Krajewski TIF Chapter 11

Chapter 11 Location
Chapter
11
Location
TRUE/FALSE
1. If the customer must be physically present at the process, location is an important issue.
Answer: True
Reference: Introduction
Difficulty: Easy
Keywords: location, physical, presence, customer
2. Secondary location factors are derived from competitive priorities.
Answer: False
Reference: Factors Affecting ocation !ecisions
Difficulty: "oderate
Keywords: secondary, location, factor
#. $ne dominant factor in locating manufacturing facilities is a favorable labor climate.
Answer: True
Keywords: labor, climate, factor
%. &hen outbound transportation costs are a dominant factor, manufacturing facilities should be located
close to suppliers and resources.
Answer: False
Keywords: transportation, cost, outbound
'. Traffic flo(s are one dominant factor in manufacturing location.
Answer: False
Keywords: traffic, flo(, location
45
Chapter 11 Location
). Service location decisions are driven primarily by the operating costs at the locations under
consideration.
Answer: False
Keywords: service, location, cost, revenue
*. +ritical mass is a situation (hereby several competing firms clustered in one location attract more
customers than the total number (ho (ould shop at the same stores in scattered locations.
Answer: True
Difficulty: Easy
Keywords: critical, mass, customers
,. A geographic information system contains demographic information.
Answer: True
Reference: -eographic Information Systems and ocation !ecisions
Difficulty: Easy
Keywords: -IS, geographic, information, system, demographic
.. /epeated onsite e0pansion ultimately leads to diseconomies of scale.
Answer: True
Reference: +hoosing 1et(een an $nsite E0pansion, 2e( ocation, or /elocation
Keywords: onsite, e0pansion
13. "ore than ,3 percent of all relocations are (ithin 23 miles of the first location, so usually the e0isting
(or4force is displaced.
Answer: True
Keywords: relocation, (or4force, displace
11. The center of gravity method considers a greater number of factors than the brea45even analysis.
Answer: False
Reference: ocating a Single Facility
Difficulty: Easy
Keywords: center, gravity, brea45even
12. A decision ma4er using brea45even analysis must assume that suppliers do not provide discounts for
large orders.
Answer: True
Keywords: brea45even
46
Chapter 11 Location
1#. 1rea45even analysis can help a manager compare location alternatives on the basis of 6uantitative
factors that can be e0pressed in terms of total cost.
Answer: True
Keywords: brea4, even
1%. &hen a firm (ith a net(or4 of e0isting facilities plans a ne( facility, the ne( facility is assumed to
operate independently of the e0isting ones.
Answer: False
Reference: ocating a Facility &ithin a 2et(or4 of Facilities
Keywords: facility, net(or4
1'. The transportation method provides optimal solutions for minimi7ation of shipping costs in multiple
facility location problems.
Answer: True
Keywords: transportation, shipping
1). A dummy plant is one that cannot meet customer demands regardless of the number of locations.
Answer: False
Keywords: dummy, plant
1*. Simulation is a procedure used to determine the 8best9 solution that generally uses simplified and less
realistic vie(s of a problem.
Answer: False
Keywords: simulation, assumption
MULTIPLE CHOICE
1,. The group of location factors found to be most important for ne( manufacturing plants, on the
average, is:
a. pro0imity to mar4ets.
b. 6uality of life.
c. pro0imity to suppliers and resources.
d. favorable labor climate.
Answer: d
Keywords: location, factors, climate
47
Chapter 11 Location
1.. A favorable labor climate might include:
a. a poor (or4 ethic.
b. no union presence.
c. high average (ages.
d. an uneducated (or4 force.
Answer: b
Keywords: labor, climate
23. ;uality of life issues include:
a. pro0imity to mar4ets.
b. prevailing (age rates.
c. local and state ta0es.
d. recreational facilities.
Answer: d
21. &hich of the follo(ing location factors (as 2$T found to dominate location decisions for ne( <.S.
manufacturing plants=
a. >ro0imity to the parent company?s facilities
b. ;uality of life
c. >ro0imity to competitors? facilities
d. Favorable labor climate
Answer: c
Keywords: location, factor
22. &hich of the follo(ing statements about locating ne( <.S. manufacturing plants is best=
a. A favorable labor climate is the most important factor for capital5intensive plants.
b. abor climate is a function of (age rates, training re6uirements, attitudes to(ard (or4, (or4er
productivity, and union strength.
c. ocating near mar4ets is less important (hen the finished goods are bul4y or heavy and outbound
transportation rates are high.
d. The shift of ne( industrial @obs to nonurban regions e0perienced in the <nited States is not ta4ing
place in Aapan and Europe.
Answer: b
4
Chapter 11 Location
2#. &hich of the follo(ing statements about locating ne( <.S. manufacturing plants is best=
a. -eneral "otors +orporation located its ne( plant to manufacture the Saturn car in !etroit,
primarily because of pro0imity to current suppliers and many of its other facilities.
b. Industries dependent on inputs of bul4y, perishable, or heavy ra( materials emphasi7e pro0imity to
mar4ets.
c. ;uality of life means good schools, recreational facilities, cultural events, and an attractive
lifestyle.
d. ocating large, high5volume facilities offshore that are focused on a particular product and mar4et
is the best (ay to deal (ith the uncertainties of nontariff barriers such as political ris4s, regional
trading bloc4s, and e0change rates.
Answer: c
Keywords: 6uality, life
2%. &hich of the follo(ing statements about locating facilities in the service sector is best=
a. The factors that apply to manufacturing firms often also apply to service facilities, but the impact
of the location on sales and customer satisfaction is an important addition.
b. "anagement should avoid locating facilities (here competitors are already (ell established, as
illustrated by ne( car sho(rooms.
c. +reating a critical mass is a strategy that avoids locating near competing firms.
d. 8Site specific9 factors are the main reason for locating (arehousing and distribution operations
near the customer.
