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Exam 8: Location Planning and Analysis

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Question 21

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Which of the following circumstances would be least likely to lead to a need for a new location?

A) shifting of markets
B) depletion of basic inputs
C) growth in demand that is leading to greater utilization of existing capacity
D) the need to expand into new markets
E) the opportunity to take advantage of globalization trends

F) A) and B)
G) B) and C)

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Question 22

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Software systems known as GIS help in location analysis. The initials GIS stand for:

A) Graphic Interface Systems.
B) Global Integrated Software.
C) Graded Information Systems.
D) Geo Intensive Software.
E) Geographic Information System.

F) A) and C)
G) None of the above

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Question 23

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Consider the following information about sites A, B, and C: $\begin{array} { l r l } \text { Site } & \text { FC (annual) } & \text { VC (per unit) } \\\hline \text { A } & \$ 100,000 & \$ 10 \\\mathrm {~B} & \$ 120,000 & \$ 8 \\\text { C } & \$ 150,000 & \$ 7\end{array}$ For what quantity would you be indifferent between selecting site A or site B?

A strategy that emphasizes convenience for the customers would probably select a single very large facility.

Nearness to raw materials would be most important to a:

Consider the following information about sites A, B, and C: $\begin{array} { l r l } \text { Site } & \text { FC (annual) } & \text { VC (per unit) } \\\hline \text { A } & \$ 100,000 & \$ 10 \\\mathrm {~B} & \$ 120,000 & \$ 8 \\\text { C } & \$ 150,000 & \$ 7\end{array}$ What are total costs for site A for a quantity of 5,000 units per year?

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below: $\begin{array} {c} \quad\quad\quad\quad\quad\quad\quad\quad{ \text { Location } } \\\begin{array} { l c c c c } \text { Factor } &\text { Wt. } & \text { A } & \text { B } & \text { C } \\\hline \text { Labor Cost } & .4 & 70 & 80 & 90 \\\text { Transportation Cost } & .2 & 80 & 80 & 60 \\\text { Market Access } & .2 & 90 & 70 & 60 \\\text { Raw Materials Cost } & .1 & 50 & 70 & 90 \\\text { Utility Cost } & .1 & 80 & 90 & 70\end{array}\end{array}$ What is the composite score for location A?

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: $\begin{array}{lcl}\text { Location } & \begin{array}{r}\text { Annual } \\\text { Fixed }\end{array} & \text { Variable } \\\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { per person } \\\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }\end{array}$ If it is estimated that 30 persons will be living in this new chapter house, what would be the Skulls' annual cost savings by selecting the less costly location, rather than the more costly?

Which statement best characterizes a typical search for location alternatives?

A hardware distributor has regional warehouses at the locations shown below. The company wants to locate a new central distribution center to serve this warehouse network. $\begin{array} { l l } \text { Location } & ( \mathrm { x } , \mathrm { y } ) \\\hline 1 & 2,3 \\2 & 3,7 \\3 & 5,5 \\4 & 7,3 \\5 & 8,7\end{array}$ Weekly shipments to each warehouse will be: WH1, 100; WH2, 150; WH3, 120; WH4, 150; and WH5, 120. What is the optimal location of the distribution center?

The method for evaluating location alternatives that uses their composite (weighted-average) scores is:

A firm is trying to decide between two location alternatives, Albany and Baltimore. Albany would result in annual fixed costs of $60,000, labor costs of $7 per unit, material costs of $10 per unit, transportation costs of $15 per unit, and revenue per unit of $50. Baltimore would have annual fixed costs of $80,000, labor costs of $6 per unit, material costs of $9 per unit, transportation costs of $14 per unit, and revenue per unit of $48. (A) At an annual volume of 9,000, which would yield the higher profit? (B) At what annual volume would management be indifferent between the two alternatives in terms of annual profits?

Given the following information on scores of three location alternatives, which alternative would you recommend? Why? $\begin{array}{r}\text { Location }\quad\quad\quad\\\begin{array}{lcccc}\text { Factor } & \text { Wt. } & \text { A } & \text { B } & \text { C } \\\hline \text { Raw Materials } & 4 & 80 & 70 & 80 \\\text { Market } & .2 & 40 & 60 & 80 \\\text { Transportation Cost } & .1 & 90 & 70 & 50 \\\text { Labor Cost } & .2 & 70 & 70 & 50 \\\text { Construction Cost } & .1 & 90 & 80 & 60\end{array}\end{array}$

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: $\begin{array}{lcl}\text { Location } & \begin{array}{r}\text { Annual } \\\text { Fixed }\end{array} & \text { Variable } \\\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { per person } \\\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }\end{array}$ If it is estimated that 30 persons will be living in this new chapter house, which location should the Skulls select?

You cannot make a mistake by locating where labor costs are low.

A clothing manufacturer produces clothing in five locations in the United States. In a move to vertical integration, the company is planning a new fabric production plant that will supply fabric to all five clothing plants. The clothing plants have been located on a coordinate system as follows: $\begin{array} { l l } \text { Location } & ( \mathrm { x } , \mathrm { y } ) \\\hline \mathrm { A } & 7,2 \\\mathrm {~B} & 4,7 \\\mathrm { C } & 5,5 \\\mathrm { D } & 6,2 \\\mathrm { E } & 8,4\end{array}$ Shipments of fabric to each plant vary per week as follows: plant A, 200 units; plant B, 400 units; plant C, 300 units; plant D, 300 units; and plant E, 200 units. What is the optimal location for the fabric plant?

Consider the following information about sites A, B, and C: $\begin{array} { l r l } \text { Site } & \text { FC (annual) } & \text { VC (per unit) } \\\hline \text { A } & \$ 100,000 & \$ 10 \\\mathrm {~B} & \$ 120,000 & \$ 8 \\\text { C } & \$ 150,000 & \$ 7\end{array}$ For the preferred site for 20,000 units per year, what would be your total costs?

Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10. What would its total cost be at a monthly volume of 250 units?

Global positioning systems (GPS) use the center of gravity method to establish starting grid coordinates.

A clothing manufacturer produces clothing in five locations in the United States. In a move to vertical integration, the company is planning a new fabric production plant that will supply fabric to all five clothing plants. The clothing plants have been located on a coordinate system as follows: $\begin{array} { l l } \text { Location } & ( \mathrm { x } , \mathrm { y } ) \\\hline \mathrm { A } & 7,2 \\\mathrm { B} & 4,7 \\\mathrm { C } & 5,5 \\\mathrm { D } & 6,2 \\\mathrm { E } & 8,4\end{array}$ If the amount of fabric shipped to each plant is equal, what is the optimal location for the fabric plant?