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There are several important factors that operation managers must consider in establishing a new facility. Let me name the most important ones.
First, cost is an important factor. The reason for this should be obvious. If a company cannot afford the facilities, then they should look for something else. Also profitability must be considered as well. In other words, will the company make enough money in view of their overhead?
Second, distance is another important factor. For example, if the company has to ship their goods overseas, then they should pick a location that is near a port, otherwise they might spend extra money on transportation costs. This could make or break a company.
Third, operation managers also have to see if their location can attract the help that they need. If the company does not have an able workforce nearby, then they might want to consider another location.
Finally, they might want to choose an operation area that is close to the headquarters, so that there would be good communications and accountability as well.
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