Ch.7 Exam Questions Facility Location Decision Tools Russell - Operations Management Canadian 1e Complete Test Bank by Roberta S. Russell. DOCX document preview.
CHAPTER 7 SUPPLEMENT
OPERATIONAL DECISION-MAKING TOOLS: FACILITY LOCATION MODELS
CHAPTER LEARNING OBJECTIVES
S1. Explain the major categories of facilities and the factors important in facility location. Facility location is an often overlooked but important aspect of a company’s strategic plan. What kind of facility to build and where to locate it are expensive decisions. A location decision is not easily reversed if it is a bad one. Heavy-manufacturing facilities are large, require a lot of space, and are expensive to construct, such as automobile plants, steel mills, and oil refineries. Light-industry facilities are smaller, cleaner plants that are usually less costly; they produce items such as electronic equipment and components, computer products, or assembled products like TVs, breweries, or pharmaceutical firms. Factors in the location decision for plants include construction costs, land costs, modes of transportation for shipping heavy manufactured items and receiving bulk shipments of raw materials, proximity to raw materials, utilities, means of waste disposal, and labour availability.
Retail and service facilities are usually the smallest and least costly. Examples include retail facilities such as groceries and department stores and service facilities such as restaurants, banks, hotels, cleaners, clinics, and law offices. One of the most important factors for locating a service or retail facility is proximity to customers.
S2. Explain the general considerations of the facility site selection process for services and manufacturing facilities. For a service operation, the wrong location can result in too few customers to be profitable. For a manufacturing operation, a wrong location can result in excessive costs, especially for transportation and distribution, and high inventories.
S3. Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS. can be used as a site selection tool. Site selection is the process companies follow when determining the country, region, community, and site at which to locate a facility. This selection process gradually and methodically narrows down the pool of alternatives until the final location is determined. A GIS is a tool specifically used for site selection. A GIS allows the user to search and analyze the data and information related to the site selection process.
S4. Use three quantitative tools for facility site selection. The quantitative tools presented in this Supplement are not usually sufficient for making an actual location decision, but they do provide means for helping in the location analysis and decision process.
TRUE-FALSE STATEMENTS
1. The factors used to evaluate location of a manufacturing plant are usually different from the factors used in locating a service facility.
Difficulty: Easy
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
2. Railroad access is frequently a factor in locating a manufacturing plant.
Difficulty: Easy
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
3. Service facilities are usually the largest and most expensive type of facility.
Difficulty: Easy
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
4. Service operations tend to make location decisions more frequently than manufacturing facilities.
Difficulty: Easy
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
5. For a service operation being in the right place usually means being in a location that is convenient and easily accessible.
Difficulty: Easy
Learning Objective: Explain the general considerations of the facility site selection process for services and manufacturing facilities.
Section Reference: Site Selection: Where to Locate
6. Facility location is often overlooked because it is not an important aspect of a firm’s strategic plan.
Difficulty: Medium
Learning Objective: Explain the general considerations of the facility site selection process for services and manufacturing facilities.
Section Reference: Site Selection: Where to Locate
7. One reason foreign firms locate facilities in North America is to reduce their supply chain costs.
Difficulty: Easy
Learning Objective: Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS) can be used as a site selection tool.
Section Reference: Site Selection: Factors to Consider
8. The cost and availability of labour is an important factor in a location decision.
Difficulty: Easy
Learning Objective: Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS) can be used as a site selection tool.
Section Reference: Site Selection: Factors to Consider
9. A location’s collection of physical support systems is known as its infrastructure.
Difficulty: Medium
Learning Objective: Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS) can be used as a site selection tool.
Section Reference: Site Selection: Factors to Consider
10. Inadequate infrastructure at a given location increases supply chain costs and decreases customer service.
Difficulty: Medium
Learning Objective: Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS) can be used as a site selection tool.
Section Reference: Site Selection: Factors to Consider
11. Transportation costs are generally a function of distance, weight, and time.
Difficulty: Easy
Learning Objective: Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS) can be used as a site selection tool.
Section Reference: Site Selection: Factors to Consider
12. The centre of gravity technique outlines a method for identifying and weighing important location factors.
Difficulty: Medium
Learning Objective: Use three quantitative tools for facility site selection.
Section Reference: Location Analysis Techniques
13. The load-distance technique evaluates different locations based on load and transport distance.
Difficulty: Medium
Learning Objective: Use three quantitative tools for facility site selection.
Section Reference: Location Analysis Techniques
MULTIPLE CHOICE QUESTIONS
14. Which of the following is not a primary factor in location decisions for manufacturing plants?
a) proximity to raw materials
b) proximity to customers
c) proximity to different modes of transportation
d) proximity to significant labour pools
Difficulty: Medium
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
15. Which type of facility is large and expensive?
a) light-industry facilities
b) retail and service facilities
c) heavy-manufacturing facilities
d) medium-site facilities
Difficulty: Easy
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
16. Which of the following is a type of facility addressed by the facility location decision?
a) heavy manufacturing
b) light manufacturing
c) retail facilities
d) all the above
Difficulty: Medium
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
17. Common location incentives include all of the following except
a) tax credits.
b) job training.
c) fixed exchange rates.
d) improvements to infrastructure.
Difficulty: Medium
Learning Objective: Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS) can be used as a site selection tool.
Section Reference: Site Selection: Factors to Consider
18. Which of the following is not a facility location factor important in selecting a country?
a) government stability
b) export and import tariffs
c) customer service
d) culture
Difficulty: Medium
Learning Objective: Discuss the factors a company should consider when selecting a facility site and explain how geographic information systems (GIS) can be used as a site selection tool.
Section Reference: Site Selection: Factors to Consider
19. A company is deciding where to locate a new warehouse that will receive shipments from three suppliers: 1, 2, and 3. The locations of the suppliers (xi, yi) and the annual number of shipments from supplier i (Wi) are provided below:
1 2 3
x1 = 250 x2= 100 x3= 500
y1 = 250 y2= 400 y3= 300
W1 = 240 W2=205 W3= 300
The coordinates for the new warehouse suggested by the centre of gravity method are
a) x = 311.4 and y = 309.4.
b) x = 309.4 and y = 311.4.
c) x = 291.2 and y =198.9.
d) x = 193.2 and y = 219.4.
Difficulty: Hard
Learning Objective: Use three quantitative tools for facility site selection.
Section Reference: Location Analysis Techniques
20. A package delivery service wants to build a new distribution centre in Calgary, Alberta. The location of the centre needs to be in the vicinity of Deerfoot Trail, Highway 22 and the Calgary Airport. The following table provides the coordinates of these three sites and the number of weekly packages.
Deerfoot Trail Highway 22 Airport
x = 20 x = 26 x = 36
y = 35 y = 13 y = 19
W = 16,000 W = 11,000 W = 8,000
The suggested coordinates for the new warehouse using the centre of gravity method are
a) x = 36.0 and y = 35.0
b) x = 27.3 and y = 22.3
c) x = 25.54 and y =24.4
d) x = 27.5 and y = 35.5
Difficulty: Hard
Learning Objective: Use three quantitative tools for facility site selection.
Section Reference: Location Analysis Techniques
21. A technique based on transport weight and distance used for locating a facility at the centre of movement in a geographic area is known as the
a) load-distance technique.
b) centre of gravity technique.
c) location factor rating.
d) location factor technique.
Difficulty: Medium
Learning Objective: Use three quantitative tools for facility site selection.
Section Reference: Location Analysis Techniques
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Operations Management Canadian 1e Complete Test Bank
By Roberta S. Russell