Question

BENDAL Group has various businesses across dozens of industries including shopping mall, on-line stock trading operation, electronics and healthcare. BENDAL Mall is one of the leading shopping malls in the Accra Metropolis and it has five retail locations. Currently, each retail outlet makes all its own bread and pastries from scratch (that is, the breads and pastries are prepared on site from basic ingredients such as flour, sugar, shortenings among others. Management has discovered that in order to reduce costs and ensure consistent quality of the firm’s products among all locations, a central commissary must be built where the dough will be mixed and the products formed and frozen. The products will then be distributed to the five retail stores for baking. As a facility location consultant, you have been approached by the BENDAL’s management to help them determine where to locate the commissary. The estimated amounts of product sold weekly (in pounds) in each store only with its respective grid coordinates are provided in the table below: Store Location Coordinate (X, Y) Pounds Of Products Sold (I.E. Volume) A B C D E 110, 50 120, 90 275, 100 170, 130 270, 160 2,500 1,250 500 750 5,000 It was assumed that there exist a linear relationship between volumes transported and the transportation costs (no premium charges). Required: (a) Using the middle of gravity methods and the information displayed in the above, i. Determine the best location for siting the central commissary. ii. Assume that the estimated amounts of products sold weekly (in pounds) in each store are the same, determine the location for siting the central commissary. (b) As a facility location consultant, explain how you would advise the management of BENDAL Ltd wanting to locate an on-line stock trading operation differently than you would advise management wanting to locate additional retail service facility.

Answer 1

(a)

(i) Center of Gravity method

(ii) Considering same volume

(b) The online store location differs in the sense that retail facility takes into account the potential customers population in the area, whereas online business has a wider geographic reach, so population of a particular does not matter for online store. What matters is availability of cheap warehouse space and availability of multiple modes of transport.