2A MODULE

DETERMINING FACILITY LOCATION

LABWORK SUBSTANCE
Determining Facility Location

LABWORK OBJECTIVES
1. Students are able to understand the related aspects in determining the location of a facility
or factory.
2. Students are able to understand how to select an alternative plan locations using Factor
Rating method.

LABWORK TOOLS
Microsoft Excel

LABWORK REQUIREMENT

Guideline

Calculator

STUDY CASE
FRI Company is a manufacturer of trolley that will build a factory facility to serve the
domestic market in the form of Business To Business (B to B). Where the company's customers
are scattered in West Java. Define the best location of some alternative option with factor rating
method!

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LABWORK STEP

A. SUPPORTING DATA

STEP 1: Input all the supporting data. The data will used in calculating the factor rating.

1. Determine alternatives location for the factory. In this case, FRI Company has 3 options
location which are Bandung Regency, Bandung City, and Cimahi City.

Table 3. 1 Alternative Locations

Alternative Location Address
FRI Kabupaten Jl. Moch. Toha Pasawahan, Kec. Dayeuhkolot, Bandung, Jawa
Company A Bandung Barat
FRI Kota
Jl. Industri II Utama Kec. Cimahi Sel. Kota Cimahi Jawa Barat
Company B Cimahi
FRI Kota
Babakan Penghulu Cinambo, Kota Bandung, Jawa Barat
Company C Bandung

2. UMK column based on the location of the place for the development plan. UMK is
divided into 3 locations which are West Bandung regency, Bandung regency, and
Bandung city. The sources used in conducting UMK checks are:
https://www.liputan6.com/regional/read/4117310/mengintip-daftar-umk-2020-di-jabar-
tertinggi-kabupaten-karawang

Table 3. 2 UMK for each alternative location

Alternative Location UMK Source

https://www.liputan6.com/regional/read/41173
FRI Company A Rp 3,139,275.37 10/mengintip-daftar-umk-2020-di-jabar-
tertinggi-kabupaten-karawang

https://www.liputan6.com/regional/read/41173
FRI Company B Rp 3,139,274.74 10/mengintip-daftar-umk-2020-di-jabar-
tertinggi-kabupaten-karawang
https://www.liputan6.com/regional/read/41173
FRI Company C Rp 3,623,778.91 10/mengintip-daftar-umk-2020-di-jabar-
tertinggi-kabupaten-karawang

3. Input Land Cost from each location

Table 3. 3 Land Cost from each Alternative Location

Alternative Location Rent Price (Rp)
FRI Company A Rp 189,000,000.00
FRI Company B Rp 150,000,000.00
FRI Company C Rp 225,000,000.00

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 4. Input land area from each location for development plan

Table 3. 4 Land Area from each alternative location

FRI Company A FRI Company B FRI Company C

Jl. Moch. Toha Pasawahan, Kec. Jl. Industri II Utama Kec. Cimahi Sel. Kota Babakan Penghulu Cinambo, Kota Bandung,
Dayeuhkolot, Bandung, Jawa Barat Cimahi Jawa Barat Jawa Barat

SCREENSHOOT LAND AREA SCREENSHOOT LAND AREA SCREENSHOOT LAND AREA

5077,53 10758,42 7263,82

4. Sreenshot distance from supplier to factory, using data from module 1

Table 3. 5 Data Supllier Distance to Factory
Supplier to FRI Company A

BJ Home Supermarket Bangunan to PFT Company A PT Sinar Jaya Glass to FRI Company A Besi Kurnia Jaya to FRI Company A

SCREENSHOT SUPPLIER DISTANCE TO FACTORY SCREENSHOT SUPPLIER DISTANCE TO FACTORY SCREENSHOT SUPPLIER DISTANCE TO FACTORY

8200 8900 5900

Supplier to FRI Company B
BJ Home Supermarket Bangunan to FRI Company B PT Sinar Jaya Glass to FRI Company B Besi Kurnia Jaya to FRI Company B

SCREENSHOT SUPPLIER DISTANCE TO FACTORY SCREENSHOT SUPPLIER DISTANCE TO FACTORY SCREENSHOT SUPPLIER DISTANCE TO FACTORY

11600 13200 8500

Supplier to FRI Company C

BJ Home Supermarket Bangunan to FRI Company C PT Sinar Jaya Glass to FRI Company C Besi Kurnia Jaya to FRI Company C

