This document discusses factors to consider in making location decisions. It provides discussion questions about specific companies' location strategies, such as FedEx choosing Memphis for its central location. It also lists numerous qualitative and quantitative factors that can influence location decisions for companies operating domestically or internationally. These factors include labor costs, transportation costs, resources, market access, incentives, and business environment considerations like regulations and cultural issues. The document presents examples and models for analyzing location decisions in a structured way.
This document discusses factors to consider in making location decisions. It provides discussion questions about specific companies' location strategies, such as FedEx choosing Memphis for its central location. It also lists numerous qualitative and quantitative factors that can influence location decisions for companies operating domestically or internationally. These factors include labor costs, transportation costs, market access, incentives, and clustering tendencies. The document provides examples and models for analyzing location decisions.
The document discusses maintenance and reliability, including:
1. The objective of maintenance is to maintain system capability while controlling costs.
2. Preventive maintenance candidates can be identified by looking at mean time between failures distributions with small standard deviations.
3. Simulation is appropriate for investigating maintenance problems because failures occur randomly.
The document contains practice problems related to inventory management.
Problem 1 involves classifying inventory items into ABC categories based on annual dollar volume. Problems 2-5 calculate order quantities, order frequencies, and total costs for inventory items. Problems 6-11 involve calculations related to safety stock, reorder points, economic order quantities, and inventory policies under different demand assumptions.
This document discusses various topics related to inventory management including the four types of inventory, ABC classification, economic order quantity (EOQ) model assumptions and calculations, reorder points, cycle counting benefits, and setting appropriate service levels for medical supplies. Key points are:
1) The four types of inventory are raw materials, work-in-process, finished goods, and maintenance, repair, and operating supplies.
2) The ABC classification scheme remains useful for identifying important inventory items despite lower computing costs, as data acquisition costs have not decreased significantly.
3) The EOQ model calculates the optimal order quantity to minimize total inventory costs based on demand, ordering costs, and carrying costs.
4) Cycle counting provides benefits
Solution manual for operations management processes and supply chains 10th ed...Aamir Ali
This document contains 11 discussion questions about operations management concepts. The questions cover topics like identifying core processes, competitive priorities for companies like Amazon and FedEx, designing hospital emergency room operations, and calculating productivity metrics. Sample responses are provided that analyze strategic plans, environmental factors, core competencies, and key capabilities for different organizations.
This document discusses various topics related to inventory management including the four types of inventory, ABC classification, economic order quantity (EOQ) model assumptions and calculations, reorder points, cycle counting benefits, and setting appropriate service levels for medical supplies. Key points are:
1) The four types of inventory are raw materials, work-in-process, finished goods, and maintenance, repair and operating supplies.
2) The ABC classification scheme remains useful for identifying items requiring more attention due to cost or volume, even as computing costs decrease.
3) The EOQ model calculates the optimal order quantity to minimize total inventory costs based on demand, ordering costs, and carrying costs, and is fairly robust to errors in estimates
This document outlines the key topics in operations management layout strategies. It begins with an overview of McDonald's innovations in layout design over the years. The strategic importance of layout decisions is discussed as well as considerations for good layout design such as material handling, capacity, and flows. Different types of layout strategies are also summarized, including office, retail, warehouse, project/fixed position, process-oriented, work cell, and repetitive/product-oriented layouts. Specific examples and key issues are provided for each type.
I. Stages of Operational Competitiveness the different levels of customer con...Lena Argosino
I. Stages of Operational Competitiveness
the different levels of customer contact in the service firm
II. Classification of the different strategies in different service operation
This document discusses factors to consider in making location decisions. It provides discussion questions about specific companies' location strategies, such as FedEx choosing Memphis for its central location. It also lists numerous qualitative and quantitative factors that can influence location decisions for companies operating domestically or internationally. These factors include labor costs, transportation costs, market access, incentives, and clustering tendencies. The document provides examples and models for analyzing location decisions.
The document discusses maintenance and reliability, including:
1. The objective of maintenance is to maintain system capability while controlling costs.
2. Preventive maintenance candidates can be identified by looking at mean time between failures distributions with small standard deviations.
3. Simulation is appropriate for investigating maintenance problems because failures occur randomly.
The document contains practice problems related to inventory management.
Problem 1 involves classifying inventory items into ABC categories based on annual dollar volume. Problems 2-5 calculate order quantities, order frequencies, and total costs for inventory items. Problems 6-11 involve calculations related to safety stock, reorder points, economic order quantities, and inventory policies under different demand assumptions.
This document discusses various topics related to inventory management including the four types of inventory, ABC classification, economic order quantity (EOQ) model assumptions and calculations, reorder points, cycle counting benefits, and setting appropriate service levels for medical supplies. Key points are:
1) The four types of inventory are raw materials, work-in-process, finished goods, and maintenance, repair, and operating supplies.
2) The ABC classification scheme remains useful for identifying important inventory items despite lower computing costs, as data acquisition costs have not decreased significantly.
3) The EOQ model calculates the optimal order quantity to minimize total inventory costs based on demand, ordering costs, and carrying costs.
4) Cycle counting provides benefits
Solution manual for operations management processes and supply chains 10th ed...Aamir Ali
This document contains 11 discussion questions about operations management concepts. The questions cover topics like identifying core processes, competitive priorities for companies like Amazon and FedEx, designing hospital emergency room operations, and calculating productivity metrics. Sample responses are provided that analyze strategic plans, environmental factors, core competencies, and key capabilities for different organizations.
This document discusses various topics related to inventory management including the four types of inventory, ABC classification, economic order quantity (EOQ) model assumptions and calculations, reorder points, cycle counting benefits, and setting appropriate service levels for medical supplies. Key points are:
1) The four types of inventory are raw materials, work-in-process, finished goods, and maintenance, repair and operating supplies.
2) The ABC classification scheme remains useful for identifying items requiring more attention due to cost or volume, even as computing costs decrease.
3) The EOQ model calculates the optimal order quantity to minimize total inventory costs based on demand, ordering costs, and carrying costs, and is fairly robust to errors in estimates
This document outlines the key topics in operations management layout strategies. It begins with an overview of McDonald's innovations in layout design over the years. The strategic importance of layout decisions is discussed as well as considerations for good layout design such as material handling, capacity, and flows. Different types of layout strategies are also summarized, including office, retail, warehouse, project/fixed position, process-oriented, work cell, and repetitive/product-oriented layouts. Specific examples and key issues are provided for each type.
I. Stages of Operational Competitiveness the different levels of customer con...Lena Argosino
I. Stages of Operational Competitiveness
the different levels of customer contact in the service firm
II. Classification of the different strategies in different service operation
This document summarizes key concepts from a chapter on aggregate planning:
1. Aggregate planning involves determining production levels and workforce needs over an intermediate time horizon of 3-18 months to minimize costs while meeting demand.
2. Strategic objectives include minimizing costs, smoothing workforce fluctuations, reducing inventory levels, and maintaining service levels. Cost minimization is often the primary focus.
3. Mixed strategies that use multiple approaches like overtime, subcontracting, hiring, and layoffs are generally better than pure strategies that only vary one factor.
4. Mathematical models are not widely used for aggregate planning due to their complexity, and most aggregate planning is done through graphical or other simple methods.
1. Phil Harris, the Production Control Manager at Brunswick Motors, wants to illustrate time-phased requirements planning using an example with the company's Model 1000 engine. He prepares a master schedule for the engine over 12 weeks.
2. Phil considers two components for the engine, the gear box and input shaft. He includes their manufacturing lead times and product structure. The gear box takes 2 weeks to produce and the input shaft takes 3 weeks.
3. Phil plans to use MRP worksheets and make assumptions about starting inventory levels and scheduled deliveries for the gear box and input shaft. He will calculate net requirements and planned order releases using lot-for-lot ordering.
This chapter discusses transportation, assignment, and transshipment models as special cases of linear programming network flow problems. It provides learning objectives and an outline of topics to be covered, which include introducing the transportation problem using an example of distributing office desks from factories to warehouses, formulating it as a linear program, and solving it using the transportation algorithm. The chapter also discusses the assignment problem using an example of assigning workers to repair jobs and the transshipment problem using an example of shipping snow blowers through distribution centers. It describes developing initial feasible solutions using the northwest corner rule and improving solutions using the stepping stone method.
Completed Winter 2002 as part of the Managerial Accounting requirements for the MBA programme at McMaster University, Hamilton, Canada. http://RobinCheung.ca/
Relevant cost analysis revealed that the Challenger deal could be a lucrative
source of incremental revenues, since the 25,000 additional units could be
produced during plant slack time; however, as a discount value line, the
Challenger program does not align strategically with BBC’s best-cost provider
strategy (Porter, 1980). Further, the initial capital outlay of $787,000 for the
project exceed BBC’s available resources.
It is recommended that BBC pursue a short-term agreement with Hi-Valu or a
competing discount retailer to produce the bicycles on more favourable credit
terms, or to seek distribution of BBC’s normal product line through alternative
retail chains.
The document describes an assembly line balancing problem to minimize balance delay. It provides the tasks, precedence relationships, task times, required cycle time of 15 minutes, and the primary rule used to assign tasks to stations (largest number of following tasks). It then shows the 6 workstations determined, tasks assigned at each station according to the rule, remaining unassigned time (balance delay) at each station, and the overall efficiency of 77.78%.
The document discusses Enager Industries' shift from using divisions as profit centers to investment centers after 1992. It provides financial details and performance metrics for three divisions - Consumer, Industrial, and Professional Services. Questions are asked about specific divisions' performance and inferences that can be drawn from their financial statements. The effectiveness of using return on investment to measure divisional performance is also discussed.
The document discusses process design and facility layout. It covers types of processes like projects, job shops, batch processing, repetitive/assembly and continuous processing. The key factors in selecting a process are variety, flexibility, volume and the tradeoff between them. Layout types include product layouts that group equipment by product steps, process layouts that group by function, and combination layouts. The document provides examples of line balancing to optimize workstation times and productivity.
Operations Management : Line BalancingRohan Bharaj
This presentation gives us details about the different methods of Line Balancing.
It also gives an example of Ford Motors and how Line Balancing helped Ford become a powerhouse in the early 1900s
The document summarizes Wickham Skinner's concept of the "focused factory" approach. It discusses how conventional factories try to do too many conflicting tasks with inconsistent policies, hurting competitiveness. Skinner's research found that factories focusing narrowly on a specific manufacturing task for a niche market outperformed conventional plants. The document outlines the characteristics of a focused factory, comparing elements like equipment, workforce management, and organization structure between the conventional and focused approaches. It concludes the focused factory approach helps industries increase competitiveness through specialization rather than just cost efficiency.
The document contains a chapter about project management tools PERT and CPM from a quantitative analysis textbook. It includes 58 multiple choice questions about key concepts related to PERT and CPM, such as their origins and uses, time estimates, critical paths, variances, and probability calculations. The questions test understanding of network diagrams, activity dependencies, slack times, and using PERT and CPM to schedule and manage complex projects.
Southwest Airlines was expecting delivery of two new planes and needed to decide how to operate them while preserving their unique culture. Southwest pioneered the low-cost carrier model with low fares, high frequency flights, and a focus on customer service. They prioritized hiring for attitude over skills and emphasized teamwork and employee ownership to build a fun and casual culture. The case discusses how Southwest could expand strategically while maintaining their low-cost advantages and culture.
Chad's Creative Concepts is a furniture manufacturer founded by Chad Thomas. The company traditionally focused on custom furniture but has expanded into standard furniture lines. While standard furniture sales are increasing, custom jobs still dominate sales volumes and profits. The company is now facing problems of rising costs from inventory of raw materials and works in progress for standard furniture, which sits unfinished while custom jobs are prioritized. A review found profits are lower than expected given the company's growth. Thomas will need to make decisions to better manage production and inventory levels to improve the company's financial position.
This document provides 10 teaching suggestions for instructors to help students better understand key concepts in decision analysis. Suggestions include having students describe personal decisions they made and which steps of the decision-making process they used; role playing to define problems and alternatives; discussing types of decisions under certainty, risk, and uncertainty; and using decision trees and Bayesian analysis to solve problems. The goal is for students to recognize how decision theory applies to important real-life decisions. Alternative examples provided apply concepts like expected monetary value to problems involving purchasing industrial robots.
Classic pen company activity based costingHarish B
Classic Pen Company is analyzing its cost accounting system using activity-based costing to better understand profitability. Previously, all overhead costs were allocated based on direct labor, but ABC analysis identified drivers like setup time and production runs. This showed that red and purple pens have higher costs than indicated previously due to more setups. ABC cost per unit for red and purple exceeds their selling price, suggesting price increases are needed to improve profitability for those products.
The document describes a queuing system of an online legal service that receives customer emails and has lawyers respond to them. Key details:
- Emails arrive at a rate of 10 per hour with a coefficient of variation of 1.
- One lawyer responds to emails, taking on average 5 minutes with a standard deviation of 4 minutes.
- The average customer wait time is calculated to be 20.5 minutes.
- With a 10 hour work day, a lawyer would receive about 100 emails.
- The lawyer would have 1.66 hours for other work when not responding to emails.
- Reducing the standard deviation of response times to 0.5 minutes would not change average wait or lawyer work time.
This document provides a full business case analysis for United Parcel Service (UPS) to increase its global market share and customer satisfaction over the next five years. It outlines three alternative recommendations:
Alternative A focuses on improving internal operations through strategic distribution center placement, time-in-transit forecasting, automated sorting, and improved package labeling.
Alternative B addresses the growth of e-commerce through next-day delivery, package tracking, competitor research, distribution center placement, and drone technology.
Alternative C emphasizes sustainability through recycled packaging options and alternative fuel trucks to improve UPS's image and decrease long-term costs.
Each alternative provides details on scope, resources, organizational factors, external environment, cost effectiveness and
This document summarizes a case study about Boston Creamery, an ice cream company that installed a new financial planning and control system to compare budgeted and actual results. The summary focuses on 4 key characters - the President, VP of Sales and Marketing, VP of Operations, and Controller. It provides background on the company and system, and describes how the VP of Operations and Controller analyze variances in areas like market growth, manufacturing costs, and product mix to identify issues and recommendations. The summary is intended to highlight the essential information about the case study in 3 sentences or less.
The document compares the standard costing method and transaction-based costing method to allocate overhead costs and calculate the unit cost of production of valves, pumps, and flow controllers. While the standard costing method allocates overhead based on direct labor costs, the transaction-based method allocates different overhead costs like depreciation, setup labor, receiving, etc. based on the number of transactions for each activity. This results in different unit costs and profitability for each product under the two methods.
The document discusses various factors that companies consider when making location decisions. It describes how FedEx pioneered the central hub model to efficiently route packages. It also explains that location strategies depend on the type of business and may aim to minimize costs or maximize revenue. Key factors in location decisions include access to markets and suppliers, labor costs, tax rates, and cultural differences between locations. Companies also sometimes cluster near competitors to access shared resources. The document provides several examples of companies' location decisions and strategies.
6 1 overcoming the liability of foreignness it is not easy to saman341480
The document discusses factors that firms must consider when entering foreign markets, including overcoming liabilities of foreignness, strategic goals related to location, cultural and institutional distances between the home and host countries, and the advantages and disadvantages of being an early or late market entrant. Some key points:
- Foreign firms face inherent disadvantages from their non-native status that can be formal, such as differences in rules and regulations, or informal, such as discrimination.
- Location-specific advantages, like access to resources, market size, efficiency gains, or innovation centers, should match a firm's strategic goals for entering the market.
- Cultural and institutional distances between countries also influence entry location decisions, with some arguments that firms initially
This document summarizes key concepts from a chapter on aggregate planning:
1. Aggregate planning involves determining production levels and workforce needs over an intermediate time horizon of 3-18 months to minimize costs while meeting demand.
2. Strategic objectives include minimizing costs, smoothing workforce fluctuations, reducing inventory levels, and maintaining service levels. Cost minimization is often the primary focus.
3. Mixed strategies that use multiple approaches like overtime, subcontracting, hiring, and layoffs are generally better than pure strategies that only vary one factor.
4. Mathematical models are not widely used for aggregate planning due to their complexity, and most aggregate planning is done through graphical or other simple methods.
1. Phil Harris, the Production Control Manager at Brunswick Motors, wants to illustrate time-phased requirements planning using an example with the company's Model 1000 engine. He prepares a master schedule for the engine over 12 weeks.
2. Phil considers two components for the engine, the gear box and input shaft. He includes their manufacturing lead times and product structure. The gear box takes 2 weeks to produce and the input shaft takes 3 weeks.
3. Phil plans to use MRP worksheets and make assumptions about starting inventory levels and scheduled deliveries for the gear box and input shaft. He will calculate net requirements and planned order releases using lot-for-lot ordering.
This chapter discusses transportation, assignment, and transshipment models as special cases of linear programming network flow problems. It provides learning objectives and an outline of topics to be covered, which include introducing the transportation problem using an example of distributing office desks from factories to warehouses, formulating it as a linear program, and solving it using the transportation algorithm. The chapter also discusses the assignment problem using an example of assigning workers to repair jobs and the transshipment problem using an example of shipping snow blowers through distribution centers. It describes developing initial feasible solutions using the northwest corner rule and improving solutions using the stepping stone method.
Completed Winter 2002 as part of the Managerial Accounting requirements for the MBA programme at McMaster University, Hamilton, Canada. http://RobinCheung.ca/
Relevant cost analysis revealed that the Challenger deal could be a lucrative
source of incremental revenues, since the 25,000 additional units could be
produced during plant slack time; however, as a discount value line, the
Challenger program does not align strategically with BBC’s best-cost provider
strategy (Porter, 1980). Further, the initial capital outlay of $787,000 for the
project exceed BBC’s available resources.
It is recommended that BBC pursue a short-term agreement with Hi-Valu or a
competing discount retailer to produce the bicycles on more favourable credit
terms, or to seek distribution of BBC’s normal product line through alternative
retail chains.
The document describes an assembly line balancing problem to minimize balance delay. It provides the tasks, precedence relationships, task times, required cycle time of 15 minutes, and the primary rule used to assign tasks to stations (largest number of following tasks). It then shows the 6 workstations determined, tasks assigned at each station according to the rule, remaining unassigned time (balance delay) at each station, and the overall efficiency of 77.78%.
The document discusses Enager Industries' shift from using divisions as profit centers to investment centers after 1992. It provides financial details and performance metrics for three divisions - Consumer, Industrial, and Professional Services. Questions are asked about specific divisions' performance and inferences that can be drawn from their financial statements. The effectiveness of using return on investment to measure divisional performance is also discussed.
