion - a fictitious name. Our purpose in preparing this paper is to present and discuss
those non-quantifiable and intangible factors which this corporation considered important
enough to use as a basis for the selection of a specific location for a new multimillion
dollar facility.

"A" Corporation operated multiple manufacturing facilities in the northeastern section
of the United States. all producing the same family of products. All of these facilities,
although recently modernized, were relatively old and inefficient, but each was still produc-
ing an acceptable quality product with relatively few consumer romplaints.

Management recognized that this geographical concentration of old and inefficient
facilities with multiple overheads was not cost effective. After a thorough study and
evaluation, they concluded that a single new state-of-the-art facility should be established
with the capability of producing twice the volume of the combined existing facilities.
Based upon distrIbution logistics. it was concluded in the evaluation that this new facility
should be located within 350 miles of the principal market, New York City.

A major plant location oonsulting organization was retained to identify. using traditional
area location and site selection methodology. the most cost effective area for the company's
new plant. Various parameters and delimitations were provided to aid the consultants in
the selection of a suitable location. Among these. in addition to the marketing oriented
objective that the facility should be within 350 miles of New York aty, was the sourc-
ing oriented objective that the facility should be near an ocean port since much of the
raw material used would come from overseas.

These consultants evaluated many areas in the ten eastern states which satisfied the
parameters and delimitations of the study. The consultants' study indicated that the new
state-of-the-art consolidated facility should be located somewhere within the geographic
triangle formed by WtlmingtoD; Philadelphia and Baltimore. This area location study
identified a general area for the new facility based upon the parameters supplied by "A"
Corporation and specific cost information which the oonsultants obtained, such as inbound
transportation rosts for materials, costs of productioD; outbound transportation costs for
finished product, state and local taxes. utility oosts. and other oosts which are generally
associated with identifying the most cost effective site for a plant relocation.

The study did not, however. identify any specific sites within the "triangle.» nor did it
evaluate non-quantified variable factors which the oompany felt were necessary to insure
a successful transition. "N' Corporation then did two very important things - first, it

110 Journal of Business Strategies Vol. 8, No.2

enlarged the consultants' assignment to include these non-quantified intangible variable
factors. Secondly, it assigned knowledgeable corporate production supervisory employees
full-time to the consultants to provide user input and to work with the consultants in the
identification and evaluation of specific alternate sites for the new facility.

The consultants and production supervisors together developed and used the following
checklist of 22 objective and subjective characteristics for detailed investigation of each
potential site within the specified triangle. This list and analysis is presented as sugges-
tive, rather than definitive. The specific factors relevant to any particular site location
should be carefully considered to insure completeness. It should also be noted that the
weighting of the factors are not equal, and any such weighting should be reserved until
all information is gathered on each site. It is possible that one site could have a unique
advantage that would dominate the decision, but which would have never been consid-
ered until this uniqueness is revealed from the investigation.

1. Labor history 13. Local and state business climate
2. Labor availability 14. Community employer
3. Influence of labor on 15. Police, security and fire protection

local industry 16. Physical climate
4. Maturity of citizens 17. Roads and highways
5. Residential housing and general 19. Trash, garbage and sewage disposal

community aspects 19. Utilities -
6. Management potential electricity,
7. Educational facilities natural gas,
8. Health care fuel oil, and
9. Culture and recreation coal

10. Industrial planning and zoning 20. Water supply
11. Community financial picture 21. Transportation
12. lax structure 22. Material availability

The task force developed specific relevant questions for each of the categories on the
check list. These questions were designed to complement "A" Corporation's mission and
to satisfy the requirements of the new facility. Examples of the type of questions asked
and evaluated for each of the categories follows:

1. Labor History
a. Does a significant portion of the labor force have deep community roots as

expressed by family orientation, long term residency, home ownership, and
community involvement?

b. What is the degree of area unionization?
c. Are one or two unions dominant in the area?
d What has been the area history of work stoppages and the willingness of

local labor to accept both work methods improvements and automation?

