Location Decisions

Industrial location analysis typically attempts to:

• minimize costs.

• maximize sales.

• focus more on human resources.

• avoid countries with strict environmental regulations.

Which of the following workers is the most productive?

• $50 wages, 10 parts produced

• $10 wages, 1 part produced

• $30 wages, 5 parts produced

• $100 wages, 21 parts produced

The reason fast food restaurants often are found in close proximity to each other is:

• location clustering near high traffic flows.

• low cost.

• availability of skilled labor.

• all of the above

Tangible costs include which of the following?

• climatic conditions

• availability of public transportation

• taxes

• quality and attitude of prospective employees

Which of the following statements regarding "proximity" in the location decision is FALSE?

• Manufacturers want to be near customers when their product is bulky, heavy, or fragile.

• Perishability of raw materials is a good reason for manufacturers to locate near the supplier, not the customer.

• Reduction in bulk is a good reason for a manufacturer to locate near the supplier.

• Clustering among fast food chains occurs because they need to be near their labor supply.

Community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods?

• transportation method

• locational cost-volume analysis

• center-of-gravity method

• factor-rating method

On the crossover chart where the costs of two or more location alternatives have been plotted, the quantity at which two cost curves cross is the quantity at which:

• fixed costs are equal for two alternative locations.

• total costs are equal for all alternative locations

• total costs are equal for two alternative locations.

• fixed costs equal variable costs for one location.

A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost?

• Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.

• Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units.

• Plant A, because it is cheaper than Plant B for all volumes.

• Plant B, because it has the lower variable cost per unit.

The center-of-gravity method is used primarily to determine what type of locations?

• service locations

• manufacturing locations

• distribution center locations

• supplier locations

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. What is the center of gravity?

• X = 28.125; Y = 31.25

• X = 22000; Y = 24000

• X = 27.5; Y = 40

• center of gravity = 28