41. A location analysis has been narrowed down to two locations, Akron and Boston. The main factors in thedecision will be the supply of raw materials, which has a weight of .50, transportation cost, which has a weightof .40, and labor cost, which has a weight of .10. The scores for raw materials, transportation, and labor are forAkron 60, 80, and 70, respectively; for Boston 70, 50, and 90, respectively. Given this information and aminimum acceptable composite score of 75, we can say that the manager should:A. be indifferent between these locationsB. choose AkronC. choose BostonD. reject both locationsE. build a plant in both cities Show
42. A manager must decide between two location alternatives, Boston and Chicago. Boston would have annualfixed costs of $70,000, transportation costs of $60 per unit, and labor and material costs of $200 per unit.Chicago would have annual fixed costs of $90,000, transportation costs of $40 per unit, and labor and materialcosts of $170 per unit. Revenue will be $300 per unit.(A) Which alternative would yield the higher profit for an annual demand of 3,000 units?(B) Would the two locations yield the same profit at a certain volume? If so, at what volume would that be?43. A firm is trying to decide between two location alternatives, Albany and Baltimore. Albany would result inannual 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 $6per 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 annualprofits? Location Planning Several factors that influence location positioning include the location of raw materials, proximity to the market, climate, and culture. Models for evaluating whether a location is best for an organization consist of cost-profit analysis for locations, the center of gravity model, the transportation model, and factor rating. This chapter discusses the decision to relocate a facility by considering costs and benefits. If you are planning on moving or acquiring a new facility, there are many factors to consider: the size, the geographic area, culture, transportation costs and others. After a location or locations have been chosen a cost-profit-volume analysis is done. The main factors that affect location decisions include regional factors, community considerations, and site-related factors. Community factors consist of quality of life, services, attitudes, taxes, environmental regulations, utilities, and development support. EVALUATING LOCATION ALTERNATIVES (Page 385)
where FC=Fixed Cost, v=Variable Cost per Unit, Q=Number of Units (Also shown below but not in the same format)
Company Relocating IDENTIFYING A COUNTRY, REGION, COMMUNITY, AND SITE (Page 376) v IDENTIFYING A
COUNTRY v IDENTIFYING A REGION- 4 major considerations v IDENTIFYING A COMMUNITY v IDENTIFYING A SITE Note:
The above part is way too lengthy for this assignment. Summary : There are several ways that are very helpful in evaluating location alternatives, such as locational cost-profit-volume analysis, factor rating, and the center of gravity method. First, let’s take a look at Location Cost-Profit-Volume Analysis. This analysis can be done numerically or graphically. The procedure for locational cost-profit-volume analysis involves these steps: 1. Determine the fixed and variable costs associated with each location alternative. This method assumes the following: Here’re a couple of important formulas to remember: Total cost = Fixed cost + Variable cost per unit * Quantity or volume of outputTotal profit = Quantity(Revenue per unit – Variable cost per unit) – Fixed costIn most situations, other factors besides cost must also be considered. We will now consider another kind of cost often considered in location decisions: transportation costs. Transportation costs sometimes play an important role in location decisions. The company can include the transportation costs in a locational cost-volume analysis by incorporating the transportation cost per unit being shipped into the variable cost per unit if a facility will be the sole source or destination of shipments. When there is a problem with shipment of goods from multiple sending points to multiple receiving points, and a new location is to be added to the system, the company should undertake a separate analysis of transportation. In this case, transportation model of linear programming is very helpful. The model is used to analyze each of the configurations considered, and it reveals the minumum costs each would provide. Then the information can be included in the evaluation of location alternatives. Multiple Plant Manufacturing Strategies (page
381-382)
2. Market Area Plant Strategy
3. Process Plant Strategy
4. General-Purpose Plant Strategy Plants are flexible and have the ability to handle a range of products
. Question 2: Question 3: Question 4: Question 5: 1.) Location analysis assumes that both qualitative and quantitative factors are important in determining an ideal location when
using: 2.) The transportation model can be applied to solve factors including: 3.) The Transportation Model uses the following information to determine costs: 4.) Which is a TRUE assumption needed to perform Cost-Profit Volume Analysis? 5.) In the Factor Rating Method of location analysis, which of the following
is NOT a managerial choice? Question 5 needs an answer, also needs page numbers where answers are found 1) What does GIS stand for? 2)The primary consideration for identifying a site is? 3) What are the common techniques used to evaluate location alternatives? 4) What is a general-purpose plant strategy? 5) Method for locating a distribution center that minimizes the
