A company needs to locate three departments (X, Y, and Z) in the three areas (I, II, and III) of a new facility. They want to minimize interdepartmental transportation costs, which are expected to be $.50 per load per meter moved. An analyst has prepared the following distances and flow matrices:
How many least costly process layouts are there?
A) 1
B) 2
C) 3
D) 4
E) 5

Question

A company needs to locate three departments (X, Y, and Z) in the three areas (I, II, and III) of a new facility. They want to minimize interdepartmental transportation costs, which are expected to be $.50 per load per meter moved. An analyst has prepared the following distances and flow matrices: 
How many least costly process layouts are there?
A) 1 
B) 2 
C) 3 
D) 4 
E) 5

Quizplus · Accepted Answer

There are two least costly process layouts:

Layout 1: 
- X in Area III 
- Y in Area II 
- Z in Area I 
Total cost = (23+17+14)($0.50) = $27

Layout 2: 
- X in Area I 
- Y in Area II 
- Z in Area III 
Total cost = (14+9+20)($0.50) = $21.5

Layout 2 is the best choice as it has the lowest total cost.

A Company Needs to Locate Three Departments (X, Y, and Z)