Student name:__________

TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Location decisions are basically one-time decisions usually made by new organizations.

⊚ true ⊚ false

2) The fact that most types of firms are located in every section of the country suggests that
in many cases, location decisions are not overly important; one location typically is as good as
another.

true false
⊚
ㅇ
⊚

3) You cannot make a mistake by locating where labor costs are low.

⊚ true ⊚
efalse

4) Advanced communications has aided globalization.

e
⊚ true ⊚ false

아evalvaling
. Usefo
cliteria
Decide on tve
t

cocalion alfernatives
5) The first step in developing location alternatives is identifying important factors.

⊚ true
O
⊚ false

6) An example of a regional factor in location planning is the location of our markets

(either existing or potential).

ㅇ
⊚ true ⊚ false

7) A strategy that emphasizes convenience for the customers would probably select a single
very large facility.

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⊚ true ⊚ㅇ false

8) For service organizations, the dominant factors in location analysis usually are market-
related.

ㅇ
⊚ true ⊚ false

9) The center of gravity method uses the earth’s center to establish starting grid coordinates
(i.e., the 0,0,0 point) in three dimensions (x, y, and z).

⊚ true ⊚ false

10) Labor laws are an important site-related factor.

⊚ true ⊚ false
ㅇ
11) Web-based, retail businesses should be located near the customer to reduce their long
distance phone charges.

⊚ true
e
⊚ false

12) For service and retail stores, a prime factor in location analysis is customer access.

⊚
etrue ⊚ false

13) Retail businesses generally prefer locations that are not near other retailers, as this
reduces their competition.

⊚ true
ㅇ
⊚ false

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14) Technology has made communication with global operations as easy as local
communication.

⊚ true ⊚ false

15) Factor rating is limited to quantitative information concerning location decisions.

⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
16) For service firms such as banks and supermarkets, location decisions are critical
elements of _____ strategy.

ㅇ marketing
A)
B) pricing
C) promotional
D) efficiency
E) effectiveness

17) O
When service firms such as retailers or banks make growth-spurred location decisions,
.
typically these involve

A) finding new sources of resources to replace exhausted ones.

B)
ㅇ adding new locations rather than expanding existing ones.
ㄱ

C) closing down existing locations and opening new ones elsewhere.

D) expanding existing locations rather than adding new ones.
E) downsizing existing locations and opening new ones elsewhere.

18) When making location decisions, nonprofit organizations differ from for-profit ones in
seeking a balance between

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 A) profits and opportunities.
B) costs and revenues.
ㅇ
C) costs and customer service.
D) growth and stability.
E) stability and opportunity.

19) In regard to supply chain management and the location decision, a primary challenge is
to address _____ distribution.

A) insourced vs. outsourced

B) strategic vs. tactical
C) local vs. global
D) centralized vs. decentralized
E) anticipatory vs. reactive

20) In general, managing global operations is made easier by _____ and _____.

A) political uncertainty; currency devaluation

B) differentiation strategies; diversified markets
C) low interest rates; price-sensitive customers
D) cost-leadership strategies; labor productivity
E) freer trade; technology

21) Among the potential disadvantages of having global operations is/are

A) low labor productivity.

B) less restrictive environmental regulation.
C) lower wage costs.
D) proximity to global markets.
E) favorable liability laws.

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22) Locational cost-profit-volume analysis assumes
(I) nonlinear variable costs.(II) fixed costs that are constant over the range of possible output.(III)
accurate estimates regarding the required level of output.(IV) multiple products.

A) I, III, and IV only

B)
ㅇ II and III only
C) I, II, and III only
D) II, III, and IV only
E) I, II, III, and IV

23) Retail businesses often engage in _____, the tendency to locate in close proximity to one
another.

A) centering
B) strategizing
ㅇ
C) clustering
D) localcasting
E) macromarketing

24) Nearness to raw materials would be most important to a

A) grocery store.
B) tax preparation service.
C) manufacturing company.
ㅇ
D) post office.
E) hospital.

