APPLYING THE MONTE CARLO SIMULATION

In Dr Walters' last article (RDM, Nov/Dec), he discussed deficiencies in current approaches to site location. A Retailing Unit System was discussed in the context of a total systems approach whereby the retail unit system becomes part of a larger environmental system, which considers the needs and reactions of both suppliers and customers. Five basic elements were examined and the argument put forward that when investigating a new location, emphasis should not be on sales revenue or profit from the proposed site alone, but rather the total profit situation which results after the impact of the new site has been assessed on the total retail unit system. These five basic elements were: finance, personnel, merchandising management, property management, and logistics. For each, possible problems associated with the addition of a new location were discussed. It was argued that no matter how attractive a new location might at first appear, it is not until all effects have been considered that the “real” profitability can be established.