Question 1

Which of the following is not a location option that management can consider in location planning?

Accepted Answer

A)  Expand an existing facility. 
B)  Add a new location. 
C)  Relocate from one location to another. 
D)  Do nothing. 
E)  All of the choices. 
A)  Expand an existing facility. 
B)  Add a new location. 
C)  Relocate from one location to another. 
D)  Do nothing. 
E)  All of the choices.

Question 2

A manager must decide between two location alternatives, Boston and Chicago. Boston would have annual fixed costs of $70,000, transportation costs of $60 per unit, and labor and material costs of $200 per unit. Chicago would have annual fixed costs of $90,000, transportation costs of $40 per unit, and labor and material costs of $170 per unit. Revenue will be $300 per unit.
(A) Which alternative would yield the higher profit for an annual demand of 3,000 units?
(B) Would the two locations yield the same profit at a certain volume? If so, at what volume would that be?

Accepted Answer

\[\begin{array} { l l cc} 
& \text { FC

Question 3

An example of a regional factor in location planning is the location of our markets (either existing or potential).

Accepted Answer

A) True 
 B)False

Question 4

The first step in developing location alternatives is identifying important factors.

Accepted Answer

A) True 
 B)False

Question 5

An approach to location analysis that can include both qualitative and quantitative considerations is:

Accepted Answer

A)  locational cost-profit-volume. 
B)  factor rating. 
C)  transportation model. 
D)  expected value (net present value). 
E)  financial analysis. 
A)  locational cost-profit-volume. 
B)  factor rating. 
C)  transportation model. 
D)  expected value (net present value). 
E)  financial analysis.

Question 6

The center of gravity method is used to _______ travel time, distance, and costs.

Accepted Answer

A)  normalize 
B)  eliminate 
C)  average 
D)  minimize 
E)  document 
A)  normalize 
B)  eliminate 
C)  average 
D)  minimize 
E)  document

Question 7

Consider the following information about sites A, B, and C: $$\begin{array} { l r l } 
\text { Site } & \text { FC (annual) } & \text { VC (per unit) } \
\hline \text { A } & \$ 100,000 & \$ 10 \
\mathrm {~B} & \$ 120,000 & \$ 8 \
\text { C } & \$ 150,000 & \$ 7
\end{array}$$ For what range of output would you prefer site C?

Accepted Answer

The answer of Consider the following information about sites A,...

Question 8

Advanced communications has aided globalization.

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

A)  30,000 units 
B)  25,000 units 
C)  40,000 units 
D)  50,000 units 
E)  60,000 units 
A)  30,000 units 
B)  25,000 units 
C)  40,000 units 
D)  50,000 units 
E)  60,000 units

Question 10

Location options do not usually include:

Accepted Answer

A)  expansion. 
B)  a contract. 
C)  adding new facilities. 
D)  moving. 
E)  doing nothing. 
A)  expansion. 
B)  a contract. 
C)  adding new facilities. 
D)  moving. 
E)  doing nothing.

Question 11

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: $\begin{array}{lcl}
\text { Location } & \begin{array}{r}
\text { Annual } \
\text { Fixed }
\end{array} & \text { Variable } \
\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { per person } \
\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }
\end{array}$ What would be the total annual costs for the Alpha Ave. location with 20 persons living there?

Accepted Answer

A)  $5,400 
B)  $4,000 
C)  $5,000 
D)  $7,000 
E)  $9,000 
A)  $5,400 
B)  $4,000 
C)  $5,000 
D)  $7,000 
E)  $9,000

Question 12

In location planning, the location of raw materials, the location of markets, and labor factors are:

Accepted Answer

A)  regional factors. 
B)  community factors. 
C)  site-related factors. 
D)  national factors. 
E)  minor considerations. 
A)  regional factors. 
B)  community factors. 
C)  site-related factors. 
D)  national factors. 
E)  minor considerations.

Question 13

The method for evaluating location alternatives that minimizes shipping costs between multiple sending and receiving locations is:

Accepted Answer

A)  locational cost-profit-volume analysis. 
B)  transportation model analysis. 
C)  factor rating analysis. 
D)  linear regression analysis. 
E)  MODI analysis. 
A)  locational cost-profit-volume analysis. 
B)  transportation model analysis. 
C)  factor rating analysis. 
D)  linear regression analysis. 
E)  MODI analysis.