25) Which statement best characterizes the objective of a typical search for location
alternatives?

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 A) Identify the best location choice.
B) Minimize cost consequences.
C) Maximize associated profits.
D) Locate near markets.
E) Identify acceptable locations.

26) Which of the following is the last step in the procedure for making location decisions?
~

A) Determine the evaluation criteria.

B) Identify important factors.
C) Develop location alternatives.
D)
ㅇ Evaluate alternatives and make a selection.
E) Request input regarding alternatives.

27) When a location evaluation includes both quantitative and qualitative inputs, a technique
that can be used is

A) linear programming.
B) consumer surveys.
C)
ㅇ factor rating.
D) transportation models.
E) center of gravity methods.

28) The center of gravity method is used to _____ travel time or shipping costs.

A) normalize
B) eliminate
C) average
D) minimize
ㅇE) document

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29) In location planning, the location of raw materials, the location of markets, and labor
factors are

A) regional factors.
ㅇ
B) community factors.
C) site-related factors.
D) national factors.
E) minor considerations.

30) Software systems known as GIS help in location analysis. The initials GIS stand for

A) Graphic Interface Systems.

B) Global Integrated Software.
C) Graded Information Systems.
D) Geo Intensive Software.
ㅇ
E) Geographic Information System.

31) Some communities offer financial and other incentives to _____ new businesses.

A) tax
ㅇ
B) attract
C) marginalize
D) incorporate
E) zone

32) Location options do not usually include

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 A) expansion.
ㅇ
B) a contract.
C) adding new facilities.
D) moving.
E) doing nothing.

33) Cultural differences, customer preferences, labor, and resources are factors relating to

A) regional choices.
B) site selection.
C) zoning.
D) product design.
E) location decisions.
ㅇ

34) The method for evaluating location alternatives that uses their total-cost lines is

A) locational cost-profit-volume analysis.

ㅇ
B) the transportation model.
C) factor rating.
D) geographic information system (GIS) analysis.
E) the center-of-gravity method.

35) The method for evaluating location alternatives that minimizes shipping costs between
multiple sending and receiving locations is

A) locational cost-profit-volume analysis.

B) the transportation model.
:

C) factor rating.
D) geographic information system (GIS) analysis.
E) the center-of-gravity method.

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36) The method for evaluating location alternatives that incorporates both qualitative and
quantitative inputs to establish a composite score for each alternative is

A) cost-profit-volume analysis.
B) the transportation model.
C)
ㅇ factor rating.
D) geographic information system (GIS) analysis.
E) the center-of-gravity method.

37) An approach to location analysis that can include both qualitative and quantitative
considerations is

A) locational cost-profit-volume.
a
B) factor rating.
C) the transportation model.
D) net present value.
E) the center-of-gravity method.

38) A location analysis has been narrowed down to two locations, Akron and Boston. The
main factors in the decision will be the supply of raw materials, which has a weight of 0.50,
transportation cost, which has a weight of 0.40, and labor cost, which has a weight of 0.10. The
scores for raw materials, transportation, and labor are for Akron 60, 80, and 70, respectively; for
Boston 70, 50, and 90, respectively. Given this information and a minimum acceptable
composite score of 75, we can say that the manager should

A) be indifferent between these locations.

B) choose Akron. Alc 중
C) choose Boston.
D)
ㅇ reject both locations. 0 5 60 no
raw ,

E) build a plant in both cities.

tcouso 50
c 이
l . o w
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…

6 해 64
39) The Skulls, a student social organization, has two different locations under consideration
for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to
differing land costs, utility rates, etc., both fixed and variable costs would be different for each of
the proposed sites, as follows

Location Annual Fixed Variable

Alpha Ave. $ 5,000 $ 200 per person

Beta Blvd. $ 8,000 $ 150 per person

What would be the total annual costs for the Alpha Ave. location with 20 persons living there?