distribution costs. 1) What is a primary factor in the regional level of location decisions? 2) In a geographic information system
(GIS), which is NOT involved in the data? 3) What is a disadvantage of globalization? 4) Mining operations, farming, forestry, and fishing are all examples of which primary reason for firms locating near or at the source of raw materials? 5) Which of the following would you establish a composite value for? 1. Which of these is a computer-based tool for collecting, storing, retrieving, and displaying demographic data on maps? 2. Which is a major consideration when choosing to operate in a region? 3. Considering global expansion, decision makers need to be absolutely clear on the benefits and risks and the likelihood of their occurrences when
deciding upon identifying: 4. A dominant factor that influences the location decision of a manufacturing firm is: 5. Which of the following is Not a primary consideration when identifying a site for operations? 1 . When using the Center of Gravity Method, what are the two differing variables for equal and unequal quantities shipped, respectively? 2. Which location alternative technique involves viewing the problem in economic terms? 3. When
considering foreign locations, crime, and the threat of terrorism fall under which category? 4. When using the factor rating method of location alternative evaluation, which of the following could be considered relevant factors? 5. Which of the following is
not a step in the general procedure for making location decisions? Chapter 8 Summary: The location of a business is crucial to it’s growth. There are many factors that come into play when choosing a suitable location. Usually it is one or a few factors that dominate the decision making process. For example, a change in market supply and/or demand, perhaps even if inputs used by the business have run out. A business can suffer greatly if the right location is not chosen. Therefore a business should evaluate all their options very carefully before making a final conclusion. There are generally four options a manager has with regard to location planning. The first option would be to take the current facility and make it bigger. The second would be to keep the current facility and just create a (or many) new one(s). The third would be to close down the current facility entirely and build a new one. The last option would be to keep things the way they are. Questions: Questions need to be multiple choice format. 1. What is the name of the computer-based tool used for collecting, storing, retrieving, and displaying demographic data on maps? 2. True or False: Most organizations try to find the one best location. 3. What are the three primary regional factors involved in location decision making? 4. Name three trade agreements mentioned in this chapter. 5. What are five disadvantages to having global operations? 6. Suppose that the operating costs of a company has a weight of .20. There are three possible location choices. The first location has a score of 60/100. The second location has a score of 50/100. The third location has a score of 80/100. What are the weighted scores of each location possibility? 7. What are some benefits associated with a company moving it’s operation’s globally? 8. What is the center of gravity method used for? 9. Find the center of gravity with the information provided below.
10. Determine the center of gravity based on the following information:
11. Use the table below and the cost-profit-volume analysis to determine the B Superior range approximation.
12. Use the table from Question 12 and the cost-profit-volume analysis to find the C Superior range approximation. Use the following information to answer question 1-3. 1. What is their total costs for the month? a. $2300 2. What is the firm’s total revenue for the month? a. $20000 3. What is the firm’s profit for the month ? a. $20000 4. If two alternatives yield comparable annual costs, management would be indifferent in choosing between the two in terms of _. a. total revenue 5. The transportation cost must be converted into cost per unit of in order to correspond to other variable costs if raw materials are involved. a. input 6. Which of the following is NOT a governmental factor when locating in a foreign region? Unit 7 Discussion#1 Choose a business that you would be interested in opening in your community. How would you decide where to locate that business? What would you be most concerned about in making this choice? What methods are used to evaluate locations?Four major methods are used for solving location problems: the factor-rating method, locational cost–volume analysis, the center-of-gravity method, and the transportation model.
Which method for evaluating location alternatives which minimizes shipping costs between multiple sending and receiving locations is?transportation model analysis**Transportation model analysis minimizes shipping costs between multiple sending and receiving locations.
Which of the following is an approach to locate a facility that includes both qualitative and quantitative considerations?Factor Rating
This method involves qualitative and quantitative inputs, and evaluates alternatives based on comparison after establishing a composite value for each alternative. Factor Rating consists of six steps: Determine relevant and important factors.
Is a general approach that is useful for evaluating a given alternative and comparing alternatives?clustering. is a general approach that is useful for evaluating a given alternative and comparing alternatives. General approach to evaluating locations that includes quantitative and qualitative inputs.
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