Answer: a
Keywords: locating, service, facility
2'. &hich of these is 2$T identified as a component of a geographical information system=
a. Bard(are
b. !ata
c. Soft(are
d. 2et(or4
Answer: d
Reference: -eographical Information Systems and ocation !ecisions
Keywords: -IS, geographical, information, system
2). &hich of these is 2$T a common functionality of a -IS=
a. !ata storage
b. +ommunication
c. "ap display
d. "odeling
Answer: b
Keywords: -IS, geographical, information, system
4!
Chapter 11 Location
2*. &hich of the follo(ing usually is an advantage of on5site e0pansion, compared to building a ne(
facility=
a. /educed construction time and costs
b. Focused facility
c. Simplified production control
d. /educed transportation cost
Answer: a
Reference: +hoosing 1et(een and $nsite E0pansion, 2e( ocation, or /elocation
Keywords: e0pansion, ne(, facility
2,. "ost firms that choose to relocate operations have:
a. more than '33 employees.
b. more than 133 employees but fe(er than '33 employees.
c. more than 13 employees but fe(er than 133 employees.
d. fe(er than 13 employees.
Answer: d
Keywords: e0pansion, ne(, facility
2.. &hich one of the follo(ing is usually an advantage of building a ne( facility, compared to on5site
e0pansion=
a. /educing construction time and costs
b. Ceeping management together
c. /educing transportation costs
d. 2ot splitting up operations
Answer: c
Keywords: ne(, facility, e0pansion
#3. &hich of the follo(ing statements about company relocations is best=
a. ess than ,3 percent of all relocations are made (ithin 23 miles of companies? original locations.
b. "ore than ,3 percent of all relocations are made (ithin 23 miles of companies? original locations.
c. "ore than 23 percent of all relocations are made (ithin , miles of companies? original locations.
d. ess than 23 percent of all relocations are made (ithin ,3 miles of companies? original locations.
Answer: b
Keywords: ne(, facility, e0pansion
5"
Chapter 11 Location
#1. &idgets, Inc. (ishes to locate t(o ne( manufacturing facilities. 1ased on the follo(ing sub@ective criteria,
(here should the ne( facilities be located= DE0cellent E ', Fery good E %, -ood E #, Fair E 2, >oor E 1G

a. 1 and !
b. A and !
c. + and !
d. ! and E
Answer: b
Keywords: location, factors
#2. "cCenna /estaurant (ishes to open a ne( store. 1ased on the follo(ing sub@ective criteria, (here 13
is e0cellent and 3 is poor, (here should the ne( store be located=
a. A
b. 1
c. +
d. !
Answer: c
Keywords: location, factors, (eighted
51
Chapter 11 Location
##. The point has been reached (here a biotechnology research and development company must e0pand
by building a ne( facility. The search has been narro(ed to four locations, all of (hich are acceptable
to management. The assessment of these sites is being made on the basis of the si0 sub@ective location
factors that follo(. "anagement has agreed to use a five5point scale DE0cellent E ', Fery good E %,
-ood E #, Fair E 2, >oor E 1G to 6uantify and compare their sub@ective opinions about the relative
goodness of the sites. The (eight reflects the importance of each factor in the decision.
+alculate the (eighted score for each alternative. &hich location (ould you recommend=
a. A
b. 1
c. +
d. !
Answer: c
Keywords: location, factors, (eighted
5#
Chapter 11 Location
#%. A company desires to locate a ne( facility. 1ased on preliminary analysis, the choice has been
reduced to four locations: A, 1, +, and !. These four locations (ere rated on a scale from 1 D(orstG to
13 DbestG on each of four criteria. Each criterion (as also (eighted to indicate its importance Di.e., the
higher the (eight, the more importantG. The list of ratings and (eights follo(s.
1ased on (eighted scores, (here should the company locate its ne( facilities=
a. A
b. 1
c. +
d. !
Answer: a
Keywords: (eighted, score, location
#'. S(eet +andy, Inc. (ishes to open t(o ne( stores. 1ased on the follo(ing sub@ective criteria, (here
should the ne( stores be located= The higher the score, the better.
Factor Score Evaluation by ocation
Factor &eight A 1 + ! E
"ar4ets #' % # ' % '
Transportation 2' # ' # # 2
abor +limate 23 ' ' 2 # '
Ta0es 1' 2 % % ' 2
;uality of life ' # % ' % '
a. A and 1
b. 1 and +
c. 1 and !
d. 1 and E
Answer: d
5$
Chapter 11 Location
#). The Bunan /estaurant (ishes to locate a ne( facility. 1ased on the follo(ing sub@ective criteria,
(here should the ne( facility be located= DFery good E ', -ood E %, Fair E #, >oor E 2, and Fery
poor E 1G
a. A
b. 1
c. +
d. !
Answer: b
#*. A 6uantitative method used to evaluate single locations based primarily on pro0imity is:
a. brea45even analysis.
b. the transportation method.
c. a preference matri0.
d. the load5distance method.
Answer: d
Keywords: load5distance, load, distance
#,. A 6uantitative method used to evaluate multiple locations based on total cost of production or service
operations is called:
a. brea45even analysis.
b. the transportation method.
c. a preference matri0.
d. the load5distance method.
Answer: a
Keywords: brea45even, brea4, even
54
Chapter 11 Location
#.. Four departments are located in ad@acent bays in the same loading doc4. The distance bet(een
ad@acent bays is #3 feet, the distance bet(een bays separated by another DAlpha and +harlie, 1ravo
and !eltaG is )3 feet, and the distance bet(een Alpha and !elta is .3 feet. <se the information in the
table to calculate the load distance for location Alpha.
To To To To
From Alpha 1ravo +harlie !elta
Alpha 3 1' 23 #3
1ravo ' 3 12 ,
+harlie 13 * 3 %
!elta 1' 2% ) 3
a. 2133
b. )%'3
c. %#'3
d. 22'3
Answer: b
%3. Four departments are located in ad@acent bays in the same loading doc4. The distance bet(een
table to calculate the load distance for location 1ravo.
