Q&A Hero

Q: FedEx schedules its aircraft using a __________ system, which it credits with reducing package mishandling and delay in transit.

Q: Geographic Information Systems can assist the location decision byA) automating center-of-gravity problemsB) computerizing factor rating analysisC) combining geography with demographic analysisD) updating transportation method solutionsE) giving good Internet placement for virtual storefronts

Q: Which of the following is most likely to affect the location strategy of a manufacturing firm?A) appearance/image of the areaB) utility costsC) purchasing power of drawing areaD) competition in the areaE) parking availability

Q: Which of these assumptions is not associated with strategies for goods-producing location decisions?A) Most major costs can be identified explicitly for each site.B) Focus on identifiable cost.C) High customer contact issues are critical.D) Intangible costs can be evaluated.E) Location is a major determinant of cost.

Q: Which of the following is a location analysis technique typically employed by a manufacturing organization?A) transportation methodB) queuing theoryC) correlation analysis and traffic countsD) simulationE) demographic analysis

Q: A jewelry store is more likely than a jewelry manufacturer to consider __________ in making a location decision.A) transportation costsB) cost of raw materialsC) parking and accessD) climateE) taxes

Q: Which of the following is a location analysis technique typically employed by a service organization?A) purchasing power analysisB) linear programmingC) queuing theoryD) crossover chartsE) cost-volume analysis

Q: _________ are beliefs that separate right from wrong and are considered accepted standards of good and bad behavior.

Q: Which of the following is most likely to affect the location decision of a service firm rather than a manufacturing firm?A) energy and utility costsB) attitude toward unionsC) parking and accessD) cost of shipping finished goodsE) labor costs

Q: Location analysis techniques typically employed by service organizations includeA) factor rating methodB) center-of-gravity methodC) purchasing power analysis of areaD) traffic countsE) all of the above

Q: What describes a system that stores and displays information that can be linked to a geographic location?A) AISB) LOCC) GLOCD) LISE) GIS

Q: ______________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

Q: ______________ users of accounting information are not directly involved in running the organization.

Q: Traffic counts and demographic analysis of drawing areas are associated withA) the center-of-gravity methodB) manufacturing location decisionsC) service location decisionsD) the transportation methodE) none of the above

Q: LaQuinta Motor Inns has a competitive edge over its rivals because itA) uses regression analysis to determine which variables most influence profitabilityB) picks better locations than its rivalsC) picks larger locations than its rivalsD) builds only along interstate highwaysE) all of the above

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Q: __________________ is an information and measurement system that identifies, records and communicates relevant, reliable and comparable information about an organization's economic activities.

Q: Traffic counts and purchasing power analysis of drawing area are techniques associated withA) locational break-even analysisB) a manufacturing location decisionC) a retail or professional service location decisionD) the factor rating methodE) the transportation method

Q: Verity Siding Company, Inc., owned by S. Verity, began operations in May and completed the following transactions during that first month of operations. Show the effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns in the table below. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance. May 1 S. Verity invested $90,000 cash in the company. 2 The company purchased $25,000 in office equipment. It paid $10,000 in cash and signed a note payable promising to pay the $15,000 over the next three years. 2 The company rented office space and paid $3,000 for the May rent. 6 The company installed new vinyl siding for a customer and immediately collected $5,000. 7 The company paid a supplier $2,000 for siding materials used on the May 6 job. 8 The company purchased a $2,500 copy machine for office use on credit. 9 The company completed work for additional customers on credit in the amount of $16,000. 15 The company paid its employees' salaries $2,300 for the first half of the month. 17 The company installed new siding for a customer and immediately collected $2,400. 20 The company received $10,000 in payments from the customers billed on May 9. 28 The company paid $1,500 on the copy machine purchased on May 8. It will pay the remaining balance in June. 31 The company paid its employees' salaries $2,400 for the second half of the month. 31 The company paid a supplier $5,300 for siding materials used on the remaining jobs completed during May. 31 The company paid $450 for this month's utility bill. VERITY SIDING CO. Assets = Liabilities + Equity Date Accounts Accounts Notes May Cash Receivable Equipment Payable Payable Common stock Dividends Revenues Expenses 1 2 2 6 7 8 9 15 17 20 28 31 31 31 $ - $ - $ - $ - $ - $ - $ - $ - $ -

