Deck 14: Location, Logistics, and Distribution

Question 1

Facility location analysis considers the competitive imperative of a favorable business climate as indicated by the presence of other companies in the same industry.

Answer 1

True
Explanation: Favorable business climate can include the presence of companies in the same industry.

Question 2

Facility location analysis considers the competitive imperative to be close to customers as to timeliness of deliveries.

Answer 2

True
Explanation: Japan's NTN Driveshafts Inc.built a major plant in Columbus,Indiana,to be closer to major automobile manufacturing plants in the United States whose buyers want their goods delivered.

Question 3

A favorable business climate in facility location decision-making might include local government providing basic skill training for prospective members of the workforce.

Answer 3

True
Explanation: Pro-business government legislation and local government intervention to facilitate businesses locating in an area via subsidies,tax abatements,and other support are also factors.

Question 4

The objective of facility location analysis is to select the site with the lowest total cost.

Question 5

Issues of product mix and capacity are strongly interconnected to the facility location decision.

Question 6

Because the world is becoming more highly interconnected,the proximity of an important supplier's plants is not crucial in supporting lean production methods.

Question 7

A favorable business climate in facility location decision-making might include local government intervention to facilitate businesses locating in an area via subsidies.

Question 8

A free trade zone is typically a closed facility into which foreign goods can be brought without being subject to the usual customs requirements.

Question 9

In facility location decision-making the factor-rating system is one of the least used general location techniques.

Question 10

The local government's willingness to invest in upgrading infrastructure to the levels required by a company is an important issue in a company's decision of where to locate a new facility.

Question 11

A free trade zone operates under different rules and laws than a foreign trade zone.

Question 12

Quality of life in a host community is not a major factor in making the facility location decision.

Question 13

Facility location analysis considers the competitive imperative of lowest total cost.

Question 14

Facility location analysis considers the competitive imperative of locating near the appropriate labor pool to take advantage of high technical skills.

Question 15

Facility location analysis considers the competitive imperative of locating near the appropriate labor pool to take advantage of low wage costs and/or skill levels.

Question 16

An example of a positive business climate that might influence a facility location decision is increasing governmental costs and increasing property taxes.

Question 17

In facility location decision-making the educational and skill levels of the labor pool must match the company's needs.

Question 18

In facility location decision-making matching the educational and skill levels of the labor pool to a company's needs is even more important than the labor pool's willingness and ability to learn.

Question 19

Governmental barriers to enter and locate in many countries are increasing through restrictive protectionist legislation.

Question 20

A favorable business climate in facility location decision-making might include government legislation of tax abatements.

Question 21

Which of the following is a criterion that influences manufacturing plant or warehouse facility location decisions?

A) Proximity to customers
B) Corporate policy
C) Competitor's locations
D) Competitive advantage
E) Host community politics

Question 22

Which of the following is not a criterion that influences manufacturing plant or warehouse facility location decisions?

A) Proximity to customers
B) Historical cost
C) Infrastructure of a country
D) Quality of labor
E) Business climate

Question 23

In a hub-and-spoke system each warehouse in the system acts as a spoke.

Question 24

An important issue in facility location analysis is business climate.An unfavorable business climate could be indicated by which of the following?

A) Similar-sized businesses nearby
B) The willingness of local politicians to provide favorable treatment for a consideration
C) The presence of other foreign companies in the case of international locations
D) The local presence of companies in the same industry
E) An established educational institution nearby

Question 25

Which of the following is not a criterion that influences manufacturing plant or warehouse facility location decisions?

A) Government barriers
B) Trading blocs
C) Environmental regulation
D) Immigration rules
E) Local labor costs

Question 26

In facility location decision-making the factor-rating system is based on linear programming.

Question 27

One of the objectives of facility location analysis is to select a site with the lowest total cost.Which of the following are hidden costs that should be included in the analysis?

A) Becoming less responsive to the customer
B) Supplier costs
C) Taxes
D) Construction costs
E) Product life cycle costs

Question 28

Services typically have multiple site locations to maintain close contact with customers.

Question 29

One of the objectives of facility location analysis is to select a site with the lowest total cost.Which of the following costs should be excluded from the analysis?

A) Historical costs
B) Inbound distribution costs
C) Land
D) Construction
E) Regional costs

Question 30

Cross-docking is an approach used in consolidation warehouses,where large shipments are broken down into small shipments for local delivery in an area.

Question 31

A third-party logistics company is a firm that manages all or part of another company's product delivery operations.

Question 32

Cross docking is a practice used in the international shipping industry that facilitates port utilization.

Question 33

One of the objectives in facility location analysis is to select a site with the lowest total cost.Which of the following costs are hidden costs that should be included in the analysis?

A) Infrastructure costs
B) Movement of preproduction material between locations
C) Taxes
D) Construction costs
E) Bribery costs

Question 34

DHL and United Parcel Service are transportation companies which are prohibited from functioning as a third-party logistics company the way Federal Express does.

Question 35

A major problem in a plant location decision based on the factor-rating system is that simple point-rating schemes do not account for the wide variance of costs that may occur within each factor used in the analysis.

Question 36

Facility location decisions are made using analytical techniques that are able to weigh a large number of different variables equally.