The document discusses process design and facility layout. It covers types of processes like projects, job shops, batch processing, repetitive/assembly and continuous processing. The key factors in selecting a process are variety, flexibility, volume and the tradeoff between them. Layout types include product layouts that group equipment by product steps, process layouts that group by function, and combination layouts. The document provides examples of line balancing to optimize workstation times and productivity.
Operations Management : Line BalancingRohan Bharaj
This presentation gives us details about the different methods of Line Balancing.
It also gives an example of Ford Motors and how Line Balancing helped Ford become a powerhouse in the early 1900s
The document summarizes Wickham Skinner's concept of the "focused factory" approach. It discusses how conventional factories try to do too many conflicting tasks with inconsistent policies, hurting competitiveness. Skinner's research found that factories focusing narrowly on a specific manufacturing task for a niche market outperformed conventional plants. The document outlines the characteristics of a focused factory, comparing elements like equipment, workforce management, and organization structure between the conventional and focused approaches. It concludes the focused factory approach helps industries increase competitiveness through specialization rather than just cost efficiency.
The document contains a chapter about project management tools PERT and CPM from a quantitative analysis textbook. It includes 58 multiple choice questions about key concepts related to PERT and CPM, such as their origins and uses, time estimates, critical paths, variances, and probability calculations. The questions test understanding of network diagrams, activity dependencies, slack times, and using PERT and CPM to schedule and manage complex projects.
Southwest Airlines was expecting delivery of two new planes and needed to decide how to operate them while preserving their unique culture. Southwest pioneered the low-cost carrier model with low fares, high frequency flights, and a focus on customer service. They prioritized hiring for attitude over skills and emphasized teamwork and employee ownership to build a fun and casual culture. The case discusses how Southwest could expand strategically while maintaining their low-cost advantages and culture.
Chad's Creative Concepts is a furniture manufacturer founded by Chad Thomas. The company traditionally focused on custom furniture but has expanded into standard furniture lines. While standard furniture sales are increasing, custom jobs still dominate sales volumes and profits. The company is now facing problems of rising costs from inventory of raw materials and works in progress for standard furniture, which sits unfinished while custom jobs are prioritized. A review found profits are lower than expected given the company's growth. Thomas will need to make decisions to better manage production and inventory levels to improve the company's financial position.
This document provides 10 teaching suggestions for instructors to help students better understand key concepts in decision analysis. Suggestions include having students describe personal decisions they made and which steps of the decision-making process they used; role playing to define problems and alternatives; discussing types of decisions under certainty, risk, and uncertainty; and using decision trees and Bayesian analysis to solve problems. The goal is for students to recognize how decision theory applies to important real-life decisions. Alternative examples provided apply concepts like expected monetary value to problems involving purchasing industrial robots.
Classic pen company activity based costingHarish B
Classic Pen Company is analyzing its cost accounting system using activity-based costing to better understand profitability. Previously, all overhead costs were allocated based on direct labor, but ABC analysis identified drivers like setup time and production runs. This showed that red and purple pens have higher costs than indicated previously due to more setups. ABC cost per unit for red and purple exceeds their selling price, suggesting price increases are needed to improve profitability for those products.
The document describes a queuing system of an online legal service that receives customer emails and has lawyers respond to them. Key details:
- Emails arrive at a rate of 10 per hour with a coefficient of variation of 1.
- One lawyer responds to emails, taking on average 5 minutes with a standard deviation of 4 minutes.
- The average customer wait time is calculated to be 20.5 minutes.
- With a 10 hour work day, a lawyer would receive about 100 emails.
- The lawyer would have 1.66 hours for other work when not responding to emails.
- Reducing the standard deviation of response times to 0.5 minutes would not change average wait or lawyer work time.
This document provides a full business case analysis for United Parcel Service (UPS) to increase its global market share and customer satisfaction over the next five years. It outlines three alternative recommendations:
Alternative A focuses on improving internal operations through strategic distribution center placement, time-in-transit forecasting, automated sorting, and improved package labeling.
Alternative B addresses the growth of e-commerce through next-day delivery, package tracking, competitor research, distribution center placement, and drone technology.
Alternative C emphasizes sustainability through recycled packaging options and alternative fuel trucks to improve UPS's image and decrease long-term costs.
Each alternative provides details on scope, resources, organizational factors, external environment, cost effectiveness and
This document summarizes a case study about Boston Creamery, an ice cream company that installed a new financial planning and control system to compare budgeted and actual results. The summary focuses on 4 key characters - the President, VP of Sales and Marketing, VP of Operations, and Controller. It provides background on the company and system, and describes how the VP of Operations and Controller analyze variances in areas like market growth, manufacturing costs, and product mix to identify issues and recommendations. The summary is intended to highlight the essential information about the case study in 3 sentences or less.
The document compares the standard costing method and transaction-based costing method to allocate overhead costs and calculate the unit cost of production of valves, pumps, and flow controllers. While the standard costing method allocates overhead based on direct labor costs, the transaction-based method allocates different overhead costs like depreciation, setup labor, receiving, etc. based on the number of transactions for each activity. This results in different unit costs and profitability for each product under the two methods.
The document discusses various factors that companies consider when making location decisions. It describes how FedEx pioneered the central hub model to efficiently route packages. It also explains that location strategies depend on the type of business and may aim to minimize costs or maximize revenue. Key factors in location decisions include access to markets and suppliers, labor costs, tax rates, and cultural differences between locations. Companies also sometimes cluster near competitors to access shared resources. The document provides several examples of companies' location decisions and strategies.
6 1 overcoming the liability of foreignness it is not easy to saman341480
The document discusses factors that firms must consider when entering foreign markets, including overcoming liabilities of foreignness, strategic goals related to location, cultural and institutional distances between the home and host countries, and the advantages and disadvantages of being an early or late market entrant. Some key points:
- Foreign firms face inherent disadvantages from their non-native status that can be formal, such as differences in rules and regulations, or informal, such as discrimination.
- Location-specific advantages, like access to resources, market size, efficiency gains, or innovation centers, should match a firm's strategic goals for entering the market.
- Cultural and institutional distances between countries also influence entry location decisions, with some arguments that firms initially
This document provides solutions to problems from chapters 1 and 2 of a managerial economics textbook. It addresses questions related to maximizing profit and revenue for firms through analyzing demand, costs, and pricing decisions. The summaries analyze key factors like demand curves, marginal revenue, marginal costs, and how equating MR=MC determines optimal output levels.
The document discusses the steps for an apparel retail company to access the US market. It begins with background on trade agreements lowering barriers and increasing US consumer demand for imported apparel. It then discusses 4 steps:
1) Analyzing the large and growing US GDP indicating purchasing power.
2) Noting US investment in infrastructure like roads important for transporting goods from Mexico.
3) The large and competitive US apparel industry worth $342B by 2016, with strategies like niche marketing important.
4) Understanding the stable political environment and diverse cultural influences in the US which allow foreign investment.
Potential benefits of the US market include its large population offering a ready market, growing e-commerce
1) The document analyzes the potential of the US market for an international apparel retail company based in Mexico called EZ.
2) Key advantages of the US market include its large population, high GDP, cultural diversity, stable political system, and the value of the US dollar for imports.
3) The document recommends EZ enter the US market through a joint venture equity alliance to leverage local knowledge and reduce costs compared to a wholly owned subsidiary.
- Black & Decker pursued an international expansion strategy during the 1950s-1960s by setting up wholly owned subsidiaries in other countries that were given autonomy to operate. This decentralized structure made sense given Black & Decker's monopoly in the power tools market at the time.
- In the 1980s-1990s, increased competition from large retailers put pressure on Black & Decker's prices. The company responded by further centralizing control over subsidiaries and engaging in cost-cutting measures to lower prices.
- By the 1990s, it was clear that Black & Decker needed to make larger strategic changes beyond just cost-cutting to address the competitive environment.
Frederick W. Smith founded Federal Express in 1971 after writing a college paper about the need for an airfreight shipping system for time-sensitive deliveries. After a period in the military, Smith started Arkansas Aviation Sales and realized the difficulty of getting packages delivered within 1-2 days. This motivated him to found Federal Express to provide fast and reliable shipping. Federal Express grew rapidly through acquisitions, becoming one of the largest cargo airlines and express shipping companies in the world.
Tesla Motors has grown to be a $3.2 billion company by 2015 producing two highly rated electric vehicles, the Roadster and Model S. While not yet profitable, sales were growing rapidly. Tesla benefited from environmentally conscious early adopters but faced challenges appealing to the mass market and competing with major automakers. The company was founded in 2003 by Martin Eberhard who envisioned an electric sports car after noticing many hybrid owners also had expensive gas-powered cars, indicating an interest in status and the environment over just fuel savings. The first vehicle, the Roadster, was based on the lightweight Lotus Elise chassis. The Model S sedan was introduced in 2008 with a 300 mile range to target a broader
The document discusses strategic vs tactical decisions and competitive advantages in business. It explains that strategic decisions are made by top management and involve long-term planning around key questions of what business to be in and how to develop competencies. Tactical decisions are operational and focus on short-term goals. Competitive advantages can come from supply advantages like proprietary technology, demand advantages like customer loyalty, or economies of scale that lower costs as production increases. Barriers to entry like brand loyalty or switching costs help companies maintain advantages.
The document provides a quiz with 30 multiple choice questions about organizational structure and economics. It covers topics like organization charts, centralization of decision making, types of organizational structures, divisionalization, and transaction cost economics including concepts like asset specificity, uncertainty, and vertical integration. The questions assess understanding of these concepts and how they apply in different organizational and industry contexts.
