A Location Analysis Has Been Narrowed Down to Three Locations

question 65

Multiple Choice

A location analysis has been narrowed down to three locations. The critical factors, their weights, and the ratings for each location are shown below: $$\begin{array} {c} \quad\quad\quad\quad\quad\quad\quad\quad{ \text { Location } } \\\begin{array} { l c c c c } \text { Factor } &\text { Wt. } & \text { A } & \text { B } & \text { C } \\\hline \text { Labor Cost } & .4 & 70 & 80 & 90 \\\text { Transportation Cost } & .2 & 80 & 80 & 60 \\\text { Market Access } & .2 & 90 & 70 & 60 \\\text { Raw Materials Cost } & .1 & 50 & 70 & 90 \\\text { Utility Cost } & .1 & 80 & 90 & 70\end{array}\end{array}$$ If the selection criterion is to be the greatest composite score, management should choose:

• A) location A.
• B) location B.
• C) location C.
• D) either location B or location C.
• E) to reject all locations.

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Definitions:

Retail Inventory Method

An accounting procedure for estimating the value of a store's merchandise by using a percentage of the retail prices.

Cost-to-Retail Ratio

The cost-to-retail ratio is a calculation used in inventory management to estimate the value of ending inventory at retail prices by considering the cost and retail value of goods available for sale.

Estimated Cost

An approximation of the costs associated with a project or production, prior to actual expenditure.

Lower of Cost or Market (LCM)

Lower of Cost or Market (LCM) is an accounting principle requiring inventory to be recorded at the lower of its historical cost or current market value to reflect any decrease in the value of inventory.