Chapter 8 Location Strategies

Industrial location analysis typically attempts to:

A) minimize costs.

What is an approach to location analysis that includes both qualitative and quantitative considerations?

B) factor-rating method

Among the following choices, an operations manager might best evaluate political risk of a country by looking at which type of country ranking?

C) based on corruption

A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost?

A) Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.

Which of the following statements regarding "proximity" in the location decision is TRUE?

A) Service organizations find that proximity to market is the most critical primary location factor. B) Manufacturers want to be near customers when their product is bulky, heavy, or fragile. C) Perishability of raw materials is a good reason for manufacturers to locate near the supplier, not the customer. D) Reduction in bulk is a good reason for a manufacturer to locate near the supplier.

A location decision for an appliance manufacturer would tend to have what type of focus?

A) cost focus

Evaluating location alternatives by comparing their composite (weighted-average) scores involves which of the following?

A) factor-rating analysis

Which of the following is a location analysis technique typically employed by a service organization?

A) purchasing power analysis

Intangible costs include which of the following?

A) quality of prospective employees B) quality of education C) availability of public transportation

FedEx chose Memphis, Tennessee, as its U.S. hub because:

A) the city is in the center of the United States, geographically. B) the airport has relatively few hours of bad weather closures. C) it needed a means to reach cities to which it did not have direct flights. D) the firm believed that a hub system was superior to traditional city-to-city flight scheduling. E) All of the above are true.

Location analysis techniques typically employed by service organizations include:

A) the factor rating method. B) the center-of-gravity method. C) purchasing power analysis of area. D) traffic counts. E) all of the above.

Which of the following is a location analysis technique typically employed by a manufacturing organization?

A) transportation method

Which of the following is among the eight determinants of revenue and volume for a service firm?

A) uniqueness of the firm's and the competitors' locations B) quality of the competition C) quality of management D) purchasing power of the customer-drawing area

La Quinta Inns has a competitive edge over its rivals because it:

A) uses regression analysis to determine which variables most influence profitability.

A clothing chain is considering two different locations for a new retail outlet. They have identified the four factors listed in the following table as the basis for evaluation, and have assigned weights as shown. The manager has rated each location on each factor, on a 100-point basis, as shown under the respective columns for Barclay and Chester. Factor Factor Description Weight Barclay Chester 1 Average community income .40 30 20 2 Community growth potential .25 40 30 3 Availability of public transportation .15 20 20 4 Labor cost .20 10 30 What is the score for Chester?

B) 24.50

Which of the following is the best example of the proximity rule that, for service firms, proximity to market is the most important location factor?

B) Few people will travel out of state for a haircut.

Which of the following statements regarding the center-of-gravity method is TRUE?

B) The optimal x- and y-coordinates are calculated separately. C) The optimal solution is unconstrained, so it could suggest a location in the middle of a body of water. D) The weights used are the quantity of goods moved to or from each location. E) The origin of the coordinate system and the scale used are arbitrary, just as long as the relative distances are correctly represented.

Currency risk is based on what assumption? A) Firms that do not continuously innovate will lose market share.

B) Values of foreign currencies continually rise and fall in most countries.

Globalization of the location decision is the result of all EXCEPT which of the following?

B) higher quality of labor overseas

The reason fast food restaurants often are found in close proximity to each other is:

B) location clustering near high traffic flows.

The transportation model, when applied to location analysis:

B) minimizes total production and transportation costs.

Governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. What is the term associated with this phenomenon?

B) political risk

Which of the following is NOT among the eight determinants of revenue and volume for a service firm?

B) shipment cost of finished goods

Production and transportation costs are always considered in which of the following location decision methods?

B) transportation model

Which of the following is most likely to affect the location strategy of a manufacturing firm?

B) utility costs

A employee produces 15 parts during a shift in which he made $90. What is the labor content of the product?

C) $6

Which of the following statements regarding FedEx is TRUE?

C) FedEx believes the hub system helps reduce mishandling and delays due to better controls.

Which of the following assumptions is NOT associated with strategies for goods-producing location decisions?

C) High customer-contact issues are critical.

________ and ________ are to key country success factors as ________ and ________ are to key region success factors.

C) Labor cost, currency risk; land costs, proximity to customers

Traffic counts and purchasing power analysis of drawing area are techniques associated with:

C) a retail or professional service location decision.

A jewelry store is more likely than a jewelry manufacturer to consider ________ in making a location decision.

C) appearance/image of the location

A regional bookstore chain wants to build a distribution center that is centrally located for its eight retail outlets. It will most likely employ which of the following tools of analysis?

C) center-of-gravity method

Geographic information systems can assist the location decision by:

C) combining geography with demographic analysis.

When making a location decision at the region/community level, which of these would be considered?

C) cost and availability of utilities

The center-of-gravity method is used primarily to determine what type of locations?

C) distribution center locations

Which of the following methods best considers intangible costs related to a location decision?

C) factor-rating method

Which of the following is most likely to affect the location decision of a service firm rather than a manufacturing firm?

C) parking and access

In location planning, environmental regulations, cost and availability of utilities, and taxes are:

C) regional/community factors

A location decision for a traditional department store (e.g., Macy's) would tend to have what type of focus?

C) revenue focus

Tangible costs include which of the following?

C) taxes

Which of these factors would be considered when making a location decision at the site level?

C) zoning regulations

Why is Northern Mexico used as a cluster for electronics firms?

D) NAFTA

Which of the following is usually NOT one of the top considerations in choosing a country for a facility location?

D) zoning regulations

What describes a system that stores and displays information that can be linked to a geographic location?

E) GIS

As described in the book Aerotropolis, nowadays location decisions worldwide are often being based on what?

E) airports

Community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods?

E) factor-rating method

When making a location decision at the country level, which of these would be considered? A) corporate desires

E) location of markets

Which of these factors would be considered when making a location decision at the region/community level?

E) proximity to raw materials and customers

Which of the following is NOT one of the predictive variables chosen by the profitability regression model used by La Quinta Inns? A) the price of the inn B) median income levels C) the state population per inn D) the location of nearby colleges E) the number of inns in a region

E) the number of inns in a region

On the crossover chart where the costs of two or more location alternatives have been plotted, the quantity at which two cost curves cross is the quantity at which:

E) total costs are equal for two alternative locations.