The responses to this category of questions would provide an indication as to the rela-

Fall 1991 Peskin & Halpern: Plant Location 111

tive stability of the area's potential work force. "A" Corporation was proud to have had
a long-term history of labor peace and good labor-management relations at all of its
locations, and it was considered important by Management that this history be maintained
at the new location.

2 Labor Availability
a. What is the labor population within a 30 mile radius? What percent are

employed in manufacturing?
b. What is the area labor distribution between skilled, semi-skilled, and unskilled

labor?
c. What is the willingness within the area for shift work?
d. What is the average area family income? Does a need exist for supple-

mental income?
The responses received to this grouping of questions would provide Management with

information about the availability of sufficiently skilled workers within the area willing
to work each of the three shifts for wages considered "normal" for the industry.

3. Influence of Labor on Local Industry
a. What are the area median wage rates and benefits, by skills.
b. What is the area degree of unionization? How mature are the area union

leaders?
c. What has been the labor strife record in the area?
d. How much will we have to compete with the area's larger industrial manu-

facturers for competent labor?
e. Have the labor or industry leaders in the area developed any special area

contract provisions, such as for seniority, bidding, layoffs, grievances, etc.?
What are these provisions?

As previously stated, this company has had a long-term history of "good" relations with
its workers at all locations. The responses to this series of questions would either resolve
or heighten any fears that Management might have about the probable relations between
labor and management at this new location.

4. Maturity of Citizens
a. Have civic leaders, local officials, and religious leaders demonstrated a

positive and progressive attitude toward industry? Do they enthusiastically
encourage new industry?

b. Are the area residents generally labor-oriented, business-oriented, or well
balanced?

c. What is the community attitude toward industrial development?
d. Do the area residents actively vote in municipal, state and national elections?

Are the residents active in community activities?
e. Is the area standard of living at or above average?

As a "good" neighbor, "N' Corporation has always encouraged its local management
to become actively involved in local civic and community activities. The answers to this

112 Journal of Business Strategies Vol. 8, No.2

series of questions will indicate to corporate management the degree to which local
company management might be accepted by the community and by local leaders. This
series of questions will also forecast the probable degree of future "N' Corporation
involvement in the community and in community activities, as well as whether the com-
munity will accept "A" Corporation as a "good" neighbor.

5. Residential Housing and General Community Aspects
a. Is there adequate rental and ownership housing available that will appeal to

both new employees and corporate personnel being transferred into the area?
Is it reasonably priced?

b. Does the community have adequate residential zoning?
c. Are the residential areas attractive? Is the appearance of the center of town

attractive? Does this indicate community pride?
d. Are there good motels and restaurants in the area?
e. Are there adequate banking, commercial, shopping and other community

services and facilities available for area residents?
f. Does the community have an excessive amount of slum or sub-marginal

areas?
This group of questions will allow Management to evaluate the community as a

respectable and responsible living community for all its employees - new hires currently
in the area, new employees moving into the area, and seasoned corporate employees being
transferred into the area. It has been an unwritten "N' Corporation policy to encourage
and provide "incentives" to management employees to live in the community where they
work and to take an active part in community activities. The answers to this series of
questions should provide the company with a sixth sense as to the degree of resistance it
might expect when asking both new and existing employees to accept a position at the
new facility and to move into the new community.

6. Management Potential
a. What is the possibility of attracting supervisors and managers from the local

area?
b. What is the possibility of attracting scientists and technicians from the local

area?
c. Can prospective local hourly workers be expected to grow into added

supervisory responsibilities?
d. Are any vocational, technical, trade and/or scientific schools located nearby?

Are they accredited? By which associations?
The answers to this series of questions would provide Management with information

concerning the degree of difficulty the company might expect if and when it attempts to
recruit management, technical and/or scientific personnel from the community rather than
import these necessary employees from outside the community. In previous area reloca-
tion situations, "N' Corporation found that it is considerably less expensive to recruit
locally than to import personnel into an area with the attendant relocation costs.

