Operations Test Questions

1226 WordsMay 22, 20135 Pages
TF Qu. 3 You can t make a mistake by locating... You can 't make a mistake by locating where labor costs are low. | True | | False | Labor costs are only occasionally a primary consideration in location decisions. TF Qu. 7 A strategy that emphasizes convenience for ... A strategy that emphasizes convenience for the customers would probably select a single very large facility. | True | | False | Convenience for customers would tend to necessitate small, dispersed facilities. TF Qu. 20 The center of gravity method of location ... The center of gravity method of location planning is accurate only when the quantities to be shipped to each location are equal. | True | | False | Center of gravity approaches factor…show more content…
| A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $185 in either case. | | Omaha | Kansas City | Annual fixed costs ($ millions) | $ | 1.2 | $ | 1.4 | Variable cost per unit | $ | 36 | $ | 47 | Expected annual demand (units) | 8,000 | 12,000 | | Using the above information, determine which location would produce the greater profit. (Omit the "$" sign in your response.) | Kansas City would produce the greater gross profit of $ . | rev: 03_27_2012 Explanation: Profit = (Rev/unit – VC/unit)Q – FC | | Omaha: ($185/unit – $36/unit)8,000 units – $1,200,000 = –$8,000 | | Kansas City: ($185/unit – $47/unit)12,000 units – $1,400,000 = $256,000 | TF Qu. 2 One way that project management differs ... One way that project management differs from management of more traditional activities is because of
Open Document