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Exam 11: Location Planning and Analysis

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Question 1

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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: $\begin{array} { l c c } \text { Location } & \text { Annual Fixed } & \text { Variable } \\\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { perperson } \\\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }\end{array}$ What would be the total annual costs for the Alpha Ave. location with 20 persons living there?

A)  $5,400
B)  $4,000
C)  $5,000
D)  $7,000
E)  $9,000

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

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Question 2

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

A)  Determine the evaluation criteria.
B)  Identify important factors.
C)  Develop location alternatives.
D)  Evaluate alternatives and make a selection.
E)  Request input regarding alternatives.

F) C) and D)
G) A) and E)

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Question 3

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

Advanced communications has aided globalization.

In general, managing global operations is made easier by __________ and __________.

For service organizations, the dominant factors in location analysis usually are market-related.

For service and retail stores, a prime factor in location analysis is customer access.

Which statement best characterizes the objective ofa typical search for location alternatives?

Retail businesses generally prefer locations that are not near other retailers, as this reduces their competition.

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

Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10. Location choice J has monthly fixed costs of $150,000 and per-unit variable costs of $9. At what volume would these locations have equal total costs?

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

The fact that most types of firms are located in every section of the country suggests that in many cases, location decisions are not overly important; one location typically is as good as another.

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. $\begin{array} { c c } \text { Location } & ( \mathrm { x } , \mathrm { y } ) \\\hline \mathrm { A } & 2,3 \\\mathrm {~B} & 3,7 \\\mathrm { C } & 5,5 \\\mathrm { D } & 7,3 \\\mathrm { E } & 8,7\end{array}$ 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?

For service firms such as banks and supermarkets, location decisions are critical elements of __________ strategy.

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

Locational cost-profit-volume analysis assumes: I. nonlinear variable costs. II.fixed costs that are constant over the range of possible output. III.accurate estimates regarding the required level of output. IV.multiple products.

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: $\begin{array} { l c c } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$ What would the total annual costs be for the Phoenix location with an annual output of 10,000 units?

Which of the following is least important as a consideration for a firm at the beginning of a supply chain?