Choosing a location for a warehouse Ratings Factor Weights Peoria Des Moines Chi

Question

Choosing a location for a warehouse

Ratings

Factor

Weights

Peoria

Des Moines

Chicago

Nearness to markets

25

4

7

5

Labor cost

35

8

8

4

Taxes

30

8

9

7

Nearness to suppliers

10

10

6

10

Please show all work that leads you to an answers

A major drug store chain wishes to build a new warehouse to serve the whole Midwest . At the moment, it is looking at three possible locations. The factors, weights, and ratings being considered are given below:

1.Conduct a location factor weighting analysis for the drug chain above.

2.How would your answer change if you expected a property tax increase, improving your weight for taxes to 45%?, allocating increase among the remaining factors?

3.What are the limitations of this particular type of analysis? Explain.

Choosing a location for a warehouse

Ratings

Factor

Weights

Peoria

Des Moines

Chicago

Nearness to markets

25

4

7

5

Labor cost

35

8

8

4

Taxes

30

8

9

7

Nearness to suppliers

10

10

6

10

Explanation / Answer

1)

The ideal location is Desmoines with a score of 7.85

b) If a property tax increases is expected and weights for taxes to be 45%

The suitable location for warehouse is Desmoines.

c) The limitations of this particular type of analysis is that it is difficult to determine relevant and important factors.

Factor weights Preoria Des Moines Chicago Nearness to Markets 0.25 4 7 5 Labor cost 0.35 8 8 4 Taxes 0.3 8 9 7 Nearness to suppliers 0.1 10 6 10 .25 X 4 + .35 X 8 + .3 X 8 + .1X10 = 7.2 .25X7 + .35X8+ .3X9 + .1X6 = 7.85 .25 X 5 + .35 X 4 + .3 X 7 + .1X10 = 5.75

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