14 KRM Om10 Tif ch11

Operations Management: Processes and Supply Chains, 10e (Krajewski et al.
)
Chapter 11 Supply Chain Location Decisions
1) If the customer must be physically present at the process, location is an important issue.
Answer: TRUE
Reference: Introduction
Difficulty: Easy
Keywords: location, physical presence, customer
Learning Outcome: Discuss factors affecting location decision and describe common methods for
location selection
2) Two conditions must be met by factors selected to evaluate location decisions: the factors must have a
high impact on the company's ability to meet its goals and the factors themselves must be affected by the
location decision.
Answer: TRUE
Reference: Factors Affecting Location Decisions
Difficulty: Moderate
Keywords: location decision, goal impact, labor, factor impact
location selection
3) When outbound transportation costs are a dominant factor, manufacturing facilities should be located
close to suppliers and resources needed for production.
Answer: FALSE
Keywords: outbound transportation cost, suppliers, resources
location selection
4) One dominant factor in locating manufacturing facilities is a favorable labor climate.

Answer: TRUE
Keywords: labor climate, manufacturing location factor
location selection
5) Traffic flows are one dominant factor in locating manufacturing location.

Answer: FALSE
Keywords: traffic flow, manufacturing location factor
location selection
11-1
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
6) Service location decisions are driven primarily by the operating costs at the locations under
consideration.
Answer: FALSE
Keywords: service location factor, cost, revenue
location selection
7) Many firms are concluding that large, centralized manufacturing facilities in low-cost countries with
poorly trained workers are not sustainable.
Answer: TRUE
Keywords: offshoring, location factor, manufacturing
location selection
8) Critical mass is a situation whereby several competing firms cluster near one location, and thus attract
more customers than the total number who would shop at the same stores in scattered locations.
Answer: TRUE
Difficulty: Easy
Keywords: critical mass, cluster of competing firms, attraction of customers
location selection
9) A geographic information system contains demographic information.

Answer: TRUE
Reference: Geographical Information Systems and Location Decisions
Difficulty: Easy
Keywords: GIS, geographic information system, demographic information
10) More than 80 percent of all relocations are within 10 miles of the first location, so usually the existing
workforce is displaced.
Answer: FALSE
Reference: Locating a Single Facility
Keywords: relocation, workforce displacement
11) Repeated onsite expansion ultimately leads to diseconomies of scale.

Answer: TRUE
Keywords: onsite expansion, diseconomies of scale
11-2
12) When comparing several sites, typically a company will pick specific available site locations, then
broaden their choices to communities, and finally to alternate regions.
Answer: FALSE
Difficulty: Easy
Keywords: comparing several sites, alternative regions, alternative communities specific sites
location selection
13) On average, it is less expensive to relocate a service-oriented business than a manufacturing business.
Answer: TRUE
Difficulty: Easy
Keywords: relocation expense, manufacturing business, service-oriented business
location selection
14) A preference matrix is a special case application of the load-distance method of comparing several
potential site locations.
Answer: FALSE
Difficulty: Easy
Keywords: preference matrix, load-distance method
location selection
15) A preference matrix permits consideration of more location factors than both the transportation
method and the load-distance model.
Answer: TRUE
Difficulty: Easy
Keywords: preference matrix, load-distance method, transportation model
location selection
16) The center of gravity method considers a greater number of location factors than the break-even
analysis.
Answer: FALSE
Difficulty: Easy
Keywords: center of gravity method, break-even analysis
location selection
11-3
17) Qualitative factors are typically evaluated in terms of dollars in the preference matrix method.
Answer: FALSE
Difficulty: Easy
Keywords: qualitative factors, preference matrix
location selection
18) When using the load-distance method to select a new location, the decision maker can represent the
number of trips to be made, the number of customers needing a physical presence, or number of tons per
week, among other measures, as loads.
Answer: TRUE
Difficulty: Easy
Keywords: load-distance method, location
location selection
19) A decision maker using break-even analysis must assume that suppliers do not provide discounts for
large orders.
Answer: TRUE
Keywords: break-even analysis
location selection
20) Break-even analysis can help a manager compare location alternatives on the basis of quantitative
factors that can be expressed in terms of total cost.
Answer: TRUE
Keywords: break-even analysis, quantitative factors
location selection
21) When a firm with a network of existing facilities plans a new facility, the new facility is assumed to
operate independently of the existing ones.
Answer: FALSE
Reference: Locating a Facility Within a Supply Chain Network
Keywords: facility network, new facility, dependent operation
11-4
22) Geographical Information System (GIS) tools are useful in solving single-facility location problems,
but because of software limitations, cannot be used for determining multiple-facility locations.
Answer: FALSE
Difficulty: Easy
Keywords: facility network, GIS, single-facility locations, multiple-facility locations
location selection
23) When using Geographical Information System (GIS) tools to solve multiple-facility location problems,
an analyst may also use load-distance scores and center of gravity data to arrive at trial locations.
Answer: TRUE
Keywords: facility network, multiple-facility locations, GIS, load-distance method, center of gravity
method
location selection
24) Because Geographical Information System (GIS) tools are primarily quantitative in nature, a firm's
managerial criteria, such as proximity to major metropolitan areas, are not able to be included in the GIS
analysis.
Answer: FALSE
Difficulty: Easy
Keywords: facility network, GIS, managerial criteria
location selection
25) Solution guidelines, or rules of thumb, that find feasiblebut not necessarily the bestsolutions to
problems are called heuristics.
Answer: TRUE
Keywords: heuristics, solution guidelines, feasible solution
location selection
26) Simulation is a procedure used to determine the "best" solution that generally uses simplified and less
realistic views of a problem.
Answer: FALSE
Keywords: simulation, optimization
location selection
11-5
27) The transportation method provides optimal solutions for minimization of shipping costs in multiple
facility location problems.
Answer: TRUE
Reference: The Transportation Method
Keywords: transportation method, minimum shipping costs
28) A dummy plant is useful for problems where the sum of the plant capacities equals the sum of the
demands.
Answer: FALSE
Reference: The Transportation Method
Keywords: dummy, plant
29) An important factor for locating new manufacturing plants is:

