problems in location analysisfvgggg

7/28/2019 Problems in LOcation Analysisfvgggg

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Machine A Machine B

Investment 50,000 80,000

Intwerest on

Capital invested 15% pa 15% pa

hourly charges(Wage+power) Rs 10 Rs 8

Pieces per hour

produced 5 8

Annual operating

hours

12

3

Which machine will have the lower cost per unit

whole year? (2000 Hrs)

If only 4000 pieces are tobe produced in ayear,

Will your answer to (i) above vary if you are info

output of machine B gets rejected at the inspecti


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of output, if run for the

hich machine would have

med that 12.5% of the

on stage. If so what could


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Selection the location alternatives which has the maximum sum o

Given below are the various factors considered for location decision and the factor rat

to each factor based on its importance for location decision and location rating for the l

basedon the ,merit of each location in each of the factors considered.

FactorsFactor

ratingsA B A B FACTOR

Tax Advantage 4 8 6 32 24

Suitable Labour Skill 3 2 3 6 9 Which location w

Prox. To Cust. 3 3 6 9 18

Prox. To Supp. 5 5 2 25 10

Adeq. Of Water 1 1 3 1 3

Community Accep. 5 5 4 25 20

Qlty Education System 4 4 1 16 4

Rail & Air Transportationn 3 3 10 9 30

Suitable of Climate 2 2 7 4 14

Power Supp 2 2 6 4 12

131 144

Location Rating


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the product ratings as the choice

ings assigned

location alternatives

RATING METHOD

ll you select?


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After evaluating two potential sites A &B by comparing costs and finding them a

from cost point of view, a manufacturer decided to evaluate the intangible facto

by point rating.

Comparative ratings assigned to major intangible location factors to determine t

for each factorand the points assigned toeach location alternative for each of the

FactorsMax Possible

pointsA B POINT R

Future Fuel

Available 300 200 250 Which loTpt flexibility &

Growth 200 150 150

Adequacy of WaterSupply 100 100 100

Labour Availabilty 250 250 220

Pollution

Regulations 30 30 20

Site Topography 50 50 40

Living Condition 150 100 125

880 905

Points assigned to locations


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proximately equal

rs for these twolocations

e relative importance

factors are given below

TING METHOD

cation will you select?


7/18

Potential locations A B & C have the cost structuresshown for producing aproduct expected to

Find the most economical location for an expected volume of 2000 units/year.

Also determine the range of annual volume of production for which each of the location A B &

Locations A B C

Fixed Cost/year 25,000 50,000 80,000

Volume cost/unit 50 25 15

Locations A B CFixed Cost/year 25,000 50,000 80,000


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sell at Rs. 100 per unit.

C would be most economical?

Locational Break-Even Anlysis

Which location will you select?


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A manufacturer is evaluating four locations for a new plant and has weighted the relevent scores a

Scores have been assignedwith higher values indicative of prferred conditions.

Using these scores, develop a qualitative factor comparison for the four lo

Relevent Factors Assigned Wt. A B C D Qualitat

Production Cost 0.35 50 40 60 30 Which lo

Raw Material supply 0.25 70 80 80 60

Labour Availability 0.2 60 70 60 50

Cost of living 0.05 80 70 40 80

Environment 0.05 50 60 70 90

Markets 0.1 70 90 80 50

17.5 14 21 10.5

17.5 20 20 15

12 14 12 10

4 3.5 2 4

2.5 3 3.5 4.57 9 8 5

60.5 63.5 66.5 49


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s given below

ations.

ve factors Method



11/18

A company is to decideon the location of a new plant. It has narrowed down the choi

Data in respect of which is furnished below,

Data A B C Qualitat

Wages & Salaries 20,000 20,000 20,000 Which loPower & Water Supply

Exp. 20,000 30,000 25,000

Raw Material &

Supplies 80,000 75,000 60,000

Total initial

investment 200,000 300,000 250,000

Distribution Exp. 50,000 40,000 60,000Misc Exp. 40,000 25,000 30,000 0.075 0.2

Expected salesper year 225,000 250,000 225,000

210,000 190,000 195,000 15000 60000

Total Exp. 2,10,000 1,90,000 1,95,000

Profit 15,000 60,000 30,000


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ices to locations A,B & C.

ve factors Method


0.12

30000


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Two locations A & B are being examined for location of a new manuf

Two production processes X & Y are being examined

Location Fixed Cost Variable Cost Fixed Cost

A 15,00,000 Rs 5.9 34,00,000

B 12,50,000 Rs 6.4 30,00,000

In what range of outputs would each location-production combinatio

2

Process X Pr


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cturing plant.

Variable Cost

Rs 3.8

Rs 4.1

be preferred?

cess Y


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1 Location A would result in fixed costs of Rs 3,00

and revenues of Rs 68 per unit.

Annual fixed costs at location B are 8,00,000 wrevenue of Rs 68 per unit. Sales volume is esti

Which location is most attractive?

2

A company has to select one location out of the

The annual operating costs and other intangibl

Factors A B

Labour Costs 1,20,000 1,10,000

Tpt Costs 10,000 8,000

Local Taxes 17,000 20,000

Cost of Power 21,000 29,000

Other Costs 16,000 11,000

Community Attitude V good fair

Labour Avail good V good

Quality of Tpt fair Acceptable

Quality of Life Acceptable fair

On the basisof annual operating costs, which si


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Devise a method of quantifying the intengible c

cost data into the overall evaluation. Which is

3


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,000 with variable coss of Rs 63 per unit

th variable costs of Rs 32 per unit andated to be Rs 25,000 units/year.

five alternatives considered for a new plant

factors are given below for these five locations.

C D E

1,60,000 85,000 75,000

7,000 12,000 14,000

25,000 19,000 17,000

25,000 18,000 23,000

12,000 16,000 18,000

good fair V good

fair Outstanding Acceptable

Outstanding Acceptable fair

good V good Outstanding

e would you choose?


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osts and integrate them with the

he best?

problems in location analysisfvgggg

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