Facility location Arpico

ARPICO SUPERCENTRES

Facility Location

PRESENTED BY : GROUP 01 DEPARTMENT OF DECISION SCIENCES

CONTENTCONTENT

• Richard Pieris & Company PLCRichard Pieris & Company PLC

• Arpico Supercentres / StoresArpico Supercentres / Stores

• What Is Facility Location?What Is Facility Location?

• Facility Location of Arpico SupercentersFacility Location of Arpico Supercenters

• Issues Relating to SupercentresIssues Relating to Supercentres

• Application of TheoryApplication of Theory

• ConclusionConclusion

Richard Pieris & Company PLCRichard Pieris & Company PLC

• One of the largest & most diversified business sectors in Sri Lanka with key business sectors like Rubber, Tyre, Plastic, Retailing ,Distribution, Plantations, Financial Services, Logistic & Construction.

• Vision:

“To be a market driven, technologically oriented diverse group.”

• Mission:

– To continually exceed the expectations of our customers.

– To optimize the contribution from our employees by providing career & personal development opportunities.

– To provide a satisfactory return to shareholders.

– To ensure continuous growth by the planned expansion & diversification business activities.

– To continually strive for the up liftmen of our community.

Arpico Supercentres / StoresArpico Supercentres / Stores

• ARPICO is one of the most trusted & respected household brand names in the country .

• Under the Retailing Sector currently they have a network of over 25 Arpico Showrooms & 15 of hypermarket stores, known as Arpico Super Centres which carryout wide range of household & grocery items under one roof.

• The first Arpico Super Centre was located at Baththaramulla with the concept of “Everything for my home’’.

• Due to the achievement of expected rapid growth they establish new Supercentres at Dehiwela, Boralesgamuwa, Hyde Park Corner, Nawinna, Kiribathgoda, Gampaha, Negambo, Wellawaththa Punchi Borella, Piliyandala, Kadawatha, Kochchikade, Kaluthara & Kandy.

• Provide Shopping experience to the entire family with ample parking space, wider aisle space for easy shopping & state-of-the-art cool rooms to provide fresh products..

What Is Facility Location?What Is Facility Location?

• is a mathematical modeling & solution of problems concerning optimal placement of facilities in order to minimize transportation costs, avoid

placing hazardous materials near housing.

• Location can make or break the business.

• Therefore when locating a facility have to consider both ,

– Quantitative Factors

• Raw material & other supplies, Fuel, power & water, Labour, Distribution cost, Distribution cost, Salary levels, Construction Costs & etc.

– Qualitative Factors

• Community facilities, Housing facility, Cost of living, Community

Attitude, Political stability of location, Climate & etc.

Facility Location of Facility Location of Arpico Supercenters / StoresArpico Supercenters / Stores

• Arpico Supercentres / Stores are mainly located at the Dehiwela, Boralesgamuwa, Hyde Park Corner, Wellawaththa, Punchi Borella, Nawinna, Kiribathgoda, Gampaha, Negambo, Piliyandala, Kadawatha, Kochchikade, Kaluthara & Kandy.

• When selecting an appropriate location for the Supercenters give priorities to:

– Land space

– Closeness to the main city

– Population

– Other Demographic Factors

Issues Relating to SupercentresIssues Relating to Supercentres

• Closeness of Supercentres / Stores.

• High Maintenance Cost relating to their own distribution Vehicles.

• Lower Return due to Cultural Influences & Personnel Attitudes.

• Operate with one central warehouse located in Mattegoda.

• High Transportation Cost.

Calculation of Transportation Cost

Assumptions

• Fuel cost per 1 liter = Rs125/= , 1 liter can be use to 10 Km.

• Cost per trip = Distance from the center warehouse * fuel cost per liter

• Transportation cost calculate using fuel cost only .

(transportation cost = Cost per trip * trips per week)

• Assume that there is no traffic during the transportation.

• Always use the minimum distance route to the transportation.

•  1 Trip = Warehouse to Centre + Centre to Warehouse

Application of TheoryApplication of Theory

• Main Issue: Operate with Single Central Warehouse which

located in Mattegoda.

• Result: High Cost related to Distribution.

• Objective: To minimize the distance & Time through locating

separate warehouses for In & Out of Colombo Area.

• Model: Use Min Max Location Model to locate two

emergency warehouses.

For warehouse 1 = Optimal location Range lies between Baddegana & Thalawathugoda.

For warehouse 2 = Optimal Range lies between Pinnawala & Nelumdeniya

ConclusionConclusion

• Arpico supercentres which run under the Retail Category of Richard Pieris & Company PLC provide opportunity of Shopping experience to the entire family.

• There are 15 major super centres which provide various items under the one roof.

• When locating a Supercentre they mainly consider about the land Space, Closeness to the Town & Population.

• Identify High level of transportation cost as the main problem occurring due to the operating with single central warehouse which located in Mattegoda among several other issues.

• Therefore used Min Max Model to find optimum location of two separate warehouses for centres which are going to be locate in & out of Colombo boundary.

Any Questions???