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Exam 8: Location Planning and Analysis

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Question 41

Multiple Choice

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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 550 units?

A) $105,200
B) $102,500
C) $100,250
D) $100,520
E) $105,500

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Question 42

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A location analysis has been narrowed down to two locations, Akron and Boston. The main factors in the decision will be the supply of raw materials, which has a weight of .50, transportation cost, which has a weight of .40, and labor cost, which has a weight of .10. The scores for raw materials, transportation, and labor are for Akron 60, 80, and 70, respectively; for Boston 70, 50, and 90, respectively. Given this information and a minimum acceptable composite score of 75, we can say that the manager should:

A) be indifferent between these locations.
B) choose Akron.
C) choose Boston.
D) reject both locations.
E) build a plant in both cities.

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Question 43

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A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: $\begin{array} { l r l } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$ What would be the total annual costs at the point of indifference?

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 range of output would you prefer site B?

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: $\begin{array} { l r l } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$ If the annual demand will be 20,000 units, what would be the cost advantage of the better location?

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 cost savings compared to each of the other two sites?

Consider the following information about sites A, B, and C: $\begin{array} { l r l } \text { Site } & \text { FC (annual) } & \text { VC (per unit) } \\\hline \text { A } & \$ 100,000 & \$ 10 \\\mathrm {~B} & \$ 120,000 & \$ 8 \\\text { C } & \$ 150,000 & \$ 7\end{array}$ Which site would you prefer for a quantity of 20,000 units per year?

Determine the center of gravity location for the following destinations and shipping quantities: $\begin{array} { l c c } \text { Destination } & ( \mathrm { x } , \mathrm { y } ) & \text { Quantity } \\\hline \text { D1 } & 3,5 & 600 \\\text { D2 } & 5,1 & 400 \\\text { D3 } & 6,7 & 300 \\\text { D4 } & 8,4 & 500\end{array}$

Having facilities, personnel, and operations located around the world is called:

Which of the following is the last step in the procedure for making location decisions?

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: $\begin{array} { l r l } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$ If annual demand is estimated to be 20,000 units, which location should the company select?

The method for evaluating location alternatives that uses their total cost curves is:

Factor rating is limited to quantitative information concerning location decisions.

Location decisions are basically one-time decisions usually made by new organizations.

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: $\begin{array}{lcl}\text { Location } & \begin{array}{r}\text { Annual } \\\text { Fixed }\end{array} & \text { Variable } \\\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { per person } \\\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }\end{array}$ What would be total annual costs for either location at the point of indifference?

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

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. $\begin{array} { l l } \text { Location } & ( \mathrm { x } , \mathrm { y } ) \\\hline 1 & 2,3 \\2 & 3,7 \\3 & 5,5 \\4 & 7,3 \\5 & 8,7\end{array}$ If weekly shipments to each warehouse will be approximately equal, what is the optimal location for the distribution center?

Technology has made communication with global operations as easy as local communication.

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: $\begin{array} { l r l } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$ What would the total annual costs be for the Phoenix location with an annual output of 10,000 units?

Cultural differences, customer preferences, labor, and resources are factors relating to: