Chapter 11 Location

Chapter
11 / Location

TRUE/FALSE

  1. If the customer must be physically present at the process, location is an important issue.

Answer: True

Reference: Introduction

Difficulty: Easy

Keywords: location, physical, presence, customer

  1. Secondary location factors are derived from competitive priorities.

Answer: False

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: secondary, location, factor

  1. One dominant factor in locating manufacturing facilities is a favorable labor climate.

Answer: True

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: labor, climate, factor

  1. When outbound transportation costs are a dominant factor, manufacturing facilities should be located close to suppliers and resources.

Answer: False

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: transportation, cost, outbound

  1. Traffic flows are one dominant factor in manufacturing location.

Answer: False

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: traffic, flow, location

  1. Service location decisions are driven primarily by the operating costs at the locations under consideration.

Answer: False

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: service, location, cost, revenue

  1. Critical mass is a situation whereby several competing firms clustered in one location attract more customers than the total number who would shop at the same stores in scattered locations.

Answer: True

Reference: Factors Affecting Location Decisions

Difficulty: Easy

Keywords: critical, mass, customers

  1. A geographic information system contains demographic information.

Answer: True

Reference: Geographic Information Systems and Location Decisions

Difficulty: Easy

Keywords: GIS, geographic, information, system, demographic

  1. Repeated onsite expansion ultimately leads to diseconomies of scale.

Answer: True

Reference: Choosing Between an Onsite Expansion, New Location, or Relocation

Difficulty: Moderate

Keywords: onsite, expansion

  1. More than 80 percent of all relocations are within 20 miles of the first location, so usually the existing workforce is displaced.

Answer: True

Reference: Choosing Between an Onsite Expansion, New Location, or Relocation

Difficulty: Moderate

Keywords: relocation, workforce, displace

  1. The center of gravity method considers a greater number of factors than the break-even analysis.

Answer: False

Reference: Locating a Single Facility

Difficulty: Easy

Keywords: center, gravity, break-even

  1. A decision maker using break-even analysis must assume that suppliers do not provide discounts for large orders.

Answer: True

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: break-even

  1. Break-even analysis can help a manager compare location alternatives on the basis of quantitative factors that can be expressed in terms of total cost.

Answer: True

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: break, even

  1. When a firm with a network of existing facilities plans a new facility, the new facility is assumed to operate independently of the existing ones.

Answer: False

Reference: Locating a Facility Within a Network of Facilities

Difficulty: Moderate

Keywords: facility, network

  1. The transportation method provides optimal solutions for minimization of shipping costs in multiple facility location problems.

Answer: True

Reference: Locating a Facility Within a Network of Facilities

Difficulty: Moderate

Keywords: transportation, shipping

  1. A dummy plant is one that cannot meet customer demands regardless of the number of locations.

Answer: False

Reference: Locating a Facility Within a Network of Facilities

Difficulty: Moderate

Keywords: dummy, plant

  1. Simulation is a procedure used to determine the “best” solution that generally uses simplified and less realistic views of a problem.

Answer: False

Reference: Locating a Facility Within a Network of Facilities

Difficulty: Moderate

Keywords: simulation, assumption

MULTIPLE CHOICE

  1. The group of location factors found to be most important for new manufacturing plants, on the average, is:
  2. proximity to markets.
  3. quality of life.
  4. proximity to suppliers and resources.
  5. favorable labor climate.

Answer: d

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: location, factors, climate

  1. A favorable labor climate might include:
  2. a poor work ethic.
  3. no union presence.
  4. high average wages.
  5. an uneducated work force.

Answer: b

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: labor, climate

  1. Quality of life issues include:
  2. proximity to markets.
  3. prevailing wage rates.
  4. local and state taxes.
  5. recreational facilities.

Answer: d

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: labor, climate

  1. Which of the following location factors was NOT found to dominate location decisions for new U.S. manufacturing plants?
  2. Proximity to the parent company’s facilities
  3. Quality of life
  4. Proximity to competitors’ facilities
  5. Favorable labor climate

Answer: c

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: location, factor

  1. Which of the following statements about locating new U.S. manufacturing plants is best?
  2. A favorable labor climate is the most important factor for capital-intensive plants.
  3. Labor climate is a function of wage rates, training requirements, attitudes toward work, worker productivity, and union strength.
  4. Locating near markets is less important when the finished goods are bulky or heavy and outbound transportation rates are high.
  5. The shift of new industrial jobs to nonurban regions experienced in the United States is not taking place in Japan and Europe.