SCREENSHOT SUPPLIER DISTANCE TO FACTORY SCREENSHOT SUPPLIER DISTANCE TO FACTORY SCREENSHOT SUPPLIER DISTANCE TO FACTORY

9600 9400 13400

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5. Input the questionnaire result from qualitative factor based from location survey, from
each location need 10 responded who knew the location. And then, calculate average
from each qualitative factor.
Table 3. 6 Questionnaire Result

AREA SURVEY
QUALITATIVE
RESPONDEN Kabupaten Kota Kota
FACTORS
Bandung Bandung Cimahi
R1 60 60 60
R2 70 70 60
R3 90 60 70
R4 85 80 70
R5 60 50 70
R6 HR Quality 50 75 80
R7 90 60 50
R8 80 90 60
R9 70 70 60
R10 75 70 70
AVERAGE 73 68.5 65
R1 70 50 70
R2 70 50 70
R3 60 70 40
R4 60 70 80
R5 50 70 40
R6 Infrastructure 60 50 70
R7 70 70 50
R8 60 60 60
R9 60 60 50
R10 70 50 50
AVERAGE 63 60 58
R1 60 40 60
R2 90 50 60
R3 40 40 70
R4 50 40 60
R5 Nature Risk 60 40 50
R6 Disaster 70 40 60
R7 60 40 60
R8 50 40 60
R9 40 50 50
R10 50 50 50
AVERAGE 57 43 58
R1 90 50 60
R2 70 70 70
R3 80 80 70
R4 Potential 60 40 40
R5 Market 80 60 50
R6 90 50 60
R7 60 40 80
R8 70 60 70
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R9 70 50 50
R10 50 50 90
AVERAGE 72 55 64

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B. FACTOR RATING

STEP 1: Determining parameters or factor that become considerations for selection, and determining the multiplication weight rate.

1. Determining parameters or factors that become considerations for selection.

Table 3. 7 Data Factors and Reasons

No Factors Type of Data Reasons

1 UMK Quantitative The value of UMK is countable and will affect the company's direct labor costs
2 Land Cost Quantitative The price of land is countable and will affect the company's initial investment
The availability of land or land area will affect company development. Land availability can
3 Availability Land Quantitative
also determine the amount of factory and warehouse capacity that can be used.
The distance to suppliers is countable and will affect the cost of the booking and the risk of
5 Supplier Distance Quantitative
delay
6 HR Quality Qualitative The quality of human resources is uncountable and will affect
The insfrastructure is uncountable and will affect the company's decision to distribution
7 Infrastructure Qualitative
product
The risk of disaster is uncountable and will affect the company's decision to avoid
8 Nature Disasters Risk Qualitative
catastrophic losses
The potential market is uncountable and will affect towards to achievement product of the
9 Potential Market Qualitative
company

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 2. Determine the multiplication weight rate for each factor.

Table 3. 8 Data Weight rate and Analysis Factors

Factors Wt Analysis

UMK 0.2 Factory Direct labor use that much so will greatly affect the company's production costs

Land Cost 0.14 Expenditures for the purchase of land only done at the beginning and it is investing

Avaibility Land 0.05 Companies can add company facilities or expand facilities
Quantitative

Supplier Distance Nut (BJ

Home Supermarket Companies avoid delay in the supply of raw materials to make the production process can run
0.07
Bangunan to FRI well
Company)
Supplier Distance Glass (
Companies avoid delay in the supply of raw materials to make the production process can run
PT Sinar Jaya Glass to FRI 0.07
well
Company)
Supplier Distance Iron (
Companies avoid delay in the supply of raw materials to make the production process can run
Besi Kurnia Jaya to FRI 0.07
well
Company)
HR Quality 0.1 Companies need a skilled workforce to maintain the performance of the company
Qualitative

Infrastructure 0.1 Companies need a swift infrasutructure because it affects the distribution activities
Nature Risk Disaster 0.1 Companies avoid the impact of the disaster that would stop the activities of the company

Potential Market 0.1 Companies need potential market to find out the magnitude of company income
Total 1
Note: the total weight must be “1” because that are the probability

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STEP 2: Determine and calculate values from each factors.

1. Determine the scale for factors, this scale function to normalization the quantitative
factors. The scale for factors in this module is 100.