ㅇ
A) $5,400
B) $4,000
C) $5,000
D) $7,000
E) $9,000
ㅇ

40) The Skulls, a student social organization, has two different locations under consideration
for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to
differing land costs, utility rates, etc., both fixed and variable costs would be different for each of
the proposed sites, as follows
Location Annual Fixed Variable
ㅥ
Alpha Ave. $ 5,000 $ 200 per person caor
Beta Blvd. $ 8,000 $ 150 per person 가

ifpo

What would be total annual costs for either location at the point of indifference?
6 w

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 A) $13,000
B) $13,350
C) $9,000
ㅇ
D) $17,000
E) $19,200

41) The Skulls, a student social organization, has two different locations under consideration
for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to
differing land costs, utility rates, etc., both fixed and variable costs would be different for each of
the proposed sites, as follows

Location Annual Fixed Variable

Alpha Ave. $ 5,000 $ 200 per person

Beta Blvd. $ 8,000 $ 150 per person

If it is estimated that 30 persons will be living in this new chapter house, which location should
the Skulls select?

ㅇ
A) Alpha Ave.
B) Beta Blvd.
C) either Alpha Ave. or Beta Blvd.
D) reject both Alpha Ave. and Beta Blvd.
E) become a virtual organization.

42) The Skulls, a student social organization, has two different locations under consideration
for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to
differing land costs, utility rates, etc., both fixed and variable costs would be different for each of
the proposed sites, as follows

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Location Annual Fixed Variable
Alpha Ave. $ 5,000 $ 200 per person 11 wv0

Beta Blvd. $ 8,000 $ 150 per person

srve

If it is estimated that 30 persons will be living in this new chapter house, what would be the
Skulls' annual cost savings by selecting the less costly location, rather than the more costly?

A) $0
B)
ㅇ $1,500
C) $200
D) $150
E) $350

43) A manufacturing firm is considering two locations for a plant to produce a new product.
The two locations have fixed and variable costs as follows
Location FC (annual) VC (per unit)
Atlanta $ 80,000 $ 20

Phoenix $ 140,000 $ 16

At what annual output would the company be indifferent between the two locations?

A) 60,000 units
B)
ㅇ 15,000 units
C) 10,000 units
D) 20,000 units
E) 4,000 units

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44) A manufacturing firm is considering two locations for a plant to produce a new product.
The two locations have fixed and variable costs as follows

Location FC (annual) VC (per unit)

Atlanta $ 80,000 $ 20 넨

,
0
1 jv
Phoenix $ 140,000 $ 16
ㅅ

What would the total annual costs be for the Phoenix location with an annual output of 10,000
units?

A) $280,000
B) $140,000
C) $220,000
D)
ㅇ $300,000
E) $156,000

45) A manufacturing firm is considering two locations for a plant to produce a new product.
The two locations have fixed and variable costs as follows

Location FC (annual) VC (per unit)

Atlanta $ 80,000 $ 20

Phoenix $ 140,000 $ 16

What would be the total annual costs at the point of indifference?

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 A) $300,000
B) $240,000
O $380,000
C)
D) $220,000
E) $760,000

46) A manufacturing firm is considering two locations for a plant to produce a new product.
The two locations have fixed and variable costs as follows

Location FC (annual) VC (per unit)

Atlanta $ 80,000 $ 20

Phoenix $ 140,000 $ 16
11 jv0

If annual demand is estimated to be 20,000 units, which location should the company select?

A) Atlanta
B)
ㅇ Phoenix
C) either Atlanta or Phoenix
D) reject both Atlanta and Phoenix
E) build at both locations

47) A manufacturing firm is considering two locations for a plant to produce a new product.
The two locations have fixed and variable costs as follows

Location FC (annual) VC (per unit)

Atlanta $ 80,000 $ 20

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Phoenix $ 140,000 $ 16 400 000 .

