Week 8 Chapter 8 Problem Set #3

Due no later than Sunday, October 25

Page 1 of 4

Chapter 8, Location Strategies (50 points available)

Problem 1 - (8 points)
In Cambodia, five laborers, each making the equivalent of $3.00 per day, can produce 40
units per day. In China, nine laborers, each making the equivalent of $2.25 per day, can
produce 45 units. In Billings, Montana, three laborers, each making $60.00 per day, can
make 105 units.
Based on labor cost per unit only, the most economical location to produce the item is
______________, with a labor cost per unit of $_____ (enter your response rounded to
two decimal places).
Problem 2 - (8 points)
Gayla Delong owns the Oklahoma Warriors, a minor league baseball team in northwest
Oklahoma. She wishes to move the Warriors east, to either Atlanta or Charlotte. The
table below gives the factors that Gayla thinks are important, their weights, and the
scores for Atlanda and Charlotte.
Factor

Weight

Atlanta

Charlotte

Incentive

0.40

75

65

Player Satisfaction

0.30

15

45

Sports Interest

0.20

40

90

Size of city

0.10

75

25

Based on the given information, the best location for the Warriors to relocate to is
______________, with a total weighted score of ______ (enter your response rounded
to two decimal places).

Week 8 Chapter 8 Problem Set #3

Due no later than Sunday, October 25

Page 2 of 4

Problem 3 - (8 points)
Peter Billington Stereo, Inc., supplies car radios to auto manufacturers and is going to
open a new plant. The company is undecided between Detroit or Dallas as the site. The
fixed costs in Dallas are lower due to cheaper land costs, but the variable costs in Dallas
are higher because shipping distances would increase.
Dallas

Detroit

Fixed Costs

$640,000

$780,000

Variable Costs

$30/radio

$22/radio

a) Based on the analysis of the volume, after rounding the numbers to the nearest
whole number, Dallas is the best below and Detroit is the best above ________
units.
b) Dallass fixed costs have increased by 10%. Based on the analysis of the volume,
after rounding the numbers to the nearest wole number, Dallas is best below and
Detroit is bet above ________ radios
Problem 4 - (10 points)
The main post office in Tampa, Florida, is due to be replaced with a much larger, more
modern facility that can handle the tremendous flow of mail that has followed the citys
growth since 1970. Since all mail, incoming or outgoing, travels from the seven regional
post offices in Tampa through the main post office, its site selection can mean a big
difference in overall delivery and movement efficiency. Using the data in the following
table, calculate the center of gravity location for the proposed new facility.
Regional Post Office
Ybor City
Davis Island
Dale-Mabry
Palma Ceia
Bayshore
Temple Terrace
Hyde Park

Map Coordinates (x,y)

(10,5)
(3,8)
(4,7)
(15,10)
(13,3)
(1,12)
(5,5)

The center of gravity is:

x = ____ (round your answer to two decimal places)
y = ____ (round your answer to two decimal places)

Truck Round-trips per Day

3
3
2
6
5
3
10

Week 8 Chapter 8 Problem Set #3

Due no later than Sunday, October 25

Page 3 of 4

Problem 5 - (16 points)

The unification of Europe has brought about changes in airline regulation that
dramatically affect major European carriers such as British International KLM, Air
France, Alitalia, and Swiss. With ambitious expansion plans, British International Air
(BIA) has decided it needs a second service hub on the continent, to complement its
large Heathrow (London) repair facility. The location selection is critical, and with the
potential for 4,000 new skilled blue-collar jobs on the line, virtually every city in Western
Europe is actively bidding for BIAs business. After initial investigations by Holmes Miller,
head of Operations Department, BIA has narrowed the list to 9 cities. Each is then rated
on 12 factors, as shown in the table below.

Factor Description

Weight Milan Rome Genoa Paris Lyon Nice Munich Bonn Berlin

Financial incentives
Skilled labor pool
Existing facility
Wage rates
Competition for jobs
Ease of air traffic access
Real estate cost
Communication link
Alternativeness to
relocating executives
Political considerations
Expansion possibilities
Union strength

90
85
75
70
65
60
40
30

7
4
6
9
8
4
5
5

8
6
7
8
3
4
3
6

8
4
2
10
9
5
8
7

7
8
8
3
1
2
5
9

7
8
6
7
7
8
7
10

7
8
6
5
8
9
5
10

6
10
8
3
4
3
3
10

6
9
9
4
8
9
5
9

8
8
1
6
9
9
5
8

20

15
10
15

5
8
1

6
3
2

5
8
1

9
2
4

8
6
6

7
4
6

9
5
7

1
5
7

8
5
7

a. Based on the given information, the best location for the aircraft servicing facility is
____________, with a total weighted score of ________.
b. After further investigation, Miller decides that an existing set of hangar faciliteis for
repairs (factor 3) is not nearly as important as earlier thought. If he lowers the
weight of that factor to 30, after this change, the best location for the aircraft
servicing facility is _______________, with a total weighted score of _________.

Week 8 Chapter 8 Problem Set #3

Due no later than Sunday, October 25

Page 4 of 4

c. After further investigation, Miller decides that an existing set of hanager facilities for
repairs (factor 3) is not nearly as important as earlier thought and he lowers the
weight of that factor to 30. After making the change to the weight, Miller has also
been informed that Germany wants to reconsider its offer of financial incentives and
wants to add 200-million-euros t the package to entice BIA. Based on this
information, the rating assigned to Germany on this factor should be raised to 10.
After making both the necessary changes, the best location for the aircraft serving
facilty is ______________, with a total weighted score of _______.