A) proximity to customers.
B) location of competitors.
C) proximity to markets.
D) favorable labor climate.
Answer: D
Keywords: location factors, labor climate
location selection
30) A favorable labor climate might include all of the following EXCEPT:
A) a good work ethic.
B) no union presence.
C) high average wages.
D) an educated work force.
Answer: C
Difficulty: Easy
Keywords: labor climate, wage rates
location selection
11-6
31) Quality of life issues include:
A) proximity to markets.
B) prevailing wage rates.
C) local and state taxes.
D) recreational facilities.
Answer: D
Keywords: quality of life, recreational facilities
location selection
32) Which of the following location factors was NOT found to dominate location decisions for new U.S.
manufacturing plants?
A) proximity to the parent company's facilities
B) quality of life
C) proximity to competitors' facilities
D) favorable labor climate
Answer: C
Keywords: location factor, competitor's facilities
location selection
33) Which of the following statements about locating facilities in the service sector is best?
A) The factors that apply to manufacturing firms often also apply to service facilities, but the impact of
the location on sales and customer satisfaction is an important addition.
B) Management should avoid locating facilities where competitors are already well established, as
illustrated by new car showrooms.
C) Creating a critical mass is a strategy that avoids locating near competing firms.
D) "Site specific" factors are the main reason for locating warehousing and distribution operations near
the customer.
Answer: A
Keywords: locating service facility, impact on sales, impact on customer satisfaction
location selection
11-7
34) Which of these is NOT identified as a component of a geographical information system?
A) hardware
B) data
C) software
D) network
Answer: D
Keywords: GIS, geographical information system
35) Which of these is NOT a common functionality of a GIS?

A) data storage
B) communication
C) map display
D) modeling
Answer: B
Keywords: GIS, geographical information system
location selection
36) Which of the following usually is an advantage of on-site expansion, compared to building a new
facility?
A) reduced construction time and costs
B) focused facility
C) simplified production control
D) reduced transportation cost
Answer: A
Keywords: on-site expansion, new facility
location selection
37) Most firms that choose to relocate operations have:

A) more than 500 employees.
B) more than 100 employees but fewer than 500 employees.
C) more than 10 employees but fewer than 100 employees.
D) fewer than 10 employees.
Answer: D
Keywords: facility relocation, number of employees
11-8
38) Which one of the following is usually an advantage of building a new facility, compared to on-site
expansion?
A) reducing construction time and costs
B) keeping management together
C) reducing transportation costs
D) not splitting up operations
Answer: C
Keywords: new facility, on-site expansion
location selection
39) Which of the following statements about company relocations is best?

A) Less than 80 percent of all relocations are made within 20 miles of companies' original locations.
B) More than 80 percent of all relocations are made within 20 miles of companies' original locations.
C) More than 20 percent of all relocations are made within 8 miles of companies' original locations.
D) Less than 20 percent of all relocations are made within 80 miles of companies' original locations.
Answer: B
Keywords: relocation, new facility, relocation distance
40) A quantitative method used to evaluate single locations based primarily on proximity is:
A) break-even analysis.
B) the transportation method.
C) a preference matrix.
D) the load-distance method.
Answer: D
Keywords: load-distance method, quantitative evaluation method, single location
location selection
41) Which of these is most likely to be classified as a "load" when using the load-distance model?
A) a process
B) a supplier
C) a shipment
D) a customer
Answer: C
Keywords: load-distance method
location selection
11-9
42) The load-distance model is used to minimize the total:
A) number of loads.
B) distance traveled.
C) cost of doing business.
D) profit of competitors.
Answer: B
Difficulty: Easy
location selection
43) Which of these distance calculation methods provides the most accurate input to a load-distance
calculation?
A) GIS
B) rectilinear distance
C) Euclidean distance
D) center of gravity
Answer: B
Difficulty: Easy
location selection
44) The center of gravity technique does not take into consideration the:
A) total volume of product any given site receives.
B) location of any given site.
C) number of locations that must be served.
D) balance of supply and demand.
Answer: B
Difficulty: Easy
location selection
11-10
45) A quantitative method used to evaluate multiple locations based on total cost of production or service
operations is called:
A) break-even analysis.
B) the transportation method.
C) a preference matrix.
D) the load-distance method.
Answer: A
Keywords: break-even analysis, quantitative evaluation method, multiple locations
location selection
46) Which of the following statements about break-even analysis is incorrect?

A) No start-up costs exist.
B) Economies of scale cannot be achieved.
C) Variable costs vary as output changes.
D) Fixed costs vary as output changes.
Answer: D
Keywords: break-even analysis, fixed costs
location selection
47) Which of the following statements concerning the use of the Geographical Information System (GIS)
method for locating multiple facilities is TRUE?
A) GIS helps with general facility locations, but is not able to identify specific locations because the
transportation structure of roads and interstate highways can't be included in the GIS databases.
B) Load-distance scores and center of gravity data can be merged with customer databases to arrive at
trial locations for facilities.
C) When locating two new facilities, the entire operating area is split into four subregions, two for each
new facility, so the best two locations from the four subregions can be selected.
D) One weakness of the GIS method is that it is slow and cumbersome, and significant time must be
allowed in order to reach a reasonable multiple-facility location decision.
Answer: B
Reference: Locating a Facility within a Network of Facilities
Keywords: Geographical Information System, GIS, multiple-facility location decisions
location selection
11-11
48) Which of the following is an example of an organization using the Geographical Information System
(GIS) method for locating multiple facilities?
A) A company that is searching for a location for its combination manufacturing plant and warehouse to
better serve several geographical regions of the country.
B) Load-distance scores and center of gravity data being used to locate a facility to provide better
customer service for multiple customers.
C) A company that is searching for a manufacturing plant location that provides enough space for the
plant to double in size over the next five years.
D) A hospital network that wants to locate several satellite medical facilities in outlying areas to better
serve a major metropolitan area.
Answer: D
Reference: Locating a Facility within a Network of Facilities
Keywords: Geographical Information System, GIS, multiple-facility location decisions
location selection
49) Widgets, Inc. wishes to locate two new manufacturing facilities. Based on the following subjective
criteria, where should the new facilities be located? (Excellent = 5, Very good = 4, Good = 3, Fair = 2, Poor
= 1)
A) B and D
B) A and D
C) C and D
D) D and E
Answer: B
Keywords: location factors, preference matrix, weighted score
AACSB: Analytic skills
11-12
50) McKenna Restaurant wishes to open a new store. Based on the following subjective criteria, where 10
is excellent and 0 is poor, where should the new store be located?
A) A
B) B
C) C
D) D
Answer: C
51) The point has been reached where a biotechnology research and development company must expand
by building a new facility. The search has been narrowed to four locations, all of which are acceptable to
management. The assessment of these sites is being made on the basis of the six subjective location factors
that follow. Management has agreed to use a five-point scale (Excellent = 5, Very good = 4, Good = 3, Fair
= 2, Poor = 1) to quantify and compare their subjective opinions about the relative goodness of the sites.
The weight reflects the importance of each factor in the decision.
Calculate the weighted score for each alternative. Which location would you recommend?
A) A
B) B
C) C
D) D
Answer: C
11-13
52) Acme Fasteners desires to locate a new facility. Based on preliminary analysis, the choice has been
reduced to four locations: A, B, C, and D. These four locations were rated on a scale from 1 (worst) to 10
(best) on each of four criteria. Each criterion was also weighted to indicate its importance (i.e., the higher
the weight, the more important). The list of ratings and weights follows.
Based on weighted scores, where should Acme locate its new facility?
A) A
B) B
C) C
D) D
Answer: A
53) Sweet Candy, Inc. wishes to open two new stores. Based on the following subjective criteria, where
should the new stores be located? The higher the score, the better.
A) A and B
B) B and C
C) B and D
D) B and E
Answer: D
11-14
54) The Hunan Restaurant wishes to locate a new facility. Based on the following subjective criteria, where
should the new facility be located? (Very good = 5, Good = 4, Fair = 3, Poor = 2, and Very poor = 1)
A) A
B) B
C) C
D) D
Answer: B
Table 11.1
Four departments are located in adjacent bays in the same loading dock. The distance between adjacent
bays is 30 feet, the distance between bays separated by another (Alpha and Charlie, Bravo and Delta) is 60
feet, and the distance between Alpha and Delta is 90 feet. Material flows (loads) between departments are
shown in the Table below.
To To To To
From Alpha Bravo Charlie Delta
Alpha 0 15 20 30
Bravo 5 0 12 8
Charlie 10 7 0 4
Delta 15 24 6 0
55) Use the information from Table 11.1. Calculate the load distance for location Alpha.
A) 2100
B) 6450
C) 4350
D) 2250
Answer: B
Keywords: load-distance-method, load distance
11-15
56) Use the information from Table 11.1. Calculate the load distance for location Bravo.
A) 3090
B) 3300
C) 2100
D) 1200
Answer: A
Keywords: load-distance-method, load distance
57) Use the information from Table 11.1. Calculate the total load distance for this layout.
A) 3930
B) 18480
C) 9240
D) 12660
Answer: C
Keywords: load-distance-method, total load distance
Table 11.2
A single facility is needed to meet the demands of four markets. The locations and demands of these four
markets are shown below.
Market Coordinates Demand

A (8, 6) 10
B (4, 12) 15
C (3, 2) 10
D (9,6) 6
58) Use the information from Table 11.2. What are the x and y coordinates for the center of gravity?
A) x > 6, y > 7
B) x > 6, y < 7
C) x < 6, y > 7
D) x < 6, y < 7
Answer: C
Keywords: center of gravity method, center of gravity coordinates
11-16
Table 11.3
Durham Toy, Inc. has five distribution centers at the location coordinates given as follows. The monthly
demand at each center is also given.
DC Coordinates Demand
A (10, 12) 40
B (25, 30) 25
C (8, 15) 30
D (11, 20) 10
E (25, 6) 20
59) Use the information in Table 11.3. What are the x and y coordinates for the center of gravity?
A) x > 14, y > 15
B) x < 14, y > 15
C) x <14, y < 15
D) x > 14, y < 15
Answer: A
Keywords: center of gravity method, center of gravity coordinates
60) Use the information in Table 11.3. If the plant is located at the center of gravity, what is the load
distance score, assuming rectilinear distance?
A) less than or equal to 1500
B) more than 1500 but less than or equal to 1600
C) more than 1600 but less than or equal to 1700
D) more than 1700
Answer: C
Keywords: center of gravity, load-distance score, rectilinear distance
11-17
61) Consider the location of four distribution centers, A, B, C, and D, with the following location
coordinates and shipping requirements per week.
Location Coordinates Tons

A (0, 100) 2
B (200, 300) 1
C (500, 600) 3
D (100, 200) 4
Management is considering locating a new plant at the site of one of the four distribution centers. What is
the loaddistance score if the plant is located at distribution center A? (Use rectilinear distance.)
B) greater than 4500 but less than or equal to 5000
C) greater than 5000 but less than or equal to 5500
D) greater than 5500
Answer: A
62) Pinkerton Company has four distribution centers located at the location coordinates given. The
monthly demand at each center is also given.
Coordinates
DC (Miles) Demand
A (100, 150) 50
B (250, 250) 30
C (150, 150) 15
D (200, 300) 100
Assume that management is considering locating its new plant at distribution center A. What is the load
A) less than 33,000
B) greater than 33,000 but less than 33,500
C) greater than 33,500 but less than 34,000
D) greater than 34,000
Answer: B
11-18
63) A single facility is needed to meet the demand of four regions depicted as follows:
Region Center Coordinates Demand

A (2, 10) 20
B (7, 10) 5
C (2, 2) 10
D (7, 4) 10
If the plant is located at A, what is the total loaddistance score, assuming Euclidean (straight line)
distance?
D) more than 180
Answer: C
Keywords: center of gravity, load-distance score, Euclidean distance
Table 11.4
Royal Flush Plumbing Supplies has the following demand forecasts for the five markets that it serves:
Demand
Market Coordinates Forecast
A (3, 1) 10
B (12, 9) 12
C (9, 14) 9
D (8, 8) 4
E (2,10) 15
64) Use the information in Table 11.4. What is the center of gravity?
A) x < 7, y < 8
B) x > 7, y < 8
C) x < 7, y > 8
D) x > 7, y > 8
Answer: C
Keywords: center of gravity method, center of gravity
11-19
65) Use the information in Table 11.4. If Royal Flush decides to locate a warehouse at market D, what is
the total loaddistance score? (Use rectilinear distance.)
A) less than 400
B) between 401 and 450
C) between 451 and 500
D) more than 500
Answer: A
Table 11.5
Paul's Pretzels manufactures and distributes gourmet pretzels for limited retail sales. Paul has determined
the "demand points" and their relative locations as follows:
66) Use the information in Table 11.5. If Paul desires to locate a manufacturing facility at the center of
gravity, what would be the x and y coordinates of the facility?
A) x < 14, y < 14
B) x < 14, y > 14
C) x < 15, y < 14
D) x < 15, y > 15
Answer: C
67) Use the information in Table 11.5. If a facility were to be located at (15,15), what would be the load
distance score? (Assume rectilinear distance.)
D) more than 5400
Answer: D
11-20
Table 11.6
Union Fork, Inc. has five distribution centers located at the location coordinates given as follows. The
demand at each center is also given.
A (2, 4) 10
B (6, 2) 15
C (4, 10) 25
D (13, 4) 30
E (10, 5) 20
A) x > 7.5, y > 6
B) x > 7.5, y < 6
C) x < 7.5, y > 6
D) x < 7.5, y < 6
Answer: B
69) Use the information in Table 11.6. If a plant is located at a center of gravity, what is the loaddistance
score, assuming rectilinear distance?
D) more than 600
Answer: D
70) Use the information in Table 11.6. Assume that two plants, rather than one, are to be locate. Plant 1
serves distribution centers A, B, and C. Plant 2 serves distribution centers D and E. What is the center of
gravity for plant 1?
A) x > 4, y > 7
B) x > 4, y < 7
C) x < 4, y > 7
D) x < 4, y < 7
Answer: B
11-21
71) Use the information in Table 11.6. What is the total loaddistance score for the two plants if Plant 1 is
located at the center of gravity serving distribution centers A, B, and C, and Plant 2 is located at the center
of gravity serving D and E? (Assume rectilinear distance.)
D) more than 400
Answer: B
Difficulty: Hard
72) Use the information in Table 11.6. What is the total loaddistance score for the two plants if Plant 1 is
located at the center of gravity serving A, B, and C, and Plant 2 is at the center of gravity serving D and E?
(Assume Euclidean, or straight line, distance.)
D) more than 280
Answer: C
Difficulty: Hard
73) The Burdell Company has four distribution centers located at the location coordinates given as
follows. The monthly demand at each center is also given.
A (100, 150) 50
B (250, 250) 30
C (150, 150) 15
D (200, 300) 100
Management wants to build a new plant that would be located at the center of gravity of the four
distribution centers. Which of the following options best represents the coordinates of the new plant
location?
A) x coordinate is greater than 150 but less than 170; y coordinate is greater than 210 but less than 230.
B) x coordinate is greater than 150 but less than 170; y coordinate is greater than 230 but less than 250.
C) x coordinate is greater than 170 but less than 190; y coordinate is greater than 210 but less than 230.
D) x coordinate is greater than 170 but less than 190; y coordinate is greater than 230 but less than 250.
Answer: D
11-22
74) Kiddie Clothes wishes to locate its warehouse so that it would serve its four different stores, described
as follows. Based on the center of gravity, what are the x and y coordinates of the proposed warehouse
location?
Store x y Trips / Day

A 1 4 5
B 2 2 1
C 4 3 2
D 3 2 3
A) x is less than or equal to 3; y is less than or equal to 2.

B) x is less than or equal to 3; y is less than or equal to 2.5.
C) x is greater than or equal to 2.5; y is greater than or equal to 3.
D) x is less than or equal to 2.5; y is greater than or equal to 2.9.
Answer: D
75) Bill Burns, district manager of the Pizza Palace, wishes to locate a new store in the metropolitan areas.
Using the following information, what are the x and y coordinates for the center of gravity? Don't round
your answer up or down before making your choice.
Demand
Market (pizzas/day) x coordinate y coordinate
Grandview Heights 250 2 2
Upper Arlington 100 4 5
Bexley 150 7 3
Worthington 350 4 9
Medfield 500 4 3
A) x is less than or equal to 4; y is less or equal to than 4.5.

B) x is greater than or equal to 5; y is greater than or equal to 3.5.
C) x is less than or equal to 3.5; y is less than or equal to 4.5.
D) x is less than or equal to 4; y is greater than or equal to 4.5.
Answer: D
11-23
76) A national drugstore chain prefers to operate one outlet in a town that has four major market
segments. The number of potential customers in each segment, along with the location coordinates, are
given below.
Which would be the best location using the center of gravity method?
A) x > 10, y < 5
B) x < 10, y > 5
C) x < 9, y < 6
D) x < 11, y > 8
Answer: B
77) A grower and shipper of fresh gourmet herbs has determined the following demand forecast for the
five metropolitan markets that the firm serves. Based on your calculations of the center of gravity, where
should the new herb farm be located?
A) x > 6, y > 8
B) x < 5, y > 5
C) x < 7, y > 6
D) x < 6, y >6
Answer: A
11-24
Table 11.7
Nuts-and-Bolts, Inc. wishes to find the best location for a plant that will satisfy customer demand in the
following five areas.
x y
Location coordinate coordinate Volume
A 3 1 35
B 5 0 90
C 8 7 15
D 2 3 20
E 5 4 55
A) x > 9, y > 14
B) x < 4, y > 2
C) x > 4.5, y < 2
D) x < 9, y < 6
Answer: C
79) Use the information in Table 11.7. If the plant is located at the coordinates (5, 5), what is the total load
D) more than 800
Answer: D
80) Use the information in Table 11.7. If the plant is located at the coordinates (5, 5), what is the total load
distance score, assuming Euclidean (straight line) distance?
D) more than 800
Answer: C
11-25
Table 11.8
An operations manager has narrowed down the search for a new plant for Burdell Industries to three
locations. Fixed and variable costs follow.
Location Fixed Cost Variable Cost

A $100,000 $10
B $150,000 $7
C $200,000 $5
81) Use the information in Table 11.8 to determine the best statement.
A) Location C is the best one if volumes are quite high.
B) Location A becomes the most expensive place to produce at volumes in excess of 2,000.
C) The break-even quantity between A and B is less than or equal to 5,000 units.
D) The break-even quantity between C and B is more than 30,000 units.
Answer: A
Keywords: break-even analysis, break-even quantity, optimal ranges
11-26
82) An operations manager has narrowed down the search for a new King Kola plant to three locations.
Fixed and variable costs follow.