If the annual demand will be 20,000 units, what would be the cost advantage of the better
location?

a
A) $20,000
B) $460,000
C) $480,000
D) $80,000
E) $60,000

48) A location analysis has been narrowed down to three locations. The critical factors, their
weights, and the ratings for each location are shown below

Location

Factor Wt. A B C
Labor Cost 0.4 70 80 90
Transportation Cost 0.2 80 80 60
Market Access 0.2 90 70 60
Raw Materials Cost 0.1 50 70 90
Utility Cost 0.1 80 90 70

What is the composite score for location A?

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 A) 76
B) 75
a
C) 78
D) 74
E) 76.33

49) A location analysis has been narrowed down to three locations. The critical factors, their
weights, and the ratings for each location are shown below

Location

Factor Wt. A B C
Labor Cost 0.4 70 80 90
Transportation Cost 0.2 80 80 60
Market Access 0.2 90 70 60
Raw Materials Cost 0.1 50 70 90
Utility Cost 0.1 80 90 70

What is the composite score for location B?

A) 76
B) 75
ㅇC) 78
D) 74
E) 76.33

50) A location analysis has been narrowed down to three locations. The critical factors, their
weights, and the ratings for each location are shown below

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 Location

Factor Wt. A B C
Labor Cost 0.4 70 80 90
Transportation Cost 0.2 80 80 60
Market Access 0.2 90 70 60
Raw Materials Cost 0.1 50 70 90
Utility Cost 0.1 80 90 70

What is the composite score for location C?

ㅇ
A)
B)
76
75
C) 78
D) 74
E) 76.33

51) A location analysis has been narrowed down to three locations. The critical factors, their
weights, and the ratings for each location are shown below

Location

Factor Wt. A B C
Labor Cost 0.4 70 80 90
Transportation Cost 0.2 80 80 60
Market Access 0.2 90 70 60
Raw Materials Cost 0.1 50 70 90
Utility Cost 0.1 80 90 70

n 6
n 5 ny
If the selection criterion is to be the greatest composite score, management should choose

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 A) location A.
이
B) location B.
C) location C.
D) either location B or location C.
E) to reject all locations.

52) A location analysis has been narrowed down to three locations. The critical factors, their
weights, and the ratings for each location are shown below

Location

Factor Wt. A B C
Labor Cost 0.4 70 80 90
Transportation Cost 0.2 80 80 60
Market Access 0.2 90 70 60
Raw Materials Cost 0.1 50 70 90
Utility Cost 0.1 80 90 70

If the decision rule is to select the location with the greatest composite score exceeding 80,
management should choose

A) location A.
B) location B.
C) location C.
D) either location B or location C.
E) to reject all locations.
ㅇ

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53) A clothing manufacturer produces clothing in five locations in the United States. In a
move to vertical integration, the company is planning a new fabric production plant that will
supply fabric to all five clothing plants. The clothing plants have been located on a coordinate
system as follows

Location (x, y)
A 7, 2
B 4, 7
C 5, 5
D 6, 2
E 8, 4

6
54
.

If the amount of fabric shipped to each plant is equal, what is the optimal location for the fabric
plant?

A) 5, 5
ㅇ
B) 6, 4
C) 4, 6
D) 6, 2
E) 5, 4

54) A clothing manufacturer produces clothing in five locations in the United States. In a
move to vertical integration, the company is planning a new fabric production plant that will
supply fabric to all five clothing plants. The clothing plants have been located on a coordinate
system as follows

Location (x, y)
ww A 7, 2
B 4, 7

뉼
C 5, 5
D 6, 2
E 8, 4

1다.
5 6 . 43 t
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 Shipments of fabric to each plant vary per week as follows: plant A, 200 units; plant B, 400
units; plant C, 300 units; plant D, 300 units; and plant E, 200 units. What is the optimal location
for the fabric plant?

A) 6.2, 3.0
B) 6.0, 4.0
C) 6.5, 5.3
D)
ㅇ 5.6, 4.4
E) 5.0, 3.0

55) A hardware distributor has regional warehouses at the locations shown below. The
company wants to locate a new central distribution center to serve this warehouse network.

