Chapter 08 Location Planning and Analysis Part 4

Chapter 08 - Location Planning and Analysis 60. For the preferred site for 20,000 units per year, what would be your total costs? $280,000 Feedback: Multiply the variable cost by the volume, then add this product to the fixed cost. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 61. For the preferred site for 20,000 units per year, what would be your cost savings compared to each of the other two sites? $20,000 vs. A; $10,000 vs. C Feedback: Compare total costs for B to the total costs for A and C. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives Multiple Choice Questions 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: 8-50 Chapter 08 - Location Planning and Analysis 62. 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 Divide the difference in fixed cost by the difference in variable cost. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 63. 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 Use the total cost formula. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-51 Chapter 08 - Location Planning and Analysis 64. 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 Use the total cost formula. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 65. 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 Compare the options based on total cost. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-52 Chapter 08 - Location Planning and Analysis 66. 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 Compare total costs at this volume. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below: 67. What is the composite score for location A? A. 76 B. 75 C. 78 D. 74 E. 76.33 Multiply A's scores by the appropriate weighting factors. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-53 Chapter 08 - Location Planning and Analysis 68. What is the composite score for location B? A. 76 B. 75 C. 78 D. 74 E. 76.33 Multiply B's scores by the appropriate weighting factors. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 69. What is the composite score for location C? A. 76 B. 75 C. 78 D. 74 E. 76.33 Multiply C's scores by the appropriate weighting factors. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-54 Chapter 08 - Location Planning and Analysis 70. If the selection criteria is to be the greatest composite score, management should choose: A. location A B. location B C. location C D. either B or C E. to reject all locations B's composite score is highest. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 71. If the decisions 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 B or C E. to reject all locations None of the options has the minimum composite score. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-55 Chapter 08 - Location Planning and Analysis A clothing manufacturer produces clothing in five locations in the U. S. 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: 72. 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 Average the values for x and y. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-56 Chapter 08 - Location Planning and Analysis 73. 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 Calculate weighted average values for x and y. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 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. 74. 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 Average the values for x and y. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-57 Chapter 08 - Location Planning and Analysis 75. 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 Calculate weighted average values for x and y. AACSB: Analytic Bloom's: Apply Difficulty: Medium Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 76. 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. Greater utilization does not necessarily mean that new capacity is needed. AACSB: Reflective Thinking Bloom's: Remember Difficulty: Easy Learning Objective: 08-01 Identify some of the main reasons organizations need to make location decisions. Topic Area: The Need for Location Decisions 8-58 Chapter 08 - Location Planning and Analysis 77. 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 Firms at the beginning of the supply chain are far-removed from final consumers. AACSB: Reflective Thinking Bloom's: Remember Difficulty: Easy Learning Objective: 08-02 Explain why location decisions are important. Topic Area: The Nature of Location Decisions 78. 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 Multiply the volume by the variable cost, then add to fixed cost. AACSB: Analytic Bloom's: Apply Difficulty: Easy Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-59 Chapter 08 - Location Planning and Analysis 79. 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 Multiply the volume by the variable cost, then add to fixed cost. AACSB: Analytic Bloom's: Apply Difficulty: Easy Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 80. 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 Divide the difference in fixed costs by the difference in variable costs. AACSB: Analytic Bloom's: Apply Difficulty: Easy Learning Objective: 08-06 Use the techniques presented to solve typical problems. Topic Area: Evaluating Location Alternatives 8-60