Additional Homework Problems
to accompany CHAPTER 8: Location Strategies
8.26 Katie Reynolds owns two exclusive women’s clothing stores in Miami. In her plan to expand to a
third location, she has narrowed her decision to three sites—one in a downtown office building, one in a
shopping mall, and one in an old Victorian house in the suburban area of Coral Gables. She feels that rent
is absolutely the most important factor to be considered, although walk-in traffic is 90% as important as
rent. Further, the more distant the new store is from her two existing stores, the better. She weights this
factor to be 80% as important as walk-in traffic. Katie developed the table below, in which she graded each
site from A to D, with A being best. Which site is preferable?
Rent
Walk-in traffic
Distance from existing stores
Downtown
D
B
B
Shopping Mall
C
A
A
Coral Gables House
A
D
C
8.27 When placing a new medical clinic, county health offices wish to consider three sites. The pertinent
data are given in the table below. Which is the best site (assuming a higher weight is more desirable than a
lower one)?
Location Factor
Facility utilization
Average time per
emergency trip
Employee preferences
Accessibility to
major roadways
Land costs
Weight
9
Downtown
9
Scores
Suburb A
7
8
6
6
8
5
2
5
6
5
8
4
5
4
2
9
6
Suburb B
6
8.28
A Detroit seafood restaurant is considering opening a second facility in the suburb of West
Bloomfield. The table below shows its ratings of five factors at each of four potential sites. Which site
should be selected?
Site
Factor
Affluence of
local population
Construction
and land cost
Traffic flow
Parking availability
Growth potential
Weight
1
2
3
4
10
70
60
85
90
10
85
90
80
60
25
20
15
70
80
90
60
90
80
85
90
90
90
80
75
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8.29 The fixed and variable costs (in U.S. dollars) for the new recycling plant that Eldon Yi is opening in
Australia are computed as follows:
Cost
Fixed
Variable
Victoria
$1,000,000
$73/unit
Perth
$800,000
$112/unit
a) Over what range is each city preferable?
b) For a recycling of 5,000 units, which site is best?
8.30 The fixed and variable costs for four potential plant sites for a ski equipment manufacturer are shown
below:
Site
Atlanta
Burlington
Cleveland
Denver
Fixed Cost Per Year
$125,000
75,000
100,000
50,000
Variable Cost Per Unit
$6
5
4
12
a) Graph the total-cost lines for the four potential sites.
b) Over what range of annual volume is each location the preferable one (that with lowest expected
cost)?
c) If expected volume of the ski equipment is 5,000 units, which location would you recommend?
8.31 Itron Health and Fitness has several production facilities scattered around the central and northern
part of Iowa. It would be desirable to have a distribution center from which to send product to retailers such
as Sears, WalMart, Kmart, and large sporting equipment retailers. Using the data in the following table,
calculate the center of gravity location for the proposed new facility.
City
A
B
C
D
E
F
G
H
Map
Coordinates (x, y)
(2, 1)
(2, 13)
(4, 17)
(7, 7)
(8, 18)
(12, 16)
(17, 4)
(18, 18)
2
Truck Round
Trips per Day
20
10
5
20
15
10
20
20
8.32 The main post office in Tampa, Florida, is due to be replaced with a much larger, more modern
facility that can handle the tremendous flow of mail that has followed the city’s growth since 1970. Since
all mail, incoming or outgoing, travels from the seven regional post offices in Tampa through the main post
office, its site selection can mean a big difference in overall delivery and movement efficiency. Using the
data in the following table, calculate the center of gravity location for the proposed new facility.
Regional
Post Office
Ybor City
Davis Island
Dale-Mabry
Palma Ceia
Bayshore
Temple
Terrace
Hyde Park
Map
Coordinates (x, y)
(10, 5)
(3, 8)
(4, 7)
(15, 10)
(13, 3)
Truck Round Trips
Per Day
3
3
2
6
5
(1, 12)
3
(5, 5)
10
8.33 Prentice Hall Publishing is going to add two additional distribution centers to its European theater of
operations. One center will be located in each of two countries selected from the set of four candidates. The
four potential countries and 15 KSF ratings are given below. The KSFs were evaluated on the basis of a 1
to 5 rating system, where 1 means least desirable country and 5, the most desirable.
Key Success Factors
1. rate of technology
change
2. innovations in
process design
3. number of skilled
workers
4. national literacy
rate
5. stability of
government
6. product liability
laws
7. export restrictions
8. similarity in
language
9. work ethic
10. tax rates
11. inflation
12. availability of
raw materials
13. interest rates
14. population
15. number of miles
of highway
Candidate Country Ratings
Spain
England
Italy
Poland
1
3
5
2
3
5
5
4
1
5
3
5
2
5
2
3
5
1
1
1
1
2
1
2
4
2
1
5
1
3
1
2
4
1
5
2
3
3
5
5
5
2
2
2
5
5
5
5
4
1
5
3
2
4
4
1
1
5
5
1
3
On the assumption that each of the 15 KSFs is equally important, which two countries would be the best
choices for locating the two new distribution centers?
8.34 In Problem 8.33, if the first 5 KSF ratings are each given a mathematical weight of 0.1 and the
remaining 10 KSFs should be equally weighted at 0.05, what are the best two countries for the new
distribution centers?
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