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0. Suppose that Farmers' Bank wishes to serve the nine customer clusters as snown in Figure 13-19. It has proposed locating a branch (A) at
0. Suppose that Farmers' Bank wishes to serve the nine customer clusters as snown in Figure 13-19. It has proposed locating a branch (A) at coordinates X1=20, Y1=20. A competing branch (B) is located at coordinates X2=40,Y2=30. Farmers' Bank is to be a full-service branch with a relative size (attractiveness) index of 1 . The competing branch is a partial-line facility (no ATM, no drivethrough capabilities) with a size index of 0.7. The travel time for customers to a bank is approximated as T (hours) =D/50, where D= distance in miles. The average customer generates $100 in gross annual revenue for a bank. The Figure 13-19 Number of Potential Customers for Branch Banks in a Region estimate of annual operating expense for Farmers' branch is $300,000, and the facility will cost $650,000 (20-year life) on land worth $100,000. a. Apply Huff's retail gravity model to determine the branch's annual revenue. Assume a=2. b. Considering the level of investment required and the operating expenses, should the branch be constructed? c. What additional information might you like to have before making a final decision
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