Table 3. 9 The Scale Factor

Scale 100

2. Determine score for each factor in each alternatives. Start from quantitative factors and
qualitative factors. Quantitative factors are a data obtained in real terms and have clear
values, whereas qualitative factors are questionnaire data by asking respondents to fill
them out. These are the following table for quantitative and qualitative factors:
Table 3. 10 Quantitative Factor
Alternatives
Quantitative Factors
PFT Company A PFT Company B PFT Company C
UMK Rp 3.139.275,37 Rp 3.139.274,74 Rp 3.623.778,91
Land Cost Rp 189.000.000 Rp 150.000.000 Rp 225.000.000
Avaibility Land 5077,53 10758,42 7263,82
Supplier Distance Nut (BJ Home Supermarket
8200 11600 9600
Bangunan to PFT Company)
Supplier Distance Glass ( PT Sinar Jaya Glass
8900 13200 9400
to PFT Company)
Supplier Distance Iron ( Besi Kurnia Jaya to
5900 8500 13400
PFT Company)

Table 3. 11 Data for Qualitative Factor

Alternatives
Qualitative Factors
PFT Company A PFT Company B PFT Company C
HR Quality 73 68,5 65
Infrastructure 63 60 58
Nature Risk Disaster 57 43 58
Potential Market 72 55 64

3. Do the normalization to unit. Normalization is only done by quantitative factor. The

formula for normalization are:
a. If j is benefit attribute (condition where greater value of the factor the more it
benefits for the company)
𝑋𝑖𝑗
( ) 𝑥 𝑆𝑐𝑎𝑙𝑒
𝑀𝑎𝑥 𝑋𝑖𝑗

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 b. If j is cost attribute (condition where smaller value of the factor the more
profitable for the company)
𝑀𝑖𝑛 𝑋𝑖𝑗
( ) 𝑥 𝑆𝑐𝑎𝑙𝑒
𝑋𝑖𝑗

Note :
Xij = quantitative factor in alternative
locatoin

Table 3. 12 Normalization Result

Alternatives
Quantitative Factors
FRI Company A FRI Company B FRI Company C

UMK 99.99997993 100 86.62986396

Land Cost 79.36507937 100 66.66666667

Avaibility Land 47.19587077 100 67.5175351

Supplier Distance Nut (BJ Home Supermarket
100 70.68965517 85.41666667
Bangunan to FRI Company)
Supplier Distance Glass ( PT Sinar Jaya Glass
100 67.42424242 94.68085106
to FRI Company)
Supplier Distance Iron ( Besi Kurnia Jaya to
100 69.41176471 44.02985075
FRI Company)

4. Determine the multiplication weight rate with each factor score to get the highest score
in that location as the determinants of the selected location.

Table 3. 13 Multiplication Result of Weight Rate

Kabupaten Bandung Kota Cimahi Kota Bandung

Factors Wt Jl. Moch. Toha Pasawahan, Kec. Jl. Industri II Utama Kec. Cimahi Babakan Penghulu Cinambo, Kota
Dayeuhkolot, Bandung, Jawa Barat Selatan, Kota Cimahi, Jawa Barat Bandung, Jawa Barat

Score Wtd Score Wtd Score Wtd

UMK 0,2 99,99997993 19,99999599 100 20 86,629864 17,32597279
Land Cost 0,14 79,36507937 11,11111111 100 14 66,6666667 9,333333333
Avaibility Land 0,05 47,19587077 2,359793538 100 5 67,5175351 3,375876755
Supplier Distance Nut (BJ Home Supermarket
0,07 100 7 70,6896552 4,948275862 85,4166667 5,979166667
Bangunan to PFT Company)
Supplier Distance Glass ( PT Sinar Jaya Glass
0,07 100 7 69,4117647 4,858823529 44,0298507 3,082089552
to PFT Company)
Supplier Distance Iron ( Besi Kurnia Jaya to
0,07 100 7 69,4117647 4,858823529 44,0298507 3,082089552
PFT Company)
HR Quality 0,1 73 7,3 68,5 6,85 65 6,5
Infrastructure 0,1 63 6,3 60 6 58 5,8
Nature Risk Disaster 0,1 57 5,7 43 4,3 58 5,8
Potential Market 0,1 72 7,2 55 5,5 64 6,4
Total 1 80,97090064 76,31592292 66,67852865

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5. Based on the calculations in point 4 that it is known that the highest score is Kabupaten
Bandung. So that the alternative location that chosen is FRI Company A.

Figure 3. 1 Conclusion and Reason

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 REFERENCE

Apple, James M., Tataletak Pabrik dan Pemindahan Bahan, Penerbit ITB, Bandung, 1990.
Tompkins, James A., et al., Facilities Planning, John Wiley & Sons, Canada, 1996.

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