A $100,000 $10
B $150,000 $7
C $200,000 $5
Plot the total cost curves in the chart provided and identify the range over which each location would be
best. Then use break-even analysis to calculate exactly the break-even quantity that defines each range.
Which of the following statements is correct?

A) By inspection, it is apparent that only one site will be the best place to produce, even at dramatically
different output volumes.
B) Location A becomes the most expensive place to produce at volumes in excess of 2,000.
Answer: D
11-27
83) An operations manager has narrowed down the search for a new plant for McIntosh Enterprises to
three locations. Fixed and variable costs follow:

A $100,000 $10
B $150,000 $7
C $200,000 $5
Which of the following statements is correct?

A) Location C is the best one if volumes are quite low.
B) Location A becomes the most expensive place to produce at volumes less than 10,000.
Answer: C
11-28
84) Excel Products is planning a new warehouse to serve the Southeast. Locations A, B, and C are under
consideration. Fixed and variable costs follow.
Fixed Cost per Variable Cost

Location Year per Unit
A $2,500,000 $19
B 1,500,000 7
C 2,000,000 9
Which of the following statements is best?

A) Location A is the best one if volumes are quite high.
B) Location B is best over all volume levels.
C) The total cost of location A, if the volume is 250,000 units, is over $8,000,000.
D) The break-even quantity between A and B is more than 75,000 units but fewer than 200,000 units.
Answer: B
11-29
Table 11.9
Sagebrush Company has four warehouses (A, B, C, and D) that require monthly shipments of 250, 200,
300, and 200 units per month, respectively. Its three plants (1, 2, and 3) have monthly capacities of 300,
400, and 250, respectively. Plant capacities, warehouse needs and shipping costs (in $) are shown in the
following initial transportation method tableau. For example, the shipping cost from Plant 1 to
Warehouse A is $17 per unit.
85) Use the information in Table 11.9. What can be said about a plan that ships 200 units from 1 to A, 100
units from 1 to B, 100 units from 2 to B, 300 units from 2 to C, and 250 units from 3 to D?
A) It is not feasible in terms of plant capacities.
B) It is not feasible in terms of satisfying warehouse demands.
C) It is feasible, but not the least-cost allocation pattern.
D) It is the optimal solution.
Answer: B
Keywords: transportation method
86) Use the information in Table 11.9. Which of these statements regarding the problem is correct?
A) Another plant must be added to the tableau because there are more warehouses than plants.
B) A dummy plant must be added due to production volumes.
C) A dummy warehouse must be added to solve this problem.
D) The simplex method can be used to solve this problem.
Answer: D
Keywords: transportation method, simplex method
11-30
87) Use the information in Table 11.9. What is the cost of a plan that ships 150 units from 1 to C, 150 units
from 1 to D, 250 units from 2 to A, 150 units from 2 to C, 200 units from 3 to B, and 50 units from 3 to D?
A) less than $15,000
B) more than $15,000 but less than $16,000
C) more than $16,000 but less than $17,000
D) more than $17,000
Answer: A
11-31
Table 11.10
Sagebrush Company has four warehouses (A, B, C, and D) that require monthly shipments of 250, 200,
300, and 200 units per month, respectively. Its three plants (1, 2, and 3) have monthly capacities of 300,
400, and 450, respectively. Plant capacities, warehouse needs and shipping costs (in $) are shown in the
following initial transportation method tableau. For example, the shipping cost from Plant 1 to
Warehouse A is $17 per unit. A second table showing POM for Windows results from running this
transportation problem is shown below the tableau.
88) Use the information in Table 11.10. The low cost solution indicates a total cost of:
A) $1,150.
B) $950.
C) $14,750.
D) The low cost solution is not provided in Table 11.10.
Answer: C

Difficulty: Easy
11-32
89) Use the information in Table 11.10. Which of the following statements is false?
A) The plants have 200 more units of capacity than the warehouses need.
B) All of the four warehouses' needs are satisfied by the solution shown.
C) Total production by the three plants is 950 units.
D) The total production from plant #3 is 450 units.
Answer: D
Table 11.11
The Neale Company has four distribution centers (A, B, C, and D) that require monthly shipments of
30,000, 24,000, 36,000, and 24,000 gallons of diesel fuel per month, respectively. Three wholesalers (1, 2,
and 3) are willing to supply up to 36,000, 48,000 and 30,000 gallons, respectively. Total costs (in $) for both
shipping and price per gallon follow. A transportation method tableau is provided below.
90) Use the information in Table 11.11. Which of the following statements about this scenario is incorrect?
A) A dummy warehouse is required to complete the analysis.
B) It costs $2 per gallon to ship from Wholesaler 3 to Distribution Center D.
C) It costs $2 per gallon to ship one gallon from Wholesaler 2 to Distribution Center C.
D) It costs $2 per gallon to ship 20,000 gallons from Wholesaler 1 to Distribution Center D.
Answer: A
Keywords: transportation method, dummy warehouse
11-33
91) Use the information in Table 11.11. What can be said about a plan that ships 18,000 gallons from 1 to
C; 18,000 gallons from 1 to D; 30,000 gallons from 2 to A; 18,000 gallons from 2 to C; 24,000 gallons from 3
to B; and 30,000 from 3 to D?
A) It is not feasible in terms of wholesaler availabilities.
B) It is not feasible in terms of satisfying distribution center demands.
C) It is feasible, and the total monthly cost is less than $223,000.
D) It is feasible, and the total monthly cost is greater than $227,000.
Answer: A
Keywords: transportation method, feasible solution, feasibility
92) Use the information in Table 11.11. What can be said about a plan that ships 30,000 gallons from 1 to
A; 6,000 gallons from 1 to C; 24,000 gallons from 2 to B; 24,000 gallons from 2 to D; and 30,000 gallons
from 3 to C?
A) It is not feasible in terms of wholesaler availabilities.
C) It is feasible, and the total monthly cost is less than or equal to $260,000.
D) It is feasible, and the total monthly cost is greater than $260,000.
Answer: C
Keywords: transportation method, feasible solution, feasibility
93) Which of the following is NOT a step in setting up a transportation tableau?

