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The fixed and variable costss for three potential manufacturin

weaver are shown.


a) Over what range of production is each location optimal
b) For a production of 200 units, which site is best?

Site Fixed cost Variable cost


1 500 11
2 1000 7
3 1700 4

Breakeven point
BEP Units
between

Site 1 and Site 2 125

Site 2 and Site 3 233.3333333333

Site 1 and Site 3 171.4285714286

Units TC Site 1 TC Site 2


0 500 1000
50 1050 1350
75 1325 1525
100 1600 1700
125 1875 1875
150 2150 2050
175 2425 2225
200 2700 2400
225 2975 2575
250 3250 2750
275 3525 2925
300 3800 3100
171.4285714286 2385.7142857143 2200
233.3333333333 3066.6666666667 2633.3333333333
Dallas
Fixed costs, $ 600000
Variable cost, $ 28

Breakeven point
25000
volume

Units Dallas Total cost, $


5000 740000
10000 880000
15000 1020000
20000 1160000
25000 1300000
30000 1440000
35000 1580000
40000 1720000
45000 1860000
50000 2000000

Variable cost per auto


Site Annualized Fixed cost
produced

A 10,000,000 2500
B 20,000,000 2000
C 25,000,000 1000

Breakeven point
BEP Units
between

Site A and Site B 20000

Site B and Site C 5000

Site A and Site C 10000


Units TC at Site A TC Site B Site A is suitable
1000 12500000 22000000
2000 15000000 24000000
3000 17500000 26000000
4000 20000000 28000000
5000 22500000 30000000
6000 25000000 32000000
7000 27500000 34000000
8000 30000000 36000000
9000 32500000 38000000
10000 35000000 40000000
11000 37500000 42000000
12000 40000000 44000000
13000 42500000 46000000
14000 45000000 48000000
15000 47500000 50000000
16000 50000000 52000000
17000 52500000 54000000
18000 55000000 56000000
19000 57500000 58000000
20000 60000000 60000000
21000 62500000 62000000
22000 65000000 64000000

City Map coordinate X Map coordinate y


A 5 10
B 6 8
C 4 9
D 9 5
E 7 9
F 3 2
G 2 6

Location of hub 5.1538461538 7.3076923077

City Map coordinate X Map coordinate y


A 5 10
B 6 8
C 4 9
D 9 5
E 7 9
F 3 2
G 2 6

Location of hub 5.1333333333 7.6666666667

Map Coordinates
City X Y
Covington 9.2 3.5
Donaldsonville 7.3 2.5
Houma 7.8 1.4
Monroe 5 8.4
Natchitoches 2.8 6.5
New Iberia 5.5 2.4
Opelousas 5 3.6
Ruston 3.8 8.5

Office location 5.9538461538 4.3538461538

Map Coordinates
Elementary school X Y
North Park 4 11
Jefferson 5 2
Lincoln 8 2
Washington 11 6

Middle school
6.2307692308 6.0769230769
location
6.2307692308 6.0769230769

Map Coordinates
Census Tract Population X
101 2000 25
102 5000 25
103 10000 55
104 7000 50
105 10000 80
106 20000 70
107 14000 90
66.6911764706
New store location 66.6911764706

Map Coordinates
Census Tract Population X
101 2000 25
102 5000 25
103 12000 55
104 7000 50
105 12000 80
106 20000 70
107 14000 90
66.7361111111
New store location 66.7361111111
e potential manufacturing plant sites for a rattan chair

ach location optimal


h site is best?

4000
Locational Breakeven analysis

3500

TC Site 1 TC Site 2 TC Site 3


3000

2500

2000

1500

1000
TC Site 3
1700 500
Site 1 is preferred Site 2 is preferred Site
1900
2000
0
2100 0 25 50 75 100 125 150 175 200 225 250

2200 Units
2300
2400
2500
2600
2700
2800
2900
2385.7142857143
2633.3333333333
Detroit
800000
20 BEP Graph of 2 locations

2500000

2000000

1500000

Axis Title
1000000
Detroit Total cost, $
500000
900000
0
1000000 5000 10000 15000 20000 25000 30000 35000 40000 45000

1100000 Axis Title


1200000
Dal l as Tota l cost, $ Detroi t Tota l cost, $
1300000
1400000
1500000
1600000
1700000
1800000

Site C is suitable

Chart Title
70000000
Site C is suitable

TC Site
Site A is suitableC
26000000 Chart Title
27000000 70000000
28000000
29000000
30000000 60000000