To To To To
Alpha 3 1' 23 #3
1ravo ' 3 12 ,
+harlie 13 * 3 %
!elta 1' 2% ) 3
a. #3.3
b. ##33
c. 2133
d. 1233
Answer: a
55
Chapter 11 Location
%1. Four departments are located in ad@acent bays in the same loading doc4. The distance bet(een
table to calculate the total load distance for this layout.
To To To To
Alpha 3 1' 23 #3
1ravo ' 3 12 ,
+harlie 13 * 3 %
!elta 1' 2% ) 3
a. #.#3
b. 1,%,3
c. .2%3
d. 12))3
Answer: c
%2. <se the information from Table 11.1. &hat are the x and y coordinates for the center of gravity=
a. x H ), y H *
b. x H ), y I *
c. x I ), y H *
d. x I ), y I *
Answer: c
Keywords: center, gravity
56
Table 11.1
A single facility is needed to meet the demands of four mar4ets. The locations and demands of
these four mar4ets are sho(n belo(.
Chapter 11 Location
%#. <se the information in Table 11.2. &hat are the x and y coordinates for the center of gravity=
a. x H 1%, y H 1'
b. x I 1%, y H 1'
c. x I1%, y I 1'
d. x H 1%, y I 1'
Answer: a
%%. <se the information in Table 11.2. If the plant is located at the center of gravity, (hat is the loadJ
distance score, assuming rectilinear distance=
a. ess than or e6ual to 1'33
b. "ore than 1'33 but less than or e6ual to 1)33
c. "ore than 1)33 but less than or e6ual to 1*33
d. "ore than 1*33
Answer: c
57
Table 11.2
!urham Toy, Inc. has five distribution centers at the location coordinates given as follo(s. The
monthly demand at each center is also given.
Chapter 11 Location
%'. +onsider the location of four distribution centers, A, 1, +, and !, (ith the follo(ing location
coordinates and shipping re6uirements per (ee4.
"anagement is considering locating a ne( plant at the site of one of the four distribution centers.
&hat is the loadJdistance score if the plant is located at distribution center A= D<se rectilinear
distance.G
a. ess than or e6ual to %'33
b. -reater than %'33 but less than or e6ual to '333
c. -reater than '333 but less than or e6ual to ''33
d. -reater than ''33
Answer: a
%). >in4erton +ompany has four distribution centers located at the location coordinates given. The
monthly demand at each center is also given.
Assume that management is considering locating its ne( plant at distribution center A. &hat is
the loadJdistance score, assuming rectilinear distance=
a. ess than ##,333
b. -reater than ##,333 but less than ##,'33
c. -reater than ##,'33 but less than #%,333
d. -reater than #%,333
Answer: b
5
Chapter 11 Location
%*. A single facility is needed to meet the demand of four regions depicted as follo(s:
If the plant is located at A, (hat is the total loadJdistance score, assuming Euclidean distance=
a. ess than or e6ual to 1333
b. "ore than 1333 but less than or e6ual to 1133
c. "ore than 1133 but less than or e6ual to 1233
d. "ore than 1233
Answer: a
%,. <se the information in Table 11.#. &hat is the center of gravity=
a. x I *, y I ,
b. x H *, y I ,
c. x I *, y H ,
d. x H *, y H ,
Answer: c
5!
Table 11.#
A firm has the follo(ing demand forecasts for the five mar4ets that it serves:
Chapter 11 Location
%.. <se the information in Table 11.#. If the firm decides to locate the (arehouse at point !, (hat is the
total loadJdistance score= D<se rectilinear distance.G
a. ess than %33
b. 1et(een %31 and %'3
c. 1et(een %'1 and '33
d. "ore than '33
Answer: a
Keywords: load, distance, rectilinear
'3. <se the information in Table 11.%. If a company desires to locate a manufacturing facility at the center
of gravity, (hat (ould be the x and y coordinates of the facility=
a. x I 1%, y I 1%
b. x I 1%, y H 1%
c. x I 1', y I 1%
d. x I 1', y H 1'
Answer: c
6"
Table 11.%
A company has determined the 8demand points9 and their relative locations as follo(s:
Chapter 11 Location
'1. <se the information in Table 11.%. If a facility (ere to be located at D1',1'G, (hat (ould be the loadJ
distance score= DAssume rectilinear distance.G
a. ess than or e6ual to ''33
b. "ore than ''33 but less than or e6ual to )333
c. "ore than )333 but less than or e6ual to )'33
d. "ore than )'33
Answer: b
'2. <se the information in Table 11.'. &hat are the x and y coordinates for the center of gravity=
a. x H *.', y H )
b. x H *.', y I )
c. x I *.', y H )
d. x I *.', y I )
Answer: b
'#. <se the information in Table 11.'. If a plant is located at a center of gravity, (hat is the loadJdistance
score, assuming rectilinear distance=
a. ess than or e6ual to '33
b. "ore than '33 but less than or e6ual to ''3
c. "ore than ''3 but less than or e6ual to )33
d. "ore than )33
Answer: d
61
Table 11.'
<nion For4, Inc. has five distribution centers located at the location coordinates given as
follo(s. The demand at each center is also given.
Chapter 11 Location
'%. <se the information in Table 11.'. Assume that t(o plants, rather than one, are to be located. >lant 1
serves distribution centers A, 1, and +. >lant 2 serves distribution centers ! and E. &hat is the center
of gravity for plant 1=
a. x H %, y H *
b. x H %, y I *
c. x I %, y H *
d. x I %, y I *
Answer: b
''. <se the information in Table 11.'. &hat is the total loadJdistance score for the t(o plants if >lant 1 is
located at the center of gravity serving distribution centers A, 1, and +, and >lant 2 is located at the
center of gravity serving ! and E= DAssume rectilinear distance.)
a. ess than or e6ual to #33
b. "ore than #33 but less than or e6ual to #'3
c. "ore than #'3 but less than or e6ual to %33
d. "ore than %33
Answer: b
Difficulty: Bard
'). <se the information in Table 11.'. &hat is the total loadJdistance score for the t(o plants if >lant 1 is
located at the center of gravity serving A, 1, and +, and >lant 2 is at the center of gravity serving !
and E= DAssume Euclidean distance.)
a. ess than or e6ual to 2%3
b. "ore than 2%3 but less than or e6ual to 2)3
c. "ore than 2)3 but less than or e6ual to 2,3
d. "ore than 2,3
Answer: c
Difficulty: Bard
Keywords: load, distance, Euclidean
6#
Chapter 11 Location
'*. "alhotra +ompany has four distribution centers located at the location coordinates given as follo(s.
