Location Planning and Analysis

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Questions and Answers

What is a reason for a location decision to arise in an organization?

A decrease in demand
A change in management
A shift in markets (correct)
A decrease in operating costs

What is an objective of location decisions?

To maximize profit potential and customer service (correct)
To minimize investment requirements
To reduce supply chain management issues
To relocate due to depletion of basic inputs

Why are location decisions strategically important?

They are not tied to an organization's strategies
They represent a short-term commitment of resources
They impact competitive advantage and investment requirements (correct)
They affect operating costs only

What is a consideration in finding an acceptable location?

Accessibility and consumer demographics (A) Signup and view all the answers

What type of location decision is based on finding a number of acceptable locations?

Multiple location decision (A) Signup and view all the answers

What is a key aspect of supply chain management in location decisions?

Centralized vs. decentralized configuration (C) Signup and view all the answers

What is one of the options available to companies in location planning?

Add new locations while retaining existing facilities (B) Signup and view all the answers

What is one of the facilitating factors that have contributed to the attractiveness of globalization?

Advances in communication and information technology (D) Signup and view all the answers

What is one of the benefits of globalization for organizations?

Access to new markets (B) Signup and view all the answers

What is one of the disadvantages of global location?

Increased security costs (C) Signup and view all the answers

What is one of the risk factors that organizations should consider when locating globally?

Economic instability in the host country (B) Signup and view all the answers

What is the purpose of locational cost-profit-volume analysis?

To evaluate location choices in economic terms (B) Signup and view all the answers

What is the primary goal of the Center of Gravity Method in locating a distribution center?

To minimize transportation costs (D) Signup and view all the answers

How are the coordinates of the center of gravity calculated when quantities to be shipped to every location are equal?

By finding the average of the x-coordinates and the average of the y-coordinates (D) Signup and view all the answers

What is the assumption made about the quantity to be shipped to each destination in the Center of Gravity Method?

The quantity is fixed and known (C) Signup and view all the answers

What is the purpose of overlaying a coordinate system on the map in the Center of Gravity Method?

To determine the relative locations of each destination (D) Signup and view all the answers

Which of the following factors is given the highest weight in the weighted scores calculation?

Rental costs (A) Signup and view all the answers

What is the total weighted score for Alt 1 in the given example?

70.6 (A) Signup and view all the answers

What is the formula to find the weighted average of the x-coordinates in the center of gravity method?

$\frac{\sum x_i Q_i}{\sum Q_i}$ (D) Signup and view all the answers

What is the purpose of the center of gravity method in location decisions?

To find the optimal location by finding the weighted average of the coordinates (A) Signup and view all the answers

In the example given, what is the quantity to be shipped to destination D1?

800 (D) Signup and view all the answers

What are the coordinates of the center of gravity in the given example?

(3.05, 3.7) (C) Signup and view all the answers

What is the formula to find the weighted average of the y-coordinates in the center of gravity method?

$\frac{\sum y_i Q_i}{\sum Q_i}$ (A) Signup and view all the answers

What is the condition required for the center of gravity method to be applicable?

Quantities to be shipped to every location are unequal (A) Signup and view all the answers

What is the formula to calculate the total cost for each alternative location?

Total Cost = FC + v  Q (C) Signup and view all the answers

What is the purpose of a locational cost-profit-volume analysis?

To determine the location that will have the lowest total cost for the expected level of output (C) Signup and view all the answers

What is the range of units for which location B is superior?

Up to 4,999 units (B) Signup and view all the answers

What is the fixed cost per year for location A?

$250,000 (D) Signup and view all the answers

What is the variable cost per unit for location C?

$20 (A) Signup and view all the answers

What determines the location that will have the lowest total cost for the expected level of output?

Both fixed and variable costs (D) Signup and view all the answers

Flashcards

Reason for location decision?

Triggered by events such as market shifts.

Objective of location decisions?

To maximize profit potential and enhance customer service levels.