31000000
32000000
50000000
33000000
34000000
35000000 40000000

36000000
37000000
30000000
38000000
39000000
40000000 20000000
41000000
42000000
10000000
43000000
44000000
45000000 0
0 5000 10000 15000 20000
46000000
47000000 TC at Si te A TC Si te B TC Si te C

Shipping load
5
10
15
5
15
10
5

Shipping load
15
10
15
5
15
10
5

Visits made
3
3
5
3
3
3
3
3

Students
500
300
300
200

Map Coordinates
Y
45
25
45
20
50
20
25
30.2205882353
30.2205882353

Map Coordinates
Y
45
25
45
20
50
20
25
31.1805555556
31.1805555556
The fixed and variable costss for three potential manufacturing plant site
weaver are shown.
a) Over what range of production is each location optimal
b) For a production of 200 units, which site is best?

Site Fixed cost Variable cost


1 500 11
2 1000 7
3 1700 4

Breakeven point
BEP Units
between

Site 1 and Site 2 125

Site 2 and Site 3 233.3333333333

Site 1 and Site 3 171.4285714286

Units TC Site 1 TC Site 2


0 500 1000
25 775 1175
50 1050 1350
75 1325 1525
100 1600 1700
125 1875 1875
150 2150 2050
175 2425 2225
200 2700 2400
225 2975 2575
250 3250 2750
Dallas
Fixed costs, $ 600000
Variable cost, $ 28

Breakeven point
25000
volume

Units Dallas Total cost, $


5000 740000
10000 880000
15000 1020000
20000 1160000
25000 1300000
30000 1440000
35000 1580000
40000 1720000
45000 1860000
50000 2000000

Variable cost per auto


Site Annualized Fixed cost
produced
A 10,000,000 2500
B 20,000,000 2000
C 25,000,000 1000

Breakeven point
BEP Units
between

Site A and Site B 20000


Site B and Site C 5000

Site A and Site C 10000

Units TC at Site A TC Site B


0 10000000 20000000
1000 12500000 22000000
2000 15000000 24000000
3000 17500000 26000000
4000 20000000 28000000
5000 22500000 30000000
6000 25000000 32000000
7000 27500000 34000000
8000 30000000 36000000
9000 32500000 38000000
10000 35000000 40000000
11000 37500000 42000000
12000 40000000 44000000
13000 42500000 46000000
14000 45000000 48000000
15000 47500000 50000000
16000 50000000 52000000
17000 52500000 54000000
18000 55000000 56000000
19000 57500000 58000000
20000 60000000 60000000
21000 62500000 62000000

City Map coordinate X Map coordinate y


A 5 10
B 6 8
C 4 9
D 9 5
E 7 9
F 3 2
G 2 6
Location of hub 5.1538461538 7.3076923077

5.1538461538 7.3076923077

City Map coordinate X Map coordinate y


A 5 10
B 6 8
C 4 9
D 9 5
E 7 9
F 3 2
G 2 6

Location of hub 5.1333333333 7.6666666667

Map Coordinates
City X Y
Covington 9.2 3.5
Donaldsonville 7.3 2.5
Houma 7.8 1.4
Monroe 5 8.4
Natchitoches 2.8 6.5
New Iberia 5.5 2.4
Opelousas 5 3.6
Ruston 3.8 8.5

Office location 5.9538461538 4.3538461538


5.9538461538 4.3538461538

Map Coordinates
Elementary school X Y
North Park 4 11
Jefferson 5 2
Lincoln 8 2
Washington 11 6

Middle school
6.2307692308 6.0769230769
location
6.2307692308 6.0769230769
Map Coordinates
Census Tract Population X
101 2000 25
102 5000 25
103 10000 55
104 7000 50
105 10000 80
106 20000 70
107 14000 90
66.6911764706
New store location 66.6911764706

Map Coordinates
Census Tract Population X
101 2000 25
102 5000 25
103 12000 55
104 7000 50
105 12000 80
106 20000 70
107 14000 90
66.7361111111
New store location 66.7361111111
al manufacturing plant sites for a rattan chair

ion optimal
best?