Answer: b

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: labor, climate

  1. Which of the following statements about locating new U.S. manufacturing plants is best?
  2. General Motors Corporation located its new plant to manufacture the Saturn car in Detroit, primarily because of proximity to current suppliers and many of its other facilities.
  3. Industries dependent on inputs of bulky, perishable, or heavy raw materials emphasize proximity to markets.
  4. Quality of life means good schools, recreational facilities, cultural events, and an attractive lifestyle.
  5. Locating large, high-volume facilities offshore that are focused on a particular product and market is the best way to deal with the uncertainties of nontariff barriers such as political risks, regional trading blocks, and exchange rates.

Answer: c

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: quality, life

  1. Which of the following statements about locating facilities in the service sector is best?
  2. The factors that apply to manufacturing firms often also apply to service facilities, but the impact of the location on sales and customer satisfaction is an important addition.
  3. Management should avoid locating facilities where competitors are already well established, as illustrated by new car showrooms.
  4. Creating a critical mass is a strategy that avoids locating near competing firms.
  5. “Site specific” factors are the main reason for locating warehousing and distribution operations near the customer.

Answer: a

Reference: Factors Affecting Location Decisions

Difficulty: Moderate

Keywords: locating, service, facility

  1. Which of these is NOT identified as a component of a geographical information system?
  2. Hardware
  3. Data
  4. Software
  5. Network

Answer: d

Reference: Geographical Information Systems and Location Decisions

Difficulty: Moderate

Keywords: GIS, geographical, information, system

  1. Which of these is NOT a common functionality of a GIS?
  2. Data storage
  3. Communication
  4. Map display
  5. Modeling

Answer: b

Reference: Geographical Information Systems and Location Decisions

Difficulty: Moderate

Keywords: GIS, geographical, information, system

  1. Which of the following usually is an advantage of on-site expansion, compared to building a new facility?
  2. Reduced construction time and costs
  3. Focused facility
  4. Simplified production control
  5. Reduced transportation cost

Answer: a

Reference:Choosing Between and Onsite Expansion, New Location, or Relocation

Difficulty: Moderate

Keywords: expansion, new, facility

  1. Most firms that choose to relocate operations have:
  2. more than 500 employees.
  3. more than 100 employees but fewer than 500 employees.
  4. more than 10 employees but fewer than 100 employees.
  5. fewer than 10 employees.

Answer: d

Reference: Choosing Between and Onsite Expansion, New Location, or Relocation

Difficulty: Moderate

Keywords: expansion, new, facility

  1. Which one of the following is usually an advantage of building a new facility, compared to on-site expansion?
  2. Reducing construction time and costs
  3. Keeping management together
  4. Reducing transportation costs
  5. Not splitting up operations

Answer: c

Reference: Choosing Between and Onsite Expansion, New Location, or Relocation

Difficulty: Moderate

Keywords: new, facility, expansion

  1. Which of the following statements about company relocations is best?
  2. Less than 80 percent of all relocations are made within 20 miles of companies’ original locations.
  3. More than 80 percent of all relocations are made within 20 miles of companies’ original locations.
  4. More than 20 percent of all relocations are made within 8 miles of companies’ original locations.
  5. Less than 20 percent of all relocations are made within 80 miles of companies’ original locations.

Answer: b

Reference: Choosing Between and Onsite Expansion, New Location, or Relocation

Difficulty: Moderate

Keywords: new, facility, expansion

  1. Widgets, Inc. wishes to locate two new manufacturing facilities. Based on the following subjective criteria, where should the new facilities be located? (Excellent = 5, Very good = 4, Good = 3, Fair = 2, Poor = 1)

  1. B and D
  2. A and D
  3. C and D
  4. D and E

Answer: b

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: location, factors

  1. McKenna Restaurant wishes to open a new store. Based on the following subjective criteria, where 10 is excellent and 0 is poor, where should the new store be located?
  1. A
  2. B
  3. C
  4. D

Answer: c

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: location, factors, weighted

  1. The point has been reached where a biotechnology research and development company must expand by building a new facility. The search has been narrowed to four locations, all of which are acceptable to management. The assessment of these sites is being made on the basis of the six subjective location factors that follow. Management has agreed to use a five-point scale (Excellent = 5, Very good = 4, Good = 3, Fair = 2, Poor = 1) to quantify and compare their subjective opinions about the relative goodness of the sites. The weight reflects the importance of each factor in the decision.

