BUSI 411 Homework 8 Location Planning and Analysis Assignment solutions complete answers
A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs compared to locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $183 in either case.
Omaha
Kansas City
Annual fixed costs ($ millions)
$
1.0
$
0.9
Variable cost per unit
$
33
$
48
Expected annual demand (units)
10,050
10,650
Using the above information, determine which location would produce the greater profit.
The owner of Genuine Subs, Inc., hopes to expand the present operation by adding one new outlet. She has studied three locations. Each would have the same labor and materials costs (food, serving containers, napkins, etc.) of $2.10 per sandwich. Sandwiches sell for $2.90 each in all locations. Rent and equipment costs would be $5,500 per month for location A, $5,750 per month for location B, and $6,000 per month for location C.
a. Determine the volume necessary at each location to realize a monthly profit of $10,500. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
b-1. If expected sales at A, B, and C are 24,500 per month, 21,500 per month, and 23,500 per month, respectively, calculate the profit of the each locations?
b-2. Which location would yield the greatest profits?
Location Score
Factor
(100 points each)
Weight
A
B
C
Convenience
0.15
85
79
89
Parking facilities
0.20
81
97
90
Display area
0.18
88
95
87
Shopper traffic
0.27
83
91
89
Operating costs
0.10
96
86
94
Neighborhood
0.10
89
94
89
1.00
a. Using the above factor ratings, calculate the composite score for each location. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
b. Determine which location alternative (A, B, or C) should be chosen on the basis of maximum composite score.
A toy manufacturer produces toys in five locations throughout the country. Raw materials (primarily barrels of powdered plastic) will be shipped from a new, centralized warehouse whose location is to be determined. The monthly quantities to be shipped to each location are the same. A coordinate system has been established, and the coordinates of each location have been determined as shown. Determine the coordinates of the centralized warehouse. (Round x̅ and y̅ to 1 decimal place.)
Location
(x,y)
A
8,8
B
9,2
C
5,9
D
5,2
E
9,5