The document appears to be a quiz for an economics course on organizational structure and transaction cost economics. It includes 29 multiple choice questions covering topics like organizational charts, centralization of decision making, types of organizational structures, transaction costs, asset specificity, uncertainty, and outsourcing. The questions assess understanding of key concepts in the economics of organization.
The document appears to be a quiz for an economics course on organizational structure and transaction cost economics. It includes 29 multiple choice questions covering topics like organizational charts, centralization of decision making, types of organizational structures, transaction costs, asset specificity, uncertainty, and outsourcing. The questions assess understanding of key concepts in the economics of organization.
Strategic management jeff dyerthird editionchapter 9intercherry686017
The document summarizes a chapter on international strategy from a textbook. It discusses various global strategies companies can take, including multi-domestic, global, and transnational strategies. It also covers reasons for expanding internationally such as growth, efficiency, managing risk, and learning. Additional topics include the CAGE framework for determining where to expand, different entry modes like exporting, licensing, and wholly owned subsidiaries, and choosing between greenfield, acquisition and joint ventures.
Companies from have being off shoring their back office operations for many years now, especially call center work. The combination of inexpensive English-speaking labor, well-developed technical infrastructure and a wealth of subcontractors looking to service the growing outsourced call center industry have made India and the Philippines convenient and competitive locations of choice.
EACH GROUP TO PRESENT BMW CASE IS REQUIRED TO PREPARE THEIR PR.docxsagarlesley
EACH GROUP TO PRESENT BMW CASE IS REQUIRED TO PREPARE THEIR PRESENTATIONS AS IN BELOW FORMAT:
1. GENERAL SUMMARY OF WHAT’S HAPPENING IN THE CASE
2. YOUR ANSWERS FOR THE BELOW QUESTIONS:
a. Assuming that most modern cars share very similar characteristics; what drive customers to purchase their next car? Considering that, how
can BMW’s “Dream It. Build It. Drive It.” program benefit from such a car-buying decision of customers?
b. Does BMW’s “Dream It. Build It. Drive It.” program have a sustainable advantage in long term? Would you use BMW’s “Dream It. Build It.
Drive It.” program for X5, and X1?
Learning Goals
1. To assess factors that create international business opportunities
2. To identify potential global business opportunities for various foreign markets
Purpose
Some organizations attempt to expand their international operations by seeking foreign markets appropriate for existing products and services. Other enterprises assess foreign business environments in an attempt to meet needs in those markets.
In this first section, you will conduct a preliminary assessment of geographic, economic, social-cultural, and political-legal factors that create global business opportunities in foreign markets. Also, you should consider how technology could create new foreign business opportunities by expanding possibilities for production, marketing, and distribution of goods and services.
Background
Global Business Opportunities
Potential foreign business opportunities may be viewed in two major categories:
A. Various country factors create international business opportunities. These include:
· • Natural resources, agricultural products, or geographic factors (climate or terrain)
· • Level of economic development and infrastructure
· Cultural characteristics, social activities, or demographic trends
· Changing political situations or legal factors
· Technology that may enhance production or distribution of an item
B. Existing companies attempting to expand into new markets around the world—Think about several possible global business opportunities that would be the basis for new or expanding international business operations. These business opportunities may be consumer goods or services; or organizational goods and services, sold to businesses, government agencies, nonprofit organizations, schools, hospitals, hotels, or other organizations.
Examples of global business opportunities include: processing of fresh fruit in Chile for distribution around the world; sale of water filtration systems in developing economies; sale of food products adapted to the tastes of different cultures; development of cellular telephone systems in countries with a weak communication infrastructure; and expansion of fast-food restaurants into countries with expanding economies.
Resources
Web links:
· Global Edge CyberSite
· Business Around the World Atlas (Works best with Firefox.)
· CIA World Fact Book
Conduct Research
Collect data a ...
International marketing strategies of foreign companies in the United States are discussed. Japanese companies like Toyota and Sony faced challenges from American competitors but responded strategically through legal challenges and emphasis on quality. Toyota surpassed General Motors in the US through lower costs, higher quality, and focus on customer satisfaction. South Korean companies Samsung and LG also focus on innovative products and flooding the market.
1. List and explain the factors influencing the Network design Decisions.
2. List and explain the characteristics of forecasts.
3. Explain Network Operations Optimization Profit Maximization Model.
4. Explain Network Operations Optimization Cost Minimization Model.
5. Uncertainty of demand and price drives the value of building flexible production capacity at a plant. Explain.
6. Explain how Network Design decisions are evaluated using decision tress.
7. What is the role of network design in supply chain? Explain it. (Refer module 3 notes)
8. With a neat diagram, explain ABC analysis in inventory management
9. “The decision to price a product at a particular value is a marketing decision” Comment on it.
10. How to take network design decisions using decision tress? Explain
11. The role of network design in the supply chain is very important!!! Comment.
GBS CH 6 COUNTRY EVALUATION AND SELECTION Shadina Shah
This document discusses factors to consider when evaluating and selecting countries for international business operations. It covers the importance of location, scanning countries to identify opportunities and risks, and variables to assess like sales expansion, resource acquisition, and political risk. The key steps are scanning countries broadly first before narrowing down options for more detailed analysis considering objectives, strategies, environmental factors, and flexibility as conditions can change. Opportunity variables include sales potential and accessing resources, while risk variables include political, economic, natural disaster, and competitive risks. Companies must prioritize and weigh these factors to decide where and how much to invest abroad.
Pricing Alignment in Canada - Case Study
The four case studies presented relate to the questions on the next slide regarding Professor Pankaj Ghemawat's Harvard Business Review (2001) article on "Distance Still Matters."
Con Should the United States government have bailed out the a.docxpatricke8
Con: Should the United States government have bailed out the automobile
industry?
Introduction
A. In 2009, the .“Big Three” (GM, Chrysler, and ford) were facing fmancial struggles.
They were fuced with a decision: either try and work through their problem on their own
by securing loans, or to go to the government for help. Of the Big Three, only Ford
declined government assistance, having already secured a line ofcredit in 2006 by using
all of their assets as collateral. GM and Chrysler filed for a managed Chapter 11
bankruptcy that was funded primarily through the U.S. Treasury using taxpayer money.
This modified version ofChapter 11 bankruptcy that was implemented by the U.S.
government appeared to have allowed these automakers to survive for the time being, but
it came at the expense ofthe taxpayers and it did not address all ofthe problems that
caused the Big Three’s issues in the first place.
I. The Big Three’s poor managerial choices created their financial problems,
and the taxpayers’ money shouldn’t be bailing them out.
A. GM, Chrysler, and ford continued to focus on and mass produce large trucks and
SUVs because of their higher profit margins despite a growing concern over increasing
fuel prices between 2002-2007.
1. Research done by Thomas Klier of the Federal Reserve Bank of Chicago
indicates that during the span of 2002-2007, “about 40 percent of the decrease in
U.S. market share has been caused by the recent increase in the price of gaso line.”
2. More specifically, research done by Meghan Busse and F brian Zettlemeyer of
Northwestern University and Christopher Knittle of UC Berkeley showed that
through the period of 1999-2006, “a$1 increein goIinepricewiII decree
the market share of cars in the least fuel efficient quartile (< 17.7 MPG) by
11.5%.... that a $1 increase in gasoline price will increase the market share of cars
inthemofu effidentquatile(>24.3MR3) by 15.1%”
B. They allowed legacy costs to build by continuing to give out large pension plans when
foreign auto makers were switching to more realistically defined contribution plans
(4OlKs) back in the $Os.
1. The average per-hour base salary ofa U.S. auto worker and a foreign auto
worker were about the same ($28/hour in 2007) but each worker actually cost
$73.21/hour compared to $44.17/hour of Japanese competitors, with the
difference being the additional benefits promised.
C. U.S. autornakers should have switched to defined contribution plans (4OlKs) in order
to stay competitive and keep costs sustainable.
1. GM didn’t officially freeze their pension plans until February of2012.
a. This meant that they would no longer contribute to the pension plans of
workers who were promised them upon employment. Those employees
would now receive 4OlKs (defined contribution plans), a change that
should have been made decades ago to avoid current financial struggles.
II. There was no market failure and the U.S. auto makei should have filed
for traditional Chapter 11 bankrup.
Similar to 241233316 solution-manual-of-chapter-8-om (20)
This document provides tips from IELTS examiners on how to prepare for the IELTS exam. It recommends immersing yourself in English daily, satisfying all parts of writing and speaking tasks completely, using free online resources to practice English, and focusing on accurately answering the exact questions asked rather than providing memorized responses. Overall, the tips suggest surrounding yourself with English, fully addressing exam tasks, taking advantage of free materials, and closely following what is being asked to do well on the IELTS exam.
The OPTIMA 7 Biogas analyzer is a handheld device that can simultaneously measure up to 7 gas components. It can measure components of biogas like methane, hydrogen sulfide, and carbon dioxide. It can also measure components of emissions like oxygen, carbon monoxide, nitric oxide, and nitrogen dioxide. The device has features like an internal data storage, rechargeable battery, and interfaces to connect additional devices. It is a powerful handheld gas analyzer for measuring biogas and engine emissions.
Frito-Lay is undertaking numerous initiatives to reduce its environmental footprint and become more sustainable in its operations. It has installed solar panels that generate power for cooking Sun Chips, built a biomass boiler, implemented water recycling systems, and strives to establish zero waste facilities. Frito-Lay has reduced energy use across its plants by 21% through these resource reduction efforts. However, further initiatives are ongoing to continue improving packaging sustainability and reducing waste.
