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.