Deck 11: Location Planning and Analysis

Question 1

For service firms such as banks and supermarkets, location decisions are critical elements of __________ strategy.

A) marketing
B) pricing
C) promotional
D) efficiency
E) effectiveness

Answer 1

A

Question 2

When making location decisions, nonprofit organizations differ from for-profit ones in seeking a balance between:

A) profits and opportunities.
B) costs and revenues.
C) costs and customer servicE.
D) growth and stability.
E) stability and opportunity.

Answer 2

C

Question 3

In regards to supply chain management and the location decision, a primary challenge is to address _______________ distribution.

A) insourced vs. outsourced
B) strategic vs. tactical
C) local vs. global
D) centralized vs. decentralized
E) anticipatory vs. reactive

Answer 3

D

Question 4

Location decisions are basically one-time decisions usually made by new organizations.

Question 5

The first step in developing location alternatives is identifying important factors.

Question 6

A strategy that emphasizes convenience for the customers would probably select a single very large facility.

Question 7

An example of a regional factor in location planning is the location of our markets (either existing or potential).

Question 8

Web-based, retail businesses should be located near the customer to reduce their long distance phone charges.

Question 9

Labor laws are an important site-related factor.

Question 10

You cannot make a mistake by locating where labor costs are low.

Question 11

Factor rating is limited to quantitative information concerning location decisions.

Question 12

When service firms such as retailers or banks make growth-spurred location decisions, typically these involve:

A) finding new sources of resources to replace exhausted ones.
B) adding new locations rather than expanding existing ones.
C) closing down existing locations and opening new ones elsewhere.
D) expanding existing locations rather than adding new ones.
E) downsizing existing locations and opening new ones elsewhere.

Question 13

For service and retail stores, a prime factor in location analysis is customer access.

Question 14

For service organizations, the dominant factors in location analysis usually are market-related.

Question 15

In general, managing global operations is made easier by __________ and __________.

A) political uncertainty; currency devaluation
B) differentiation strategies; diversified markets
C) low interest rates; price-sensitive customers
D) cost-leadership strategies; labor productivity
E) freer trade; technology

Question 16

The fact that most types of firms are located in every section of the country suggests that in many cases, location decisions are not overly important; one location typically is as good as another.

Question 17

Technology has made communication with global operations as easy as local communication.

Question 18

Advanced communications has aided globalization.

Question 19

Retail businesses generally prefer locations that are not near other retailers, as this reduces their competition.

Question 20

The center of gravity method uses the earth's center to establish starting grid coordinates (i.e., the 0,0,0 point) in three dimensions (x, y and z).

Question 21

Retail businesses often engage in ____________, the tendency to locate in close proximity to one another.

A) centering
B) strategizing
C) clustering
D) localcasting
E) macromarketing

Question 22

The center of gravity method is used to _______ travel time or shipping costs.

A) normalize
B) eliminate
C) average
D) minimize
E) document

Question 23

Locational cost-profit-volume analysis assumes:

A) I, III, and IV only
B) II and III only
C) I, II, and III only
D) II, III, and IV only
E) I, II, III, and IV

Question 24

Which statement best characterizes the objective ofa typical search for location alternatives?

A) Identify the best location choice.
B) Minimize cost consequences.
C) Maximize associated profits.
D) Locate near markets.
E) Identify acceptable locations.

Question 25

An approach to location analysis that can include both qualitative and quantitative considerations is:

A) locational cost-profit-volume.
B) factor rating.
C) the transportation model.
D) net present value.
E) the center-of-gravity method.

Question 26

Location options do not usually include:

A) expansion.
B) a contract.
C) adding new facilities.
D) moving.
E) doing nothing.

Question 27

Some communities offer financial and other incentives to ______ new businesses.

A) tax
B) attract
C) marginalize
D) incorporate
E) zone

Question 28

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows:
What would be the total annual costs for the Alpha Ave. location with 20 persons living there?