This document provides supplemental material on capacity and constraint management. It includes an introduction noting that the topic could fill a full class session, especially if the dice game simulation is used. Suggested class discussion ideas involve using lecture halls as an example of design versus effective capacity, and ways firms can increase capacity in the short and long run. A video clip from "I Love Lucy" is presented to demonstrate poor management techniques relating to capacity. Active learning exercises include playing the dice game simulation from "The Goal" to show how throughput is affected by bottlenecks and variability. Presentation slides are also provided on key capacity concepts.
This supplement discusses capacity and constraint management. It begins with definitions of key capacity terms like design capacity, effective capacity, utilization, and efficiency. It then demonstrates how to calculate these metrics using examples. It also discusses balancing capacity with demand, including using complementary products. The supplement covers bottleneck analysis and identification, which is crucial for improving system throughput. It presents examples to demonstrate bottleneck calculations. Finally, it summarizes the theory of constraints and bottleneck management principles.
The document discusses the history and development of chocolate over centuries. It details how cocoa beans were first used by Mesoamerican cultures before being introduced to Europe, where it became popular in drinks and confections. The document also notes that modern chocolate production methods were established in the 19th century to allow chocolate to be consumed on a larger scale.
The document discusses the history and development of chocolate over centuries. It details how cocoa beans were first used by Mesoamerican cultures before being introduced to Europe, where it became popular in drinks and confections. The document also notes that modern chocolate production methods were established in the 19th century to allow chocolate to be consumed on a larger scale.
The document describes 5 different engineering design problems involving the selection of materials based on mechanical properties and performance criteria. For each problem, the document defines the design objective, relevant equations, and derives a materials performance index to determine the optimal material selection region on a log-log materials property chart. The optimal materials are identified for several example performance criteria and are highlighted on the provided charts.
The document provides information on internal combustion engines, including:
- IC engines convert chemical energy from fuels like gasoline into mechanical work. They are used in vehicles, generators, and other machinery.
- The basic components of IC engines are cylinders, pistons, inlet/exhaust valves. Pistons move between top and bottom dead centers.
- IC engines are classified as either spark-ignition (gasoline) or compression-ignition (diesel) based on how combustion is initiated in the cylinder.
The document then discusses air standard cycles that model idealized versions of engine cycles, including the Otto cycle for gasoline engines and Diesel cycle for diesel engines. It provides analysis of the cycles
1. CHAPTER 8 LOCATION DECISIONS 107
C H A P T E R
Location Decisions
DISCUSSION QUESTIONS
1. FedEx’s key location concept is the central hub concept, with
Memphis selected for several reasons, including its being in the
middle of the country and having very few hours of bad weather
closures.
2. The major reason for U.S. firms to locate overseas is often
lower labor costs, but as this chapter, Chapter 2, and
Supplement 11 suggest, there are a number of considerations.
3. The major reason foreign firms build in the U.S. is to satisfy
the demand for foreign goods in the United States while reducing
transportation cost and foreign exchange risk; in addition, U.S.
locations allow foreign firms to circumvent quotas and/or tariffs.
4. Clustering is the tendency of firms to locate near competitors.
5. Different weights can be given to different factors. Personal
preferences are included.
6. The qualitative approach usually considers many more
factors, but its results are less exact.
7. Clustering examples in the service sector include fastfood
restaurants, shoe and jewelry stores in a shopping mall, and theme
parks.
8. Factors to consider when choosing a country:
Exchange rates
Government stability (political risk)
Communications systems within the country and to the
home office
Wage rates
Productivity
Transportation costs
Language
Tariffs
Taxes
Attitude towards foreign investors/incentives
Legal system
Ethical standards
Cultural issues
Supplies availability
Market locations
9. Factors to consider in a region/community decision:
Corporate desires
Attractiveness of region
Labor issue
Utilities
Environmental regulations
Incentives
Proximity to raw materials/customers
Land/construction costs
10. Franchise operations may add new units per year; Exxon,
McDonald’s, and WalMart add hundreds of units per year, almost
a daily location decision. For such organizations, the location
decision becomes more structured, more routine. Perhaps by
repeating this process they discover what makes their strategic
locations decisions successful.
11. Factors affecting location decisions: nearness to resources,
suppliers, and customers; labor productivity; foreign exchange;
political risk, unions; employment; zoning; pollution; taxes; and
clustering.
12. The centerofgravity method assumes that cost is directly
proportional to both distance and volume shipped. For service
facilities, revenue is assumed to be directly proportional to
proximity to markets.
13. Locational breakeven analysis three steps:
Step 1: Determine fixed and variable cost for each
location.
Step 2: Plot the costs for each location, with costs on the
vertical axis of the graph and annual volume on the
horizontal axis.
Step 3: Select the location that has the lowest total cost
for the expected production volume.
14. The issue of weight or volume gain and weight or volume
loss during processing is important, and supports the
manufacturing side of the saying (weight loss during mining and
refining, for example, suggests shipping after processing). But JIT
may be more easily accomplished when suppliers are clustered
near the customer. And some services (such as Internet sales) can
take place at tremendous distances without sacrificing close
contact.
15. Besides low wage rates, productivity should be considered
also. Employees with poor training, poor education, or poor work
habits are not a good buy. Moreover, employees who cannot or will
not reach their place of work are not much good to the organization.
16. Service location techniques: regression models to determine
importance of various factors, factor rating method, traffic counts,
demographic analysis of drawing area, purchasing power analysis of
area, centerofgravity method, and geographic information system.
17. The distributor is more concerned with transportation and
storage costs, and the supermarket more concerned with proximity
to markets. The distributor will focus more on roads, overall
population density (store density), while the supermarket will focus
more on neighborhood affluence, traffic patterns, etc. The
2. 108 CHAPTER 8 LOCATION DECISIONS
distributor will be concerned with speedy and reliable delivery, the
supermarket with easy access. Both will have concerns over
attitudes and zoning. Both will need access to similar labor forces;
both will need similar measures of workforce education, etc. Many
other comparisons can be drawn.
18. This is a service location problem, and should focus on
revenues, not costs. Customer traffic, customer income, customer
density, are obvious beginning points. Parking/access, security/
lighting, appearance/image, rent, etc. (see Table 8.6) are other
important variables.
ETHICAL DILEMMA
Location is a major issue in the U.S. today. Almost every
community is seeking new jobs, especially from foreign firms like
Mercedes. As Mercedes was definitely coming to the U.S. any
way, the bidding wars are nonproductive from a central economy
perspective. There are many implications to the local citizenry,
especially because they pay the bills if the financial successes
predicted are not accurate. Votes are usually not taken as these
decisions are made by the political leaders of the community.
Objective economic analysis on the incentives versus benefits
might limit the giveaways.
As the United Airlines discussion suggests, there are many
downsides to the spread of incentives being offered by almost
every city, state, and country. Orlando and Louisville are likely
counting their blessings that they lost the bidding war for the
United repair base. For every happy ending (such as Vance,
Alabama, claims with its Mercedes plant), there is a story like the
one in this Ethical Dilemma. The Internet should yield a rich crop
of similar situations.
Active Model Exercise
ACTIVE MODEL 8.1 Center of Gravity
1. What is the total weighted distance from the current old and
inadequate warehouse in Pittsburgh?
318,692
2. If they relocate their warehouse to the center of gravity, by
how much will this reduce the total weighted shipping distance?
By 18,663—from 318,692 to 300,029.
3. Observe the graph. If the number of shipments from New
York doubles, how does this affect the center of gravity?
The center of gravity moves north and east.
4. The center of gravity does not necessarily find the site with
the minimum total weighted distance. Use the scrollbars to move
the trial location and see if you can improve (lower) the distance.
64, 97 with a total weighted distance of 299, 234 (using
Solver).
5. If you have Solver set up in Excel, from Excel’s main menu,
use Tools, Solver, Solve in order to see the best answer to the
previous question.
64, 97 with a total weighted distance of 299, 234.
END-OF-CHAPTER PROBLEMS
8.1 Where: Six laborers each making $3 per day can produce 40 units.
Ten laborers each making $2.00 per day can produce 45 units.
Two laborers each making $60 per day can make 100 units.
6 $3
(a) Cambodia $0.45 unit
40
10 $2.00
(b) China $0.44 unit
45
2 $60
(c) Montana $1.20 unit
100
China is most economical, assuming that transportation costs
are not included.
8.2 Cambodia $0.45 $1.50 $1.95
China $0.44 $1.00 $1.44
Montana $1.20 $0.25 $1.45
China is most favorable, but Montana is almost tied.
8.3 Thailand: 2,000 baht/200 10 baht/unit,
if $1 10 baht $1/unit
India: 2,000 rupees/200 10 rupees/unit,
if $1 8 rupees $1.25/unit
Sacramento (U.S.A.): $200/200 = $1/unit
Select either Thai or U.S. company.
8.4 If India had a tariff of 30%, then making the items in India is
$0.05 less than importing them from anywhere.
8.5 (a) Baptist Church is best.
Site
Maitland Baptist
Church
Northside
Mall
Factor (weight
score)
(weight
score)
(weight
score)
Space 18 21 24
Costs 10 20 7.5
Traffic density 10 16 12
Neighborhood income
7.5 10.5
6Zoning laws
8 2 9
Totals53.5 69.5 58.5
(b) The totals are now Maitland, 52.5; Baptist Church, 70.5; and
Northside Mall, 56.5. Baptist Church’s location is even more preferred.
