A firm is seeking to lease a small plant in Memphis, TN; Biloxi, MS; or Birmingham, AL. and is provided annual costs for building, equipment, and administration as well as labor and materials costs per unit and transportation costs per year for each location. A retired mechanic is considering opening a rustproofing shop in the center of the city or on the outskirts and is given fixed monthly costs and labor/materials/transportation costs per car for each location. A manager is provided factor ratings out of 10 points for various factors like business services, community services, and taxes for several cities being considered for a new office complex.

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1. Problem 8-6
A firm that has recently experienced an enormous growth rate is seeking to lease a small plant in
Memphis, TN; Biloxi, MS; or Birmingham, AL. Prepare an economic analysis of the three
locations given the following information: Annual costs for building, equipment, and
administration would be $42,400 for Memphis,
$60,000 for Biloxi, and $100,000 for Birmingham. Labor and materials are expected to be $8 per
unit in Memphis, $4 per unit in Biloxi, and $5 per unit in Birmingham. The Memphis location
would increase system transportation costs by $50,000 per year, the Biloxi location by $60,000
per year, and the Birmingham location by $27,200 per year. Expected annual volume is
13,000 units.​(Omit the "$" sign in your response.)
2. ​Problem 8-7
A retired auto mechanic hopes to open a rustproofing shop. Customers would be local
new-car dealers. Two locations are being considered, one in the center of the city and one on
the outskirts. The central city location would involve fixed monthly costs of $6,820 and labor,
materials, and transportation costs of $30 per car. The outside location would have fixed
monthly costs of $4,500 and labor, materials, and transportation costs of $40 per car. Dealer
price at either location will be $90 per car.
Which location will yield the greatest profit if monthly demand is (1) 200 cars? (2) 300
cars?
3. ​Problem 8-9
Location Score

2. Factor
(100 points
each)
Weight A B C
Convenience .15 81 91 66
Parking
facilities
.20 70 98 97
Display area .18 89 89 93
Shopper traffic .27 88 89 82
Operating
costs
.10 96 87 97

3. Neighborhood .10 85 91 81
1.00
​a. ​Using the above factor ratings, calculate the composite score for each location. ​(Do not
round intermediate calculations. Round your final answers to 2 decimal places.)
4.
Problem 8-10
Factor Weight East #1 East #2 West
Initial cost 10 130 130 100

4. Traffic 10 40 60 55
Maintenance 5 20 15 17
Dock space 6 18 17 24
Neighborhood 3 9 7 14
Using the above factor ratings, calculate the composite score for each location
5. ​Problem 8-11
A manager has received an analysis of several cities being considered for a new office complex.
The data (10 points maximum) are as follows:
Location Score

5. Factor A B C
Business services 8 7 7
Community services 7 6 7
Real estate cost 3 8 7
Construction costs 5 7 6
Cost of living 3 7 8
Taxes 5 5 4

6. Transportation 6 7 8
If the manager weights the factors equally, how would the locations stack up in terms of their
composite factor rating scores?