Exam 8: Location Strategies

Every month, a distribution center will deliver 14,000 units to Retailer A at coordinates (20, 10), 12,000 units to Retailer B at coordinates (30, -15), and 20,000 units to Retailer C at coordinates (4, 4). Assuming no constraints on location, at what coordinates should the distribution center be located (rounded to two decimal places)?

A clothing chain is considering two different locations for a new retail outlet. They have identified the four factors listed in the following table as the basis for evaluation, and have assigned weights as shown. The manager has rated each location on each factor, on a 100-point basis, as shown under the respective columns for Barclay and Chester. What is the score for Barclay?

What kinds of location decisions are appropriate for the use of center-of-gravity analysis? What variable is being optimized in this analysis?

Health Care Systems of the South is about to buy an expensive piece of diagnostic equipment. The company estimates that it will generate uniform revenues of $250,000 for each of the next eight years. What is the present value of this stream of earnings, at an interest rate of 7%? What is the net present value if the machine lasts ten years, not eight? If the equipment cost $1,500,000, should the company purchase it?

A graphic design studio is considering three new computers. The first model, A, costs $5000. Model B and C cost $3000 and $1000 respectively. If each customer provides $50 of revenue and variable costs are $20/customer, find the number of customers required for each model to break even.

Break-even analysis can be used by a firm that produces more than one product, but:

A tortilla chip workstation produces 1,000 chips in 60 seconds. What is its bottleneck time?

Identify the three location options when demand has outgrown the current plant's capacity.

Lag and straddle strategies for increasing capacity have what main advantage over a leading strategy?

In location planning, environmental regulations, cost and availability of utilities, and taxes are:

Break-even is the number of units at which:

Net present value:

A contractor for the military is looking for a new location for a supply depot. The depot will supply four bases whose tonnage (demand) and map coordinates are shown below. If management wants the depot to have a central location, what should be its map coordinates?

Variable costs are those costs that continue even if no units are produced.

Suppose that a bus company is deciding where to locate its central hub. There are 6 possible destinations for the buses. Suppose that the center of town will be used as the reference for describing the possible destinations. A is located 7 miles North and 3 miles East. B is located 3 miles North and 2 miles East. C is located 1 mile South and 4 miles West. D is located 2 miles North and 3 miles West. E is located exactly in the center of town. F is located 14 miles South and 5 miles East. Assume that traffic to each destination will be equal. Where should the hub go so that travel time is minimized?

________ is actual output as a percent of effective capacity.

The staff training center at a large regional hospital provides training sessions in CPR to all employees. Assume that the capacity of this training system was designed to be 1200 employees per year. Since the training center was first put into use, the program has become more complex, so that 950 now represents the most employees that can be trained per year. In the past year, 850 employees were trained. The efficiency of this system is approximately ________ and its utilization is approximately ________.

Why does FedEx use a central hub airline network, rather than a "point-to-point" network? Describe FedEx's approach to choosing its superhub.

A grocery chain is deciding on where to locate its new distribution center (DC). The new DC will serve four grocery stores, each with a demand of 10,000 units. If the coordinates of the stores are (108,112), (110,50), (40, 85), and (10, 25) where should the DC be located? Suppose now that each store instead had demand of 30,000 units. Where should the DC go in this case?

Location greatly affects fixed cost, but not variable cost.