A) Create a row for each plant being considered.
B) Remove the lowest and highest cost intersections from consideration.
C) Create a column for each warehouse being considered.
D) Add a column and a row for plant capacities and total demands.
Answer: B
Keywords: transportation method, tableau
94) Which of the following invalidates any analysis using the transportation method?
A) unequal supply and demand amounts
B) more sources than destinations
C) more destinations than sources
D) lack of a linear increase in shipping costs
Answer: D
11-34
95) The Nelson Company has four distribution centers (A, B, C, and D) that require shipments of 20, 30,
40, and 10 units per week, respectively. Its three plants (1, 2, and 3) have monthly capacities of 40, 30, and
30, respectively. Shipping costs (in $) follow.
What can be said about a plan that ships 40 units from 1 to C, 30 units from 2 to B, 20 units from 3 to A,
and 10 units from 3 to D?
A) It is not feasible in terms of plant capacities.
C) It is feasible, and the weekly shipping cost is less than $1,600.
D) It is feasible, and the weekly shipping cost is greater than $2,000.
Answer: C
Difficulty: Hard
Keywords: transportation method, feasible solution, feasibility, optimal solution
96) The transportation method of production planning is a special case of:

A) linear programming.
B) integer programming.
C) queuing theory.
D) goal programming.
Answer: A
Difficulty: Easy
Keywords: transportation method, linear programming
11-35
Table 11.12
Tanfastic, Inc., a manufacturer of swimwear, is in the process of developing a production plan for the
coming spring break. The ending inventory for January is 30 units. Undertime is paid, at a rate of $5.00
per unit. Details are shown in the following POM for Windows table.
11-36
97) Use the information in Table 11.12. Given the information in the optimal tableau, what is the inventory
carrying cost, in dollars per unit per quarter?
A) less than $1
B) greater than $1 but less than or equal to $2
C) greater than $2 but less than or equal to $3
D) greater than $3
Answer: C
Keywords: production plan, transportation method, inventory holding cost
98) Use the information in Table 11.12. Given the information in the optimal tableau, what is the overtime
cost in dollars per unit?
A) less than $12
B) greater than $12 but less than or equal to $14
C) greater than $14 but less than or equal to $16
D) greater than $16
Answer: C
Keywords: production plan, transportation method, overtime cost
11-37
99) ________ is the process of determining a geographic site for a firm's operations.
Answer: Facility location
Reference: Introduction
Keywords: geographic site, facility location
100) ________ is a function of wage rates, training requirements, attitudes toward work, worker
productivity, and union strength.
Answer: Labor climate
Keywords: labor climate
location selection
101) ________ is a strategy by which several competing firms cluster in one location to attract more
customers than the total who would shop at the same stores at scattered locations.
Answer: Critical mass
Keywords: critical mass
location selection
102) A ________ is a system of computer hardware, software, and data that the firm's personnel can use to
manipulate, analyze and present information relevant to a location decision.
Answer: geographical information system (GIS)
Difficulty: Easy
Keywords: geographical information system, GIS
103) ________ has the advantage of keeping people together, reducing construction time and costs, and
avoiding splitting up operations.
Answer: Onsite expansion
Keywords: onsite expansion
location selection
104) A preference matrix is used to incorporate ________ like community attitudes and quality of life into
a location analysis.
Answer: qualitative factors
Difficulty: Easy
Keywords: qualitative factors, preference matrix
11-38
location selection
105) The objective of the loaddistance method is to minimize the ________ into and out of the facility.
Answer: total weighted loads
location selection
106) If the total supply does not equal the total number of units demanded, then the modeler should use
a(n) ________ warehouse as part of the transportation method.
Answer: dummy
Keywords: tableau, transportation method, dummy
107) Costs that are represented in each cell of a transportation tableau are based on ________.
Answer: per unit or a single unit shipped from a factory to a warehouse
Keywords: tableau, transportation method, cost
108) Each cell in the interior of a transportation tableau not in the requirements row or capacity column is
a(n) ________.
Answer: possible shipping route
Keywords: tableau, transportation method, degeneracy
109) The number of nonzero shipments in an optimal transportation solution will never exceed ________.
Answer: the sum of the number of plants and warehouses minus one
Keywords: tableau, transportation method, degeneracy
110) A(n) ________ is a standard matrix that is used to solve location problems using the transportation
method.
Answer: tableau
Keywords: tableau, transportation method, location
11-39
111) List four of the six dominant factors in locating manufacturing facilities, as discussed in the book.
Answer: Choices include favorable labor climate; proximity to markets; quality of life; proximity to
supplies and resources; proximity to parent company facilities; and utility, tax, and real estate costs.
Keywords: location factors, manufacturing facility
location selection
112) You have the world's most powerful geographic information system at your disposal as you make
your location decision. Using a manufacturer or service business of your choosing, explain what
databases you would mine and how you would arrive at a decision.
Answer: Answers will vary, but depending on the business example selected, should cite databases that
include: customers sales and locations; census tract populations and income levels; and demographics,
such as population of a metropolitan area, city or ZIP code; average income; and number of families with
children. Similarly, roads systems and terrain information databases also play an important role in facility
location decisions and should be included. With these databases, GIS can be used to manipulate, analyze
and present the best location options for a manufacturing or service business.
Keywords: GIS, geographical information systems
location selection
113) What are the trade-offs among on-site expansion, new location, and relocation?
Answer: The advantages of building a new location or moving are that the firm does not have to rely on
production from a single plant, can hire new labor, can modernize with new technology, and can possibly
reduce transportation costs. On-site expansion has the advantage of keeping management together,
reducing construction time and costs, and avoiding the split-up of operations.
Keywords: on-site expansion, new location, relocation
location selection
114) Chapter 11 presents a number of models for location analysis for a single site and two alternatives for
locating multiple facilities. Which of these models are most adaptable to the other purpose, that is, is
which single site location model is best suited to a multiple location puzzle and vice-versa? Why? Discuss
possible crossover models.
Answer: Answers will vary; however, a graphical information system is discussed throughout the chapter
and is most probably the best tool to use for both single-site and multiple-site location decisions.
Reference: Multiple Sections
Keywords: location models
location selection
11-40
115) Pick any three methods of making a single facility location decision; rank them according to the
scope of factors considered, and explain your reasoning.
Answer: The methods discussed in the text for making a single facility location decision (listed in order
of increasing scope and sophistication) are weighted score using a preference matrix, the center of gravity
method, the load distance method, and break-even analysis. Both the center of gravity and the load
distance methods consider only transportation costs (or load) by factoring the number of trips (or volume
of material transported) and the distance between the potential site. The break-even method considers
both fixed and variable costs for a site, transportation being one component of the variable cost. Break-
even analysis also considers the cost of site acquisition, utilities, labor, raw materials, and other factors
that might vary among sites under consideration. The weighted score method using a preference matrix
considers all factors that break-even analysis includes, plus any qualitative factors that the decision maker
deems important. Factors such as climate, growth potential, labor skill, attractiveness, and others can be
included in the analysis by assigning a weight to each factor and a score to each site for each factor.
Keywords: break-even analysis, load distance, center of gravity, preference matrix
location selection
116) Which of the location decision tools is the most objective and can be used by the greatest number of
decision makers to arrive at the same site decision? Which of the location decision tools would result in
the least consistent choice when used by different decision makers? Explain your reasoning.
Answer: Optimization is most objective and will lead to the same site decision by greatest number of
decision makers. Weighted score method using a preference matrix would lead to the least consistent
choice.
Reference: Locating a Single Facility/Locating a Facility within a Supply Chain Network
Keywords: break-even analysis, load distance, center of gravity, transportation, simulation, GIS, heuristic
location selection
117) What is a dummy plant or warehouse and when is it needed?