The monthly demand at each center is also given.
"anagement (ants to build a ne( plant that (ould be located at the center of gravity of the four
distribution centers. &hich of the follo(ing options best represents the coordinates of the ne(
plant location=
a. X coordinate is greater than 1'3 but less than 1*3K y coordinate is greater than 213 but less than
2#3.
b. X coordinate is greater than 1'3 but less than 1*3K y coordinate is greater than 2#3 but less than
2'3.
c. X coordinate is greater than 1*3 but less than 1.3K y coordinate is greater than 213 but less than
2#3.
d. X coordinate is greater than 1*3 but less than 1.3K y coordinate is greater than 2#3 but less than
2'3.
Answer: d
6$
Chapter 11 Location
',. Ciddie +lothes (ishes to locate its (arehouse so that it (ould serve its four different stores, described
as follo(s. 1ased on the center of gravity, (hat are the x and y coordinates of the proposed (arehouse
location=
a. X is less than or e6ual to #K y is less than or e6ual to 2.
b. X is less than or e6ual to #K y is less than or e6ual to 2.'.
c. X is greater than or e6ual to 2.'K y is greater than or e6ual to #.
d. X is less than or e6ual to 2.'K y is greater than or e6ual to 2...
Answer: d
'.. 1ill 1urns, district manager of the >i77a >alace, (ishes to locate a ne( store in the metropolitan
areas. <sing the follo(ing information, (hat are the x and y coordinates for the center of gravity=
!on?t round up or do(n your ans(er before ma4ing your choice.
"ar4et
!emand
Dpi77asLdayG
0 coordinate y coordinate
-randvie( Beights 2'3 2 2
<pper Arlington 133 % '
1e0ley 1'3 * #
&orthington #'3 % .
"edfield '33 % #
a. X is less than or e6ual to %K y is less or e6ual to than %.'.
b. X is greater than or e6ual to 'K y is greater than or e6ual to #.'.
c. X is less than or e6ual to #.'K y is less than or e6ual to %.'.
d. X is less than or e6ual to %K y is greater than or e6ual to %.'.
Answer: d
64
Chapter 11 Location
)3. A national drugstore chain prefers to operate one outlet in a to(n that has four ma@or mar4et
segments. The number of potential customers in each segment, along (ith the location coordinates,
are given belo(.
&hich (ould be the best location using the center of gravity method=
a. x H 13, y I '
b. x I 13, y H '
c. x I ., y I )
d. x I 11, y H ,
Answer: b
)1. A gro(er and shipper of fresh gourmet herbs has determined the follo(ing demand forecast for the
five metropolitan mar4ets that the firm serves. 1ased on your calculations of the center of gravity,
(here should the ne( herb farm be located=

a. x I ', y H '
b. x I *, y H )
c. x I ), y H)
d. x H ), y H ,
Answer: d
65
Chapter 11 Location
)2. <se the information in Table 11.). &hat are the x and y coordinates for the center of gravity=
a. x H ., y H 1%
b. x H %.), y I 2
c. x I %, y H 2
d. x I ., y I )
Answer: b
)#. <se the information in Table 11.). If the plant is located at the coordinates D', 'G, (hat is the total
loadJdistance score, assuming rectilinear distance=
a. ess than %33
b. %33J''3
c. ''1J*33
d. "ore than *33
Answer: d
)%. <se the information in Table 11.). If the plant is located at the coordinates D', 'G, (hat is the total
loadJdistance score, assuming Euclidean distance=
a. ess than %33
b. %33J''3
c. ''1J*33
d. "ore than *33
Answer: d
Keywords: Euclidean, center, gravity
66
Table 11.)
2uts5and51olts, Inc. (ishes to find the best location for a plant that (ill satisfy customer demand
in the follo(ing five areas.
Location
x
coordinate
y
coordinate Volume
A # 1 #'
1 ' 3 .3
+ , * 1'
! 2 # 23
E ' % ''
Chapter 11 Location
)'. An operations manager has narro(ed do(n the search for a ne( plant to three locations. Fi0ed and
variable costs follo(.
Location Fixed Cost Variable Cost
A M133,333 M13
1 M1'3,333 M*
+ M233,333 M'
>lot the total cost curves in the chart provided and identify the range over (hich each location
(ould be best. Then use brea45even analysis to calculate e0actly the brea45even 6uantity that
defines each range.
&hich of the follo(ing statements is correct=
a. ocation + is the best one if volumes are 6uite lo(.
b. ocation A becomes the most e0pensive place to produce at volumes in e0cess of 2333.
c. The brea45even 6uantity bet(een A and 1 is less than or e6ual to '33 units.
d. The brea45even 6uantity bet(een + and 1 is more than #333 units.
Answer: b
Keywords: brea4, even, brea45even
67
Chapter 11 Location
)). An operations manager has narro(ed do(n the search for a ne( plant to three locations. Fi0ed and
A M133,333 M13
1 M1'3,333 M*
+ M233,333 M'
defines each range.
a. 1y inspection, it is apparent that at least t(o different sites (ill be the best places to produce at
dramatically different output volumes.
b. ocation A becomes the most e0pensive place to produce at volumes in e0cess of 1'33.
c. The brea45even 6uantity bet(een A and 1 is less than or e6ual to '33 units.