8.6 (a) Atlanta 0.4(80) 0.3(20) 0.2(40) 0.1(70) 53
Charlotte 0.4(60) 0.3(50) 0.2(90) 0.1(30) 60
Charlotte is better.
(b) A change to 75 (from 60) in Charlotte’s incentive package
does not change the answer to part (a) because Charlotte was
already the better site. The new Charlotte score is now 66
overall, while Atlanta stays at 53.
8.7
Factor
Philadelphia
(weight score)
New York
(weight
score)
Customer
convenience 17.5 20
Bank accessibility 8.0 18
Computer support 17.0 15
Rental costs 13.5 8.25
Labor costs 8.0 5.0
3. CHAPTER 8 LOCATION DECISIONS 109
Taxes 9.0 5.0
Totals 73.0 71.25
ILA should locate in Philadelphia.
8.8 (a)
It appears that Hyde Park represents the best alternative.
(b) If Present Location’s public transportation score increases
from 30 to 40, the total score increases by 10 points × 0.20
weight = 2.0 points. So the new score is 51 points for Present
Location, which is still not as good as Hyde Park’s score.
8.9 (a) The weighted averages are:
Akron 81.5
Biloxi 80.0
Carthage 87.5
Denver 76.0
(b) Carthage is preferred (87.5 points) in the initial scenario.
Location
Factor
Present Location
Wgt
Newbury
Wgt
Hyde Park
Wgt
1 40 0.30 12 60 0.30 18.00 50 0.30 15.0
2 20 0.15 3 20 0.15 3.00 80 0.15 12.0
3 30 0.20 6 60 0.20 12.00 50 0.20 10.0
4 80 0.35 28 50 0.35 17.50 50 0.35 17.5
Total Points 49 Total Points 50.5
0
Total Points 54.
5
Akron Biloxi Carthage Denver
Factor Weight Score
Weight
Score
Score
Weight
Score Score
Weight
Score Score
Weight
Score
Labor 0.15 90 13.5 80 12.0 90 13.5 80 12.0
Availability
Tech. School 0.10 95 9.5 75 7.5 65 6.5 85 8.5
Quality
Operating Cost 0.30 80 24.0 85 25.5 95 28.5 85 25.5
Land &
Construction 0.15 60 9.0 80 12.0 90 13.5 70 10.5
Ind. Incentives 0.20 90 18.0 75 15.0 85 17.0 60 12.0
Labor Cost 0.10 75 7.5 80 8.0 85 8.5 75 7.5
1.00 81.5 80. 87.5 76.
Akron Biloxi Carthage Denver
Factor Weight Score
Weight
Score
Score
Weight
Score Score
Weight
Score Score
Weight
Score
Labor 0.15 90 13.5 80 12.0 90 13.5 80 12.0
Availability
Tech. School 0.10 95 9.5 75 7.5 65 6.5 85 8.5
Quality
Operating Cost 0.10 80 8.0 85 8.5 95 9.5 85 8.5
Land &
Construction 0.15 60 9.0 80 12.0 90 13.5 70 10.5
Ind. Incentives 0.20 90 18.0 75 15.0 85 17.0 60 12.0
Labor Cost 0.30 75 22.5 80 24.0 85 25.5 75 22.5
1.0
0
80.
5
79.
0
85.
5
74.0
(c) In the second scenario, all four scores fall to smaller values, Carthage more than the others, but it is still
firmly in first place. All scores are smaller because all sites had operating cost scores better than labor cost
scores. When labor cost takes on the higher weight, the lower scores have more influence on the total.
The new scores are:
Akron 80.5
Biloxi 79.0
Carthage 85.5
4. 110 CHAPTER 8 LOCATION DECISIONS
8.10 (a)
Location A
Factor Weight Rating Weighted
Score
1 5 100 500
2 3 80 240
3 4 30 120
4 2 10 20
5 2 90 180
6 3 50 150
Total weighted score: 1210
Location B
Factor Weight Rating Weighted
Score
1 5 80 400
2 3 70 210
3 4 60 240
4 2 80 160
5 2 60 120
6 3 60 180
Total weighted score: 131
0
Location C
Factor Weight Rating Weighted
Score
1 5 80 400
2 3 100 300
3 4 70 280
4 2 60 120
5 2 80 160
6 3 90 270
Total weighted score: 153
0
Based on the total weighted scores, Location C should be recommended.
Note that raw weights were used in computing these weighted scores
(we just multiplied “weight” times “rating”). Relative weights could have
been used instead by taking each factor weight and dividing by the sum of
the weights (i.e., 19). Then the weight for factor 1 would have been 5/19 =
0.26. Location C would still have been selected.
(b) Location B’s “Proximity to Port Facilities” score increases from
80 to 90: The total score increases by 10 × (5 weight) = 50, to
1,360 points.
(c) To change its rank to first place, Location B needs to increase to at
least 1,530 points from 1,310. Even if the score is 100, the total only
increases to 1,410, so B will stay as the second choice. To end up in
third place, if the rating drops below 60, the total weighted score drops
below 1,210, which is Location A’s total score.
8.11 (a)
Factor Weight Taiwan Thailand Singapore
Technology 0.2 .8 1.0 .2
Level of education 0.1 .4 .1 .5
Political/legal 0.4 .4 1.2 1.2
Social 0.1 .4 .2 .3
Economic 0.2 .6 .6 .4
Weighted average 2.6 3.1 2.6
Thailand rates highest (3.1).
(b) Now Thailand’s overall score drops to 2.7, just ahead (but not
by much) of Taiwan and Singapore.
(c) Now Thailand’s score drops to 2.3, leaving the other two
countries in a tie for first place.
8.12 (a) Given the factors and weightings presented, the
following table suggests that Great Britain be selected:
Great
Factor Hollan
d
Britain ItalyBelgium Greec
e
1 Stability of 5 5 3 5 4
government
2 Degree to 4 5 3 4 3
which the
population can
converse in
English
3 Stability of 5 4 3 4 3
the monetary
system
4 Communications 4 5 3 4 3
infrastructure
5 Transportation 5 5 3 5 3
infrastructure
6 Availability of 3 4 5 3 5
historic/
cultural sites
7 Import 4 4 3 4 4
restrictions
8 Availability of 4 4 3 4 3
suitable
quarters
34 36 26 33 28
(b) If English is not an issue, as illustrated in the following
table, Great Britain, Holland, and Belgium should all
be considered further:
Great
Factor Hollan
d
BritainItaly Belgium Greec
e
1 Stability of 5 5 3 5 4
government
3 Stability of the 5 4 3 4 3
monetary
system
4 Communications 4 5 3 4 3
infrastructure
5 Transportation 5 5 3 5 3
infrastructure
6 Availability of 3 4 5 3 5
historic/
cultural sites
7 Import 4 4 3 4 4
restrictions
8 Availability of 4 4 3 4 3
suitable
quarters
30 31 23 29 25
8.13 (a)
Site Total Weighted Score
A 174
5. CHAPTER 8 LOCATION DECISIONS 111
B 185
C 187
D 165
Site C has the highest total weighted score so should be selected.
(As a practical matter, when scores are as close as those for Sites
B and C, further analysis is warranted.)
8.14 (a)
Italy is highest.
(b) Spain’s cost would drop, but the result would not
change with a 4, since Spain is already lowest. No score
will change Spain’s last place.
8.15 (a) Chicago = 16 + 6 + 7 + 4 = 33
Milwaukee = 10 + 13.5 + 6 + 3 = 32.5
Madison = 12 + 12 + 4 + 2.5 = 30.5
Detroit = 14 + 6 + 7 + 4.5 = 31.5
All four are quite close, with Chicago and Milwaukee
almost tied. Chicago has the largest rating, with a 33.
(b) With a cutoff of 5, Chicago is unacceptable because it scores
only 4 on the second factor. Only Milwaukee has scores of 5
or higher on all factors. Detroit and Madison are also
eliminated, as each has one rating of a 4.
8.16 (a) The following figure indicates the volume range for
which each site is optimal.
Site 1 is optimal for production less than or equal to 125 units.
Site 2 is optimal for production between 125 and
233 units.
Site 3 is optimal for production above 233 units.
(b) For 200 units, site 2 is optimal.
8.17 (a) See the figure below:
(b) Q drops to 23,333, from 33,333.
since $660,000 + 28Q = $800,000 + 22Q
so, 6Q = 140,000
or Q = 23,333
8.18 (a)
For all volumes above 10,000, site C has the lowest cost.
(b) Site A is optimal for volumes from 0 to 10,000 Audis.
(c) Site B is never optimal because its cost line always exceeds
that of A or C for all volume levels.
8.19 (a) Crossover is where ProfitBonham = ProfitMcKinney;
or – 800,000 + 15,000X = – 920,000 + 16,000X
Crossover is at 120 units.
10,000,000 + 2,500V = 25,000,000 +1,000V
1,500V = 15,000,000
V = 10,000.