Answer: The transportation method assigns product built at two or more factories to demand at two or
more warehouses or commercial centers. If the total supply does not equal the total demand, then the
modeler must create a dummy source of supply (or demand whichever is lesser) to make the system
supply match the system demand.
11-41
118) The transportation method is customarily used to minimize transportation costs between sources of
supply and sinks of demand. How could this model be used in other areas of operations management to
maximize profit? Provide examples.
Answer: The logic of the transportation method would be reversed and the values in the tableau would
need to be revenues, but it would be possible to use it to maximize values of interest. If certain markets
were willing to pay a premium for some products, then high numbers would be desirable outcomes.
Examples will vary.
119) A manufacturer's research and development center must expand by building a new facility. The
search has been narrowed to five locations, all of which are acceptable to management. The assessment of
these sites is being made on the basis of the five subjective location factors that follow. Management has
agreed to use a five-point scale (Excellent = 5, and Poor = 1) to quantify and compare their subjective
opinions about the relative goodness of the sites. The weight reflects the importance of each factor in the
decision.
Calculate the weighted score for each alternative. Which location would you recommend?
Answer:
Location A is best with a score of 3.55.

11-42
120) King's Fries company desires to locate a new facility. Based on preliminary analysis, the choice has
been reduced to four locations: A, B, C, and D. These four locations were rated on a scale from 1 (worst) to
10 (best) on each of four criteria. Each criterion was also weighted to indicate its importance (i.e., the
higher the weight, the more important). The list of ratings and weights follows.
Based on weighted scores, where should the King's Fries company locate its new facilities?
Answer:
Location A would be the best using this method.

11-43
121) A veterinarian with a GIS plans to locate her clinic roughly in the middle of a large southwestern
farming area. The locations of the major ranches in the area and the number of head of cattle each has are
shown in the table.
Ranch Cattle Head Latitude Longitude

Lazy W 250 35.657 97.480
Cranky J 375 35.664 97.454
Wandering S 140 35.975 97.330
Rocking G 560 35.623 97.505
Sleeping B 420 35.640 97.400
Short H 330 35.680 97.350
Total Load 2075
What is the center of gravity?

Answer:
Cattle Cattle Head Cattle Head
Ranch Head Latitude Lat Longitude Long
Lazy W 250 35.657 8914.25 97.480 24370
Cranky J 375 35.664 13374 97.454 36545.25
Wandering S 140 35.975 5036.5 97.330 13626.2
Rocking G 560 35.623 19948.88 97.505 54602.8
Sleeping B 420 35.640 14968.8 97.400 40908
Short H 330 35.680 11774.4 97.350 32125.5
Total 2075 74016.83 202177.8
Latitude = 74016.83/2075 = 35.671

Longitude = 202177.8/2075 = 97.435
Difficulty: Easy
11-44
122) A company has determined the "demand points" and their relative locations as follows:
X Y
Demand Points Coordinate Coordinate Load
A 10 11 150
B 21 18 150
C 15 12 200
D 21 15 250
Total Load 750
If a company desires to locate a manufacturing facility at the center of gravity, what would be the x and y
coordinates of the facility?
Answer:
x* = [10(150)+21(150)+15(200)+21(250)]/750 = 17.20,
y* = [11(150)+18(150)+12(200)+15(250)]/750 = 14.00
123) A company has determined the "demand points" and their relative locations as follows:
X Y
Demand Points Coordinate Coordinate Load
A 12 15 1000
B 22 9 450
C 16 14 750
D 14 15 550
Total Load 2750
If a company desires to locate a manufacturing facility at the center of gravity, what would be the x and y
coordinates of the facility?
Answer:
x* = [12(1000)+22(450)+16(750)+14(550)]/2750 = 15.13,
y* = [15(1000) +9(450)+14(750)+15(550)]/2750 = 13.75
11-45
124) The operations manager has narrowed down the search for a new plant to three locations. Fixed and
variable costs follow.
a. What is the break-even quantity between A and B?

b. What is the break-even quantity between B and C?
11-46
Answer:
A & B: B & C:
70,000 + 25x = 120,000 + 22x 120,000 + 22x = 250,000 + 17x
3x = %0,000 5x = 130,000
x = 16,666. x = 26,000
11-47
125) Consider the transportation tableau shown below. What is the minimum cost of transporting the
production from Ada, Bugtussle, and Choctaw to Durant, Edmond, and Foss if costs per unit are shown
at the intersections of each location?
Durant Edmond Foss Capacity

