Which of the Following Statements on Locating Facilities in the Service

question 185

Multiple Choice

Which of the following statements on locating facilities in the service sector is best?

• A) The factors that apply to manufacturing firms often also apply to service facilities, but the impact of the location on sales and customer satisfaction is an important addition.
• B) Management should avoid locating facilities where competitors are already well established, as illustrated by new car showrooms.
• C) Creating a "critical mass" is a strategy that avoids locating near competing firms.
• D) "Site specific" factors are the main reason for locating warehousing and distribution operations near the customer.

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Definitions:

Production Function

An economic model that describes the relationship between input resources and the output of goods for a specific period.

Short-Run Cost Function

A representation of how total production costs change with output levels in the short term, when some factors are fixed.

Quasi-Fixed Costs

Costs that are not directly variable with the level of output but can change over time with scale of operations, such as salaries for permanent staff.

Positive Output

Production of goods or services in a quantity that exceeds zero.