Question

Consider the following short cases. Connect each case with one of the three location techniques we talked about in class (linear programming, centroid or factor rating), answer the related question and explain why:

Lynn, Inc. is trying to locate a customer service center in a suburban area. They have population data for the various suburbs and villages around their area. They are interested in locating the center centrally with minimum distance between customers and the service center. In this technique two factors come into play – distance and _______. What is the missing word?

1. Fran, Inc. is trying to locate a distribution center for their products that they distribute to retail stores. Shipping cost is a major concern and the firm would like to minimize it. In this technique two factors come into play – shipping cost and ______. What is the missing word?
2. Orch is an insurance company that wants to relocate its headquarters. Managers are concerned with a number of items including education system, quality of life, tax rates and many others. There are two parts to the quantitative evaluation of this situation – they are ______ and _______ .

Answer 1

1. Service quality

The two factors that come into play while making decision to locate the center centrally with minimum distance between customers and the service center are distance and service quality. Distance is an important factor to consider since the company would want to cater to maximum number of customers possible for which the location of service centre is important. Also service quality is another factor which would indicate that customer satisfaction is achieved. Hence company has to ensure that best service is provided to the customers.

2. Location

This is because shipping cost determines the cost incurred by the company to transport it's products to the retail stores and has to ensure that the shipping costs are kept to a minimum level. Also the location of distribution centre has to be central so that it is able to transport products to maximum retail stores in minimum possible time.

3. Cost and price

Orch has to consider and evaluate the cost that it would incur by relocating it's headquarters to a different location. Also the price that the insurance company shall charge to its potential customers has also to be checked in order to cover the expenses or cost incurred by the company through relocation. The profit margins of the company must not suffer due to relocation.