Cost(Dallas) Cost(Detroit)
(Dallas) (Dallas) (Detroit) (Detroit)
$600,000 $28 $800,000 $22
$6 $200,000
$200,000/$6
33,333
FC Q VC FC Q VC
Q Q
Q
Q
Q
Germany: 0.05(5) 0.05(4) 0.2(5) 0.2(5) 0.2(1) 0.1(4) 0.1(1) 0.1(2)
Italy: 0.05(5) 0.05(2) 0.2(5) 0.2(2) 0.2(4) 0.1(2) 0.1(4) 0.1(3)
Spain: 0.05(5) 0.05(1) 0.2(5) 0.2(3) 0.2(1) 0.1(1) 0.1(4) 0.1(1)
Greece: 0.05(2) 0.05(1) 0.2(2) 0.2(5) 0.2(3) 0.1(1) 0.1(3) 0.1(5)
Bonham
McKinney
Profit 800,000 + (29,000 14,000)X
800,000 + 15,000X
Profit 920,000 + (29,000 13,000)X
920,000 + 16,000X
(b) Site D’s total score is now raised from 165 to 175. Although D
ranks slightly higher than A, the results do not change.
(c) Site A’s total score increases by 12 points, to 186. This is now close to a three
way tie between sites A, B and C. Other factors need to be introduced.
6. 112 CHAPTER 8 LOCATION DECISIONS
(b, c) McKinney is preferable beyond 120 units, Bonham
below 120 units.
(d) Bonham has breakeven at about 53 units; McKinney
about 58, so both are beyond breakeven at the
crossover.
8.20 (a)
5 5 6 10 4 15 9 5 7 15 3 10 2 5
5 10 15 5 15 10 5
335
5.15
65
10 5 8 10 9 15 5 5 9 15 2 10 6 5
5 10 15 5 15 10 5
475
7.31
65
x
y
C
C
The proposed new hub should be near (5.15, 7.31).
(b) When the shipment loads from City A triple, from 5 to 15, the
new coordinates are (5.13, 7.67).
8.21
3 9.2 3 7.3 5 7.8 3 5.0 3 2.8
3 5.5 3 5.0 3 3.8
26
154.8
5.95
26
3 3.5 3 2.5 5 1.4 3 8.4 3 6.5 3 2.4
3 3.6 3 8.5
26
113.2
4.35
26
x
y
C
C
The distanceminimizing location is at (5.95, 4.35). This minimizes
distance traveled, but is “straight line,” which does not reflect reali
ties of highway routes. It does not consider rivers, bridges, and other
geographical impediments. Consider placing the office as near the
center of gravity as possible and still be on or near a major highway.
Students who overlay this onto a map of Louisiana should recognize
that Baton Rouge would be an ideal location.
8.22
(a)
X = New middle school to serve 4 elementary schools.
A (North Park) (4, 11) 500
B (Jefferson) (5, 2) 300
C (Lincoln) (8, 2) 300
D (Washington) (11, 6) 200
1300
7. CHAPTER 8 LOCATION DECISIONS 113
(b) Other considerations:
Cannot locate on the highway, obviously
Safety—pedestrian bridge
Space for school and grounds
Traffic
Availability of land and its price
8.23 (a)
xC = x coordinate of center of gravity
x
x
y
C
C
C
[25(2,000) 25(5,000) 55(10,000) 50(7,000)
80(10,000) 70(20,000) 90(14,000)]
[2,000 5,000 10,000 7,000 10,000
20,000 14,000]
4,535,000
66.69
68,000
[45(2,000) 25(5,000) 45(10,000) 20(7,000)
50(10,
yC
000) 20(20,000) 25(14,000)]
[2,000 5,000 10,000 7,000 10,000
20,000 14,000]
2,055,000
30.22
68,000
The center of gravity is (66.69, 30.22).
(b) When Census tracks 103 and 105 increase by 20% each, from
10,000 to 12,000 population, the new coordinates become
(66.74, 31.18). Coordinate denominators increase (by 2,000
+ 2,000) to 72,000. The xcoordinate numerator increases (by
55(2,000) + 80(2,000)) to 4,805,000. The ycoordinate
numerator increases (by 45(2,000) + 50(2,000)) to 2,245,000.
8.24 (a) Calculate the overall site scores for each site:
Site Overall Score
A 20(5) + 16(2) + 16(3) + … + 10(5) =
348
B 20(4) + 16(3) + 16(4) + … + 10(4) =
370
C 20(4) + 16(4) + 16(3) + … + 10(3) =
374
D 20(5) + 16(1) + 16(2) + … + 10(3) =
330
Site C is best
(b) Replace 10 by w 7 in the overall score calculations
above. Get overall site scores as a function of w7
thereby:
Site Overall Score
A 20(5) + 16(2) + 16(3) + … + 5w7 = 298
+ 5w7
B 20(4) + 16(3) + 16(4) + … + 4w7 = 330
+ 4w7
C 20(4) + 16(4) + 16(3) + … + 3w7 = 344
+ 3w7
D 20(5) + 16(1) + 16(2) + … + 3w7 = 300
+ 3w7
Now find all values (a) 344 + 3w7 298 + 5w7
of w7 such that (b) 344 + 3w7 330 + 4w7
(a), (b), & (c) all hold: (c) 344 + 3w7 300 + 3w7
Results:
(a) states w7 23 (b) states w7 14
(c) states 344 300 (which holds for all values of w7).
For all positive values of w7 such that w7 14.
8.25 (a) Weighted scores
British International Airways
Milan Rome Genoa Paris Lyon Nice
3,415 2,945 3,425 3,155 3,970 3,660
Munich Bonn Berlin
3,425 3,915 3,665
So, for part (a) the top three cities become: Lyon is best (3,970),
Bonn is second (3,915), and Berlin is third (3,665).
(b) Weighted scores with hangar weights modified:
British International Airways
Milan Rome Genoa Paris Lyon Nice
3,215 2,825 3,345 2,795 3,730 3,460
Munich Bonn Berlin
3,065 3,555 3,585
So, for part (b) the top three cities become: Lyon is best (3,730),
Berlin is second (3,585), and Bonn is third (3,555).
(c) German cities reweighed on financial incentives:
British International Airways
Munich Bonn Berlin
Weighted
Score
3,320 3,810 3,840
Yes, increasing the financial incentive factors to 10 for the three
German cities of Munich, Bonn, and Berlin changes the top three
cities to Berlin (3,840), Bonn (3,810), and Lyon (3,730).
ADDITIONAL HOMEWORK PROBLEMS
Here are solutions to additional homework problems that appear
on our Web site, www.pearsonglobaleditions.com/myomlab.
8.26 To aid in this analysis, we assign a rating to each “grade”.
Grade Rating
A 4
B 3
C 2
D 1
and to each “factor”:
Factor Rating
Rent 1.00
Walk-in 0.90
Distance 0.72
(4 500) (5 300) (8 300) (11 200) 8100
6.23
1300 1300
(11 500) (2 300) (2 300) (6 200) 7900
6.08
1300 1300
x
y
C
C
8. 114 CHAPTER 8 LOCATION DECISIONS
and compute overall ratings for each location:
1 1.0 3 0.90 3 0.72
Downtown rating 2.24
2.62
2 1.0 4 0.90 4 0.72
Shopping mall rating 3.24
2.62
4 1.0 1 0.90 2 0.72
Coral Gables rating 2.42
2.62
If you do not divide by the sum of the weights, the respective rat
ings are 5.86, 8.48, and 6.34. The shopping mall receives the
highest rating using this site selection approach.
8.27
9 9 6 8 2 5 8 5 2 4
Downtown rating 6.03
31
7 9 6 8 5 5 4 5 9 4
Suburb A rating 6.19
31
6 9 8 8 6 5 5 5 6 4
Suburb B rating 6.35
31
Suburb B has the highest rating, but weights should be examined
using sensitivity analysis, as the final ratings are all close.
8.28
8.29
(a)
1,000,000 73X 800,000 112X
200,000 39X or X 5,128
(b) For 5,000 units, Perth is the better option.
70 ×10 +85×10 + 70×25+80×20 +90×15 6250
Site 1 factor rating = = = 78.125
80 80
60×10 +90×10 +60×25+90 ×20 +80×15 6000
Site 2 factor rating = = = 75.0
80 80
85×10 +80×10 +85×25+90×20 +90×15 6925
Site 3 factor rating = = = 86.56
80 80
Site
90×10 +60×10 +90×25+80×20 +75×15 6475
4 factor rating = = = 80.94
80 80
Site 3 has the highest rating factor, 86.56, and should be selected.
9. CHAPTER 8 LOCATION DECISIONS 115
8.30
(a)
The total cost equations are:
Atlanta: 125,000 6
Burlington: 75,000 5
Cleveland: 100,000 4
Denver: 50,000 12
TC x
TC x
TC x
TC x
(b) Denver is preferable over the range from 0–3,570 units.
Burlington is lowest cost at any volume exceeding
3,570, but less than 25,000 units. Atlanta is never
lowest in cost. Cleveland becomes the best site only
when volume exceeds 25,000 units per year.
(c) At a volume of 5,000 units, Burlington is the least
cost site.
8.31
City Map Coordinates Shipping
Load
A 2,1 20
B 2,13 10
C 4,17 5
D 7,7 20
E 8,18 15
F 12,16 10
G 17,4 20
H 18,18 20
120
2(20) 2(10) 4(5) 7(20) 8(15) 12(10) 17(20) 18(20)
(20 10 5 20 15 10 20 20)
1160
9.67
120
1(20) 13(10) 17(5) 7(20) 18(15) 16(10) 4(20) 18(20)
(20 10 5 20 15 10 20 20)
1245
10.37
120
x
y
C
C
8.32
10 3 3 3 4 2 15 6 13 5 1 3 5 10
3 3 2 6 5 3 10
255
7.97
32
5 3 8 3 7 2 10 6 3 5 12 3 5 10
3 3 2 6 5 3 10
214
6.69
32
x
y
C
C
The proposed new facility should be near (7.97, 6.69).
