Factor rating methodPoint rating methodBreak even analysis

Factor rating method In this methods factors are rate according to there

importance .1.The more important factors get higher rate .2. locations are rate according to its merits on each

factor.3.Then the factors rates and location rates are

multiply and get product rating.4.The decision taken over composite score of

product rating .

Factors Factor Rating

Locat-ion A

Locat-ion B

Product Rating A

Product Rating B

Tax advantage 4 4 3 16 12

Availability of power 2 2 4 4 8

Suitability of labour skill 3 3 2 9 6

Proximity to customers 3 1 5 3 15

Availability of raw material 5 5 1 25 5

composite score 57 46

Example

Point rating methodIn this method, certain factors are

categorized, and the company gives number of points to a perfect site in each category. The site with the highest total number of points is considered superior to other sites.

ExampleFactors Maximu

m possible point

Location A

Location B

Tax advantage 300 200 250

Availability of power 100 70 60

Suitability of labour skill 200 100 130

Proximity to customers 150 100 90

Availability of raw material 250 170 210

composite score 640 740

Break even analysis An economic comparison of locations can be

made by identifying the fixed costs & variable costs & plotting the break-even analysis on a graph for each location.

Example :- total cost over 1,000 units selling prize

Rs 10/unit .

Location Fixed cost Variable Total cost

A 25000 50 75000

B 50000 30 80000

C 80000 15 85000

25000

50000

80000

No. of units

Tot

al c

ost

Kaushal Sharma

PGDM II sem.