Discuss the factors that influence the number of facilities that a firm chooses to operate.

Rather than asking, “Where should a new facility be located?” organizations should be thinking about the optimal number of facilities in the system. The need for additional facilities often arises when an organization’s service performance from existing facilities drops below “acceptable” levels. Most analytical procedures for determining the number of facilities are computerized because of the vast number of permutations involved, as well as the complementary relationships between current facilities in a distribution network.

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