The Center-Of Gravity Method of Determining a Facility Location

question 7

Multiple Choice

The center-of gravity method of determining a facility location:

• A)Requires that demand be estimated in terms of the dollar sales revenue in each market.
• B)Requires that cost be measured in dollars of transportation cost.
• C)Does not require that qualitative factors be considered in location decisions.
• D)All of these.

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Definitions:

Break-Even

The point at which total costs and total revenues are equal, meaning that a business or product is neither making a profit nor sustaining a loss.

Sales Dollars

The total revenue generated from the sale of goods or services by a company before any expenses are deducted.

Common Fixed Expenses

Costs that do not change with the level of output or sales, shared across different sections or products of a business.

Break-Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain.