Service Management: Operations, Strategy, Information Technology 8th Edition by James Fitzsimmons,Mona Fitzsimmons,Sanjeev Bordoloi

Exercise 11

locally owned department store samples two customers in each of five geographic areas to estimate consumer spending in its home appliances department. It is estimated that these customers are a good sample of the 10,000 customers the store serves. The number of customers in each area is C 1 = 1,500, C 2 = 2,500, C 3 = 1,000, C 4 = 3,000, and C 5 = 2,000. It is found that the two consumers have the following budgets in dollars for home appliances per year: B 11 = 100, B 12 = 150; B 21 = 75, B 22 = 100; B 31 = 125, B 32 = 125; B 41= 100, B 42 = 120; and B 51 = 120, B 52 = 125.
a. Using the Huff retail location model, estimate annual home appliance sales for the store.
b. Bull's-Eye, a chain department store, opens a branch in a shopping complex nearby. The Bull's-Eye branch is three times larger than the locally owned store. The travel times in minutes from the five areas to the two stores ( j = 1 for the locally owned store, j = 2 for Bull's-Eye) are T 11 = 20, T 12 = 15; T 21 = 35, T 22 = 20; T 31 = 30, T 32 = 25; T 41 = 20, T 42 = 25; and T 51 = 25, T 52 = 25. Use the Huff retail location model to estimate the annual consumer expenditures in the home appliance section of each store assuming that