4000
Locational Breakeven analysis

3500

TC Site 1 TC Site 2 TC Site 3


3000

2500

2000

1500

1000
TC Site 3
1700 500
Site 1 is preferred Site 2 is preferred Site 3 is
1800
1900
0
2000 0 25 50 75 100 125 150 175 200 225 250 27

2100 Units
2200
2300
2400
2500
2600
2700
Detroit
800000
20 BEP Graph of 2 locati ons

2500000

2000000

Axis Title 1500000

1000000
Detroit Total cost, $
500000
900000
0
1000000 5000 10000 15000 20000 25000 30000 35000 40000 45000 500
1100000 Axis Title

1200000
Da l l as Total cost, $ Detroi t Tota l cost, $
1300000
1400000
1500000
1600000
1700000
1800000
TC Site C
25000000 Chart Title
26000000 70000000
27000000
28000000 60000000
29000000
30000000 50000000
31000000
32000000 40000000
33000000
34000000 30000000
35000000
36000000 20000000
37000000
38000000 10000000
39000000
40000000 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
41000000
Uni ts TC at Si te A TC Si te B TC S
42000000
43000000
44000000
45000000
46000000

Shipping load
5
10
15
5
15
10
5

Shipping load
15
10
15
5
15
10
5

Visits made
3
3
5
3
3
3
3
3

Students
500
300
300
200
Map Coordinates
Y
45
25
45
20
50
20
25
30.2205882353
30.2205882353

Map Coordinates
Y
45
25
45
20
50
20
25
31.1805555556
31.1805555556
keven analysis

TC Site 3

preferred Site 3 is preferred

75 200 225 250 275 300 325


ocati ons

0000 35000 40000 45000 50000

Detroi t Tota l cost, $


hart Title

0 11 12 13 14 15 16 17 18 19 20 21 22

te A TC Si te B TC Si te C
Subway, with more than 20,000 outlets in the U.S., is planning for a new restaur
locations are being considered. The following table gives the factors for each sit
1) At which site should Subway open the new restaurant?
2) If the weights for Space and Traffic density are reversed, how would this affec

Weight
Factor
Space 0.30
Costs 0.25
Traffic density 0.20
Neighbourhood income 0.15
Zoning laws 0.10
Weighted average method 1.00

Weight
Factor
Space 0.20
Costs 0.25
Traffic density 0.30
Neighbourhood income 0.15
Zoning laws 0.10
Weighted average method 1

Ken GIlbert owns the Knoxville Warriors, a minor league baseball team in Tennessee. He wis
Jackson (Mississippi). THe table below gives the factors that Gilbert thinks are imortant, their
a) Which site should he select?
b) Jackson just raised its incentive package, and the new score is 75. Why doesn't this impac

Factor Weight
Incentive 0.4
Player satisfaction 0.3
Sports interest 0.2
Size of city 0.1
Direct summation method
Weighted average method
Factor Weight
Incentive 0.4
Player satisfaction 0.3
Sports interest 0.2
Size of city 0.1
Weighted average method

Northeastern Insurance Company is considering opening an office in the U.S. T


consideration are Philadelphia and New York. The factor ratings (higher scores
given in the following table. In which city should Northeastern locate?

Factor Weight
Customer convenience 0.25
Bank accessibility 0.20
Computer support 0.20
Rental costs 0.15
Labor costs 0.10
Taxes 0.10
Weighted average method

A location analysis for Cook Controls, a small manufacturer of parts for high-tec
down to four locations. Cook will need to train assemblers, testers, and robotics
Lori Cook, the president, has asked each potential site to offer training programs
The critical factors, their weights, and the ratings for each location are shown in
favorable values.
a) Compute the composite (weighted average) rating for each location.
b) Which site would you choose?
c) Would you reach the same conclusion if the weights for operating cost and la
necessary and explain.
necessary and explain.

Factor Weight
Labor availability 0.15
Technical School Quality 0.10
Operating cost 0.30
Land and construction cost 0.15
Industrial incentives 0.20
Labor cost 0.10
Weighted average method

Factor Weight
Labor availability 0.15
Technical School Quality 0.10
Operating cost 0.10
Land and construction cost 0.15
Industrial incentives 0.20
Labor cost 0.30
Weighted average method

Pan American REfineries, headquartered in Houston, must decide among three sitesfor the co
center. THe firm has selected the six factors listed below as a basis for evaluation and has as
each factor. Subhajit Chakraborty, the CO, has rated each locationfor each factor on a 1-to-10
1) Whcih site will be recommended based on total weighted scores?
2) If location B's score for Proxiity to port facilities was reset at 90, how would the result chang
3) What score would location B need on Proximity to port facilities to change its ranking?

Factor Name Rating Weight


1 Proximity to port facilities 5
2 Power-source availability and cost 3
3 Workforce attitude and cost 4
4 Distance from Houston 2
5 Community desirability 2
6 Equipment suppliers in area 3
If location B's score for Proxiity to port
facilities was reset at 90, it would not
change the finl decision on selecting the
location.

What score would location B need on Proximity to port facilities to change its ranking?
With one factor alone, we cannot change the decision of selecting the location by
selecting location B, as theweighted score comes up to 120 which is > 100, the maximum
weighted score that a location can take.