Answer: a
6
Chapter 11 Location
)*. An operations manager has narro(ed do(n the search for a ne( plant to three locations. Fi0ed and
variable costs follo(:
A M133,333 M13
1 M1'3,333 M*
+ M233,333 M'
defines each range.
a. ocation + is the best one if volumes are 6uite lo(.
b. ocation A becomes the most e0pensive place to produce at volumes less than 2333.
c. The brea45even 6uantity bet(een A and 1 is less than or e6ual to 1*33 units.
Answer: c
),. &hich of the follo(ing statements about linear brea45even analysis is incorrect=
a. 2o start5up costs e0ist.
b. 2o economies of scale can be achieved.
c. Fariable costs vary as output changes.
d. Fi0ed costs vary as output changes.
Answer: d
6!
Chapter 11 Location
).. E0cel >roducts is planning a ne( (arehouse to serve the Southeast. ocations A, 1, and + are under
consideration. Fi0ed and variable costs follo(.
(ould be best. Then use brea45even analysis as necessary to calculate e0actly the brea45even
6uantity that defines each range.
a. ocation A is the best one if volumes are 6uite high.
b. ocation 1 is best over all volume levels.
c. The total cost of location A, if the volume is 2'3,333 units, is over M*,333,333.
d. The brea45even 6uantity bet(een A and 1 is more than *',333 units but fe(er than 233,333 units.
Answer: b
7"
Chapter 11 Location
*3. <se the information in Table 11.*. &hat can be said about a plan that ships 233 units from 1 to A, 133
units from 1 to 1, 133 units from 2 to 1, #33 units from 2 to +, and 2'3 units from # to !=
a. It is not feasible in terms of plant capacities.
b. It is not feasible in terms of satisfying (arehouse demands.
c. It is feasible, but not the least5cost allocation pattern.
d. It is the optimal solution.
Answer: b
Keywords: transportation, method
71
Table 11.*
Sagebrush +ompany has four (arehouses DA, 1, +, and !G that re6uire monthly shipments of
2'3, 233, #33, and 233 units per month, respectively. Its three plants D1, 2, and #) have monthly
capacities of #33, %33, and 2'3, respectively. Shipping costs Din MG follo(. A blan4 transportation
method tableau is provided belo(.
Chapter 11 Location
*1. <se the information in Table 11.*. &hich of these statements regarding the problem is correct=
a. Another plant must be added to the tableau because there are more (arehouses than plants.
b. A dummy plant must be added due to production volumes.
c. A dummy (arehouse must be added due to demands.
d. The simple0 method can be used to solve this problem.
Answer: d
Keywords: simple0, transportation, method
*2. <se the information in Table 11.*. &hat is the cost of a plan that ships 1'3 units from 1 to +, 1'3
units from 1 to !, 2'3 units from 2 to A, 1'3 units from 2 to +, 233 units from # to 1, and '3 units
from # to !=
a. ess than M1',333
b. "ore than M1',333 but less than M1),333
c. "ore than M1),333 but less than M1*,333
d. "ore than M1*,333
Answer: a
7#
Table 11.,
The 2eale +ompany has four distribution centers DA, 1, +, and !G that re6uire monthly
shipments of #3,333, 2%,333, #),333, and 2%,333 gallons of diesel fuel per month, respectively.
Three (holesalers D1, 2, and #G are (illing to supply up to #),333, %,,333 and #3,333 gallons,
respectively. Total costs Din MG for both shipping and price follo(. A blan4 transportation
method tableau is provided belo(.
Chapter 11 Location
*#. <se the information in Table 11.,. &hich of the follo(ing statements about this scenario is incorrect=
a. A dummy (arehouse is re6uired to complete the analysis.
b. It costs M2 per gallon to ship bet(een &holesaler # and !istribution +enter !.
c. It costs M2 per gallon to ship one gallon from &holesaler # to !istribution +enter !.
d. It costs M2 per gallon to ship 23,333 gallons from &holesaler # to !istribution +enter !.
Answer: a
Keywords: dummy, transportation, method
*%. <se the information in Table 11.,. &hat can be said about a plan that ships 1,,333 gallons from 1 to
+K 1,,333 gallons from 1 to !K #3,333 gallons from 2 to AK 1,,333 gallons from 2 to +K 2%,333
gallons from # to 1K and #3,333 from # to !=
a. It is not feasible in terms of (holesaler availabilities.
b. It is not feasible in terms of satisfying distribution center demands.
c. It is feasible, and the total monthly cost is less than M22#,333.
d. It is feasible, and the total monthly cost is greater than M22*,333.
Answer: a
*'. <se the information in Table 11.,. &hat can be said about a plan that ships #3,333 gallons from 1 to
AK ),333 gallons from 1 to +K 2%,333 gallons from 2 to 1K 2%,333 gallons from 2 to !K and #3,333
gallons from # to +=
a. It is not feasible in terms of (holesaler availabilities.
c. It is feasible, and the total monthly cost is less than or e6ual to M2)3,333.
d. It is feasible, and the total monthly cost is greater than M2)3,333.
Answer: c
7$
Chapter 11 Location
*). A company ma4es products at four different plants and ships them to four different distribution
centers. The cost of shipping a single unit bet(een each combination of plant and distribution center
is sho(n in the table. The capacity of each plant and demand for each distribution center is also
displayed for your calculating pleasure. &hat is the total cost for the optimal solution=
N O P & Supply
A M) M. M12 M1% '33
1 M. M1 M' M, %'3
+ M) M, M% M' #*'
! M. M1% M1' M, %33
!emand *'3 22' #2' %2'
a. M.,'*'
b. 13,%''
c. M.,,'3
d. M13,*,3
Answer: a
**. A company ma4es products at four different plants and ships them to four different distribution
centers. The cost of shipping a single unit bet(een each combination of plant and distribution center
is sho(n in the table. The capacity of each plant and demand for each distribution center is also
displayed for your calculating pleasure.
N O P & Supply
A M) M. M12 M1% '33
1 M. M1 M' M, %'3
+ M) M, M% M' #*'
! M. M1% M1' M, %33
!emand *'3 22' #2' %2'
The logistics division decides to ship product as shown in the table.
