Deck 12: Finding the Right Location

Question 1

Your university's location can be described in absolute or relative terms.

Answer 1

True

Question 2

A location can only be described by its demographic attributes such as population and age groups.

Answer 2

False

Question 3

Location decisions are only important for manufacturing facilities.

Answer 3

False

Question 4

Manufacturers with high distribution costs may want to locate close to their customers.

Question 5

Service providers do not have to be in close proximity to their customers.

Question 6

Location decisions should be made on the basis of labor costs and taxes only.

Question 7

Manufacturing location decisions are primarily based on costs, whereas service location decisions are primarily based on revenue.

Question 8

Services and manufacturing location decisions only differ in terms of frequency, size of investment, and exit costs.

Question 9

Formulating location criteria and objectives and then evaluating the short-listed sites is the best process for location decision making.

Question 10

The factor rating method is the best method for evaluating manufacturing locations.

Question 11

The factor rating method is the lowest composite score of all the location choices.

Question 12

Statistical methods such as regression can be used to refine location decisions.

Question 13

GIS is a mapping tool from Google that shows the best locations to use.

Question 14

The center of gravity method balances distance, market size, and logistics costs to find the approximate best location that minimizes the total incremental cost of serving several markets from a distribution point.

Question 15

The center of gravity method finds the best location of serving several markets from a distribution point by finding the center of the map.

Question 16

Starbucks might choose new café locations largely based on customer feedback, not sophisticated models and site selection technology.

Question 17

Mathematical simulation often drives the location decision in the call center industry.

Question 18

The location decisions of manufacturing firms often use break-even analysis, mathematical models, and simulation.

Question 19

The goal of location decisions for manufacturing firms is to minimize risks.

Question 20

Break-even analysis cannot be used for service location decisions because costs are hard to measure.

Question 21

Political considerations do not affect site selection decisions.

Question 22

A rigorous scenario analysis of foreign exchange rates, labor costs, infrastructural promises, and political conditions is required in foreign location choices.

Question 23

Co-location decisions by retailing firms are done because of revenue benefits.

Question 24

Co-location decisions by manufacturing firms are done for reasons of time, quality, inventory, communication, and ease of management.

Question 25

Clustering is a popular location strategy seen with 'urge' purchase businesses such as Au Bon Pain, Starbucks, and Dunkin' Donuts.

Question 26

Clustering is the best location strategy for service providers only.

Question 27

Clustering in the manufacturing sector is done to reduce transportation costs.

Question 28

Pop-ups are permanent retail locations that take advantage of low rents.

Question 29

Pop-ups are temporary retail locations that help younger businesses attain market visibility.

Question 30

Locating a business online is always more profitable than a brick and mortar store because of lower overhead costs.

Question 31

Advantages of locating a business online include the ability to display thousands of products and access to a global market.

Question 32

Ethical considerations should never be a factor when considering the location of manufacturing facilities.

Question 33

Firms competing on low costs should always locate in countries that have the cheapest labor.

Question 34

A location can be described in terms of

A) its absolute description
B) its relative description
C) its physical and demographic attributes
D) all of the above

Question 35

Which of the following statements regarding location is true?

A) Location of service facilities should be close to the customers.
B) Locating a manufacturing plant close to customers is important.
C) Cost is not an important factor in location decisions.
D) Firms should always locate where the cheapest labor is available.

Question 36

Some of the important factors for business location decision making include all of the following except

A) the frequency of the location decision
B) the size of the investment
C) the incentives offered by the local municipality
D) the location of the back office

Question 37

The location decision-making process includes all of the following except

A) team formation
B) criteria selection
C) building design
D) evaluation

Question 38

Which of the following statements regarding locating demand sensitive businesses is false?

A) Statistical methods such as linear regression are used to refine the choice of locations.
B) The location should be chosen based on demand.
C) GIS methods require the use of demographic information and the most current map information.
D) The factor rating method is one of the simplest methods to use.

Question 39

Which of the following statements regarding the center of gravity method is false?

A) The volume used is the demand at each location.
B) The result could suggest a location in the middle of a body of water or on top of a building.
C) The objective is to minimize the travel distance to any location.
D) You only need the relative locations of the demand points and not the actual locations.

Question 40

Break-even locational analysis is used only when

A) Cost is the only factor.
B) Profit is the only factor.
C) Both cost and profit are factors.
D) Break-even analysis is not used in any of these situations.

