Purpose: In recent years, numerous companies have moved their manufacturing plants to
China to capitalize on lower cost and tax. Plant location has such an impact on cost, stocks, and
logistics network but location selection in the company is usually based on subjective preference
of high ranking managers. Such a decision-making process might result in selecting a location
with a lower fixed cost but a higher operational cost. Therefore, this research adapts real data
from an electronics company to develop a framework that incorporates both quantitative and
qualitative factors for selecting new plant locations.
Design/methodology/approach: In-depth interviews were conducted with 12 high rank
managers (7 of them are department manager, 2 of them are vice-president, 1 of them is senior
engineer, and 2 of them are plant manager) in the departments of construction, finance,
planning, production, and warehouse to determine the important factors. A questionnaire
survey is then conducted for comparing factors which are analyzed using the Analytic Hierarchy
Process (AHP).
Findings: Results show that the best location chosen by the developed framework coincides
well with the company’s primal production base. The results have been presented to the
company’s high ranking managers for realizing the accuracy of the framework. Positive responses of the managers indicate usefulness of implementing the proposed model into
reality, which adds to the value of this research.
Practical implications: The proposed framework can save numerous time-consuming
meetings called to compromise opinions and conflictions from different departments in
location selection.
Originality/value: This paper adapts the Analytic Hierarchy Process (AHP) to incorporate
quantitative and qualitative factors which are obtained through in-depth interviews with high
rank managers in a company into the location decision.
