CHAPTER 8 LO C A T I O N ST R A T E G I E S 113
Copyright ©2014 Pearson Education, Inc.
lation density (store density), while the supermarket will focus more
on neighborhood affluence, traffic patterns, etc. The distributor will
be concerned with speedy and reliable delivery, the supermarket
with easy access. Both will have concerns over attitudes and zoning.
Both will need access to similar labor forces; both will need similar
measures of workforce education, etc. Many other comparisons can
be drawn.
18. This is a service location problem, and should focus on rev-
enues, not costs. Customer traffic, customer income, customer
density, are obvious beginning points. Parking/access, security/
19. An aerotropolis is an airport region that integrates a cluster of
hotels, offices, distribution, and logistics facilities.
ETHICAL DILEMMA
Location is a major issue in the U.S. today. Almost every
community is seeking new jobs, especially from foreign firms like
1. What is the total weighted distance from the current old and
inadequate warehouse in Pittsburgh?
318,692
2. If they relocate their warehouse to the center of gravity, by
how much will this reduce the total weighted shipping distance?
By 18,663—from 318,692 to 300,029.
3. Observe the graph. If the number of shipments from New
York doubles, how does this affect the center of gravity?
The center of gravity moves north and east.
4. The center of gravity does not necessarily find the site with
the minimum total weighted distance. Use the scrollbars to move
the trial location and see if you can improve (lower) the distance.
64, 97, (with a total weighted distance of 299), 234 (using
Solver).
5. If you have Solver set up in Excel, from Excel’s main menu,
use Tools, Solver, Solve in order to see the best answer to the
previous question.
64, 97, (with a total weighted distance of 299), 234.
114 CHAPTER 8 LO C A T I O N ST R A T E G I E S
END–OF-CHAPTER PROBLEMS
8.1 Where: 6 laborers each making $3 per day can produce 40 units.
10 laborers each making $2.00 per day can produce 45 units.
2 laborers each making $60 per day can make 100 units.
==
3
30
0.20
6
60
0.20
12.00
4
80
0.35
28
50
0.35
17.50
3
30
0.20
6
60
0.20
12.00
4
80
0.35
28
50
0.35
17.50
6 $3
(a) Myanmar $0.45 unit
40
China $0.44 + $1.00 = $1.44
Montana $1.20 + $0.25 = $1.45
8.3 Thailand: 2,000 baht/200 = 10 baht/unit,
if $1 = 10 baht $1/unit
India: 2,000 rupees/200 = 10 rupees/unit,
Space
Costs
Traffic density
Zoning laws
Customer
convenience
Bank accessibility
Computer support
Rental costs
Labor costs
Labor
0.15
13.5
Availability
Tech. School
0.10
Quality
Operating Cost
0.30
24.0
Land &
Construction
0.15
Ind. Incentives
0.20
18.0
Labor Cost
0.10
Labor
Availability
Operating Cost
Land &
Construction
Ind. Incentives
Labor Cost
Space
Costs
Traffic density
Zoning laws
Customer
convenience
Bank accessibility
Computer support
Rental costs
Labor costs
Labor
0.15
13.5
Availability
Tech. School
0.10
Quality
Operating Cost
0.30
24.0
Land &
Construction
0.15
Ind. Incentives
0.20
18.0
Labor Cost
0.10
Labor
Availability
Operating Cost
Land &
Construction
Ind. Incentives
Labor Cost
Tech. School
Quality
Tech. School
Quality
8.8 (a)
8.9 (a) The weighted averages are:
Akron 81.5
Biloxi 80.0
Carthage 87.5
Location
Factor
Present Location
Wgt
Newbury
Wgt
1
40
0.30
12
60
0.30
18.00
2
20
0.15
3
20
0.15
3.00
116 CHAPTER 8 LO C A T I O N ST R A T E G I E S
8.14 (a)
Italy is highest.
(b) Spain’s cost would drop, but the result would not
8.15 (a) Chicago = 16 + 6 + 7 + 4 = 33
Milwaukee = 10 + 13.5 + 6 + 3 = 32.5
Madison = 12 + 12 + 4 + 2.5 = 30.5
8.16 (a) The following figure indicates the volume range for
which each site is optimal.
8.17 (a) See the figure below:
(b) Q drops to 23,333, from 33,333.
8.19 (a) Crossover is where ProfitBonham = ProfitMcKinney;
or –800,000 + 15,000X = –920,000 + 16,000X
Crossover is at 120 units.
