Templates to accompany Operations Management, Seventh Edition

created by Lee Tangedahl, The University of Montana

Copyright 2001 by The McGraw Hill Companies, Inc.
All rights Reserved.

Chapter Eight - Location Planning and Analysis

Templates:

Locational Cost-Profit-Volume Analysis

Center of Gravity Method

Examples
Solved Problems

See Instructions template for complete instructions.

Locational Analysis

Locational Cost-Profit-Volume Analysis

Annual Output =
A
B
C
D

Variable
Cost
11
30
20
35
Volume
7894.73684
11111.1111
2083.33333
5000
-20000
-3333.33333
8000
1000
338000
340000
310000
480000

Volume
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000

Total Annual Cost

A
B
C
D

Fixed
Cost
250000
100000
150000
200000
Intersection
A- B
A- C
A- D
B-C
B-D
C-D

A
800,000
250,000
261,000
700,000
272,000
283,000
600,000
294,000
305,000
500,000
316,000
327,000
400,000
338,000
349,000
300,000
360,000
371,000
200,000
382,000
393,000
100,000
404,000

Chart Settings:
Start:
B
100,000
130,000
160,000
190,000
220,000
250,000
280,000
310,000
340,000
370,000
400,000
430,000
460,000
490,000
520,000

0
C
150,000
170,000
190,000
210,000
230,000
250,000
270,000
290,000
310,000
330,000
350,000
370,000
390,000
410,000
430,000

Step:
D
200,000
235,000
270,000
305,000
340,000
375,000
410,000
445,000
480,000
515,000
310,000.00
550,000
585,000
620,000
655,000
690,000

1,000

8000
8000

0
310000

0
A

2,000
C

4,000

Page 2

6,000
8,000 10,000
Annual Output

12,000

14,000

16,000

Center of Gravity Method

7

Clear
Destination
D1
D2
D3
D4
D5
D6
D7
D8
D9
D10
D11
D12

x
2
3
5
8

Center of Gravity =

y
2
5
4
5

Quantity

1
1
1
1
0
0
0
0
0
0
0
0

5
4
3
2
1

x
4.5

y
4

1
9
4.5
4.5

4
4
1
6

0
0

Destinations
Column J

Column J
Center of Gravity

10

Chapter 8 - Examples

1. Locational Cost-Profit-Volume Analysis

A
B
C
D

Fixed
Cost
250000
100000
150000
200000
Intersection
A- B
A- C
A- D
B-C
B-D
C-D

Annual Output =
A
B
C
D
Annual Output =
A
B
C
D

Variable
Cost
11
30
20
35
Volume
7894.73684
11111.1111
2083.33333
5000
-20000
-3333.33333
8000
1000
338000
340000
310000
480000
10000
1000
360000
400000
350000
550000

3. Center of Gravity Method

Destination
D1
D2
D3
D4
D5
D6
D7
D8
D9
D10
D11
D12

x
2
3
5
8

y
2
5
4
5

Quantity

Center of Gravity =

x
4.5

y
4

y
2
5
4
5

Quantity
800
900
200
100

x
3.05

y
3.7

4. Center of Gravity Method

Destination
D1
D2
D3
D4
D5
D6
D7
D8
D9
D10
D11
D12

x
2
3
5
8

Center of Gravity =

Chapter 8 - Solved Problems

1. Locational Cost-Profit-Volume Analysis
Fixed
Cost
23000
25500
23000

Variable
Cost
4
5
6

Intersection
A- B
A- C
A- D
B-C
B-D
C-D

Volume
-2500
0

Annual Output =

800
100
26200
29500
27800

A
B
C
D

A
B
C
D

2500

2. Locational Cost-Profit-Volume Analysis

Fixed
Cost
8000
9400

Variable
Cost
5
4

Intersection
A- B
A- C
A- D
B-C
B-D
C-D

Volume
1400

Annual Output =

8800
100
52000
44600

A
B
C
D

A
B
C
D