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Q: The records of Roadmaster Auto Rentals, Inc. show the following information as of December 31. The owner, Rob Fletcher, the sole stockholder, received a dividend of $52,000 during the year.. Prepare a December income statement, a December statement of retained earnings, and a December 30 balance sheet. Accounts payable $36,000 Wages expense $75,000 Insurance expense 2,000 Advertising expense 22,000 Accounts receivable 24,000 Cash 11,000 Retained earnings, January 1 150,000 Office Furniture 15,000 Airplanes 150,000 Maintenance expense 39,000 Notes payable 47,000 Revenues 217,000 Hangar 60,000

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Q: Jet Styling, Inc. has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows. a. Beginning cash balance"u00a6"u00a6"u00a6"u00a6"u00a6.. $ 3,200 b. Cash investment by owner"u00a6"u00a6"u00a6"u00a6.. 15,000 c. Cash payment toward long-term loan 1,000 d. Cash payment of rent"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 1,800 e. Purchased equipment for cash"u00a6"u00a6.. 7,500 f. Purchased store supplies for cash"u00a6 1,500 g. Cash collected from customers"u00a6"u00a6. 7,750 h. Cash dividend to stockholder"u00a6"u00a6"u00a6"u00a6.. 2,000 i. Cash payment of wages"u00a6"u00a6"u00a6"u00a6"u00a6. 4,000

Q: The transportation method, when applied to location analysisA) minimizes total fixed costsB) minimizes total production and transportation costsC) minimizes total transportation costsD) maximizes revenuesE) minimizes the movement of goods

Q: Data for Kennedy Realty are as follows: Total assets at January 1 $100,000 Total liabilities at January 1 35,000 Total revenues for the year 79,000 Total expenses for the year 47,000 The owner, Finn Kennedy, received a dividend of $30,000 during the year. Using the above data, prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31

Q: Production and transportation costs are always considered in which of the following location decision methods?A) traffic countsB) transportation methodC) purchasing powerD) proximity of marketsE) clustering

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Q: Option FC ($) VC ($/unit) A 50000 2 B 100000 1 C 60000 4 Answer: Attached is the graph of the total cost with respect to units produced. To solve for the crossover points students should set the total cost functions equal for the various options. This gives the following equations 50000+2x=100000+x, x=50000 units 50000+2x=60000+1.4x, x=16667 units 100000+x=60000+1.4x, x=100000 units To check which function is the lowest cost for a given range students should test each function for its total cost. For example A(0)=50000+2(0)=50000 B(0)=100000+1(0)=100000 C(0)=60000+1.4(0)=60000 Therefore for the range 0 to 16667 option A is cheapest. A( 20000)=90000 B(20000)= 120000 C(20000)=88000 Therefore for the range 16667 to 50000 option C is cheapest. A(60000)=170000 B(60000)=160000 C(60000)=144000 Therefore for the range 50000 to 100000 option C is cheapest A(110000)=270000 B(110000)=210000 C(110000)=214000 Therefore for the range 100000 or more option B is cheapest Combining these ranges shows that for production of under 16667 units A is cheapest, for between 16667 and 100000 C is cheapest, and for 100000 and above B is cheapest. 22) A grocery chain is deciding on where to locate its new distribution center. The new DC will serve four grocery stores, each with a demand of 10,000 units. If the coordinates of the stores are (112,108), (110,50), (40, 85), and (10, 25) where should the DC be located? Suppose now that each store instead had demand of 20,000 units. Where should the DC go in this case? Answer: Since each store has the same demand the x and y coordinates can simply be averaged and the DC will be located in the same spot for each case. X=(112+110+40+10)/4 =68 Y=(108+50+85+25)=67 Thus the DC should be located at (68,67) for both cases. 23) Suppose that a bus company is deciding where to locate its central hub. There are 6 possible destinations for the buses. Suppose that the center of town will be used as the reference for describing the possible destinations. A is located 5 miles South and 3 miles West. B is located 3 miles North and 2 miles East. C is located 1 mile South and 5 miles East. D is located 2 miles North and 3 miles West. E is located exactly in the center of town. F is located 10 miles North and 5 miles East. Assume that traffic to each destination will be equal. Where should the hub go so that travel time is minimized? Answer: Since each site has the same demand the coordinates can simply be averaged. Converting the center of town to (0,0) will mean that coordinates that are labeled South become -y and those labeled West become -x, while North becomes +y and East +x. Thus the location is found to be: X= (-3+2+5-3+0+5)/6 =1 Y= (-5+3-1+2+0+10)/6=1.5 Converting back into direction yields 1 mile East and 1.5 miles North of the center of town should be the location for the hub.