A) $5,400
B) $4,000
C) $5,000
D) $7,000
E) $9,000

Question 29

In location planning, the location of raw materials, the location of markets, and labor factors are:

A) regional factors.
B) community factors.
C) site-related factors.
D) national factors.
E) minor considerations.

Question 30

Cultural differences, customer preferences, labor, and resources are factors relating to:

A) regional choices.
B) site selection.
C) zoning.
D) product design.
E) location decisions.

Question 31

When a location evaluation includes both quantitative and qualitative inputs, a technique that can be used is:

A) linear programming.
B) consumer surveys.
C) factor rating.
D) transportation models.
E) center of gravity methods.

Question 32

Which of the following is the last step in the procedure for making location decisions?

A) Determine the evaluation criteria.
B) Identify important factors.
C) Develop location alternatives.
D) Evaluate alternatives and make a selection.
E) Request input regarding alternatives.

Question 33

The method for evaluating location alternatives that uses their total-cost lines is:

A) locational cost-profit-volume analysis.
B) the transportation model.
C) factor rating.
D) geographic information system (GIS) analysis.
E) the center-of-gravity method.

Question 34

Which of the following is a location option that management can consider in location planning?

A) I and II only.
B) I and III only.
C) II and IV only.
D) I, II, and III only.
E) I, II, III, and IV.

Question 35

The method for evaluating location alternatives that incorporates both qualitative and quantitative inputs to establish a composite score for each alternative is:

A) cost-profit-volume analysis.
B) the transportation model.
C) factor rating.
D) geographic information system (GIS) analysis.
E) the center-of-gravity method.

Question 36

The method for evaluating location alternatives that minimizes shipping costs between multiple sending and receiving locations is:

A) locational cost-profit-volume analysis.
B) the transportation model.
C) factor rating.
D) geographic information system (GIS) analysis.
E) the center-of-gravity method.

Question 37

Nearness to raw materials would be most important to a:

A) grocery store.
B) tax preparation service.
C) manufacturing company.
D) post office.
E) hospital.

Question 38

Among the potential disadvantages of having global operations is/are:

A) low labor productivity.
B) less restrictive environmental regulation.
C) lower wage costs.
D) proximity to global markets.
E) favorable liability laws.

Question 39

Software systems known as GIS help in location analysis. The initials GIS stand for:

A) Graphic Interface Systems.
B) Global Integrated Software.
C) Graded Information Systems.
D) Geo Intensive Software.
E) Geographic Information System.

Question 40

A location analysis has been narrowed down to two locations, Akron and Boston. The main factors in the decision will be the supply of raw materials, which has a weight of .50, transportation cost, which has a weight of .40, and labor cost, which has a weight of .10. The scores for raw materials, transportation, and labor are for Akron 60, 80, and 70, respectively; for Boston 70, 50, and 90, respectively. Given this information and a minimum acceptable composite score of 75, we can say that the manager should:

A) be indifferent between these locations.
B) choose Akron.
C) choose Boston.
D) reject both locations.
E) build a plant in both cities.

Question 41

A hardware distributor has regional warehouses at the locations shown below. The company wants to locate a new central distribution center to serve this warehouse network.
If weekly shipments to each warehouse will be approximately equal, what is the optimal location for the distribution center?

A) 5, 5
B) 5, 4
C) 4, 5
D) 5, 6
E) 6, 5

Question 42

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below:
What is the composite score for location A?

A) 76
B) 75
C) 78
D) 74
E) 76.33

Question 43

A clothing manufacturer produces clothing in five locations in the United States. In a move to vertical integration, the company is planning a new fabric production plant that will supply fabric to all five clothing plants. The clothing plants have been located on a coordinate system as follows: Shipments of fabric to each plant vary per week as follows: plant A, 200 units; plant B, 400 units; plant C, 300 units; plant D, 300 units; and plant E, 200 units. What is the optimal location for the fabric plant?

A) 6.2, 3.0
B) 6.0, 4.0
C) 6.5, 5.3
D) 5.6, 4.4
E) 5.0, 3.0

Question 44

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: If it is estimated that 30 persons will be living in this new chapter house, what would be the Skulls' annual cost savings by selecting the less costly location, rather than the more costly?