Ada 5 7 3 200
Bugtussle 3 4 4 300
Choctaw 8 6 8 200
Requirements 250 300 150
Answer: The optimal tableau is:
Durant Edmond Foss Capacity

Ada 50 150 200
Bugtussle 200 100 300
Choctaw 200 200
Requirements 250 300 150
Total Cost = Unit Shipping Cost #Units Shipped

Total Cost = 50 $5 + 200 $3 + 100 $4 + 200 $6 + 150 $3 = $2,900
11-48
126) A national firm has beef jerky processing facilities in Locations 1, 2, 3, and 4. They ship to central
distributors (represented as A, B, C, and D) handling four regions of the country. The per-unit shipping
costs between each possible combination of locations are shown in the following table.
A B C D
1 $5 $10 $5 $4
2 $3 $4 $4 $3
3 $8 $6 $8 $2
4 $2 $3 $5 $9
The processing facility locations are capable of monthly production (in tons) as follows:
Location 1: 600
Location 2: 350
Location 3: 475
Location 4: 850
The central distributors have firm commitments for the following quantities:
Distributor A: 650
Distributor B: 725
Distributor C: 400
Distributor D: 500
What is the lowest-cost shipping arrangement that can be made between the plant locations and
distributors and what is the annual shipping cost?
Total Cost = Unit Shipping Cost #Units Shipped

Total Cost = 175 $5 + 475 $2 + 350 $4 + 375 $3 + 400 $5 + 25 $4 + 475 $2 = $7,400
11-49
127) Five sources exist for the civet cat coffee favored by true coffee connoisseurs. The four processing
centers for these coffee beans are scattered about the country, each with a different level of demand. The
five sources all face different cost structures for transporting their beans, the prices in the table reflect a
dollar cost per 50 pound bag of coffee beans. The total amounts supplied by each source and demanded
by each destination are also shown in the table, and as luck would have it, the total supply equals the total
demand. What is the optimal shipping scheme such that the total transportation cost is minimized?
Destination 1 Destination 2 Destination 3 Destination 4 Supply

Source 1 $5 $7 $2 $9 400
Source 2 $8 $6 $3 $4 400
Source 3 $11 $15 $18 $11 300
Source 4 $9 $6 $4 $3 200
Source 5 $7 $9 $11 $8 200
Demand 500 350 250 400 1500
Destination 1 Destination 2 Destination 3 Destination 4

Source 1 150 0 250 0
Source 2 0 350 0 50
Source 3 150 0 0 150
Source 4 0 0 0 200
Source 5 200 0 0 0
The total cost of this solution is $8850

11-50
128) As legend has it, Buddhist monks trained monkeys to gather the youngest leaves from the tops of
wild tea trees. The deft, monkey -picked leaves are unbroken and evenly sized to create the finest oolong
tea in the world. There are five plantations that use monkeys for this task and four tea centers where the
leaves must be shipped. The cost to send a kilogram of leaves from each plantation to each tea center is
shown in the table. Note that supply equals demand in this scenario. What is the optimal shipping
scheme such that the total transportation cost is minimized?
Tea House 1 Tea House 2 Tea House 3 Tea House 4 Supply

Monkey 1 $12 $13 $23 $15 400
Monkey 2 $6 $17 $11 $4 400
Monkey 3 $6 $14 $13 $19 300
Monkey 4 $8 $10 $6 $8 200
Monkey 5 $21 $22 $5 $21 200
Demand 500 350 250 400 1500
Tea House 1 Tea House 2 Tea House 3 Tea House 4

Monkey 1 50 350 0 0
Monkey 2 0 0 0 400
Monkey 3 300 0 0 0
Monkey 4 150 0 50 0
Monkey 5 0 0 200 0
The total cost of this solution is $11,050

11-51

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Operations Management: Processes and Supply Chains, 10e (Krajewski et al.

4) One dominant factor in locating manufacturing facilities is a favorable labor climate.

5) Traffic flows are one dominant factor in locating manufacturing location.

9) A geographic information system contains demographic information.

11) Repeated onsite expansion ultimately leads to diseconomies of scale.

29) An important factor for locating new manufacturing plants is:

35) Which of these is NOT a common functionality of a GIS?

37) Most firms that choose to relocate operations have:

39) Which of the following statements about company relocations is best?

46) Which of the following statements about break-even analysis is incorrect?

Market Coordinates Demand

Location Coordinates Tons

Region Center Coordinates Demand

Store x y Trips / Day

A) x is less than or equal to 3; y is less than or equal to 2.

A) x is less than or equal to 4; y is less or equal to than 4.5.

Location Fixed Cost Variable Cost

Location Fixed Cost Variable Cost

Which of the following statements is correct?

Location Fixed Cost Variable Cost

Which of the following statements is correct?

Fixed Cost per Variable Cost

Which of the following statements is best?

Reference: Locating a Facility Within a Supply Chain Network

93) Which of the following is NOT a step in setting up a transportation tableau?

96) The transportation method of production planning is a special case of:

117) What is a dummy plant or warehouse and when is it needed?

Location A is best with a score of 3.55.

Location A would be the best using this method.

Ranch Cattle Head Latitude Longitude

What is the center of gravity?

Latitude = 74016.83/2075 = 35.671

a. What is the break-even quantity between A and B?

Durant Edmond Foss Capacity

Answer: The optimal tableau is:

Durant Edmond Foss Capacity

Total Cost = Unit Shipping Cost #Units Shipped

Answer: The optimal tableau is:

Total Cost = Unit Shipping Cost #Units Shipped

Destination 1 Destination 2 Destination 3 Destination 4 Supply

Answer: The optimal tableau is:

Destination 1 Destination 2 Destination 3 Destination 4

The total cost of this solution is $8850

Tea House 1 Tea House 2 Tea House 3 Tea House 4 Supply

Answer: The optimal tableau is:

Tea House 1 Tea House 2 Tea House 3 Tea House 4

The total cost of this solution is $11,050

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