N O P & Supply
A '33 '33
1 22' 22' %'3
+ 2'3 133 2' #*'
! %33 %33
!emand *'3 22' #2' %2'
&hich of the follo(ing moves results in an e6uivalent total cost once the table is rebalanced=
a. Shipping 133 units from + to O
b. Shipping 2' units from 1 to &
c. Shipping 133 units from ! to P
d. Shipping 2'3 units from ! to N
Answer: d
74
Chapter 11 Location
*,. Baving failed to lose money producing Springtime For Bitler in -ermany, "a0 1ialystoc4 and eo
1loom embar4 on logistics management service for (ealthy (ido(s. They design the (orst
distribution system possible for a company that ma4es products at four different plants and ships them
to four different distribution centers. The cost of shipping a single unit bet(een each combination of
plant and distribution center is sho(n in the table. The capacity of each plant and demand for each
distribution center is also displayed for your calculating pleasure. &hat is the total cost for the (orst
solution?
Nero -ene Cen "el Supply
2ate M) M. M12 M1% '33
"att M. M1 M' M, %'3
&ill M) M, M% M' #*'
<ma M. M1% M1' M, %33
!emand *'3 22' #2' %2'
a. M21,#*'
b. 1,,%,'
c. M1.,1'3
d. M1',,23
Answer: c
*.. &hich of the follo(ing statements about dummy locations is correct=
a. $nly a source can be represented as a dummy.
b. $nly a destination can be represented as a dummy.
c. !ummy locations are assigned a dollar cost per unit shipped.
d. !ummy locations are assigned a very high DinfiniteG cost per unit shipped, so no actual product is
assigned to that grid point.
Answer: c
Keywords: dummy, cost
,3. &hich of the follo(ing is 2$T a step in setting up a transportation tableau=
a. +reate a ro( for each plant being considered.
b. /emove the lo(est and highest cost intersections from consideration.
c. +reate a column for each (arehouse being considered.
d. Add a column and a ro( for plant capacities and total demands.
Answer: b
Keywords: transportation, method, tableau
75
Chapter 11 Location
,1. &hich of the follo(ing invalidates any analysis using the transportation method=
a. <ne6ual supply and demand amounts
b. "ore sources than destinations
c. "ore destinations than sources
d. ac4 of a linear increase in shipping costs
Answer: d
,2. The 2elson +ompany has four distribution centers DA, 1, +, and !G that re6uire shipments of 23, #3,
%3, and 13 units per (ee4, respectively. Its three plants D1, 2, and #G have monthly capacities of %3,
#3, and #3, respectively. Shipping costs Din MG follo(.
&hat can be said about a plan that ships %3 units from 1 to +, #3 units from 2 to 1, 23 units from
# to A, and 13 units from # to !=
a. It is not feasible in terms of plant capacities.
c. It is feasible, and the (ee4ly shipping cost is less than M1,)33.
d. It is feasible, and the (ee4ly shipping cost is greater than M2,333.
Answer: c
Difficulty: Bard
76
Chapter 11 Location
,#. A rule of thumb, or guideline, is also 4no(n as aDnG:
a. heuristic.
b. simulation.
c. optimi7ation.
d. model.
Answer: a
Keywords: heuristic, guideline, thumb
,%. A procedure used to determine the best solution is also 4no(n as aDnG:
a. heuristic.
b. simulation.
c. optimi7ation.
d. model.
Answer: c
Keywords: optimi7ation, procedure, best
,'. A modeling techni6ue that reproduces the behavior of a system is 4no(n as aDnG:
a. heuristic.
b. simulation.
c. optimi7ation.
d. model.
Answer: b
Keywords: simulation, modeling, system, behavior
,). &hich one of the follo(ing statements about heuristics is best=
a. 1ecause heuristics are efficient, they do not need the computer.
b. In general, heuristics handle less5realistic vie(s of the problem than optimi7ation methods.
c. Beuristics do not necessarily find the best solution.
d. The transportation method (as one of the first heuristics developed for solving location problems.
Answer: c
Keywords: heuristic, solution
77
Chapter 11 Location
FILL I% THE &LA%'
,*. QQQQQQQQQQQQ is the process of determining a geographic site for a firm?s operations.
Answer: Facility location
Reference: Introduction
Keywords: geographic, site, location
,,. QQQQQQQQQQQQ is a function of (age rates, training re6uirements, attitudes to(ard (or4, (or4er
productivity, and union strength.
Answer: abor climate
,.. QQQQQQQQQQQQ is a strategy by (hich several competing firms cluster in one location to attract more
customers than the total (ho (ould shop at the same stores at scattered locations.
Answer: +ritical mass
Keywords: critical, mass
.3. ADnG QQQQQQQQQQQQ is a system of computer hard(are, soft(are, and data that the firm?s personnel
can use to manipulate, analy7e and present information relevant to a location decision.
Answer: geographical information system D-ISG
Difficulty: Easy
Keywords: geographical, information, system, -IS
.1. QQQQQQQQQQQQ has the advantage of 4eeping people together, reducing construction time and costs,
and avoiding splitting up operations.
Answer: $nsite e0pansion
Keywords: onsite, e0pansion
.2. A preference matri0 is used to incorporate QQQQQQQQQQQQ li4e community attitudes and 6uality of life
into a location analysis.
Answer: 6ualitative factors
Difficulty: Easy
Keywords: 6ualitative, preference, matri0
7
Chapter 11 Location
.#. The ob@ective of the loadJdistance method is to minimi7e the QQQQQQQQQQQQ into and out of the
facility.
Answer: total (eighted loads
Keywords: load, distance
.%. ADnG QQQQQQQQQQQQ is a standard matri0 that is used to solve location problems using the
transportation method.
Answer: tableau
Keywords: tableau, transportation, location
.'. QQQQQQQQQQQQ is a modeling techni6ue that reproduces the behavior of a system.
