The Logistics of Industrial Location Decisions: An Application of the Analytic Hierarchy Process Methodology

Abstract

Facility location decisions are a critical element in strategic logistics planning. The ramifications of siting facilities are broadly based and long - lasting, impacting numerous operational and logistical decisions. High costs associated with property acquisition and facility construction make facility location or relocation projects long - term investments. But although important, cost optimisation is progressively being sided by logistic service considerations in the site location decision - making process. In this paper, a decision - support approach has been developed based on the analytic hierarchy process. The overall framework of analysis consists of a criteria hierarchy that includes traditional as well as logistic service attributes. The application of this technique draws from a real - world case study concerning the location decision of a combined manufacturing and distribution (warehousing) facility. The location decision was meant to adapt to dynamic changes in business environments surrounding the firm's supply - chain operations.