Question 37

The Association for Operations Management defines logistics as "the art and science of obtaining,producing,and distributing material and product in the proper place and in proper quantities."

Question 38

One of the objectives of facility location analysis is to select a site with the lowest total cost.Which of the following costs should not be included in the analysis?

A) Outbound distribution costs
B) Incidental costs
C) Energy costs
D) Hidden costs
E) Taxes

Question 39

Hub and spoke systems combine the idea of consolidation and that of cross docking.

Question 40

Which of the following is a not criterion that influences manufacturing plant or warehouse facility location decisions?

A) Suppliers
B) Free trade zones
C) Political risk
D) Gross national product
E) Tariffs and customs duties

Question 41

Plant A is located at the (X,Y)coordinates of (200,500)and has a volume of shipping of 400 units a day.Plant B is located at the (X,Y)coordinates of (300,100)and has a volume of shipping of 300 units a day.Using the centroid method,which of the following is the X coordinate for the new plant location?

A) About 208
B) About 227
C) About 243
D) About 389
E) X coordinate cannot be computed from the data given

Question 42

The text describes 14 "Issues in facility location." Name as many of these as you can.
1)________________________
2)________________________
3)________________________
4)________________________
5)________________________
6)________________________
7)________________________
8)________________________
9)________________________
10)________________________
11)________________________
12)________________________
13)________________________
14)________________________

Question 43

An example of a trading bloc is which of the following?

A) Central American Free Trade Agreement countries
B) Free trade zones
C) ISO-9000 companies
D) American Production and Inventory Control Society
E) Wal-Mart and its' suppliers

Question 44

What is the name for a group of countries that have agreed on a set of special arrangements governing the buying and selling of goods between member countries? ________________________

Question 45

Which of the following is not an infrastructure criteria used in facility location analysis?

A) Adequate school system
B) Adequate health care
C) Adequate transportation
D) Adequate low cost labor
E) Adequate public utility systems

Question 46

As a facility location consultant,would you advise a client wanting to locate a retail service facility differently than you would advise a client wanting to locate an on-line stock trading operation? Explain.

Question 47

What is a closed area or compound into which foreign goods can be brought without being subject to the normal customs requirements? ____________________

Question 48

A company wants to determine where they should locate a new warehouse.They have two existing production plants and will have a volume of shipping of 150 units a day.Using the centroid method,which of the following are the X and Y coordinates for the new plant location?

A) (81,117)
B) (88,138)
C) (117,102)
D) (76,123)
E) X and Y coordinates cannot be computed from the data given

Question 49

Three distribution centers,A,B,and C,are located at the following (X,Y)coordinates: A, (20,130);B, (180,0);and C, (200,200).A factory is to be constructed to distribute a new product through these warehouses.The expected annual volumes expected to be shipped through the three warehouses is forecast to be 20 million units through A,100 million through B and 50 million through C.Using the centroid method,approximately what should the coordinates of the new factory be? _________________

Question 50

Compare and contrast the factor-rating system and the transportation method of linear programming as used in facility location decisions.

Question 51

In which of the following situations should we not use the transportation method of linear programming?

A) To find a new site location for a plant
B) To minimize costs of shipping "n" units to "m" destinations
C) To maximize profits of shipping "n" units to "m" destinations
D) To determine which corner of a street intersection to locate a retail service facility
E) To locate a finished goods distribution warehouse

Question 52

How many free trade zones are there in the United States?

A) Less than 50
B) Less than 100
C) About 260
D) More than 412
E) About 310

Question 53

Very few products are moved without at least part of their journey being by which mode of transportation?

A) Highway
B) Rail
C) Water
D) Pipeline
E) Air

Question 54

Which of the following is a plant location methodology good for locating a single facility within a set of existing facilities based in distances and volumes of goods shipped?

A) Factor-rating systems
B) Centroid method
C) Decision trees
D) Linear programming
E) Regression analysis

Question 55

What are the two "hidden costs" that are often overlooked in determining the total cost of a facility location decision?
(1)__________________________________
(2)__________________________________

Question 56

Name four methods of quantitative analysis that are useful in informing the facility location decision.
1)____________________
2)____________________
3)____________________
4)____________________

Question 57

Plant A is located at the (X,Y)coordinates of (100,200)and has a volume of shipping of 500 units a day.Plant B is located at the (X,Y)coordinates of (150,400)and has a volume of shipping of 200 units a day.Using the centroid method,which of the following is the X coordinate for the new plant location?

A) About 100
B) About 114
C) About 130
D) About 150
E) X coordinate cannot be computed from the data given

Question 58

What transportation mode has very high initial investment costs but gives a very low cost per mile for products that are highly specialized and require no packaging?

A) Highway
B) Rail
C) Water
D) Pipeline
E) Air

Question 59

The centroid method for plant location uses which of the following data?

A) Volume of goods to be shipped between existing points
B) Inbound transportation costs
C) Transport times between facilities
D) Correlation matrix of existing facilities
E) Probabilities and payoffs

Question 60

Name the five of the six transportation modes discussed in the textbook.
1)____________________
2)____________________
3)____________________
4)____________________
5)____________________

Question 61

What weight should be given to environmental pollution control regulations that differ from location to location or from country to country in making facility location decisions?