A Location Analysis Has Been Narrowed Down to Two Locations

question 14

Multiple Choice

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 .50, transportation cost, which has a weight of .40, and labor cost, which has a weight of .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.
• C) choose Boston.
• D) reject both locations.
• E) build a plant in both cities.

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Definitions:

Static Budget

A budget based on a fixed set of assumptions and not adjusted for actual activity levels.

Guest-Days

A measure used in the hospitality industry to quantify the total number of days guest have stayed.

Total Fixed Cost

It encompasses all the expenses that do not change regardless of the business activity volume, such as rent and salaries.

Servicing Materials

Supplies or materials used in the maintenance and repair of products or equipment.