Use of Multi-Criteria Decision Analysis in Location Decision of a Plant, 2012

Topics: Decision theory, Decision making software, Decision making Pages: 13 (3869 words) Published: August 17, 2012
Use of Multi-criteria Decision Analysis in Location Decision of a Plant, 2012

1.0 Introduction

Haque Confectionaries is part of the Haque Brothers Industries Limited operating in Bangladesh for over 64 years. They focus on the production of quite a few biscuit brands based on different flavours and also a good range of wafers (Haque Group of Industries, 2012). Initially they used to import their raw materials, especially fruit syrups and flavours from abroad. One of their most popular products is the strawberry wafer and also some of their biscuits and candies are based on the flavor of strawberry. As such, one of their biggest imports is the strawberry syrup. Recently, the strawberry research in Bangladesh has come up with a breed of Strawberry which can be grown in the soil of the Rajshahi Region. This development was done by the Botanical Research body in Rajshashi University, and studies in 2007 showed that the soil can support the growth of strawberry (Ara et al., 2009) and another study in 2008 showed the development of a new breed of strawberry which can be grown for commercial purposes in large numbers (Karim et al., 2011). As such, the market for strawberries is thriving in the country and the yield is large enough to make a strawberry syrup manufacturing plant feasible. This would not only reduce the costs of raw materials for the Haque Confectionaries, but will also add to the economy in terms of lesser imports and more employment.

The study that follows has four parts. The first part will focus on the theoretical concepts behind the location decision and justify the choice of the decision making tool. The second part will focus on the model details. The third part will deal with the results of the MCDA and the sensitivity analysis done on the results. Finally the paper ends with concluding remarks and the evaluation of the possibility of further research in this topic as well as the use of this modeling framework to problems having similar context and similar parameters.

Hence, this paper aims to come up with three speculative sites which may be suitable places for the location of the new strawberry syrup manufacturing plant. The ranking of these three sites are based on criteria which mainly fall under the categories of physical factors, human based factors and government subsidies (Beckman 1968). The justification for the choice of sites is done by a method of Multi-criteria Decision Analysis (MCDA). The methodology has been chosen in such a way so that this paper can be used to further investigate different other location decisions using MCDA.


Use of Multi-criteria Decision Analysis in Location Decision of a Plant, 2012

2.0 Background
As can be seen from the introduction part, the problem in hand is a location problem. Normally, the location decision of any economic activity is taken by different methods. Notable among them are Distance Models, Transportation Networks, Hierarchy Models and Flow Models (Beckman 1968). But all these methods focus on the variability of one or two factors, keeping everything else constant, wherein lie their drawbacks (Sorenson and Baum, 2003). As such, an alternative method has been proposed in this paper.

2.1 Location Decisions

The biggest benefit of multi-criteria decision analysis is that it can be used to solve problems involving both quantitative and qualitative criteria. As such, it can incorporate more details in location selection problem, not only profit maximization (Gamboa and Munda, 2007). Although research is not abundant in this subject field, there are relevant studies in similar circumstances which can be used to show the validity of the use of MCDA in this paper (Smith and Junginger, 2011). Similar methodology has been used in the selection of a country for Foreign Direct Investment (FDI) based on criteria which are very similar to the ones used for this paper. In addition to this, other papers follow the methodology which can...

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