Factor rating is a means of assigning quantitative values to all the factors related to each decision option and then getting a score to evaluate which option is suitable. In this way right priorities are kept in mind and constraints are also ruled out. Procedure for qualitative factor rating is,
- Lineate a list of relevant factors associated with selecting a warehouse.
- Assign a weight to each factor to indicate its relative importance (weights may total 10)
- Assign a common scale to each factor (ex 0-100 points) and designate any minimum.
- Score each potential location according to the designated scale, and multiply the scores by the weights.
- Total the points for each location, and choose the location with the maximum points.
Weighted scores are computed by multiplying the score times with the assigned weight and summing those products. Based on this data, a location among many would get selected as the preferred location for the new warehouse.