A) $0
B) $1,500
C) $200
D) $150
E) $350

Question 45

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below:
What is the composite score for location C?

A) 76
B) 75
C) 78
D) 74
E) 76.33

Question 46

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: If it is estimated that 30 persons will be living in this new chapter house, which location should the Skulls select?

A) Alpha AvE.
B) Beta Blvd.
C) either Alpha Ave. or Beta Blvd.
D) reject both Alpha Ave. and Beta Blvd.
E) become a virtual organization.

Question 47

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: At what annual output would the company be indifferent between the two locations?

A) 60,000 units
B) 15,000 units
C) 10,000 units
D) 20,000 units
E) 4,000 units

Question 48

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below:
If the selection criterion is to be the greatest composite score, management should choose:

A) location A.
B) location B.
C) location C.
D) either location B or location C.
E) to reject all locations.

Question 49

Which of the following circumstances would be least likely to lead to a need for a new location?

A) shifting of markets
B) depletion of basic inputs
C) growth in demand that is leading to greater utilization of existing capacity
D) the need to expand into new markets
E) the opportunity to take advantage of globalization trends

Question 50

Which of the following is least important as a consideration for a firm at the beginning of a supply chain?

A) access to end consumers
B) access to resources
C) proximity to customers
D) access to transportation infrastructure
E) access to productive labor

Question 51

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: What would be total annual costs for either location at the point of indifference?

A) $13,000
B) $13,350
C) $9,000
D) $17,000
E) $19,200

Question 52

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below:
If the decision rule is to select the location with the greatest composite score exceeding 80, management should choose:

A) location A.
B) location B.
C) location C.
D) either location B or location C.
E) to reject all locations.

Question 53

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: What would the total annual costs be for the Phoenix location with an annual output of 10,000 units?

A) $280,000
B) $140,000
C) $220,000
D) $300,000
E) $156,000

Question 54

Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10. What would its total cost be at a monthly volume of 250 units?

A) $105,200
B) $102,500
C) $100,250
D) $100,520
E) $105,500

Question 55

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows:
What would be the total annual costs at the point of indifference?

A) $300,000
B) $240,000
C) $380,000
D) $220,000
E) $760,000

Question 56

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below:
What is the composite score for location B?

A) 76
B) 75
C) 78
D) 74
E) 76.33

Question 57

A hardware distributor has regional warehouses at the locations shown below. The company wants to locate a new central distribution center to serve this warehouse network. Weekly shipments to each warehouse will be: WH1, 100; WH2, 150; WH3, 120; WH4, 150; and WH5, 120. What is the optimal location of the distribution center?

A) 5.1, 4.2
B) 5.2, 4.0
C) 5.1, 5.1
D) 4.2, 5.1
E) 4.9, 5.2

Question 58

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: If annual demand is estimated to be 20,000 units, which location should the company select?

A) Atlanta
B) Phoenix
C) either Atlanta or Phoenix
D) reject both Atlanta and Phoenix
E) build at both locations

Question 59

A clothing manufacturer produces clothing in five locations in the United States. In a move to vertical integration, the company is planning a new fabric production plant that will supply fabric to all five clothing plants. The clothing plants have been located on a coordinate system as follows:
If the amount of fabric shipped to each plant is equal, what is the optimal location for the fabric plant?

A) 5, 5
B) 6, 4
C) 4, 6
D) 6, 2
E) 5, 4

Question 60

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows:
If the annual demand will be 20,000 units, what would be the cost advantage of the better location?

A) $20,000
B) $460,000
C) $480,000
D) $80,000
E) $60,000

Question 61

Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10. What would its total cost be at a monthly volume of 550 units?

A) $105,200
B) $102,500
C) $100,250
D) $100,520
E) $105,500

Question 62

Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10. Location choice J has monthly fixed costs of $150,000 and per-unit variable costs of $9. At what volume would these locations have equal total costs?

A) 30,000 units
B) 25,000 units
C) 40,000 units
D) 50,000 units
E) 60,000 units