Q: A company wishes to buy new equipment for $9,000. The equipment is expected to generate an additional $2,800 in cash inflows for six years. All cash flows occur at year-end. A bank will make an $9,000 loan to the company at a 10% interest rate so that the company can purchase the equipment. Use the table below to determine break-even time for this equipment: Year Present Value of 1 at 10% 0 1.0000 1 0.9091 2 0.8264 3 0.7513 4 0.6830 5 0.6209 6 0.5645 A. Break-even time is between two and three years. B. Break-even time is between three and four years. C. Break-even time is between four and five years. D. Break-even time is between five and six years. E. This project will never break-even.

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Q: Site W(1) W(2) A 65 5 B 60 15.5 C 75 19.5 D 95 19

Q: If a manager were concerned with the time value of money, from which two capital budgeting methods should the manager choose? A. IRR or Payback. B. BET or IRR. C. BET or Payback. D. NPV or ARR. E. NPV or Payback.

Q: A regional bookstore chain is about 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?A) assembly line balancingB) load-distance analysisC) center-of-gravity modelD) linear programmingE) all of the above

Q: Distance to COG Project A 94 Project B 29.29 Project C 23.35 Project D 17.90 31.94 * 2 + 29.29 * 2 + 23.35 * 2 + 17.9 * 2 = 204.96 total miles traveled d. Coordinates are (33.75, 37.50) 18) Every month, a distribution center will deliver 14,000 units to Retailer A at coordinates (20, 10), 12,000 units, to Retailer B at coordinates (30, -15), and 20,000 units to Retailer C at coordinates (4, 4). Assuming no constraints on location, at what coordinates should the distribution center be located (rounded to two decimal places)? Answer: (15.65, 0.87), where 15.65 = [20(14) + 30(12) + 4(20)]/(14 + 12 + 20), and 0.87 = [10(14) - 15(12) + 4(20)]/(14 + 12 + 20). 19) A school district is considering where in town to house its central office (The office must also be located at an existing school for cost reasons). If there are five schools in the district, with locations and size given in the following table, use the COG method to determine at which school the central office should be placed to minimize the average distance between the office and students. Location X,Y Size (Enrollment) A 5,5 2500 B 0,5 1000 C 0,0 10000 D 5,0 4500 E 2,1 7500 Answer: The total number of students is (2500+1000+10000+4500+7500)=25500 X=(5*2500+0*1000+0*10000+5*4500+2*7500)/25500 = 1.96 Y=(5*2500+5*1000+0*10000+0*4500+1*7500)/25500= .98 Rounding these gives (X,Y) of (2,1) which is closest to school E. 20) A school district is considering four locations for a new high school. There are four factors the district is considering (Cost of land, distance to students, land size, and traffic flow). The district would like to compare results using two weighting systems. The first system would give each factor equal weight and the second would give the factors weights of .4, .2, .1, and .3 respectively. Fill in the missing information in the table and then use the factor rating method to determine which location is best for each weighting system. Factor W(1) W(2) A B C D Cost of Land 1 .4 10 20 25 5 Distance to Students 1 .2 30 25 15 20 Land Size 1 .1 5 10 20 40 Traffic Flow 1 .3 20 5 15 30 Answer: Students should first fill in the W(1) and W(2) columns as shown (note W(1) can have any value so long as each value is equal). Applying the factor rating method gives the following results:

Q: A given project requires a $28,500 investment and is expected to generate end-of-period annual cash inflows of $12,000 for each of three years. Assuming a discount rate of 10%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below: i = 10% n = 1 i = 10% n = 2 i = 10% n = 3 .9091 .8264 .7513 A. $0.00 B. $2,668.00 C. ($7,461.00) D. $1,341.60 E. $29,841.60

Q: The center-of-gravity method is used primarily to determine what type of locations?A) service locationsB) manufacturing locationsC) distribution center locationsD) supplier locationsE) call center locations

Q: Weight X coord Y coord Project A 1 50 10 Project B 1 15 60 Project C 1 40 60 Project D 1 30 20 Sum Average 33.75 37.5 Weighted Average 33.75 37.5 c.

Q: The center-of-gravity method does not take into consideration theA) location of marketsB) volume of goods shipped to the marketsC) value of the goods shippedD) combination of volume and distanceE) center-of-gravity method considers none of the above

Q: Weight Location A Location B Location C Wages 40 30 75 90 Labor Climate 30 40 70 40 Taxes 15 80 40 90 Utilities 15 75 60 10 Total 100 Weighted sum 4725 6600 6300 Weighted average 47.25 66 63 16) A contractor for the military is looking for a new location for a supply depot. The depot will supply four bases whose tonnage (demand) and map coordinates are shown below. If management wants the depot to have a central location, what should be its map coordinates? Bases (X,Y) Coordinates Tonnage Fort Able (40,110) 30,000 Base Baker (70,50) 60,000 Camp Charlie (90,20) 35,000 Camp Delta (70,80) 75,000 Answer: The depot should be located near X = 69, Y = 65. Bases Weight X coord Y coord X mult. Y mult. Fort Able 30,000 40 110 1,200,000 3,300,000 Base Baker 60,000 70 50 4,200,000 3,000,000 Camp Charlie 35,000 90 20 3,150,000 700,000 Camp Delta 75,000 70 80 5,250,000 6,000,000 Sum 200,000 270 260 13,800,000 13,000,000 Weighted Average 69 65 17) A highway contractor needs to locate a single supply point to provide road building materials to four projects. The four projects, which are all approximately the same magnitude, are located at the following coordinates. Coordinate units are in miles. X (East) Y (North) Project A 50 10 Project B 15 60 Project C 40 60 Project D 30 20 a. On the grid below, plot the locations of the four road-building sites. Properly label all points. b. What is the center of gravity? c. If a single truck were sent from center-of-gravity to each project and back (four round trips), how many miles would be traveled? (Hint: use the Pythagorean Theorem C =). d. Add the calculated center of gravity to the grid. Answer: a. Coordinates are (50, 10), (15, 60), (40,60), and (30, 20) b. The supply point should be at (33.75, 37.50).

Q: The internal rate of return method is not subject to the limitations of the net present value method when comparing projects with different amounts invested because: A. The internal rate of return is expressed as a percent rather than the absolute dollar value of present value. B. The internal rate of return is expressed as an absolute dollar value rather than the percent of net present value. C. The internal rate of return reflects the time value of money rather than the absolute dollar value of present value. D. The internal rate of return is expressed as an absolute dollar value rather than the time value of money used in net present value. E. The internal rate of return is expressed as a percent rather than the accrual income method used in net present value.

