A Company Needs to Locate Three Departments (X, Y, and Z)in

question 60

Multiple Choice

A company needs to locate three departments (X, Y, and Z) in the three areas (I, II, and III) of a new facility. They want to minimize interdepartmental transportation costs, which are expected to be $0.50 per load per meter moved. An analyst has prepared the following distances and flow matrices:

If departments X, Y, and Z were to be located in areas I, II, and III, respectively, what would be the total distance (in meters) loads would be moved each week?

• A)4,000
• B)4,500
• C)7,000
• D)8,000
• E)9,000

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Definitions:

Direct Labor

The wages paid to employees who are directly involved in the production of goods or provision of services, considered a variable cost.

Direct Labor Rate

The cost per hour for labor directly involved in the production of goods or services.

Indirect Labor Rate

The cost of labor that cannot be directly traced to the production of goods or services, but is necessary for the process.