18) Production and transportation costs are always considered in which of the following location decision
methods?
A) traffic counts
B) transportation model
C) purchasing power
D) proximity of markets
E) clustering
19) The transportation model, when applied to location analysis:
A) minimizes total fixed costs.
B) minimizes total production and transportation costs.
C) minimizes total transportation costs.
D) maximizes revenues.
E) minimizes the movement of goods.
20) The ________ method is popular because a wide variety of factors, from education to recreation to
labor skills, can be objectively included.
21) The ________ is a mathematical technique used for finding the best location for a single distribution
point that services several stores or areas.
22) The ________ is used to determine the best pattern of shipments from several points of supply to
several points of demand.
23) Identify the four major quantitative methods for solving location problems.
24) What are the advantages and disadvantages of the use of the factor-rating method?
25) What kinds of location decisions are appropriate for the use of locational cost-volume analysis? Write
a brief paragraph explaining how the method can assist an operations manager in choosing among
alternative sites in making a location decision.
26) What kinds of location decisions are appropriate for the use of center–of-gravity analysis? What
variable is being optimized in this analysis?
27) A manufacturing company preparing to build a new plant is considering three potential locations for
it. The fixed and variable costs for the three alternative locations are presented below.
a. Complete a numeric locational cost-volume analysis.
b. Indicate over what range each of the alternatives A, B, C is the low–cost choice.
c. Is any alternative never preferred? Explain.
Costs A B C
Fixed ($) 2,500,000 2,000,000 3,500,000
Variable ($ per unit) 21 25 15
28) A farmers’ cooperative association plans to build a new sugar mill in Southwestern Louisiana. The
primary objective of the mill is to provide the farmers with a place to take their crop for processing that
will reduce their transportation costs. The members of the co-op believe that the center–of-gravity method
is appropriate for this objective. While there are over 200 sugar cane farms in the region, they are tightly
clustered around six villages. Using the data below, use the center-of-gravity method to calculate the
coordinates of the best location for this mill. All mileage references use the city of Lake Charles as (0,0).
Village Miles East of
Lake Charles Miles North of Lake Charles Sugar Cane tonnage
Arceneaux 90 10 240,000
Boudreaux 140 60 320,000
Cancienne 20 70 450,000
Darbonne 50 20 120,000
Evangeline 100 80 60,000
Fontenot 10 120 140,000
29) A clothing chain is considering two different locations for a new retail outlet. The organization has
identified the four factors listed in the following table as the basis for evaluation, and it has assigned
weights as shown. The manager has rated each location on each factor, on a 100-point basis (higher scores
are better), as shown under the respective columns for Barclay and Chester.
a. Calculate the composite score for each alternative location.
b. Which site should be chosen?
c. Are you concerned about the sensitivity and subjectivity of this solution? Comment.
Factor Factor Description Weight Barclay Chester
1 Average community income .40 75 70
2 Community growth potential .25 60 80
3 Availability of public transportation .15 45 90
4 Labor cost .20 80 60
30) A manufacturing company is considering two alternative locations for a new facility. The fixed and
variable costs for the two locations are found in the table below. For which volume of business would the
two locations be equally attractive? If the company plans on producing 50,000 units, which location
would be more attractive?
Glen Rose Mesquite
Fixed Costs $1,000,000 $1,500,000
Variable Costs ($ per unit) 25 23
31) East Texas Seasonings is preparing to build one processing center to serve its four sources of
seasonings. The four source locations are at coordinates shown below. Also, the volume from each source
is provided.
a. Calculate the volume-weighted center of gravity.
b. Calculate the simple center of gravity (all cities weighted equally).
c. Explain why the two calculations differ.
X-coordinate Y-coordinate Volume
Athens, Texas 30 40 100
Beaumont, Texas 20 15 400
Carthage, Texas 55 60 150
Denton, Texas 20 70 250
32) Location A would result in annual fixed costs of $300,000 and variable costs of $55 per unit. Annual
fixed costs at Location B are $600,000 with variable costs of $32 per unit. Sales volume is estimated to be
30,000 units per year. Which location has the lower cost at this volume? How large is its cost advantage?
At what volume are the two facilities equal in cost?
33) Using the factor ratings shown below, determine which location alternative should be chosen on the
basis of maximum composite score.
Location
Factor Weight A B C
Easy access 0.15 86 72 90
Parking facilities 0.20 72 77 91
Display area 0.18 86 90 90
Shopper (walking) traffic 0.21 94 86 80
Neighborhood wealth 0.16 99 89 81
Neighborhood safety 0.10 96 85 75
34) A manager has received an analysis of several cities being considered for a new order fulfillment
center (warehouse) for Shop at Home Network. The scores (scale is 10 points = best) are contained in the
table below.
a. If the manager weights the factors equally, how would the locations be ranked?
b. If transportation costs and operating costs are given weights that are double the weights of the others,
should the locations be ranked differently?
Location
Factor W X Y Z
Business services 7 9 5 4
Community services 5 7 6 7
Real estate cost 7 3 8 6
Construction costs 8 6 6 5
Operating costs 5 4 7 6
Business taxes 6 9 6 4
Transportation costs 8 6 7 8
location selection
35) A telecommunications firm is planning to lay fiber optic cable from several community college
distance learning sites to a central studio, in such a way that the miles of cable are minimized. Some
locations require more than one set of cables (these are the loads). Where should the studio be located to
accomplish the objective?
College Map Coordinate (x, y) Load
A (2,10) 3
B (6,8) 2
C (4,9) 4
D (9,5) 1
E (8,1) 3
F (3,2) 2
G (2,6) 1
36) The owner of a millwork shop is considering three alternative locations for a new plant for building
embossed-and-clad steel exterior doors for residences. Fixed and variable costs follow. Since the plant
ships nationwide, revenue is assumed the same regardless of plant location. Identify the range over
which each location is best.
Location
Costs A B C
Fixed $700,000 $1,000,000 $1,1000,000
Variable $28 $18 $20
37) A manufacturing firm is considering three potential locations for a new parts manufacturing facility.
A consulting firm has assessed three sites based on the four factors supplied by management as critical to
the location’s success. Given the management-supplied factor weights and the consultant team scores,
which location should be selected? Scores are based on 50 = best.
Location
Factor Weight A B C
Labor Climate 10 35 45 20
Taxes 30 30 40 40
Utilities 20 25 20 45
Wages 40 10 25 25
38) Environmental Glass Products, Inc. wants to build a new centralized facility to receive household,
commercial, and industrial glass for recycling. This center will be supplied by trucks coming from four
“collection points,” where recyclable glass is dropped off by individuals and businesses. The volume and
the map coordinates for the four collection centers are shown below. Where should the collection center
be located?
Collection point Load (X,Y) Coordinates
A 9,000 (4,8)
B 4,000 (7,2)
C 2,000 (4,1)
D 5,000 (7,3)
39) A manufacturer of stamped metal auto parts has four parts factories in one city at the location
coordinates shown below. Each coordinate unit represents a city block (roughly 100 meters). The yearly
demand at each factory is also given.
Factories Demand X-Coord. Y-Coord.
Rayburn Industrial Park 19,000 20 130
Port of Zavalla 3,000 60 40
Henderson Mfg. Center 5,000 70 100
Wax Mills Site 6,000 90 30
Management has decided to build a new sheet metal mill, to supply these factories, at a location central to
these plants. What should be the map coordinates of the new plant?