Teaching location planning with the center-of-gravity method using real cities and distances

Abstract

Facility placement is of strategic importance to most organizations as a well-placed distribution center minimizes delivery costs and reduces fulfillment lead times, thus improving customer service levels. Because organizations value the location planning process, this teaching brief offers an exercise that analyzes the planning process using the center-of-gravity algorithm, a service area map, and real-world constraints. The objective of the exercise is to identify two locations within a service area that minimize total network distribution costs. Our exercise is intended to complement standard course content and support instructors developing curricula for undergraduate operations management and supply chain management courses. Student-based survey results indicate that the assignment enhanced classroom engagement and helped students better understand the complexities of location planning.