Fall 1991 Peskin & Halpern: Plant Location 113

7. Educational Facilities
a. Are there a sufficient number of «good" public elementary and high schools

in the community to accommodate the families of new and transferred
employees?

b. Is the public school system keeping pace with expected community growth?
c. Are the local vocational, trade, technical, and scientific schools oriented

toward our requirements? If not, will they be willing to modify their ori-
entation? Will they be willing to implement specific training courses to meet
our requirements?

d. Are higher educational facilities sufficiently near to help attract management
and other key personnel?

e. Are there quality local adult and continuing education programs in the com-
munity?

The responses to this group of questions will provide an indication of the community's
attitude toward education and whether the community might help train potential employ-
ees and participate in the continuing education of existing employees.

8. Health Care
a. Are there adequate medical, dental and health services such as emergency

services, doctors, general practitioners, specialists, hospitals, dentists, nurs-
ing services, etc.?

b. Is there an adequate public health program?
c. Has the community enacted and is it enforcing adequate sanitary and envi-

ronmental health legislation?
The answers to this group of questions will tell the company what the community's

attitude is toward the health of its citizens, and will indicate the degree of difficulty that
the company might expect when requesting employees to relocate there.

9. Culture and Recreation
a. Are there well maintained public parks and playgrounds, well equipped and

adequately staffed public hbraries, and a sufficient number of cultural cen-
ters such as museums and theaters to attract and retain management and other
key employees?

b. Do the local colleges and universities have cultural outreach programs for
the community?

c. Does the area have a variety of local outdoor attractions such as boating,
swimming, golf, tennis, fishing, hunting, ice skating, skiing, etc.?

d. Are there resort and other recreational areas located within a one hour drive?
e. Are there sufficient houses of worship of varying creeds and denominations?

Cultural and recreational activities located within a reasonable commuting distance have
been found by "A" Corporation to be very important to corporate employees transferring
to rural locations from urban areas. The responses to this group of questions will help
the company determine the degree of difficulty it might expect when recruiting manage-

114 Journal of Business Strategies Vol. 8, No.2

ment, technical and scientific personnel from outside the area, and when transferring
employees into the community.

10. Industrial Planning and Zoning
a. Does the community have an active and forward looking planning and zon-

ing commission?
b. Are the industrial areas as well protected by planning and zoning as are the

residential and commercial areas?
c. Have building codes been revised and updated for modem methods, mate-

rials, and technologies?
d. Will municipal authorities provide written assurances protecting against future

unfavorable planning and zoning changes?
e. If the specific site selected is outside the community zoning district, will

the community annex the site to provide the necessary zoning for the plant's
needs?

Management recognizes that it is extremely important to protect corporate assets. The
answers received to this series of questions will provide "N' Corporation with informa-
tion concerning the community's attitude toward zoning, and the degree of planning and
zoning protection the company might expect in the future from the community leaders.

11. Community Financial Picture
a. Does the local tax structure allow the community to adequately service its

existing indebtedness?
b. Is the community tax structure well balanced between residential, industrial

and commercial sources? Are the tax assessments in line with services
received?

c. Will the municipal authorities provide written assurances concerning future
d. Do unusually low taxes indicate inferior schools, streets, health, safety and

other services?
The answers to this series of questions will indicate the community's degree of finan-

cial stability and the protection that "~' Corporation might expect from unexpected com-
munity taxation.

12. Tax Structure
a. What and how much are the state and local taxes • property, inventory,

income, sales, franchise, other?
b. Which taxes increase or dectease the number of new and transfer employees?
c. Which taxes increase or decrease the number of new or expanded industry?
d. Are there any state or local "special" or unusual taxes? Which taxes are

these?
e. Will the state or local government offer any incentives for location into their

area? What are these incentives?
This group of questions will provide the company with an indication of the community's

attitude toward industry and the existing tax relationship between personal and corporate
taxation.

Fall 1991 Peskin & Halpern: Plant Location 115

13. Local and State Business Oimate
a. Do the local community and the state both have a "good" record toward

industry? Are they "fair" and "cooperative" to industry?
b. Are local and state laws concerning industry fairly written and fairly ad-

ministered? Are these laws conducive to good management-labor-govern-
ment relations?

c. Has the local community and the state each enacted legislation that will
restrict unreasonable union acts? Do the local and state courts have a "good"
record against illegal strikes and picketing?

d. Will new industry strain municipal facilities? Which facilities?
e. Does the community have any business-sponsored civic organizations?