(b, c) McKinney is preferable beyond 120 units, Bonham
Cost(Dallas) Cost(Detroit)
(Dallas) (Dallas) (Detroit) (Detroit)
$600,000 $28 $800,000 $22
$200,000 / $6
33,333
FC Q VC FC Q VC
QQ
Q
Q
=
+ = +
+ = +
=
=
Germany:
0.05(5) + 0.05(4) + 0.2(5) + 0.2(5) + 0.2(1) + 0.1(4) + 0.1(1) + 0.1(2) = 3.35
Italy:
0.05(5) + 0.05(2) + 0.2(5) + 0.2(2) + 0.2(4) + 0.1(2) + 0.1(4) + 0.1(3) = 3.45
Spain:
0.05(5) + 0.05(1) + 0.2(5) + 0.2(3) + 0.2(1) + 0.1(1) + 0.1(4) + 0.1(1) = 2.7
Greece:
0.05(2) + 0.05(1) + 0.2(2) + 0.2(5) + 0.2(3) + 0.1(1) + 0.1(3) + 0.1(5) = 3.05
= − −
=−
= − −
=−
Bonham
McKinney
Profit 800,000 + (29,000 14,000)
800,000 + 15,000
Profit 920,000 + (29,000 13,000)
920,000 + 16,000
X
X
X
X
CHAPTER 8 LO C A T I O N ST R A T E G I E S 113
Copyright ©2014 Pearson Education, Inc.
lation density (store density), while the supermarket will focus more
on neighborhood affluence, traffic patterns, etc. The distributor will
be concerned with speedy and reliable delivery, the supermarket
with easy access. Both will have concerns over attitudes and zoning.
Both will need access to similar labor forces; both will need similar
measures of workforce education, etc. Many other comparisons can
be drawn.
18. This is a service location problem, and should focus on rev-
enues, not costs. Customer traffic, customer income, customer
density, are obvious beginning points. Parking/access, security/
19. An aerotropolis is an airport region that integrates a cluster of
hotels, offices, distribution, and logistics facilities.
ETHICAL DILEMMA
Location is a major issue in the U.S. today. Almost every
community is seeking new jobs, especially from foreign firms like
1. What is the total weighted distance from the current old and
inadequate warehouse in Pittsburgh?
318,692
2. If they relocate their warehouse to the center of gravity, by
how much will this reduce the total weighted shipping distance?
By 18,663—from 318,692 to 300,029.
3. Observe the graph. If the number of shipments from New
York doubles, how does this affect the center of gravity?
The center of gravity moves north and east.
4. The center of gravity does not necessarily find the site with
the minimum total weighted distance. Use the scrollbars to move
the trial location and see if you can improve (lower) the distance.
64, 97, (with a total weighted distance of 299), 234 (using
Solver).
5. If you have Solver set up in Excel, from Excel’s main menu,
use Tools, Solver, Solve in order to see the best answer to the
previous question.
64, 97, (with a total weighted distance of 299), 234.
114 CHAPTER 8 LO C A T I O N ST R A T E G I E S
END–OF-CHAPTER PROBLEMS
8.1 Where: 6 laborers each making $3 per day can produce 40 units.
10 laborers each making $2.00 per day can produce 45 units.
2 laborers each making $60 per day can make 100 units.
==
6 $3
(a) Myanmar $0.45 unit
40
China $0.44 + $1.00 = $1.44
Montana $1.20 + $0.25 = $1.45
8.3 Thailand: 2,000 baht/200 = 10 baht/unit,
if $1 = 10 baht $1/unit
India: 2,000 rupees/200 = 10 rupees/unit,
8.8 (a)
8.9 (a) The weighted averages are:
Akron 81.5
Biloxi 80.0
Carthage 87.5
Location
Factor
Present Location
Wgt
Newbury
Wgt
1
40
0.30
12
60
0.30
18.00
2
20
0.15
3
20
0.15
3.00
116 CHAPTER 8 LO C A T I O N ST R A T E G I E S
8.14 (a)
Italy is highest.
(b) Spain’s cost would drop, but the result would not
8.15 (a) Chicago = 16 + 6 + 7 + 4 = 33
Milwaukee = 10 + 13.5 + 6 + 3 = 32.5
Madison = 12 + 12 + 4 + 2.5 = 30.5
8.16 (a) The following figure indicates the volume range for
which each site is optimal.
8.17 (a) See the figure below:
(b) Q drops to 23,333, from 33,333.
8.19 (a) Crossover is where ProfitBonham = ProfitMcKinney;
or –800,000 + 15,000X = –920,000 + 16,000X
Crossover is at 120 units.
(b, c) McKinney is preferable beyond 120 units, Bonham
Cost(Dallas) Cost(Detroit)
(Dallas) (Dallas) (Detroit) (Detroit)
$600,000 $28 $800,000 $22
$200,000 / $6
33,333
FC Q VC FC Q VC
QQ
Q
Q
=
+ = +
+ = +
=
=
Germany:
0.05(5) + 0.05(4) + 0.2(5) + 0.2(5) + 0.2(1) + 0.1(4) + 0.1(1) + 0.1(2) = 3.35
Italy:
0.05(5) + 0.05(2) + 0.2(5) + 0.2(2) + 0.2(4) + 0.1(2) + 0.1(4) + 0.1(3) = 3.45
Spain:
0.05(5) + 0.05(1) + 0.2(5) + 0.2(3) + 0.2(1) + 0.1(1) + 0.1(4) + 0.1(1) = 2.7
Greece:
0.05(2) + 0.05(1) + 0.2(2) + 0.2(5) + 0.2(3) + 0.1(1) + 0.1(3) + 0.1(5) = 3.05
= − −
=−
= − −
=−
Bonham
McKinney
Profit 800,000 + (29,000 14,000)
800,000 + 15,000
Profit 920,000 + (29,000 13,000)
920,000 + 16,000
X
X
X
X