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Factor Rating Method

Concept

The Factor Rating Method is a structured approach to location selection. It allows for the inclusion of both qualitative and quantitative factors, assigning weights to reflect their relative importance. This method promotes a more objective decision-making process.

Steps

  1. Identify Key Success Factors:
    • Create a list of relevant factors that influence the location decision.
    • These factors can include everything from facility utilization and patient volume to construction costs and employee preferences.
  2. Assign Weights:
    • Assign a weight to each factor, reflecting its importance to the company's objectives.
    • Use a scale, typically ranging from 1 (least important) to 10 (most important), or a similar system.
  3. Develop a Scale:
    • Create a rating scale for each factor.
    • This can be a scale like 1 to 10 or 1 to 100, or descriptive (e.g., poor, fair, good, excellent).
  4. Assign Scores:
    • Evaluate each potential location against each factor.
    • Assign a score based on the established scale.
  5. Calculate Weighted Scores:
    • Multiply the score for each factor by its assigned weight for each location.
    • Sum the weighted scores for each location.
  6. Make a Recommendation:
    • Select the location with the highest total weighted score.
    • Consider this result alongside other quantitative findings.

Example

Scenario: A hospital needs to decide between two locations for a new facility.

Factors and Weights

Factor Weight
Facility Utilization 8
Total Patients Per Month 5
Avg. Time Per Emergency Trip 6
Land and Construction Costs 3
Employee Preferences 5

Ratings & Weighted Scores

Factor Weight Loc 1 Rating Loc 1 Score Loc 2 Rating Loc 2 Score
Facility Utilization 8 3 24 5 40
Total Patients Per Month 5 4 20 3 15
Avg. Time Per Emergency Trip 6 4 24 5 30
Land and Construction Costs 3 1 3 2 6
Employee Preferences 5 5 25 3 15
Total 96 106

Conclusion: Location 2 is the preferred location due to its higher total score of 106.

Practical Application

A public health agency is deciding on a location for a drug treatment center. Using the factor rating method, they determined the following importance weights and ratings for three locations:

FACTOR WEIGHT HOMELESS SHELTER CITY HALL BUS TERMINAL
Accessibility 5 9 7 7
Lease Cost 3 6 10 3
Inconspicuous 3 5 2 7
Staff 2 3 6 2
Weighted Score Calculations:
  • Homeless Shelter: (5*9) + (3*6) + (3*5) + (2*3) = 84
  • City Hall: (5*7) + (3*10) + (3*2) + (2*6) = 83
  • Bus Terminal (5*7) + (3*3) + (3*7) + (2*2) = 69

The homeless shelter location is most suitable for a drug treatment center.

Advantages

  • Incorporates diverse factors.
  • Provides a structured approach.
  • Helps quantify qualitative considerations.
  • Objective scoring system.

Limitations

  • Subjectivity in selecting factors and assigning weights.
  • Can require significant data collection.
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