OPERATIONS MANAGEMENT with TQM

1st Semester SY 2023-2024

Ms. Marissa C. Bautista
Lesson: Location Decisions

1. The location factors, factor rating and scores for two potential sites are shown in
the following table. Which is the best location based on factor rating method?

Factor Rating
Location Factor
rating Site 1 Site 2
1 Labor pool and climate 1 5 4
2 Proximity to suppliers 5 10 6
3 Wage rates 4 3 8
4 Community environment 3 5 5
5 Proximity to customers 2 2 2
6 Shipping modes 1 7 7

2. Let us say we are evaluating 3 factory locations called A, B, and C. Then step 1
would be to determine or obtain the Fixed and Variable cost for those 3
locations. Fixed Cost is usually land, building, and equipment cost and Variable
cost per unit is transportation, labor, overhead, raw materials, etc. Using the
following information below prepare the location breakeven analysis.

Cost Data
Location Site Fixed Costs Variable Costs Price per unit
A 75,000.00 65,000.00 50.00
B 45,000.00 10,000.00 55.00
C 30,000.00 5,000.00 60.00

 Compute for the breakeven quantity per location.

 What would be the profit or loss for the three sites at the breakeven volume?
 Where would you like to locate the factory?

3. Figure shows the X and Y coordinates of seven retail locations of a retail chain.
Information regarding the quantity to be shipped to each of the seven locations
is given in Table. Using the center of gravity method, identify the coordinates of
the optimal location for the warehouse.

Retail Outlet x y Volume (l)

1 4 10 80
2 3.5 15 100
3 4 6 120
4 10 2 130
5 16 6 100
6 8 5 150
7 14 13 90

Plot your answer into two-dimensional plane or grid and determine their
coordinates.

4.

Destinations
I II III IV Supply
Sources

A 8 6 12 400
B 7 11 10 14 500
C 13 8 8 7 600
OPERATIONS MANAGEMENT with TQM
1st Semester SY 2023-2024
Ms. Marissa C. Bautista
Lesson: Location Decisions

Demand 325 425 475 275