Location Models or Methods
Factor rating system
Factor Rating System are perhaps the most widely used of the general location techniques because they provide a mechanism to combine diverse factors in an easy to understand format. In this method, factor ratings are used to evaluate alternative locations.
The method has the following advantages:
- Simplicity, which facilitates communication about why one location/ site is better than another.
- Enables bringing diverse location considerations into the evaluation process.
- Foster consistency of judgment about location alternatives.
The steps involved are:
- List the most relevant factor in the location decision.
- Rate each factor ( say from 1 for very low and to 5 for very high) according to its relative importance i, e, factor rating is given to each factor based on its importance the higher the ratings the more important is the factor.
- Rate each location ( say 1 for very low and to 10 for very high) according to its merits on each factor .
- Compute the product of ratings multiplying the factor rating by the location rating for each factor.
- Compute the sum of the product of ratings for each location.
Decision: Select the location alternative which has the maximum sum of the product ratings as the choice.