Omaha
Annual fixed costs, ($ Million) 1.2
Variable cost per unit, $ 36
Expected annual demand (units) 8000
Revenue per unit, $ 185

Profit -8000
-8000

Factor Weight
Convenient 0.15
Parking facilities 0.20
Display area facilities 0.18
Shopper trafffic 0.27
Operating costs facilities 0.10
Neighborhood facilities 0.10
Weighted score
1.00

Location
Factor A
Business Services 9
Community Services 7
Real Estate Cost 3
Construction Costs 5
Cost of Living 4
Taxes 5
Transportation 6
Scores when weighted equally 39
Scores with weights 5.88889

x
10
9 4 Location
8
7 A
6 9 7
Axis Title

5 7 B
4 C
3 9
2 D
1
Hospital location to
0
0 1 2 3 4 5 stay
6 7
Axis Title near to the
vendours
Locati on proximity of the locati on
10
9 4
8
y co-ordinate distance

7
6 9 7
5 7
4
3 9
2
1
0
0 1 2 3 4 5 6 7
x co-ordinate distance
., is planning for a new restaurant in Buffalo, New York. Three
e gives the factors for each site.
aurant?
reversed, how would this affect the decision?

Northside 1. Baptist Church is the best location.


Maitland Baptist Church 2. No change even if the weights are reversed,
Mall Baptist Church is the best location.
60 70 80
40 80 30
50 80 60
50 70 40
80 20 90
53.5 69.5 58.5

Northside
Maitland Baptist Church
Mall
60 70 80
40 80 30
50 80 60
50 70 40
80 20 90
52.5 70.5 56.5

aseball team in Tennessee. He wishes to move the Warriors south, either Mobile (Alabama) or
hat Gilbert thinks are imortant, their weights, and the scores for Mobile and Jackson.

score is 75. Why doesn't this impact your decision in part (a)?

Mobile Jackson a) Use Jackson, as the location has the best weighted
80 60 average value.
20 50 b) The incentive score is more than that of the previous
one, and all other factors remain the same. Hence, there is
40 90 no impact on the decion in part (a), still we can use
Jackson, as the location has the best weighted average
value.
a) Use Jackson, as the location has the best weighted
average value.
b) The incentive score is more than that of the previous
one, and all other factors remain the same. Hence, there is
no impact on the decion in part (a), still we can use
70 30 Jackson, as the location has the best weighted average
210 230 value.
53 60
Mobile Jackson
80 75
20 50
40 90
70 30
53 66

opening an office in the U.S. The two cities under


e factor ratings (higher scores are better) for the two cities are
Northeastern locate?

Philadelphia New York *Philadephia has the higher


weighted score as compared to NY,
70 80 hence Philadephia is selected.
40 90
85 75
90 55
80 50
90 50
73 71.25

nufacturer of parts for high-technology cable systems, has been narrowed


emblers, testers, and robotics maintainers in local training centers.
l site to offer training programs, tax breaks, and other industrial incentives.
or each location are shown in the following table. High scores represent

ting for each location.

eights for operating cost and labor cost were reversed? Recompute as
Location
Akron, Biloxi, Carthage, Denver, a) Carthage, Texas is the location
that is chosen as the location has t
OH MS TX CO best weighted average value.
90 80 90 80
95 75 65 85
80 85 95 85
60 80 90 70
90 75 85 60
75 80 85 75
81.5 80 87.5 76

Location
Akron, Biloxi, Carthage, Denver, a) Carthage, Texas is the location
OH MS TX CO that is chosen as the location has the
best weighted average value.
90 80 90 80 b) Yes, because we still have
95 75 65 85 Carthage, Texas is the location that is
chosen as the location has the best
80 85 95 85 weighted average value.
60 80 90 70
90 75 85 60
75 80 85 75
80.5 79 85.5 74

t decide among three sitesfor the construction of new oil processing


s a basis for evaluation and has assigned rating weights from 1 to 5 on
locationfor each factor on a 1-to-100 points basis.
d scores?
et at 90, how would the result change?
acilities to change its ranking?

*Location C is optimal forsetting up the


company/orgn.

