Solution of Chapter 8 Operations Mangement by Jay Heizer

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ChAPTER 8

DISCUSSION QUESTIONS

5.Service location decisions tend to focus on the revenue function, whereas manufacturing/industrial location decisions tend to focus on costs. The service sector uses techniques such as:
Correlation analysis
Traffic counts
Demographic analysis
Purchasing power analysis

The industrial decision uses:
Transportation method
Factor-weighting approach
Break-even analysis
Crossover charts

8.Factors to consider when choosing a country:
Exchange rates
Government stability
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.Site location factors:
Size and cost
Transportation systems
Zoning
Proximity of services/supplies needed
Environmental impact

END-OF-CHAPTER PROBLEMS

8.1(a)Six laborers each making $3 per day can produce 40 units. (b)Eight laborers each making $2.50 per day, can produce 45 units. (c)Two laborers, each making $64 per day, can make 100 units.

China is most economical, assuming transportation costs are not included.

8.2Malaysia
China
Montana
China is most favorable.

8.6Atlanta
Charlotte
Charlotte is better.

8.7| |
Suburb B has the highest rating, but weights should be examined using sensitivity analysis, as the final ratings are all close.

8.8| | Location|
| | Present Location| Newbury| Hyde Park|
| Factor| | Wgt| | | Wgt| | | 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| 50.50| Total Points| 54.5|

It appears that Hyde Park represents the best alternative.

8.9(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.

8.10| 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: | 1310|

| 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:| 1530|

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...
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