8.33 With equal weights of 1 for each of the 15 factors:
Total Average
Spain 39 2.60
England 52 3.47
Italy 50 3.33
Poland 41 2.73
England is the top choice.
10. 1
2
116 CHAPTER 8 LOCATION DECISIONS
8.34 With weights given, the result became:
Spain 2.55
England 3.55
Italy 3.30
Poland 2.80
England remains the top selection.
CASE STUDY
FINDING A LOCATION FOR ELECTRONICS COMPONENT
MANUFACTURING IN ASIA
1. What advantages and disadvantages does each potential
location offer?
Singapore
Advantages: labor relatively cheap, good transport
infrastructure and incentives offered to stay.
Disadvantages: increasing labor costs and increasing utility
costs.
Hong Kong
Advantages: labor consistently cheap and good transport
infrastructure.
Disadvantages: no specific disadvantage has been identified
in the case but students should attempt to discuss this further.
Malaysia
Advantages: access to raw materials and natural resources
inexpensive labor.
Disadvantages: Concern with frequency of ship visits.
2. What other relevant factors that are not mentioned in the case
study might play a role in this decision?
The education of the workforce (both current workforce and
future generations) as well as political stability will impact
the decision.
3. Why is transportation infrastructure so important in this
decision?
Since ACM is reliant on logistics for raw materials and
transporting final products to customers, transportation costs
(both current and expected development of the costs) will
doubtlessly have a large impact on the decision.
4. This is a longterm strategic decision; what factors might
change in the next ten to twenty years? How will this
influence the decision?
Since the plant will “pay for itself” over a long time horizon,
decision relevant costs must be examined not only at their
current level but also how this is expected to develop over
the horizon. Examples of costs which are likely to change
and whose change would make or break the decision would
include labor costs, utility costs, raw material costs, transport
costs. Also other difficult to forecast developments such as
exchange rates and political stability will impact the
profitability.
5. Which alternative would you recommend, under which
circumstances?
Answers will vary but students should discuss how to approach
the problem of selecting the appropriate location. For example,
if possible, students should explore the use of factorrating
method for this problem.
VIDEO CASE STUDIES
LOCATING THE NEXT RED LOBSTER
RESTAURANT
1. MapInfo has 72 clusters that provide socioeconomic profiling.
These profiles (PSYTE) provide interesting reading and data for
class discussion. MapInfo would tell you that the applications are
virtually limitless. For instance, the BusinessMAP database
includes the following datasets to aid financial institution location
decisions:
ESRI’s currentyear and 5yearout estimates for
population, age, race, and income
Branch location, asset, and deposit information from
RPM Consulting’s Branchinfo
MarketBank data, with information about deposit and
loan potential
National Credit Union Association data on member
assets, loans, etc.
Segmented lifestyle/life change information
D & B listings
Street level maps
Data such as the above helps the location decision by providing
current and potential deposit and loan information as well as
information about the competition.
Sources: www.esri.com/bmapfinancial, www.esri.com/archnews,
and www.esri.com/partners.
2. Many differences can be identified in an assignment or class
discussion, but restaurants want disposable income, while retail—
depending on the type of retail—wants high traffic, and
manufacturing wants a focus on costs, infrastructure, and low
taxes.
3. Darden has shied away from urban locations; high location
costs do not fit its current model, but Darden has found fertile
ground in first and secondtier suburban and exurban/small (over
90% of the Red Lobsters are in these three density classes).
Incidentally, in 2010, Darden announced it will begin to open
facilities outside the U.S. and Canada.
WHERE TO PLACE THE HARD ROCK CAFE
1. The attached report details the information that Munday
collects and analyzes about each site. As such, it provides the
answer to the first question.
2. The ratings of the four cities are:
A = 80.5, B = 64.5, C = 71.5, and D = 79.5. So City A is a close
first choice over City D. In reality, they are so close that other
considerations may be included, or sensitivity analysis on scores
or weights performed.
3. Expansion is the lifeblood of any global organization. Good
decisions mean a 10 to 20year cash flow. Bad ones mean a 10
plus year commitment to a moneylosing location.
11. CHAPTER 8 LOCATION DECISIONS 117
4. Hard Rock considers political risk, crime, currency, and other
factors in location decisions abroad. In Russia and Colombia,
corruption is so endemic that having a local partner who can
understand and handle these issues is a necessity.
HARD ROCK REPORT (CONT’D)
4. Attendance
5. Future Bookings
6. Expansion Plans
7. Major Conventions
Attractions
Entertainment (Including location, seats, attendance)
1. Theaters (Including live performance space)
2. Cinemas (Including IMAX)
3. Theme Parks
4. Zoo/Aquarium
5. Historic Sites
Sports (Capacity, annual attendance, location, age
of facility, etc.)
1. Soccer
2. Rugby
3. Baseball
4. Minor Leagues
Retail (Size, tenants, visitors, seasonality)
1. Regional Shopping Centers
2. Discount Shopping Centers
3. Shopping Districts
Transportation
Airport
1. Age
2. Passengers Annually
3. Airlines (Indicate hub city)
4. Direct Flights
Rail
Road
Sea/River
Restaurants (A selection of restaurants in key areas of the
target market)
1. Name
2. Location
3. Type
4. Seats
5. Age
6. Estimated Gross Sales
7. Average check
8. Size of Bar
9. Outside Dining Facilities
Nightclubs (A selection of clubs/casinos etc. in key
areas of the target market)
1. Name
2. Location
3. Type
4. Seats/capacity
5. Age
6. Estimated Gross Sales
7. Average check
8. Size of Bar
9. Music type (e.g., live/disco/combination)
HARD ROCK CAFE
STANDARD MARKET REPORT
(OFFSHORE)
Executive Summary
Introduction
Purpose
Product Type (e.g., franchise or company owned, cafe,
hotel, casino)
Overview of City/Market (e.g., set context) including
history, macroeconomic summary
Demographics (Local, City, Region SMSA, or
equivalent)
Population (Trend analysis, if possible)
1. Number
2. Age
3. Households
4. Average Household Income
Economic Indicators (Trend analysis, if possible)
1. Cost of Living Index (compared to national average)
2. Unemployment
3. Size of Workforce
4. Employment by sector
5. Major employers
Visitor Market
Tourism/Business Visitor (Trend analysis, if possible)
1. Number
2. Origins
3. Length of Stay
4. Average Spend
5. Size of Party
6. Reasons for Visit
7. Frequency of Repeat Visits
8. Seasonality
9. Method of Transportation
Hotels (Trend analysis, if possible)
1. Hotel Room Inventory
2. Occupancy Rates (Annual and monthly for
seasonality)
3. Room Rates
4. Function Room Demand
5. Recent Development
6. Future Development
Convention Center (Trend analysis, if possible)
1. Size
2. National Ranking
3. Days Booked per annum
12. 118 CHAPTER 8 LOCATION DECISIONS
ADDITIONAL CASE STUDY*
SOUTHWESTERN UNIVERSITY: E
1. The five factors appear reasonable. Many others could be in
cluded, such as potential parking or concession revenue, parking,
and longterm potential.
2. Option 1 Expand y $1,000,000 $1x
Option 2 New stadium y $5,000,000 $2x
Option 3 Rent y $1,000,000 $750,000 $1x
$10 15,000 students 5 games
HARD ROCK REPORT (CONT’D)
Real Estate Market Overview
1. Introduction
2. Retail Rents
3. Recent Developments
4. Future Developments
HRC Comparable Market Analysis
1. Identify comparable existing HRC markets
2. Explain similarities (e.g. regional population, visitors,
hotel rooms, seasonality, etc.)
3. Prepare city P&L spreadsheet analysis
Conclusion
1. Estimate of Gross Food & Beverage Revenue for
market in General with backup and comparables
2. Estimate of Gross Merchandise Revenue for market
in General with backup and comparables
3. Preferred locations
4. Sizzle (How will we make ourselves special in this
market?)
13. CHAPTER 8 LOCATION DECISIONS 119
3. Based on the survey data, rating “comfort” and “national
image” as 1s, “convenience” as a 2, and “cost” and “guaranteed
availability” as 4s, the results (using A = 4, B 3, C = 2, D = 1,
F = 0 for grades):
Sum of Rating’s (Weighted Averages in Parentheses)
Existing SiteNew Site Dallas Cowboy
Site
Students 36 (3) 21 (1.75) 35 (2.92)
Boosters 34 (2.83) 23 (1.92) 47 (3.92)
Faculty/staff 43 (3.58) 23 (1.92) 35 (2.92)
Students are almost neutral between the existing site and the
Dallas site. Boosters strongly prefer Dallas. Faculty/staff strongly
prefer the existing site. No group ranks the new site near campus
as their first or second choice.
4. The expansion of the existing stadium appears preferable
even at annual attendance of 500,000 fans.
5. Gardner used the factor rating method to rate the constituency
responses. This was appropriate for evaluating the qualitative
values. He should consider weighting the criteria as the
administration did ultimately.
Weighted
Center
Ada 1.0624
Ardmore 0.4641
Denton 1.824
Durant 0.7372
Greenville 2.3239
McAlester 2.1746
Norman 2.1597
Paris 2.2572
Sherman 1.1183
Wichita Falls 2.6212
Total 16.742
6
Weighted Total 7,767.13
Location, Small DC in Texas
*Solution to the case that appears on our Companion Web site,
www.pearsonglobaleditions.com/heizer.