Chapter 8

A computer-based tool for collecting, storing, retrieving and displaying demographic data on maps is ______.

GIS

Better serving existing customers by having a quicker response time when problems occur is a benefit of _____.

Globalization

The increased dispersion of manufacturing and service operations about the world was brought about by ___.

Gobalization

Internet-based retail businesses such as Netflix are ___ location decisions than a distribution-based business such as Amazon.

Much less dependent on

In the context of identifying a suitable site, land costs can be ___ to other site-related factors, such as room for future ___.

Secondary; growth

Clustering refers to ___ types of businesses locating in the same area.

Similiar

Which of the following statements about site selection are true? a. Transportation access can be added if it does not already exist, and is a secondary concern. b. The cost of land is always a primary consideration in the decision process. c. Customer service facilities could consider industrial parks as locations. d. Land, transportation, and zoning are the primary considerations in site selection.

c. Customer service facilities could consider industrial parks as locations. d. Land, transportation, and zoning are the primary considerations in site selection.

Which are the four general plant strategies when a company has multiple manufacturing plants? a. Product plant, market area plant, process plant, profit plant b. Product plant, location plant, process plant, general-purpose plant c. Product plant, market area plant, process plant, general-purpose plant

c. Product plant, market area plant, process plant, general-purpose plant

Which of the following statements about location decisions is not true? a. A business at the beginning of the supply chain are often located near raw materials. b. Central distribution locations are often chosen to minimize distribution costs. c. Web-based business are just as dependent on location decisions as traditional businesses are. d. It is usually difficult to find the one single best location.

c. Web-based business are just as dependent on location decisions as traditional businesses are.

Geographic Information Systems are _____-based tools that are used to display data on ____. They can be used to analyze customer, demographic, and sales data in addition to a variety of other information types.

computer; maps

Two key factors that have made globalization attractive to many organizations are ___ and ___.

- Technological advances - trade agreements

What are possible disadvantages of globalizing operations?

- Transportation costs. - Import restrictions - Security costs - Ethical concerns about labor practices

Trade agreements and technology are ___ in globalization.

Facilitating factors

T or F: All organizations attempt to identify the best location available, in making location decisions.

False

T or F: It is not possible to find more than one additional location at a time using the transportation model.

False

Factor rating is an approach that can be used to evaluate location alternatives. It includes both ___ and ___ inputs.

Quantitative; Qualitative

The importance of factors in location decisions will differ depending on ___. a. management's preference b. the country chosen c. the type of facility

c. the type of facility

What are the steps for making location decisions in correct order?

1. Decide on evaluating criteria 2. Identify important factors. 3. Develop location alternatives. 4. Evaluate alternatives and make a decision.

Which of the following are the assumptions for the locational cost-profit-volume analysis? a. Fixed costs are constant. b. Multiple products are involved. c. Variable costs are linear for the range of output. d. Required level of output can be roughly estimated.

a. Fixed costs are constant. c. Variable costs are linear for the range of output.

Which of the following statements about the center of gravity method are true? a. It does not take existing roads or routing methods into account. b. It can only be used if the amount to be shipped to each destination is not fixed. c. It finds a distribution center location to minimize distribution costs. d. It can only be used for distribution costs, not for travel times.

a. It does not take existing roads or routing methods into account. c. It finds a distribution center location to minimize distribution costs.

___ in the areas of transportation, labor, and raw material are benefits of globalization.

Cost savings

Which of the following is least important as a consideration for a firm at the beginning of a supply chain? A. Access to end consumers B. Access to resources C. Proximity to customers D. Access to transportation infrastructure E. Access to productive labor

A. Access to end consumers

Which of the following circumstances would be least likely to lead to a need for a new location? A. Shifting of markets. B. Depletion of basic inputs. C. Growth in demand that is leading to greater utilization of existing capacity. D. The need to expand into new markets. E. The opportunity to take advantage of globalization trends.

C. Growth in demand that is leading to greater utilization of existing capacity.

T or F: Technology has made communication with global operations as easy as local communication.

False

T or F: The fact that most types of firms are located in every section of the country suggests that in many cases, location decisions are not overly important; one location typically is as good as another.

False

T or F: You cannot make a mistake by locating where labor costs are low.

False

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: Location FC (annual) VC (per unit) Atlanta $80,000 $20 Phoenix $140,000 $16 What would be the total annual costs at the point of indifference?

$380.00

What are the steps of the locational cost-profit-volume analysis in correct order?

1. Determine the fixed and variable costs associated with each alternative. 2. Plot the total-cost lines for all alternatives on the same graph. 3. Determine which location has the lowest total costs (or highest profit) at the expected output levels.

Place the steps for factor rating in correct order.

1. Determine which factors are relevant 2. Assign a weight to each factor. 3. Decide on a common scale for all factors. 4. Score each location alternative. 5. Multiply the factor weight by the factor score. Add the results for each alternative. 6. Choose the alternative that has the highest composite score.

Locational cost-profit-volume analysis assumes: (I) nonlinear variable costs. (II) fixed costs that are constant over the range of possible output. (III) accurate estimates regarding the required level of output. (IV) multiple products. A. I, III, and IV only B. II and III only C. I, II, and III only D. II, III, and IV only E. I, II, III, and IV

B. II and III only

T or F: For service and retail stores, a prime factor in location analysis is customer access.

True

T or F: Services tend to locate overseas for the low labor cost.

True

Which of the following statements about location planning is not true? a. Both manufacturing and service focus primarily on traffic patterns and competitor locations. b. Abundant energy supplies can be important for manufacturing companies. c. Transportation costs can be a major factor for manufacturing companies. d. Services often try to locate in close proximity to their market.

a. Both manufacturing and service focus primarily on traffic patterns and competitor locations.

Which of the following statements about service and retail locations are true? a. Customer safety and security can be important factors. b. They tend to not want to locate near competitors. c. They are usually cost-focused. d. They are usually found near the center of the markets they serve. e. They are usually revenue-focused.

a. Customer safety and security can be important factors. d. They are usually found near the center of the markets they serve. e. They are usually revenue-focused.

Which of the following are reasons companies may choose to locate manufacturing facilities in other countries? a. Delay paying taxes on profits b. Low wage rates c. Avoid taxes through transfer pricing rules d. Changes in exchange rates

a. Delay paying taxes on profits b. Low wage rates c. Avoid taxes through transfer pricing rules

Which of the following statements about product plant strategy are true? a. Entire products or product lines are produced at in separate plants. b. It can result in economies of scale, reducing costs. c. It can result in significant transportation savings because products are produced close to their final destination. d. Product components are delivered from other manufacturing plants for final assembly.

a. Entire products or product lines are produced at in separate plants. b. It can result in economies of scale, reducing costs.

Which of the following is not an issue associated with managing global operations? a. Need to operate using the local currency b. Increased travel cost and time. c. Miscommunication because of cultural differences d. Coordination of remote operations.

a. Need to operate using the local currency

Identify the factors that affect location decisions while identifying a community. a. Taxes b. Pollution c. Environmental regulations d. Languages spoken

a. Taxes b. Pollution c. Environmental regulations

Which of the following are potential issues in managing global operations? a. bribery b. differences in work ethics c. corruption d. lack of competititon

a. bribery b. differences in work ethics c. corruption

Which of the following are the main options generally considered by managers in location planning of existing companies? a. Outsource production to another company. b. Do nothing c. Shut down one location and move to another d. Expand existing facilities. e. Add new locations while keeping existing ones.

b. Do nothing c. Shut down one location and move to another d. Expand existing facilities. e. Add new locations while keeping existing ones.

Which of the following is not a strategic implication of location decisions? a. Impact availability of raw materials. b. Impact availability of finished goods. c. Impact company flexibility. d. Impact operating cost.

b. Impact availability of finished goods.

Which of the following statements about a market area plant strategy are true? a. It is the same as the product plant strategy because entire product lines are produced at a single plant. b. It requires centralized coordination between all plants. c. Individual plants produce most/all of a company's products for a specific area. d. Enables greater responsiveness to local needs.

b. It requires centralized coordination between all plants. c. Individual plants produce most/all of a company's products for a specific area. d. Enables greater responsiveness to local needs.

Which of the following statements about site selection are true? a. The cost of land is always a primary consideration in the decision process. b. Land, transportation, and zoning are the primary considerations in site selection. c. Transportation access can be added if it does not already exist, and is a secondary concern. d. Customer service facilities could consider industrial parks as locations.

b. Land, transportation, and zoning are the primary considerations in site selection. d. Customer service facilities could consider industrial parks as locations.

Which of the following are reasons companies may choose to not locate manufacturing facilities in other countries? a. Proximity to new markets b. Longer transportation times c. Avoid taxes through transfer pricing rules d. Increased inventory

b. Longer transportation times d. Increased inventory

Which of the following statements regarding service location decisions is true? a. Services tend to locate overseas for the low labor costs. b. Services tend to locate in high-traffic areas. c. Services tend to locate near raw materials. d. Services tend to focus on the cost of utilities.

b. Services tend to locate in high-traffic areas.

When goods will be shipped from multiple sending points to multiple receiving points, which method should be used in deciding where to add a new shipping or receiving location? a. Linear programming b. Transportation model c. Locational cost-volume analysis

b. Transportation model

Many communities try to attract new businesses because they are viewed as potential sources of ___. a. customer service facilities b. future tax revenues c. raw materials d. new job opportunities

b. future tax revenues d. new job opportunities

Which of the following is not a risk associated with globalizing operations? a. Changes in legal environment removing previous benefits. b. Political instability c. Cultural differences d. Low labor productivity.

d. Low labor productivity.

Which of the following are the three primary reasons companies locate near the source of raw materials? a. Perishability, labor costs, transportation costs b. Necessity, perishability, labor costs c. Necessity, labor costs, transportation costs d. Necessity, perishability, transportation costs

d. Necessity, perishability, transportation costs

Which statement best characterizes the objective of a typical search for location alternatives? a. Identify the best location choice. b. Minimize cost consequences. c. Maximize associated profits. d. Locate near markets. e. Identify acceptable locations.

e. Identify acceptable locations.