Q: Which methods of evaluating a capital investment project use cash flows as a measurement basis? A. Net present value, accounting rate of return, and internal rate of return. B. Internal rate of return, payback period, and accounting rate of return. C. Accounting rate of return, net present value, and payback period. D. Payback period, internal rate of return, and net present value. E. Net present value, payback period, accounting rate of return, and internal rate of return.

Q: 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.B) Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units.C) Plant A, because it is cheaper than Plant B for all volumes.D) Plant B, because it has the lower variable cost per unit.E) Neither Plant A nor Plant B, because the crossover point is at 10 million units.

Q: Which methods of evaluating a capital investment project ignore the time value of money? A. Net present value and accounting rate of return. B. Accounting rate of return and internal rate of return. C. Internal rate of return and payback period. D. Payback period and accounting rate of return. E. Net present value and payback period.

Q: Sheet Metal Mill Solution Weighted # trips x-coord y-coord X multiplied Y multiplied Rayburn 20. 130. 380. 2,470. Zavalla 3. 60. 40. 180. 120. Henderson 5. 70. 100. 350. 500. Wax MIlls 6. 90. 30. 540. 180. Total 33. 240. 300. 1,450. 3,270.. Average 60. 75. Weighted Average 43.9394. 99.0909. Median 17. 20. 130.. 14) A small producer of music boxes wants to move to a larger facility. Two alternative facilities have been found. Site 1 has a fixed cost of $500,000 per year, with a variable cost of $25 per unit. Site 2 has a fixed cost of $800,000 per year, but a variable cost of $22 per unit. a. Write out the equation for total cost for each site. b. At what volume of output would the two locations have the same total cost? c. For what range of output would Site 1 be superior? d. For what range of output would Site 2 be superior? Answer: (a) The equation for the total cost at site 1 is TC = 500,000 + 25X, where X is volume. The equation for total cost at Site 2 is TC = 800,000 + 22X. (b) Set these two equations equal and solve for X. 500,000 + 25X = 800,000 + 22X leads to 300,000 = 3X, then to X = 100,000. (c) Site 1 is preferred for volumes up to 100,000 units, and (d) site 2 is preferred above 100,000 units. 15) A small manufacturer is considering several locations for a new facility. They have identified four factors that they consider to be important for their location decision. They have decided to assign scores to the four factors, with a higher score indicating a more favorable location. Use the information in the following table to perform a factor rating to select the best location. Weight Location A Location B Location C Wages 40 30 75 90 Labor Climate 30 40 70 40 Taxes 15 80 40 90 Utilities 15 75 60 10 Answer: Location B is the preferred location.

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Q: Collection Point Weight X coord Y coord A 9,000 4 8 B 4,000 7 2 C 2,000 4 1 D 5,000 7 3 Sum 20,000 22 14 Average 5.5 3.5 Weighted Average 5.35 4.85 13) A manufacturer of stamped metal auto parts has four parts factories in one city at the location coordinates shown below. Each coordinate unit represents a city block (roughly 100 meters). The yearly demand at each factory is also given. Factories Demand X-Coord. Y-Coord. Rayburn Industrial Park 19,000 20 130 Port of Zavalla 3,000 60 40 Henderson Mfg.Center 5,000 70 100 Wax Mills Site 6,000 90 30 Management has decided to build a new sheet metal mill, to supply these factories, at a location central to these plants. What should be the map coordinates of the new plant? On the grid below, graph the locations of the four parts factories and the proposed sheet metal mill. Answer: The mill should be located near (44, 99). The center-of-gravity model does not favor any single data point; it is the weighted average of them all. In this case, being central does not mean being close to any single factory, but it is closer to the collection of all four than any other mill location could be.

Q: 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 whichA) fixed costs are equal for two alternative locationsB) variable costs are equal for two alternative locationsC) total costs are equal for all alternative locationsD) fixed costs equal variable costs for one locationE) total costs are equal for two alternative locations

Q: The time value of money concept: A. Means that a dollar today is worth less than a dollar tomorrow. B. Means that a dollar tomorrow is worth more than a dollar today. C. Means that a dollar today is worth more than a dollar tomorrow. D. Means that "Time is money." E. Does not involve the concept of compound interest.