Question 14

Labor laws are an important site-related factor.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is least important as a consideration for a firm at the beginning of a supply chain?

Accepted Answer

A)  access to end consumers 
B)  access to resources 
C)  proximity to customers 
D)  access to transportation infrastructure 
E)  access to productive labor 
A)  access to end consumers 
B)  access to resources 
C)  proximity to customers 
D)  access to transportation infrastructure 
E)  access to productive labor

Question 16

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: $$\begin{array} { l r l } 
\text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \
\hline \text { Atlanta } & \$ 80,000 & \$ 20 \
\text { Phoenix } & \$ 140,000 & \$ 16
\end{array}$$ At what annual output would the company be indifferent between the two locations?

Accepted Answer

A)  60,000 units 
B)  15,000 units 
C)  10,000 units 
D)  20,000 units 
E)  4,000 units 
A)  60,000 units 
B)  15,000 units 
C)  10,000 units 
D)  20,000 units 
E)  4,000 units

Question 17

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below: $$\begin{array} {c} 
\quad\quad\quad\quad\quad\quad\quad\quad{ \text { Location } } \

\begin{array} { l c c c c } 
\text { Factor } &\text { Wt. } & \text { A } & \text { B } & \text { C } \
\hline \text { Labor Cost } & .4 & 70 & 80 & 90 \
\text { Transportation Cost } & .2 & 80 & 80 & 60 \
\text { Market Access } & .2 & 90 & 70 & 60 \
\text { Raw Materials Cost } & .1 & 50 & 70 & 90 \
\text { Utility Cost } & .1 & 80 & 90 & 70
\end{array}\end{array}$$ If the decision rule is to select the location with the greatest composite score exceeding 80, management should choose:

Accepted Answer

A)  location A. 
B)  location B. 
C)  location C. 
D)  either location B or location C. 
E)  to reject all locations. 
A)  location A. 
B)  location B. 
C)  location C. 
D)  either location B or location C. 
E)  to reject all locations.

Question 18

For service and retail stores, a prime factor in location analysis is customer access.

Accepted Answer

A) True 
 B)False

Question 19

Retail businesses generally prefer locations that are not near other retailers, as this reduces their competition.

Accepted Answer

A) True 
 B)False

Question 20

In regards to supply chain management and the location decision, a primary challenge is to address _______________ distribution.

Accepted Answer

A)  insourced vs. outsourced 
B)  strategic vs. tactical 
C)  local vs. global 
D)  centralized vs. decentralized 
E)  anticipatory vs. reactive 
A)  insourced vs. outsourced 
B)  strategic vs. tactical 
C)  local vs. global 
D)  centralized vs. decentralized 
E)  anticipatory vs. reactive

Exam 8: Location Planning and Analysis

Which of the following is not a location option that management can consider in location planning?

An example of a regional factor in location planning is the location of our markets (either existing or potential).

The first step in developing location alternatives is identifying important factors.

An approach to location analysis that can include both qualitative and quantitative considerations is:

The center of gravity method is used to _______ travel time, distance, and costs.

Consider the following information about sites A, B, and C: Site FC (annual) VC (per unit) A \ 100,000 \ 10 \ 120,000 \ 8 C \ 150,000 \ 7 For what range of output would you prefer site C?

Advanced communications has aided globalization.

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?

Location options do not usually include:

In location planning, the location of raw materials, the location of markets, and labor factors are:

The method for evaluating location alternatives that minimizes shipping costs between multiple sending and receiving locations is:

Labor laws are an important site-related factor.

Which of the following is least important as a consideration for a firm at the beginning of a supply chain?

For service and retail stores, a prime factor in location analysis is customer access.

Retail businesses generally prefer locations that are not near other retailers, as this reduces their competition.

In regards to supply chain management and the location decision, a primary challenge is to address _______________ distribution.

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Extension: Reliability

Strategic Capacity Planning for Products and Services

Extension: Decision Theory

Process Selection and Facility Layout

Work Design and Measurement

Extension: Learning Curves

Extension: The Transportation Model

Management of Quality

Quality Control

Extension: Acceptance Sampling

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

Jit and Lean Operations

Extension: Maintenance

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters