Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

Service Location Strategy

While the focus in industrial-sector location analysis is on minimizing cost, the focus in the service sector is on maximizing revenue. This is because manufacturing firms find that costs tend to vary substantially among locations, while service firms find that location often has more impact on revenue than cost. Therefore, the location focus for service firms should be on determining the volume of customers and revenue.

Student Tip

Retail stores often attract more shoppers when competitors are close.

There are eight major determinants of volume and revenue for the service firm:

1. Purchasing power of the customer-drawing ...