Location (x, y)
A 2, 3
B 3, 7
C 5, 5
D 7, 3
E 8, 7

55
If weekly shipments to each warehouse will be approximately equal, what is the optimal
location for the distribution center?

ㅇ
A) 5, 5
B) 5, 4
C) 4, 5
D) 5, 6
E) 6, 5

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 56) A hardware distributor has regional warehouses at the locations shown below. The
company wants to locate a new central distribution center to serve this warehouse network.

Location (x, y)
00 A 2, 3
150 B 3, 7
C 5, 5
(20 D 7, 3
150 E 8, 7
12 ②
ㅡ
50 대 506
beo
Weekly shipments to each warehouse will be: WH1, 100; WH2, 150; WH3, 120; WH4, 150;
and WH5, 120. What is the optimal location of the distribution center?

A) 5.1, 4.2
B) 5.2, 4.0
이C) 5.1, 5.1
D) 4.2, 5.1
E) 4.9, 5.2

57) O
Which of the following circumstances would be least likely to lead to a need for a new
location?

A) shifting of markets
B) depletion of basic inputs
C) growth in demand that is leading to greater utilization of existing capacity
D) the need to expand into new markets
:

E) the opportunity to take advantage of globalization trends

58)
e
Which of the following is least important as a consideration for a firm at the beginning
of a supply chain?
j

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 ㅇ
A) access to end consumers
B) access to resources
C) proximity to customers
D) access to transportation infrastructure
E) access to productive labor

59) Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10.
What would its total cost be at a monthly volume of 250 units?

A) $105,200

ㅇ B) $102,500
C) $100,250
D) $100,520
E) $105,500

60) Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10.
What would its total cost be at a monthly volume of 550 units?

A) $105,200
B) $102,500
C) $100,250
D) $100,520
E) $105,500
ㅇ

61) Location choice I has monthly fixed costs of $100,000 and per-unit variable costs of $10.
Location choice J has monthly fixed costs of $150,000 and per-unit variable costs of $9. At what
~

volume would these locations have equal total costs?

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 A) 30,000 units
B) 25,000 units
C) 40,000 units
O
D) 50,000 units
E) 60,000 units

62) e
Which of the following is least likely to experience relocation decisions based upon
depletion of basic inputs?

A) petroleum operations
B) mining operations
C) farming operations
D) logging operations
E) fishing operations

63) Which of the following is not an option in location planning?

A) expand globally
B) expand an existing facility
C) do nothing
D) move locations
E) add locations

64)
e
All of the following are benefits of globalizing operations except for?
~

ㅇ
A) unskilled labor
B) expanding markets
C) cost savings
D) new ideas
E) less restrictive regulations

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65) _____ has/have a major influence on the decision-making process of where to produce
goods.
ㅡ

e
A) Automation
B) Technology
C) Costs
D) Transportation costs
E) Skilled labor

66) ~
0
The following are all ways businesses use GIS except for?
ㅡ

A) plan routes
.

B) balance supply and demand

C) analyze circulation
ㅡ

D) determine premiums
ㅡ

E) technology innovation
ㅡ

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Answer Key

Test name: Chapter 08 Test Bank

1) FALSE
2) FALSE
3) FALSE
4) TRUE
5) FALSE
6) TRUE
7) FALSE
8) TRUE
9) FALSE
10) FALSE
11) FALSE
12) TRUE
13) FALSE
14) FALSE
15) FALSE
16) A
17) B
18) C
19) D
20) E
21) A
22) B
23) C
24) C
25) E
26) D
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27) C
28) D
29) A
30) E
31) B
32) B
33) E
34) A
35) B
36) C
37) B
38) D
39) E
40) D
41) A
42) B
43) B
44) D
45) C
46) B
47) A
48) B
49) C
50) A
51) B
52) E
53) B
54) D
55) A
56) C
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57) C
58) A
59) B
60) E
61) D
62) C
63) A
64) A
65) A
66) E

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