Calculate the weighted score for each alternative. Which location would you recommend?

  1. A
  2. B
  3. C
  4. D

Answer: c

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: location, factors, weighted

  1. A company desires to locate a new facility. Based on preliminary analysis, the choice has been reduced to four locations: A, B, C, and D. These four locations were rated on a scale from 1 (worst)to 10 (best)on each of four criteria. Each criterion was also weighted to indicate its importance (i.e., the higher the weight, the more important).The list of ratings and weights follows.

Based on weighted scores, where should the company locate its new facilities?

  1. A
  2. B
  3. C
  4. D

Answer: a

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: weighted, score, location

  1. Sweet Candy, Inc. wishes to open two new stores. Based on the following subjective criteria, where should the new stores be located? The higher the score, the better.

Factor Score Evaluation by Location
Factor / Weight / A / B / C / D / E
Markets / 35 / 4 / 3 / 5 / 4 / 5
Transportation / 25 / 3 / 5 / 3 / 3 / 2
Labor Climate / 20 / 5 / 5 / 2 / 3 / 5
Taxes / 15 / 2 / 4 / 4 / 5 / 2
Quality of life / 5 / 3 / 4 / 5 / 4 / 5
  1. A and B
  2. B and C
  3. B and D
  4. B and E

Answer: d

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: weighted, score, location

  1. The Hunan Restaurant wishes to locate a new facility. Based on the following subjective criteria, where should the new facility be located? (Very good = 5, Good = 4, Fair = 3, Poor = 2, and Very poor = 1)

  1. A
  2. B
  3. C
  4. D

Answer: b

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: weighted, score, location

  1. A quantitative method used to evaluate single locations based primarily on proximity is:
  2. break-even analysis.
  3. the transportation method.
  4. a preference matrix.
  5. the load-distance method.

Answer: d

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: load-distance, load, distance

  1. A quantitative method used to evaluate multiple locations based on total cost of production or service operations is called:
  2. break-even analysis.
  3. the transportation method.
  4. a preference matrix.
  5. the load-distance method.

Answer: a

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: break-even, break, even

  1. Four departments are located in adjacent bays in the same loading dock. The distance between adjacent bays is 30 feet, the distance between bays separated by another (Alpha and Charlie, Bravo and Delta) is 60 feet, and the distance between Alpha and Delta is 90 feet. Use the information in the table to calculate the load distance for location Alpha.

To / To / To / To
From / Alpha / Bravo / Charlie / Delta
Alpha / 0 / 15 / 20 / 30
Bravo / 5 / 0 / 12 / 8
Charlie / 10 / 7 / 0 / 4
Delta / 15 / 24 / 6 / 0
  1. 2100
  2. 6450
  3. 4350
  4. 2250

Answer: b

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords:load-distance, load, distance

  1. Four departments are located in adjacent bays in the same loading dock. The distance between adjacent bays is 30 feet, the distance between bays separated by another (Alpha and Charlie, Bravo and Delta) is 60 feet, and the distance between Alpha and Delta is 90 feet. Use the information in the table to calculate the load distance for location Bravo.

To / To / To / To
From / Alpha / Bravo / Charlie / Delta
Alpha / 0 / 15 / 20 / 30
Bravo / 5 / 0 / 12 / 8
Charlie / 10 / 7 / 0 / 4
Delta / 15 / 24 / 6 / 0
  1. 3090
  2. 3300
  3. 2100
  4. 1200

Answer: a

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords:load-distance, load, distance

  1. Four departments are located in adjacent bays in the same loading dock. The distance between adjacent bays is 30 feet, the distance between bays separated by another (Alpha and Charlie, Bravo and Delta) is 60 feet, and the distance between Alpha and Delta is 90 feet. Use the information in the table to calculate the total load distance for this layout.