The answers to this series of questions will provide the company with an indication as
to whether the community is or is not industry~riented. Although "A" Corporation is
recognized as a "good" employer, it would be hesitant to enter an area which has an
anti-management history.

14. Community Employer Evaluation
a. Are there any branch plants representing national corporations in the area?

Which ones?
b. Do most area employers demonstrate enlightened management policies?
c. Does any singular area industry have a poor labor strife record?
d. Will local industry participate in surveys regarding wages, union contracts,

personnel policies, etc.?
"A" Corporation has always cooperated with, participated in, and been a leader of area-

industry associations. The responses to this group of questions will indicate the degree
of cooperation and association the company might expect from other industries in the area.

15. Police, Security and Fire Protection
a. Is the local fire department a paid department?
b. Do the local and state police and fire departments each have high standards

for personnel, equipment, training, and morale?
c. Is a public police patrol provided for industrial properties? Are private

security agencies available?
d. Is there a cooperative disaster aid plan with other communities in the area?
e. Is community and area crime under control?
f. Does the area have a large number of bars and taverns?
g. Is local industry satisfied with the police and fire departments?

Security for both corporate assets and for corporate employees is paramount for the
organizaoon and absolutely necessary for "A" Corporation's continued presence in an area.
Responses to this group of questions will tell the company just how "secure" the area is
for both the corporation and its employees.

116 Journal ofBusiness Strategies Vol. 8, No.2

16. Physical Climate
a. Is the area climate satisfactory for both living and manufacturing?
b. What has been the monthly average and ranges of temperature, humidity,

rainfall, and snowfall?
c. What has been the incidence of industrial disruption due to snow, heat, flood,

wind, cold, prolonged dry spell, or prolonged wet spell?
d. What is the average velocity and direction of prevailing winds?
e. How deep is the area frost line?

The ability to satisfy customer demand by maintaining scheduled production as planned
without unanticipated interruptions is believed by Management to be one of the key
factors in the continuing success of the company. To insure uninterrupted production,
"N' Corporation needs to know that the climatic conditions of the area are such that
continuing production is assured.

17. Roads and Highways
a. Are public roads and highways well maintained?
b. Are public highways quickly cleared of snow and ice?
c. Are local highways adequately interconnected with federal interstate high-

ways?
Well maintained highways are essential for continued production support. Employees

require well maintained roads for access to and egress from the facility. Incoming ma-
terials and outgoing finished product also require well maintained highways to assure
adequate materials for production purposes and adequate finished goods for timely deliv-
ery to customers. Without the ability for employees to have continuous access and egress
to and from the facility in all types of weather, production will falter; without the abil-
ity to receive raw materials for production and to ship finished product in all types of
weather, customer requirements will not be satisfied. In a competitive consumer product
environment, if one manufacturer cannot guarantee a continuous supply of product to the
customer, the customer will go to a competitor for the product. "N' Corporation wants
to assure itself that it will be able to guarantee the continuous supply of product to its
customers.

18. Trash, Garbage and Sewage Disposal
a. Does the community have a pollution control board? Are pollution regula-

tions rigorously enforced?
b. Are incinerators permitted?
c. Are private contractors available for trash and garbage removal?
d. Is the municipal sewage system sufficiently sized to accommodate the plant's

anticipated waste?
e. Does the community require industry to pretreat sewage?

Environmental concerns today are paramount in selecting a facility location. Recog-
nizing that solid waste landfills are becoming over utilized and are being closed by the
various environmental protection agencies, that air and water pollution are becoming

Fall 1991 Peskin & Halpern: Plant Location 117

concerns of the local environmentalists, and that every industrial facility creates both
garbage and exhaust, "1\:' Corporation knows through its own experience that ineffective
municipal control of the environment can, does, and will result in severe and unaccept-
able state and federal restrictions. The answer to this series of questions will provide
Management with a good knowledge of present and a reasonable knowledge of future
environmental requirements within the community in advance of selecting it as a loca-
tion for the new facility.