Question 41

All of the following decision-making tools can be used to locate services except

A) center of gravity method
B) factor rating method
C) break-even analysis
D) mathematical modelling and simulation

Question 42

In addition to quantitative location decision making, which of the following behavioral considerations can be used?

A) location perception
B) cultural issues
C) spiritual issues
D) all of the above

Question 43

Reasons for a poor choice of location can include all of the following except

A) political factors
B) rising exchange rates
C) tax incentives
D) follow-the-crowd mentality

Question 44

Recent trends in location analysis include

A) clustering
B) outsourcing
C) cooperatives
D) downsizing

Question 45

Instead of comparing the total cost of Kim's proposed Midtown nail salon to her proposed Uptown nail salon, which of the following methods should be used to make a better comparison?

A) break-even analysis
B) center of gravity method
C) fixed costs
D) variable costs

Question 46

Pharmaceutical companies tend to locate near areas containing universities or its graduates because of

A) cheap housing for the graduates
B) tax incentives offered by the universities
C) availability of a highly skilled labor pool
D) favorable foreign exchange rates

Question 47

Locating globally is the result of all of the following except

A) favorable foreign exchange rates
B) better infrastructure
C) cheaper labor overseas
D) cheaper raw materials

Question 48

A manufacturing firm finds a location using the center of gravity method but rejects that location because they are unable to efficiently transport the finished goods to market. The firm's action illustrates the link between __________ and location.

A) proximity
B) clustering
C) infrastructure
D) globalization

Question 49

In choosing a country for a facility location, which of the following is usually not one of the major considerations?

A) zoning regulations
B) availability of labor and labor productivity
C) exchange rates
D) location of markets

Question 50

Operations managers will need to consider ethical and social responsibility issues when location decisions involve

A) corruption
B) child labor issues
C) spiritual or cultural issues
D) all of the above

Question 51

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

A) Service organizations find that proximity to market is the most critical success factor.
B) Clustering among financial firms occurs because they need to be near their highly skilled labor supply.
C) Perishability of raw materials is a good reason for manufacturers to locate near the customer and not their supplier.
D) Manufacturers want to be near customers when their product is bulky, heavy, or fragile.

Question 52

Which of the following worker characteristics would likely be least important for Kim's nail salon to open up locations in different cities?

A) Workers need to speak English and be highly educated.
B) Workers need to have some knowledge of local popular culture.
C) Worker must be willing to accept low wages.
D) Workers must be young.

Question 53

Infrastructure, tax regulations, and the quality of labor force are likely to be considered in which of the following location decision methods?

A) center of gravity method
B) factor rating method
C) locational break-even analysis
D) transportation method

Question 54

Which location analysis model best accounts for intangible costs related to a location decision?

A) the transportation method
B) factor rating analysis
C) locational break-even analysis
D) center of gravity method

Question 55

Kim is considering two different locations for a new nail salon. She hires Jenny from MGMT 3121 as her operations manager. Jenny has identified the four factors listed in the following table as the basis for evaluation, and she has assigned weights as shown on the left. She has rated each location on each factor, on a 100-point scale, as shown on the right.
What is the score for the 34th St. and 3rd Ave. location?
$$\begin{array} { | c | c | c | c | } \hline \text { Factor Description } & \text { Weight } & \begin{array} { r } \text { 23rd St. \& } \\\text { Lex. } \\\text { Ave. }\end{array} & \begin{array} { r } \text { 34th St. \& 3rd } \\\text { Ave. }\end{array} \\\hline \text { Average community income } & .20 & 30 & 20 \\\hline \text { Nearby restaurants } & .15 & 30 & 40 \\\hline \text { Availability of pub lic } \\\text { transportation } & .25 & 20 & 10 \\\hline \text { Labor cost } & .40 & 20 & 30 \\\hline\end{array}$$

A) 25.40
B) 23.50
C) 24.50
D) 100.00

Question 56

What is the score for the 23rd St. and Lexington. Ave. location?

A) 24.50
B) 23.50
C) 25.40
D) 100.00

Question 57

A manufacturing facility is considering two location alternatives, X and Y. At location X, fixed costs would be $5,000,000 per year and variable costs would be $0.30 per unit. At location Y, fixed costs would be $4,600,000 per year and variable costs would be $0.40 per unit. If annual demand is expected to be 10 million units, which location should be chosen?