To / To / To / To
From / Alpha / Bravo / Charlie / Delta
Alpha / 0 / 15 / 20 / 30
Bravo / 5 / 0 / 12 / 8
Charlie / 10 / 7 / 0 / 4
Delta / 15 / 24 / 6 / 0
  1. 3930
  2. 18480
  3. 9240
  4. 12660

Answer: c

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords:load-distance, load, distance

  1. Use the information from Table 11.1. What are the x and y coordinates for the center of gravity?
  2. x 6, y 7
  3. x 6, y < 7
  4. x < 6, y 7
  5. x < 6, y < 7

Answer: c

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Use the information in Table 11.2. What are the x and y coordinates for the center of gravity?
  2. x 14, y 15
  3. x < 14, y 15
  4. x <14, y < 15
  5. x 14, y < 15

Answer: a

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Use the information in Table 11.2. If the plant is located at the center of gravity, what is the load–distance score, assuming rectilinear distance?
  2. Less than or equal to 1500
  3. More than 1500 but less than or equal to 1600
  4. More than 1600 but less than or equal to 1700
  5. More than 1700

Answer: c

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Consider the location of four distribution centers, A, B, C, and D, with the following location coordinates and shipping requirements per week.

Management is considering locating a new plant at the site of one of the four distribution centers. What is the load–distance score if the plant is located at distribution center A? (Use rectilinear distance.)

  1. Less than or equal to 4500
  2. Greater than 4500 but less than or equal to 5000
  3. Greater than 5000 but less than or equal to 5500
  4. Greater than 5500

Answer: a

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Pinkerton Company has four distribution centers located at the location coordinates given. The monthly demand at each center is also given.

Assume that management is considering locating its new plant at distribution center A. What is the load–distance score, assuming rectilinear distance?

  1. Less than 33,000
  2. Greater than 33,000 but less than 33,500
  3. Greater than 33,500 but less than 34,000
  4. Greater than 34,000

Answer: b

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. A single facility is needed to meet the demand of four regions depicted as follows:

If the plant is located at A, what is the total load–distance score, assuming Euclidean distance?

  1. Less than or equal to 1000
  2. More than 1000 but less than or equal to 1100
  3. More than 1100 but less than or equal to 1200
  4. More than 1200

Answer: a

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Use the information in Table 11.3. What is the center of gravity?
  2. x 7, y 8
  3. x > 7, y 8
  4. x 7, y > 8
  5. x > 7, y > 8

Answer: c

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Use the information in Table 11.3. If the firm decides to locate the warehouse at point D, what is the total load–distance score? (Use rectilinear distance.)
  2. Less than 400
  3. Between 401 and 450
  4. Between 451 and 500
  5. More than 500

Answer: a

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: load, distance, rectilinear

  1. Use the information in Table 11.4. If a company desires to locate a manufacturing facility at the center of gravity, what would be the x and y coordinates of the facility?
  2. x 14, y 14
  3. x 14, y 14
  4. x 15, y 14
  5. x < 15, y 15

Answer: c

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Use the information in Table 11.4. If a facility were to be located at (15,15), what would be the load–distance score? (Assume rectilinear distance.)
  2. Less than or equal to 5500
  3. More than 5500 but less than or equal to 6000
  4. More than 6000 but less than or equal to 6500
  5. More than 6500

Answer: b

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: load, distance, rectilinear

  1. Use the information in Table 11.5. What are the x and y coordinates for the center of gravity?
  2. x 7.5, y 6
  3. x 7.5, y 6
  4. x 7.5, y 6
  5. x 7.5, y 6

Answer: b

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Use the information in Table 11.5. If a plant is located at a center of gravity, what is the load–distance score, assuming rectilinear distance?
  2. Less than or equal to 500
  3. More than 500 but less than or equal to 550
  4. More than 550 but less than or equal to 600
  5. More than 600

Answer: d

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: load, distance, rectilinear

  1. Use the information in Table 11.5. Assume that two plants, rather than one, are to be located.Plant 1 serves distribution centers A, B, and C. Plant 2 serves distribution centers D and E. What is the center of gravity for plant 1?
  2. x 4, y 7
  3. x 4, y 7
  4. x 4, y 7
  5. x 4, y 7

Answer: b

Reference: Locating a Single Facility

Difficulty: Moderate

Keywords: center, gravity

  1. Use the information in Table 11.5. What is the total load–distance score for the two plants if Plant 1 is located at the center of gravity serving distribution centers A, B, and C, and Plant 2 is located at the center of gravity serving D and E? (Assume rectilinear distance.)
  2. Less than or equal to 300
  3. More than 300 but less than or equal to 350
  4. More than 350 but less than or equal to 400
  5. More than 400

Answer: b