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
-
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.
-
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.
-
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).
-
Assign Scores:
- Evaluate each potential location against each factor.
- Assign a score based on the established scale.
-
Calculate Weighted Scores:
- Multiply the score for each factor by its assigned weight for each location.
- Sum the weighted scores for each location.
-
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.