Q: Factor Weight A B C Labor Climate 10 35 45 20 Taxes 30 30 40 40 Utilities 20 25 20 45 Wages 40 10 25 25 Total 100 Weighted sum 2150 3050 3300 Weighted average 21.5 30.5 33.0 12) Environmental Glass Products, Inc. wants to build a new centralized facility to receive household, commercial, and industrial glass for recycling. This center will be supplied by trucks coming from four "collection points," where recyclable glass is dropped off by individuals and businesses. The volume and the map coordinates for the four collection centers are shown below. Where should the collection center be located? Collection point Load (X,Y) Coordinates A 9,000 (4,8) B 4,000 (7,2) C 2,000 (4,1) D 5,000 (7,3) Answer: The center should be built near coordinates (5.35, 4.85).

Q: Which of the following is an objective of capital budgeting? A. To eliminate all risk. B. To discount all future and past cash flows. C. To earn a satisfactory return on investment. D. To reverse past decisions. E. To reduce the number of investment activities.

Q: An approach to location analysis that includes both qualitative and quantitative considerations isA) locational cost-volumeB) factor-ratingC) transportation modelD) assignment methodE) make or buy analysis

Q: The net cash flow of a particular investment project: A. Does not take income taxes into consideration. B. Equals the total of the inflows of the project. C. Equals the total of the outflows of the project. D. Does not include depreciation. E. Is equal to operating income each period.

Q: Weight X coord Y coord Location 1 3 2 10 Location 2 2 6 8 Location 3 4 4 9 Location 4 1 9 5 Location 5 3 8 1 Location 6 2 3 2 Location 7 1 2 6 Sum 16 34 41 Average 4.857 5.857 Weighted Average 4.6875 6.25 10) The owner of a millwork shop is considering three alternative locations for a new plant for building embossed-and-clad steel exterior doors for residences. Fixed and variable costs follow. Since the plant ships nationwide, revenue is assumed the same regardless of plant location. Plot the total cost lines in the chart provided below, and identify the range over which each location is best. Location Costs A B C Fixed $700,000 $1,000,000 $1,1000,000 Variable $28 $18 $20 Answer: A is cheapest from 0 to about 30,000 units. B is cheapest thereafter. C can never be preferred. Break-even points Units Dollars Location A vs. Location B 30,000 $1,540,000 Location A vs. Location C 50,000 $2,100,000 Location B vs. Location C -50,000 $100,000 11) A manufacturing firm is considering three potential locations for a new parts manufacturing facility. A consulting firm has assessed three sites based on the four factors supplied by management as critical to the location's success. Given the management-supplied factor weights and the consultant team scores, which location should be selected? Scores are based on 50 = best. Do the results surprise you in any way? Comment. Location Factor Weight A B C Labor Climate 10 35 45 20 Taxes 30 30 40 40 Utilities 20 25 20 45 Wages 40 10 25 25 Answer: C is clearly better than either A or B. This problem illustrates the importance of having good scores on important factors. B has scores that are about as high as those of C, but in the wrong places.

Q: Capital budgeting decisions usually involve analysis of: A. Cash outflows only. B. Short-term investments only. C. Long-term investments only. D. Investments with certain outcomes only. E. Operating revenues.

Q: Weight W X Y Z Business services 1 7 9 5 4 Community services 1 5 7 6 7 Real estate cost 1 7 3 8 6 Construction costs 1 8 6 6 5 Operating costs 2 5 4 7 6 Business taxes 1 6 9 6 4 Transportation costs 2 8 6 7 8 Total 9 Weighted sum 59 54 59 54 Weighted average 6.56 6 6.56 6 9) A telecommunications firm is planning to lay fiber optic cable from several community college distance learning sites to a central studio, in such a way that the miles of cable are minimized. Some locations require more than one set of cables (these are the loads). Where should the studio be located to accomplish the objective? College Map Coordinate (x, y) Load A (2,10) 3 B (6,8) 2 C (4,9) 4 D (9,5) 1 E (8,1) 3 F (3,2) 2 G (2,6) 1 Answer: This is a center-of-gravity problem, even though it is not about shipping tangible items. The center of gravity is at coordinates X = 4.69, Y = 6.25.

