Facility siting methods are based on the siting cost factors of the break-even point balance evaluation method, the center of gravity method, linear programming on the table operation method, heuristic algorithms, etc., but also based on the siting of a number of factors of the integrated factor evaluation method. These methods are all quantitative analysis of facility siting methods, each with simple and complex calculations, each with its own advantages and characteristics, but also have their own shortcomings.
(I) Center of gravity method
1. Site selection of a single warehouse
Warehouse is a site in the logistics process, theoretically, it should be the ideal place to minimize the costs incurred in the process of concentration and distribution of goods. We use mathematical methods to establish an analytical model to find the ideal location of the warehouse, which is the single warehouse site selection of the center of gravity method, the method is also known as static continuous site selection model method. This method is simple and practical because it is applied by considering only the transportation rates and the amount of goods transported at that point.
(1) The principle of the center of gravity method
Cost functions can be used to find the location of the minimum cost of transportation from the warehouse to the customer between the site because the site selection factors include only the transportation rate and the amount of goods transported to the point, so this method is very simple.
With a series of points representing production and demand, each with a certain amount of goods need to be transported at a certain rate to the warehouse location to be determined, or from the warehouse, so where is the warehouse located? We multiply the volume of the point by the transportation rate to the point, and then multiplied by the distance to the point, we can find the point where the sum of the above products (i.e., the total cost of transportation) is the smallest
(2) Center of gravity method of calculation of the assumptions
The center of gravity method is the location of warehouses under ideal conditions, but the assumptions made in the model in the actual will be subject to certain restrictions. Simplified assumptions in center of gravity calculations include the following:
(1) The model often assumes that demand is concentrated at a single point, whereas in reality demand comes from multiple points of consumption dispersed over a wide area.
(2) Models do not distinguish between differences in the capital costs required to build warehouses in different locations, and other costs associated with operating in different locations, but only calculate transportation costs.
(3) Transportation costs increase in the formula in a linear proportion with distance, whereas freight costs are composed of a fixed component that does not vary with distance and a variable component that varies with distance.
(4) The routes between the warehouse and other network nodes in the model are usually assumed to be straight lines. Instead, the routes used for actual transportation should be chosen.
(5) The model does not take into account future changes in revenues and costs.
From the above assumptions it can be seen that the model has many constraints, but this does not mean that the model is not valuable to use. What is important is the degree to which the results of the siting model are sensitive to factual issues. If simplifying the assumptions has little or no effect on the modeled facility siting recommendations, then a simple model can be shown to be more effective than a complex one.
2. Multi-centric approach to siting multiple warehouses
For modern logistics network planning, the logistics network contains numerous warehouses, which leads to the problem of siting multiple warehouses. This problem can be broken down into the following questions:
1) How many warehouses should be built?
(2) Where should the warehouse be built?
(3) How large should the warehouse be built?
(4) What are the customers served by each warehouse?
(5) What are the supply channels for each warehouse?
(6) What goods should be stored in each warehouse?
(7) How should the mode of delivery be chosen?
There are many ways to study these problems, and although some of them are not very perfect, they still provide us with several mathematical methods of planning the location of warehouses. One of these methods is the polycentric method.
The exact center of gravity method is a calculus-based model for finding the location of intermediate facilities that minimize transportation costs between points of origin and destination. If there is more than one point to be determined, it is necessary to pre-assign the origin and destination points to warehouses whose locations are to be determined. This results in a number of clusters of origins and destinations equal to the number of warehouses to be located. Subsequently, the exact center of gravity of each cluster is found.
There are many ways of assigning origins and destinations to warehouses, especially when multiple warehouses are considered and the problem involves many origins and destinations. One method is to combine the closest points to each other to form clusters, find the center of gravity of each cluster, then reassign the points to warehouses where these locations are known, find the new center of gravity of the corrected clusters, and continue the process until there are no more changes. This completes the calculation of the site selection for a specific number of warehouses. The method can also repeat the calculation process for different numbers of warehouses.
Increasing the number of warehouses usually results in a decrease in transportation costs, but the other costs of the logistics process rise, especially the fixed costs of warehouse construction and inventory holding costs, and the optimal solution minimizes the total cost. The problem of siting multiple warehouses can also be used in other ways, which we will not describe here.
(II) Comprehensive Factor Evaluation Method
Comprehensive Factor Evaluation Method is a method of quantitative analysis of site selection based on the many factors affecting the siting of facilities and designed.
There are many factors affecting the siting of facilities, from the macro perspective of the regional siting of market conditions, resource conditions, transportation conditions, social environment and other factors, which have a great impact on the relationship between geographic location and the characteristics of the facility; there are from the micro perspective of the specific location of the siting of the topographic conditions, geological conditions, construction conditions, water supply and drainage conditions, cost conditions and other factors. Some of the above factors can be quantitatively analyzed and reflected in monetary terms, known as economic factors or cost factors, can be based on the siting cost factors of the break-even point balance evaluation method, the center of gravity method, linear planning on the table operation method, heuristic algorithms, and other methods of siting analysis and evaluation. Some factors such as policies and regulations, climatic conditions, human environment, environmental protection, etc. are non-economic factors, and it is still difficult to evaluate these non-economic factors by adopting the break-even evaluation method based on the siting cost factor, the center of gravity method, the table operation method of linear programming, and heuristic algorithm. China's impact on these non-economic factors in the siting of facilities, has long been the use of qualitative empirical analysis, this method depends largely on the experience and intuition of the individual designer, making some of the decision-making there are large errors.
An important principle of facility siting is that it should be based on the method of systematic analysis to seek overall optimization, and at the same time combine the qualitative analysis with quantitative analysis to avoid decision-making mistakes. How to use more scientific quantitative analysis methods to avoid or reduce the personal subjective color of qualitative analysis methods, is the classic quantitative analysis of facility siting, but also the urgent need to solve and improve the problem.
The comprehensive factor evaluation method is currently a good method for quantitative analysis of the impact of facility siting on non-economic factors. It is based on mathematical statistics and probability theory to analyze the problem, quantify the non-economic factors, and then use a certain method to calculate the score of each siting plan, to score a high program as a reasonable program. The role of the comprehensive factor evaluation method is to quantify and analyze the non-economic factors affecting the siting of facilities (non-cost factors), providing an important basis for decision-making on the siting of facilities; not only that, but the factor analysis method in the comprehensive factor evaluation method can be incorporated into the calculation and analysis and evaluation of economic and non-economic factors affecting the siting of facilities, providing an important basis for decision-making on the siting of facilities, which is the current profit-and-loss points This is the current profit and loss point evaluation method, center of gravity method, linear programming on the table operation method, heuristic algorithms and other methods are difficult to do.