Facility Location Decision Tools Russell Ch.7 Exam Questions - Operations Management 2e Canadian 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
Blooms: Knowledge
AACSB: Reflective Thinking
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
Blooms: Knowledge
AACSB: Reflective Thinking
3. A service facility is 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
Blooms: Knowledge
AACSB: Reflective Thinking
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
Blooms: Knowledge
AACSB: Reflective Thinking
5. For a service operation to be in the right place, it 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
Blooms: Knowledge
AACSB: Reflective Thinking
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
Blooms: Comprehension
AACSB: Reflective Thinking
7. One of the reasons that foreign firms locate the 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
Blooms: Knowledge
AACSB: Reflective Thinking
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
Blooms: Knowledge
AACSB: Reflective Thinking
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
Blooms: Knowledge
AACSB: Reflective Thinking
10. Inadequate infrastructure, at a given location, increases the supply chain costs and decreases the 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
Blooms: Knowledge
AACSB: Reflective Thinking
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
Blooms: Knowledge
AACSB: Reflective Thinking
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
Blooms: Comprehension
AACSB: Reflective Thinking
13. The load-distance technique evaluates the different locations based on the load and transport distance.
Difficulty: Medium
Learning Objective: Use three quantitative tools for facility site selection.
Section Reference: Location Analysis Techniques
Blooms: Comprehension
AACSB: Reflective Thinking
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
Blooms: Comprehension
AACSB: Reflective Thinking
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
Blooms: Knowledge
AACSB: Reflective Thinking
16. Which of the following is a type of facility addressed by the facility location decision?
a) heavy manufacturing
b) light industry
c) retail and service 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
Blooms: Knowledge
AACSB: Reflective Thinking
17. A brewery is an example of
a) heavy manufacturing
b) light
c) retail facilities
d) none the above
Difficulty: Easy
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
Blooms: Knowledge
AACSB: Reflective Thinking
18. Which of the following is a not a major criterion for a manufacturing facility?
a) nature of the labour force and labour costs
b) access to end consumers
c) distribution and transportation costs
d) government regulations and taxes
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
Blooms: Knowledge
AACSB: Reflective Thinking
19. 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
Blooms: Comprehension
AACSB: Reflective Thinking
20. 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
Blooms: Comprehension
AACSB: Reflective Thinking
21.. When selecting the part of the country and community for a facility, which of the following factors are considered?
a) local business regulations
b) environmental regulations
c) climate
d) all of the above
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
Blooms: Comprehension
AACSB: Reflective Thinking
22.. A company is deciding where to locate a new warehouse that will receive shipments from three suppliers: 1, 2, and 3. The supplier locations (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
Blooms: Analysis
AACSB: Reflective Thinking
23. 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
Blooms: Analysis
AACSB: Reflective Thinking
24. 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
Blooms: Comprehension
AACSB: Reflective Thinking
25. A method of identifying and weighting the important location factors is known as the
a) load-distance technique
b) centre of gravity technique
c) location factor rating technique
d) location factor technique
Difficulty: Medium
Learning Objective: Use three quantitative tools for facility site selection.
Section Reference: Location Analysis Techniques
Blooms: Comprehension
AACSB: Reflective Thinking
SHORT-ANSWER ESSAY QUESTIONS
26. Explain the major categories of facilities and the important factors in facility location identification.
Heavy-manufacturing facilities are large, require a lot of space, and are expensive to construct, such as automobile plants, steel mills, and oil refineries. 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. Sites for manufacturing plants are normally selected where construction and land costs can be kept at a minimum and raw material sources are nearby to reduce transportation costs. Access to railroads is frequently
a factor in locating a plant. Environmental issues have increasingly become a factor in plant location decisions.
Light-industry facilities are smaller, cleaner plants that produce electronic equipment and components, computer products, or assembled products such as TVs, breweries, or pharmaceutical firms. Distribution centres for The Gap, Target, and Home Depot each encompass more than 130 thousand square metres of space—about 80 times bigger than the area of a hockey rink! The UPS Worldwide Logistics warehouse in the United States includes 120 thousand square metres of floor space. Because of warehouses’ role as intermediate points in the supply chain, transportation costs are often an important factor in the location decision for warehouses. The proximity to markets is also a consideration, depending on the delivery requirements, including frequency of delivery required by the customer.
Retail and service facilities are usually the smallest and least costly. Examples include retail facilities such as groceries and department stores, among many others, and such service facilities as restaurants, banks, hotels, cleaners, clinics, and law offices. However, there are always exceptions, and some service facilities, such as hospitals, company headquarters, resort hotels, or university academic buildings, can be large and expensive. One of the most important factors for locating a service or retail facility is proximity to customers. It is often critical that a service facility be near the customers it serves, and a retail facility must be near the customers who buy from it. Construction costs tend to be less important, although land or leasing costs can be high. For retail operations, for which the saying “location is everything” is meaningful, site costs can be very high. Factors like zoning, utilities, transportation, environmental constraints, and labour tend to be less important for service operations. Closeness to suppliers is not usually as important as it is to manufacturing firms, which must be close to materials and parts suppliers.
Difficulty: Medium
Learning Objective: Explain the major categories of facilities and the factors important in facility location.
Section Reference: Types of Facilities
Blooms: Comprehension
AACSB: Reflective Thinking
27. Discuss the location incentives as factors to be considered when selecting a site.
Provinces and communities cannot afford to overlook incentives if they hope to attract new companies and jobs. However, they must make sure that the amount of their investment in incentive packages and the costs they incur for infrastructure improvements are balanced against the number of new jobs developed and the expansion of the economy the new plant will provide. Incentives are a good public investment unless they bankrupt the locality.
While some small communities are successful in attracting new businesses, they are left with little remaining tax base to pay for the infrastructure improvements needed to support the increased population drawn by job demand. Thus, provinces and communities, much like businesses, need a strategy for economic development which weighs the costs versus the benefits of attracting companies.
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
Blooms: Comprehension
AACSB: Reflective Thinking
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