Q: Evaluating location alternatives by comparing their composite (weighted-average) scores involvesA) factor-rating analysisB) cost-volume analysisC) transportation model analysisD) linear regression analysisE) crossover analysis

Q: Business services 1 7 9 5 4 Community services 1 5 7 6 7 Real estate cost 1 7 3 8 6 Construction costs 1 8 6 6 5 Operating costs 1 5 4 7 6 Business taxes 1 6 9 6 4 Transportation costs Total 7 46 44 45 40 Weighted average 6.579 6.286 6.429 5.714

Q: A limitation of the internal rate of return method is that it: A.Does not consider the time value of money. B.Measures results in years. C.Lacks ability to compare dissimilar projects. D.Ignores varying risks over the life of a project. E.Measures net income rather than cash flows.

Q: Which of the following methods best considers intangible costs related to a location decision?A) crossover methodsB) locational break-even analysisC) factor-rating analysisD) the transportation methodE) the assignment method

Q: Factor Weight A B C Easy access 15 86 72 90 Parking facilities 0.20 72 77 91 Display area 0.18 86 90 90 Shopper (walking) traffic 0.21 94 86 80 Neighborhood wealth 0.16 99 89 81 Neighborhood safety 0.10 96 85 75 Total 1.00 Weighted sum 87.96 83.20 85.16 Weighted average 87.96 83.20 85.16 8) A manager has received an analysis of several cities being considered for a new order fulfillment center (warehouse) for Shop at Home Network. The scores (scale is 10 points = best) are contained in the table below. a. If the manager weights the factors equally, how would the locations be ranked? b. If transportation costs and operating costs are given weights that are double the weights of the others, should the locations be ranked differently? Location Factor W X Y Z Business services 7 9 5 4 Community services 5 7 6 7 Real estate cost 7 3 8 6 Construction costs 8 6 6 5 Operating costs 5 4 7 6 Business taxes 6 9 6 4 Transportation costs 8 6 7 8 Answer: The locations are ranked W, Y, X, Z with equal weights; but W and Y tie for highest, and Z and X tie for lowest as revised.

Q: A the company's required rate of return, typically its cost of capital is called the: A.Internal rate of return. B.Average rate of return. C.Hurdle rate. D.Maximum rate. E.Payback rate.

Q: Community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods?A) transportation methodB) locational break-even analysisC) center-of-gravity methodD) simulationE) factor-rating method

Q: Location Factor Weight A B C Easy access 15 86 72 90 Parking facilities 0.20 72 77 91 Display area 0.18 86 90 90 Shopper (walking) traffic 0.21 94 86 80 Neighborhood wealth 0.16 99 89 81 Neighborhood safety 0.10 96 85 75

Q: Which of the following worker characteristics would likely be least important for U.S. firms looking to open up call centers in different countries?A) willing to accept low wagesB) have a high level of educationC) speak EnglishD) possess an in-depth knowledge of American popular cultureE) are young

Q: East Texas Seasonings Solutions Weighted # trips x-coord y-coord X multiplied Y multiplied A 30. 40. 3,000. 4,000. B 400. 20. 15. 8,000. 6,000. C 150. 55. 60. 8,250. 9,000. D 250. 20. 70. 5,000. 17,500. Total 900. 125. 185. 24,250. 36,500. Average 31.25 46.25 Weighted Average 26.9444 40,5556 Median 450. 20. 40. 6) Location A would result in annual fixed costs of $300,000 and variable costs of $55 per unit. Annual fixed costs at Location B are $600,000 with variable costs of $32 per unit. Sales volume is estimated to be 30,000 units per year. Which location has the lower cost at this volume? How large is its cost advantage? At what volume are the two facilities equal in cost? Answer: At 30,000 units, Location A has total costs of $1, 950,000, while Location B has total costs of $1,560,000. Location B is cheaper by $390,000. The crossover occurs where 600,000 + 32X = 300,000 + 55X, or at X = 300,000 / 23 = 13,043 units 7) Using the factor ratings shown below, determine which location alternative should be chosen on the basis of maximum composite score.