19. Utilities - Electricity, Natural Gas, Fuel Oil, and Coal
a. Is there sufficient economic electric power available for our present and

future needs?
b. Is co-generation permitted and acceptable?
c. What is the history of area electric power outages?
d. Are low sulphur oil, natural gas and low sulphur coal competitive fuels in

the area?
e. Can oil and coal delivery be depended upon in all weather?
f. Is there any problem with disposal of coal ash?

The cost for utilities is a major cost factor for this company. The responses to this
series of questions will provide "A" CQrporation with the information it needs to know
about the present status of utility supplies. Management believes it must know if it can
rely on the continuous availability of sufficient cost competitive utilities to maintain pro-
duction, and if not, whether it will be permitted by legislation to generate its own power?

20. Water Supply
a. Is the quantity of water publicly available adequate for the plant's current

and future needs? Is it pure enough for the proposed manufacturing pro-
cess?

b. Are private water wells permitted?
c. What is the chemical analysis of the public water supply and of the well

water? Is this satisfactory for the plant's needs?
d What is the history of uninterrupted public water service and well water

supply?
"A" Corporation is a large consumer of water for processing purposes. The answers

to this series of questions will tell Management if it can be reasonably certain that suf-
ficient water of acceptable quality will be continuously available to insure adequate product
quality and uninterrupted production operations.

21. 'fransportation
a. Is there adequate rail, truck, ship, and air freight service available locally?
b. Will the railroad provide switching services as needed?
c. Do major truckers have terminals in the area?
d. Are any state or local laws restrictive to trucking? Which ones?
e. Are freight forwarders available locally?

118 Journal ofBusiness Strategies Vol. 8, No.2

f. Is adequate air passenger service available within a one hour drive?
As mentioned previously, good transportation facilities are essential for continued plant

operations - for continued receipt of those raw materials and supplies needed for pro-
duction and for continuous shipments to customers with the product they require when
they require it. This is especially important in the just-in-time environment "A" Corpo-
ration is planning to implement at the new facility.

22. Material Availability
a. What are the logistics of raw and packing material supply?
b. Will raw and packing material costs be competitive with other sites?
c. Can we be assured of multiple sources of supply?
d. Will there be strong area competition for our needed supplies?
e. What is the anticipated quality of locally supplied materials?

It goes without saying that the economical availability of raw and packaging materials
are vital to the continued success of the operation

The enlarged area location task force, consisting of the consultants and the assigned
corporate supervisory employees, evaluated a total of six specific locations in detail, each
against the others, based upon the preceding 22-category checklist. Each of the twenty-
two factors was independently weighted by the task force in consultation with Corporate
management based upon presumed importance of the individual factor. As was indicated
previously, the weighting of the factors were not equal, and the assignment of relative
weighting did not occur until all information was gathered on all sites. The weighting
were developed using this procedure because it was felt by both management and the
consultants that one site could conceivable have a unique advantage over the others that
might dominate the decision making process but which would have never been consid-
ered until the uniqueness was revealed from the investigation.

One of the six locations ranked very high and appeared to be superior to the others
for the needs of the corporation. Further detailed investigation indicated that this one
location was indeed superior to the others, and the "N' Corporation finalized on this one
area as the most suitable for the new facility based upon a combination of both tangible
cost factors and the important intangible non-quantifiable cost variables as descnbed in
this paper.

The facility was constructed as planned and the prognosis by Corporation top manage-
ment is that a very successful, accurate, and valid area location and site selection study
was conducted. The consultants agree and believe that time will prove them to be cor-
rect.

Fall 1991 Peskin & Halpern: Plant Location

References

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1. Anderson, J. "Logistics Management: An Asset or a Liability in the 198O&?" Transpor-
tation Review (Winter 1983).

2. Reed, R. Plant Location and Layout: Factors. Principles. and Techniques. Homewood,
IL: Richard D. Irwin (1961).

3. Schmenner, R Makine Business Location Decisions. Englewood Oiffs, NJ: Prentice-
Hall (1982).