When deciding the location of new facilities, such as a new warehouse, a point of gravity calculation is used to calculate the weighted point of gravity that is closest to the customers that will receive deliveries.
Optilon runs point of gravity calculations for facilities in three steps:
Through our extensive database, longitude and latitude are determined for each delivery point. A delivery point may represent an end-customer, store, terminal or storage facility. Often, thousands of delivery points can be spread over one or several countries. A common method is to use the postal codes that each delivery point is associated with.
With regard to the volume-weighted longitude and latitude, the geographic positions providing the shortest total distance are calculated.
The point of gravity calculated in step 2 is used as starting point for a convergent algorithm that calculates the point of gravity providing the shortest total distance, based on real ground distances.
If a number of start-up location candidates already have been defined, an analysis to select the most optimal location among these is easier than if the task is to find the point of gravity without any restrictions or guidance.
Point of gravity calculations are often a subset of the supply chain design analysis. Learn more about our offerings in Supply Chain Design.