Weights Factor Location A Location B Location C


0.2631578947 1 100 80 80
0.1578947368 2 80 70 100
0.2105263158 3 30 60 70
0.1052631579 4 10 80 60
0.1052631579 5 90 60 80
0.1578947368 6 50 60 90
Weighted average method 63.68421053 68.94736842 80.5263157895

Factor Location A Location B Location C


r Proxiity to port
90, it would not 1 100 90 80
on on selecting the 2 80 70 100
3 30 60 70
4 10 80 60
5 90 60 80
6 50 60 90
Weighted average method 63.68421053 71.57894737 80.5263157895

change its ranking? Factor Location A Location B Location C


he location by 1 100 125.8 80
> 100, the maximum
2 80 70 100
3 30 60 70
4 10 80 60
5 90 60 80
6 50 60 90
Weighted average method 63.68421053 81 80.5263157895

Kansas City
1.4 1000000
47
12000
185

256000
256000

Location
A B C
80 70 60
72 76 92
88 90 90
94 86 80
98 90 82
96 85 75
87.02 82.62 80.90
87.02 82.62 80.9

Location
B C
5 5
6 7
8 7
6 5
7 8
5 4
7 8
44 44
6.11111 6.00000

Weekly
x y
quantity
5 7 15
6 9 20
3 9 25
9 4 30

6 7
st location.
weights are reversed,
location.

a) or

best weighted

at of the previous
ame. Hence, there is
ll we can use
weighted average
best weighted

at of the previous
ame. Hence, there is
ll we can use
weighted average
age, Texas is the location
hosen as the location has the
ghted average value.

e, Texas is the location


sen as the location has the
ted average value.
ause we still have
Texas is the location that is
the location has the best
average value.
Problem S7-1

Location factor Weight Mall 1


College proximity 0.30 40
Median income 0.25 90
Vehicle traffic 0.20 60
Mall quality and size 0.10 74
Proximity of other shopping 0.15 80
Sum of the weights 1.00
Total weighted score 65.9
Maximum score 78.55

Problem S7-2

Location factor Weight Mall 1


Political stability 0.25 50
Economic growth 0.18 90
Port facilities 0.15 60
Container support 0.10 50
Land and construction cost 0.08 90
Transportation/distribution 0.08 50
Duties and tariffs 0.07 70
Trade regulations 0.05 70
Airline service 0.02 60
Area roads 0.02 60
Sum of the weights 1.00

Total weighted score 64.70

Maximum score 81.10


2

Problem S7-3

Location factor Weight South


Proximity to housing 0.23 70
Student traffic 0.22 75
Parking availability 0.16 90
Plot size, terrain 0.12 80
Infrastructure 0.10 50
Off-campus accessibility 0.06 90
Proximity to dining 0.05 60
Visitor traffic 0.04 70
Landscape/aesthetics 0.02 50
Sum of the weights 1.00

Total weighted score 73.80

Maximum score 74.50


Problem S7-4

Location factor Weight City 1


Work ethic 0.17 50
Quality of life 0.16 75
Labor laws/unionization 0.12 70
Infrastructure 0.10 60
Education 0.05 80
Labor skill and education 0.07 75
Cost of living 0.05 70
Taxes 0.06 65
Incentive package 0.06 90
Government regulations 0.04 40
Environmental regulations 0.03 65
Transportation 0.01 60
Space for expansion 0.02 90
Urban proximity 0.06 60
Sum of the weights 1.00

Total weighted score 66.50

Maximum score 79.25

Problem S7-5
Location factor Weight Albermarte
Work ethic 0.40 80
Quality of life 0.20 50
Labor laws/unionization 0.15 70
Infrastructure 0.05 90
Education 0.05 40
Labor skill and education 0.05 70
Cost of living 0.05 30
Taxes 0.05 100
Sum of the weights 1.00

Total weighted score 69.00

Maximum score 76.00


Mall 2 Mall 3 Mall 4
50 90 60
80 75 70
75 79 90
100 80 90
30 60 70

64.5 78.55 73

Mall 2 Mall 3
80 90
80 75
95 90
80 90
50 30
80 70
90 90
95 95
80 70
70 80

81.10 80.55

West A West B East


90 65 80
80 60 85
60 80 70
70 90 65
60 40 60
70 70 70
80 70 80
80 65 55
40 60 70

74.50 67.25 73.90


City 2 City 3 City 4
90 70 75
85 95 90
60 90 70
80 60 65
90 85 95
65 70 80
80 85 70
90 70 60
80 70 80
50 85 55
60 70 80
80 95 70
95 90 90
90 70 80

79.25 78.15 76.20


Oceanfront Calypso Dafuskle Eden isle
70 70 90 60
70 90 60 90
60 70 50 80
80 90 60 80
60 70 80 100
90 90 80 90
80 50 70 60
70 90 80 90

70.00 76.00 74.00 75.00


Warehouse A B Supply Row Total Location
1 360 300 0 660 660 SH
2 40 0 0 340 40 LCI
3 0 200 0 200 200 FI
Demand 400 500 0
Column totoal 400 500 0

15 9
10 7
14 18

Total
transportation
12100
cost
(minimized)