Answer: Simulation
Keywords: simulation, modeling
.). ADnG QQQQQQQQQQQQ is a solution guideline, or rule of thumb, that finds feasibleRbut not necessarily
the bestRsolution to a problem.
Answer: heuristic
Keywords: heuristic, guide, thumb
SHORT A%S(ERS
.*. ist four of the si0 dominant factors in locating manufacturing facilities, as discussed in the boo4.
Answer: +hoices include favorable labor climateK pro0imity to mar4etsK 6uality of lifeK pro0imity
to supplies and resourcesK pro0imity to parent company facilitiesK and utility, ta0, and real estate
costs.
Keywords: location, factors
.,. Oou have the (orld?s most po(erful geographic information system at your disposal as you ma4e
your location decision. <sing a manufacturer or service business of your choosing, e0plain (hat
databases you (ould mine and ho( you (ould arrive at a decision.
Answer: Ans(ers (ill vary.
Keywords: -IS, geographical, information, systems
7!
Chapter 11 Location
... &hat are the trade5offs among on5site e0pansion, ne( location, and relocation=
Answer: The advantages of building a ne( location or moving are that the firm does not have to
rely on production from a single plant, can hire ne( labor, can moderni7e (ith ne( technology,
and can possibly reduce transportation costs. $n5site e0pansion has the advantage of 4eeping
management together, reducing construction time and costs, and avoiding the split5up of
operations.
Keywords: e0pansion, ne(, location, relocation
133. >ic4 any three methods of ma4ing a single facility location decisionK ran4 them according to the
scope of factors considered, and e0plain your reasoning.
Answer: The methods discussed in the te0t for ma4ing a single facility location decision Dlisted
in order of increasing scopeG are the center of gravity method, the load distance method, brea45
even analysis, and a (eighted score using a preference matri0. 1oth the center of gravity and the
load distance methods consider only transportation costs Dor loadG by factoring the number of
trips Dor volume of material transportedG and the distance bet(een the potential site. The brea45
even method considers both fi0ed and variable costs for a site, transportation being one
component of the variable cost. 1rea45even analysis also considers the cost of site ac6uisition,
utilities, labor, ra( materials, and other factors that might vary among sites under consideration.
The (eighted score method using a preference matri0 considers all factors that brea45even
analysis includes, plus any 6ualitative factors that the decision ma4er deems important. Factors
such as climate, gro(th potential, labor s4ill, attractiveness, and others can be included in the
analysis by assigning a (eight to each factor and a score to each site for each factor.
Keywords: brea45even, load, distance, center, gravity, preference, matri0
131. &hich of the location decision tools is the most ob@ective and can be used by the greatest number of
decision ma4ers to arrive at the same site decision= &hich of the location decision tools (ould result
in the least consistent choice (hen used by different decision ma4ers= E0plain your reasoning.
Answer: Ans(ers (ill vary.
Reference: ocating a Single FacilityLocating a Facility &ithin a 2et(or4 of Facilities
Keywords: brea45even, load, distance, center, gravity, transportation, simulation, -IS, heuristic
132. &hat are the differences bet(een heuristics, simulation, and optimi7ation=
Answer: Beuristics are solution guidelines, or rules of thumb, that find feasible Dbut not
necessarily the bestG solutions to problems. $ptimi7ation is a procedure that is used to determine
the best solution, generally using simplified and less realistic vie(s of a problem. Simulation is a
modeling techni6ue that reproduces the behavior of a systemK it (or4s by trial and error.
!epending on the s4ill of the modeler, it may handle more realistic vie(s of a problem than a
closed5form optimi7ation techni6ue.
Keywords: transportation
"
Chapter 11 Location
13#. &hat is the purpose of the transportation method and (hat assumptions does it re6uire=
Answer: The transportation method is a 6uantitative approach that can help solve multiple
facility location problems. Specifically, it optimi7es Dminimi7esG the cost of shipping products
from t(o or more plants or sources of supply to t(o or more (arehouses or destinations. The
transportation method re6uires that the sum of capacities e6ual the sum of demands. +osts are
also assumed to increase linearly (ith the si7e of the shipmentK that is, the cost is the same per
unit regardless of the si7e of the total shipment.
PRO&LEMS
13%. A manufacturer?s research and development center must e0pand by building a ne( facility. The
search has been narro(ed to five locations, all of (hich are acceptable to management. The
assessment of these sites is being made on the basis of the five sub@ective location factors that follo(.
"anagement has agreed to use a five5point scale DE0cellent E ', and >oor E 1G to 6uantify and
compare their sub@ective opinions about the relative goodness of the sites. The (eight reflects the
importance of each factor in the decision.
Locations
Factor Weigt A ! C D "
abor climate 3.#3 % 2 1 % 2
>ro0imity to mar4ets 3.#3 ' # # % %
;uality of life 3.1' 1 # 2 1 '
>ro0imity to suppliers 3.1' 2 ' # % #
Ta0es 3.13 % % % 1 #
+alculate the (eighted score for each alternative. &hich location (ould you recommend=
Answer:
Locations
Factor Weigt A ! C D "
abor climate 3.#3 % 2 1 % 2
>ro0imity to mar4ets 3.#3 ' # # % %
;uality of life 3.1' 1 # 2 1 '
>ro0imity to suppliers 3.1' 2 ' # % #
Ta0es 3.13 % % % 1 #
&eighted score #.'' #.13 2.#' #.2' #.#3
ocation A is best (ith a score of #.''.
Keywords: (eighted, score, factor
1
Chapter 11 Location
13'. A company desires to locate a ne( facility. 1ased on preliminary analysis, the choice has been
reduced to four locations: A, 1, +, and !. These four locations (ere rated on a scale from 1 D(orstG to
13 DbestG on each of four criteria. Each criterion (as also (eighted to indicate its importance Di.e., the
higher the (eight, the more importantG. The list of ratings and (eights follo(s.
