1. Masar Industries is analyzing the location of a possible new distribution cen
ID: 443812 • Letter: 1
Question
1. Masar Industries is analyzing the location of a possible new distribution center among five candidates. The data for consideration is located in the table below.
Data
Location 1
Location 2
Location 3
Location 4
Location 5
Fixed Costs
$115,000
$105,000
$95,000
$100,000
$90,000
Direct material cost/unit
$3.45
$3.25
$3.70
$3.35
$3.55
Direct labor cost/unit
$8.50
$8.25
$8.25
$9.25
$9.25
Overhead/unit
$1.10
$1.15
$1.20
$1.15
$1.25
Transportation cost/unit
$1.85
$1.75
$2.10
$1.75
$1.95
Part A) With an annual production rate of 5,500 units, what is the least-cost location?
Part B) Would that location remain the same if the forecast was 25% higher than the current annual production rate? Determine the range of demand (annual production) that would suit each location best. (Hint: find cross-over points up to 25,000 annual production units) Discuss your recommendation for the best location over the next 4 years assuming a 25% growth rate.
2. Coligary Distribution Services provides daily delivery services on a contract basis around the city. Coligary is looking to relocate their central distribution center to be more efficient for their customers. Below is a table of the six most active districts with coordinates and contract levels.
Location
X-coordinate
Y-coordinate
Number of contracts
Downtown
40
80
25
Warehouse
25
105
85
Loring Park
25
40
15
North Loop
15
130
45
University
55
90
35
Convention Cntr.
45
35
15
Use equations 9.1 and 9.2 to determine the center of gravity for the listed locations. Discuss the best location for Coligary to relocate their new distribution center center. Then use the template provided by CourseMate to verify the location. Show all your work.
Data
Location 1
Location 2
Location 3
Location 4
Location 5
Fixed Costs
$115,000
$105,000
$95,000
$100,000
$90,000
Direct material cost/unit
$3.45
$3.25
$3.70
$3.35
$3.55
Direct labor cost/unit
$8.50
$8.25
$8.25
$9.25
$9.25
Overhead/unit
$1.10
$1.15
$1.20
$1.15
$1.25
Transportation cost/unit
$1.85
$1.75
$2.10
$1.75
$1.95
Explanation / Answer
2.
Total number of contracts = 25 + 85 + 15 + 45 + 35 + 15 = 220
X = (40*25) + (25*85) + (25*15) + (15*45) + (55*35) + (45*15) / 220
= 6775 / 220 = 30.795 = 30.8
Y =(80*25) + (105*85) + (40*15) + (130*45) + (90*35) + (35*15) / 220
= 21050 / 220 = 95.68 = 95.7
The best location for Coligary to relocate their new distribution center is (30.8 , 95.7)
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