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Q: 4) A manufacturing company is considering two alternative locations for a new facility. The fixed and variable costs for the two locations are found in the table below. For which volume of business would the two locations be equally attractive? If the company plans on producing 50,000 units, which location would be more attractive? Glen RoseMesquiteFixed Costs$1,000,000$1,500,000Variable Costs ($ per unit)2523 Answer: Crossover is at 250,000 units. Below the crossover, Glen Rose must be cheaper as it has the lower fixed cost. Thus, for an estimated unit volume of 50,000, Glen Rose should be chosen. Break-even pointsUnitsDollarsOption 1 vs. Option 2250,0007,250,000 Volume analysis at 50,000 units Option 1Option 2total cost$2,250,000.00$2,650,000.00 5) East Texas Seasonings is preparing to build one processing center to serve its four sources of seasonings. The four source locations are at coordinates shown below. Also, the volume from each source is provided.a. Calculate the volume-weighted center of gravity.b. Calculate the simple center of gravity (all cities weighted equally).c. Explain why the two calculations differ. X-coordinateY-coordinateVolumeAthens, Texas3040100Beaumont, Texas2015400Carthage, Texas5560150Denton, Texas2070250 Answer: The weighted center of gravity is located at X = 24,250 / 900 = 26.9, Y = 36,500 / 900 = 40.6. The simple center of gravity is located at X = 125 / 4 = 31.25. Y = 185 / 4 = 46.25. The simple center is more to the east and north than the weighted center of gravity. A partial explanation is that the heaviest tonnage is from Beaumont, which is far to the west and south. Its influence pulls the weighted center toward the west and south.

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Q: A firm is seeking a new factory location, and is considering several countries worldwide. In some of these countries, child labor is prevalent; in others, working conditions and worker safety are inferior to conditions in the U.S. An operations manager paying attention to __________ will factor these issues into the location decision.A) ethical and social responsibility issuesB) key success factorsC) factor-rating systemsD) geographic information systemsE) regression models

Q: FedEx chose Memphis, Tennessee, for its central location, or "hub," primarily because of the incentives offered by the city of Memphis and the state of Tennessee.

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Q: Intangible costs include which of the following?A) quality of prospective employeesB) quality of educationC) availability of public transportationD) all of the aboveE) none of the above

Q: Three widely used methods of comparing investment alternatives are payback period, net present value, and rate of return on average investment.

Q: Tangible costs include which of the following?A) climatic conditionsB) availability of public transportationC) taxesD) quality and attitude of prospective employeesE) zoning regulations

Q: The net present value capital budgeting method considers all estimated cash flows for the project's expected life.

Q: Which of these factors would be considered when making a location decision at the site level?A) government rules, attitudes, stability, incentivesB) cultural and economic issuesC) zoning regulationsD) cost and availability of utilitiesE) proximity to raw materials and customers

Q: When making a location decision at the region/community level, which of these would be considered?A) government rules, attitudes, stability, incentivesB) cultural and economic issuesC) cost and availability of utilitiesD) zoning restrictionsE) air, rail, highway, waterway systems

Q: Accounting rate of return is the simplest capital budgeting method. It gives managers an estimate of how soon they will recover their initial investment.

Q: Neither the net present value nor the internal rate of return methods of evaluating investments consider the time value of money.

Q: When making a location decision at the country level, which of these would be considered?A) corporate desiresB) land/construction costsC) air, rail, highway, waterway systemsD) zoning restrictionsE) location of markets