Location
Factor Weigt A ! C D
&ages 3.%3 * ' # '
abor climate 3.#' ) ' . '
ocal regulation 3.1' # % # 2
&eather 3.13 2 , ) .
1ased on (eighted scores, (here should the company locate its ne( facilities=
Answer:
Location
Factor Weigt A ! C D
&ages 3.%3 * ' # '
abor climate 3.#' ) ' . '
ocal regulation 3.1' # % # 2
&eather 3.13 2 , ) .
&eighted score '.'' '.1' '.%3 %..'
ocation A (ould be the best using this method.
Keywords: (eighted, score, factor
#
Chapter 11 Location
13). A veterinarian (ith a -IS plans to locate her clinic roughly in the middle of a large south(estern
farming area. The locations of the ma@or ranches in the area and the number of head of cattle each has
are sho(n in the table.
/anch Bead atitude ongitude
a7y & 2'3 #'.)'* .*.%,3
+ran4y A #*' #'.))% .*.%'%
&andering S 1%3 #'..*' .*.##3
/oc4ing - ')3 #'.)2# .*.'3'
Sleeping 1 %23 #'.)%3 .*.%33
Short B ##3 #'.),3 .*.#'3
Total oad 23*'
&hat is the center of gravity=
Answer:
/anch Bead atitude Bead 0 at ongitude Bead 0 ong
a7y & 2'3 #'.)'* ,.1%.2' .*.%,3 2%#*3
+ran4y A #*' #'.))% 1##*% .*.%'% #)'%'.2'
&andering S 1%3 #'..*' '3#).' .*.##3 1#)2).2
/oc4ing - ')3 #'.)2# 1..%,.,, .*.'3' '%)32.,
Sleeping 1 %23 #'.)%3 1%.),., .*.%33 %3.3,
Short B ##3 #'.),3 11**%.% .*.#'3 #212'.'
Total 23*' *%31).,# 2321**.,
atitude E *%31).,#L23*' E #'.)*1
ongitude E 2321**.,L23*' E .*.%#'
Difficulty: Easy
13*. A company has determined the 8demand points9 and their relative locations as follo(s:
Demand
Points X Coordinate Y Coordinate Load
A 10 11 150
B 21 18 150
C 15 12 200
D 21 15 250
Total Load 750
If a company desires to locate a manufacturing facility at the center of gravity, (hat (ould be the x and y
coordinates of the facility=
Answer:
xS E T13D1'3GU21D1'3GU1'D233GU21D2'3GVL*'3 E 1*.23,
yS E T11D1'3GU1,D1'3GU12D233GU21D2'3GVL*'3 E 1%.33
$
Chapter 11 Location
13,. A company has determined the 8demand points9 and their relative locations as follo(s:
Demand
Points X Coordinate Y Coordinate Load
A 12 15 1000
B 22 9 450
C 16 14 750
D 14 15 550
Total Load 2750
If a company desires to locate a manufacturing facility at the center of gravity, (hat (ould be the x
and y coordinates of the facility=
Answer:
xS E T12D1333GU22D%'3GU1)D*'3GU1%D''3GVL2*'3 E 1'.1#,
yS E T1'D1333G U.D%'3GU1%D*'3GU1'D''3GVL2*'3 E 1#.*'
13.. The operations manager has narro(ed do(n the search for a ne( plant to three locations. Fi0ed and
Fixed Costs Variale Costs
Lo!ation Per "ear Per #nit
A 70$000 25
B 120$000 22
C 250$000 17
defines each range.
a. &hat is the brea45even 6uantity bet(een A and 1=
b. &hat is the brea45even 6uantity bet(een 1 and +=
4
Chapter 11 Location
Answer:
W :
*3, 333 2' 123, 333 22
# '3, 333
1), ))).)
A B
x x
x
x
+ = +
=
=
W :
123, 333 22 2'3, 333 1*
' 1#3, 333
2), 333
B C
x x
x
x
+ = +
=
=
Keywords: brea45even, brea4, even
113. Consider the transportation tableau shown below. What is the minimum cost of transporting
the production from Ada, Bugtussle, and Choctaw to Durant, Edmond, and Foss if costs per
unit are shown at the intersections of each location?
Durant "dmond Foss Ca#acity
Ada ' * # 233
!ugtussle # % % #33
Coctaw , ) , 233
Re$uirements 2'3 #33 1'3
5
Chapter 11 Location
Answer:
The optimal tableau is:
Durant "dmond Foss Ca#acity
Ada '3 1'3 233
!ugtussle 233 133 #33
Coctaw 233 233
Re$uirements 2'3 #33 1'3
X Total Cost Unit Shipping Cost Units Shipped =
'3 M' 233 M# 133 M% 233 M) 1'3 M# M2, .33 Total Cost = + + + + =
111. A national firm has beef @er4y processing facilities in ocations 1, 2, #, and %. They ship to central
distributors Drepresented as A, 1, +, and !G handling four regions of the country. The per5unit
shipping costs bet(een each possible combination of locations are sho(n in the follo(ing table.
A ! C D
% M' M13 M' M%
& M# M% M% M#
' M, M) M, M2
( M2 M# M' M.
The processing facility locations are capable of monthly production Din tonsG as follo(s:
ocation 1: )33
ocation 2: #'3
ocation #: %*'
ocation %: ,'3
The central distributors have firm commitments for the follo(ing 6uantities:
!istributor A: 650
!istributor 1: 725
!istributor +: 400
!istributor !: 500
&hat is the lo(est5cost shipping arrangement that can be made bet(een the plant locations and
distributors and (hat is the annual shipping cost=
6
Chapter 11 Location
Answer:
The optimal tableau is:
Distributor
Facility A B C D Totals
1 175 400 25 600
2 350 350
3 475 475
4 475 375 850
Totals 650 725 400 500 2,275
X Total Cost Unit Shipping Cost Units Shipped =
1*' M' %*' M2 #'3 M% #*' M# %33 M' 2' M% %*' M2 M*, %33 Total Cost = + + + + + + =
7

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Chapter 11 Location

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