A) Plant X, because it is cheaper than Plant Y for all volumes.
B) Plant Y, because it is cheaper than Plant X for all volumes over 4,000,000 units.
C) Plant X, because it is cheaper than Plant Y for all volumes over 4,000,000 units.
D) Plant Y, because it has the lower variable cost per unit.

Question 58

The center of gravity method does not account for the

A) combination of volume and delivery cost
B) distance to markets
C) volume of goods shipped to the markets
D) value of the goods shipped

Question 59

Kim needs to decide which product distribution center to use to supply her four nail salons. The four locations are at coordinates shown in the following table. The volume of products required from by each store is also provided. What is the center of gravity of the distribution center relative to the salons? $$\begin{array} { | l | c | c | c | } \hline \text { Location } & \text { X-coordinate } & \text { Y-coordinate } & \text { Volume } \\\hline \text { Uptown } & 30 & 70 & 200 \\\hline \text { Midtown } & 40 & 50 & 350 \\\hline \text { Lower East Side } & 50 & 30 & 150 \\\hline \text { Lower West Side } & 10 & 20 & 100 \\\hline\end{array}$$

A) X = 35.625; Y = 47.50
B) X = 28.50; Y = 38.00
C) X = 28,500; Y = 38,000
D) X = 47.50; Y = 35.625

Question 60

NYC Sanitation wants to build a centrally located waste processing facility to serve the five boroughs' current recycling locations. The five locations have the properties listed in the following table. What is the approximate center of gravity of these five locations? $$\begin{array} { | c | c | c | c | } \hline \text { Location } & \text { X-coordinate } & \text { Y-coordinate } & \text { Tonnage } \\\hline \text { Brooklyn } & 5 & 5 & 50 \\\hline \text { Bronx } & 6 & 9 & 50 \\\hline \text { Manhattan } & 4 & 7 & 45 \\\hline \text { Queens } & 8 & 5 & 35 \\\hline \text { Staten Island } & 2 & 2 & 20 \\\hline\end{array}$$

A) 1,050, 1,230
B) 25, 28
C) 5.25, 6.15
D) 5.00, 5.60

Question 61

Foot traffic counts and local purchasing power are associated with

A) the factor rating method
B) a retail or professional service location decision
C) the regression method
D) all of the above

Question 62

Which of the following statements regarding Mercedes Benz is true?

A) They chose to locate their manufacturing facilities according to the cheapest labor available.
B) They chose to locate their manufacturing facilities according to the cheapest raw materials available.
C) They chose to locate their manufacturing facilities to fit their brand image.
D) Their choice of manufacturing facilities was based on environmental concerns.

Question 63

A manufacturing organization may typically employ which of the following location analysis techniques?

A) trial and error method
B) linear regression
C) break-even analysis
D) demographic analysis

Question 64

Geographic information systems can assist the location decision by doing all of the following except

A) combining geography with demographic analysis
B) identifying customer segments
C) identifying key success factors
D) providing center of gravity analysis

Question 65

Location is important for manufacturers for __________ efficiencies and for service firms for __________ flows.

Question 66

__________ and __________ are the first stages in the location decision process.

Question 67

__________ may not be the primary factor for location decision making if the firm's operations strategy is based on innovation and R&D investments.

Question 68

Political risk, unions, and exchange rates are among the __________ that affect which country will be selected as a location.

Question 69

The __________ and the __________ methods are two of the most commonly employed methods for service facility location.

Question 70

When cost is a key factor, __________ evaluates the total cost associated with alternative location sites.

Question 71

__________ occurs when competing companies locate near each other because of access to the same talent or natural resources.

Question 72

In addition to costs, __________ should also play an important role in location decision making.

Question 73

__________ are databases combining geographical data with demographic and business data.

Question 74

What is the primary objective of a firm's location strategy? How is this objective carried out by manufacturing, and how does that differ for service firms?

Question 75

Walmart is very famous in an industry where they are one of the lowest cost providers. How do you think Walmart selects the site for their next store?

Question 76

Location decisions are frequently made based on tangible criteria such as revenue and costs. However, other intangible criteria often influence locations decisions. Identify some of these criteria and discuss them.

Question 77

Is the role of labor productivity more important than low wages in location decisions? Explain and use an example.

Question 78

Center of gravity locational analysis is best for what kind of firms? Explain your answer with examples.

Question 79

What are the differences and similarities (if any) between service location strategies and manufacturing location strategies?

Question 80

Your university is considering three alternatives for its new parking lot. Using the following factor ratings, determine which location alternative should be chosen.