Concept explainers
A
Interpretation: The location of Dennison should be determined using a break-point analysis.
Concept Introduction: Decision making is a process of determining the alternative option to a given situation. It reaches the most suitable option for action. During decision making, the factors and some uncertainties are taken to consider.
B
Interpretation: The location of Dennison, at foreseeable units of manufacturing, is to be determined.
Concept Introduction: Decision making is a process of determining the alternative option to a given situation. It reaches the most suitable option for action. During decision making, the factors and some uncertainties are taken to consider.
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Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
- Wiebe Trucking, Inc., is planning a new warehouse to servethe western United States. Denver, Santa Fe, and Salt LakeCity are under consideration. For each location, annual fixedcosts (rent, equipment, and insurance) and average variablecosts per shipment (labor, transportation, and utilities) arelisted in the following table. Sales projections range from550,000 to 600,000 shipments per year.a. Plot the total cost curves for all the locations on a singlegraph.b. Which city provides the lowest overall costs?arrow_forwardA manufacturer has decided to locate a new factory in northwestern United States to serve growing demand in that market. They have narrowed the potential sites down to two finalists, City A and City B. They have developed a list of important factors to consider in selecting a site, and rated each as shown in the following table. FACTOR CITY A CITY B Utility rates 98 114 Availability of skilled labor 82 75 Tax rates 38 38 Transportation 44 38 Proximity to suppliers 35 30 Quality of life 20 16 Based on this data, which city appears to be the better choice? multiple choice City A City B They are equally attractive There is insufficient information provided to answer this questionarrow_forwardA manufacturer has decided to locate a new factory in northwestern United States to serve growing demand in the market. They have narrowed the potential sites down to two finalists, City A City B. they have developed a list of important factors to consider in selecting a site and rated each as shown in the following table. FACTOR CITY A CITY B Utility rates 95 118 Availability of skilled labor 75 75 Tax rates 42 39 Transportaion 45 38 Proximity to suppliers 35 34 Quality of life 22 16 a. Based on this data, which city appears to be the better choice? City B, or City A, b. Are they equally attractive or is there insufficient information provided to answerarrow_forward
- Hyundai Motors is considering three sites- A, B, and C- at which to locate a factory to build its new-model automobile, the Hyundai Sport CJSO. The goal is to locate at a minimum-costsi te, where cost is measured by the annual fixed plus variable costs of production. Hyundai Motors has gathered the following data: The firm knows it will produce between 0 and 60,000 Sport Cl50s at the new plant each year, but, thus far, that is the extent of its knowledge about production plans.a) For what values of volume, V, of production, if any, is site C a recommended site?b) What volume indicates site A is optimal?c) Over what range of volume is site B optimal? Why?arrow_forwardXun Xu Health and Fitness has several productionfacilities scattered around the central and northern pa rt ofIowa. It would be desirable to have a distribution center fromwhich to send product to retailers such as Sears, WaiMart,Kmart, and large sporting equipment re tailers. Using the datain the following table, calculate the center of gravity locationfor the proposed new facility.arrow_forwardDobb's Ltd Wants to choose the best location for its new aluminum plant. The manager ofproductions and operations has three possible locations to choose from. His assistantrecommends that he use break-even analysis location technique to help determine whichlocation is best based on costs. Assuming: Total fixed cost = 80,000 Price per unit= 20 AVC (Average variable cost) = 40 Break-even point= Total fixed cost / (AVC-Price per unit) Break-even point = 80,000/ (40-20) Break-even point = 4,000 1) Demonstrate to the OM manager using graph how to go about choosing the best location using thenumerical example designed above.arrow_forward
- ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager ofproductions and operations has three possible locations to choose from. His assistantrecommends that he use break-even analysis location technique to help determine whichlocation is best based on costs. Assuming: Total fixed cost = 80,000 Price per unit= 20 AVC (Average variable cost) = 40 Break-even point= Total fixed cost / (AVC-Price per unit) Break-even point = 80,000/ (40-20) Break-even point = 4,000 1) Demonstrate to the OM manager how to go about choosing the best location using thenumerical example designed above.arrow_forwardMarilyn Helm Retailers is attempting to decide on alocation for a new retail outlet. At the moment, the firm has threealternatives—stay where it is but enlarge the facility; locate alongthe main street in nearby Newbury; or locate in a new shoppingmall in Hyde Park. The company has selected the four factorslisted in the following table as the basis for evaluation and hasassigned weights as shown:FACTOR FACTOR DESCRIPTION WEIGHT1 Average community income .302 Community growth potential .153 Availability of public transportation .204 Labor availability, attitude, and cost .35Helm has rated each location for each factor, on a 100-pointbasis. These ratings are given below:LOCATION FACTOR PRESENT LOCATION NEWBURY HYDE PARK1 40 60 502 20 20 803 30 60 504 80 50 50a) What should Helm do?b) A new subway station is scheduled to open across the street fromthe present location in about a month, so its third factor scoreshould be raised to 40. How does this change your answer?arrow_forwardThe method for determining facility location which involves determining x and y co-ordinates of the proposed new location O a. Factor Rating Method O b. Locational Break-even Analysis O C. Transportation Method Od. Centroid Methodarrow_forward
- Dennison Manufacturing makes large helical springs used inaircraft landing gear. The company has narrowed its potentialchoices for its new manufacturing facility to four cities. Thefollowing information is known about the manufacturing andshipping costs of locating in each of these four cities: a. Use break-even point analysis to determine where Den-nison should locate.b. Based solely on break-even quantity, if Dennison’s manu-facturing forecast for the foreseeable future is 40,000 unitsannually, where should he locate?arrow_forwardTwo alternative locations are under consideration for a new plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson location is superior in terms of costs. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm’s customers prefer local suppliers. The selling price of the product is $250 per unit in either case. Use the following information to determine which location yields the higher total profit per year: Location AnnualFixed Cost Variable Costper Unit ForecastDemand per Year Jackson Dayton $1,500,000 $2,800,000 $50 $85 30,000 units 40,000 unitsarrow_forwardABC Ltd. Wants to choose the best location for its new aluminium plant. The manager of productions and operations has three possible locations to choose from. His assistant recommends that he use the break-even analysis location technique to help determine which location is best based on costs. I. Design a numerical example in order to demonstrate to the Productions and Operations Manager how break-even analysis can be used in this case. II. Demonstrate to the OM manager how to go about choosing the best location using the numerical example you designed above.arrow_forward
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