Problem 1: 10 points The Davis national drugstore chain prefers to operate one outlet in a town that has four major market segments. The number of potential customers in each segment along with the coordinates are as follows: Name 12 2 x-Coordinate 3 4 18 2000 17 600 2 1500 2 3400 Center of Gravity 7.47 7500 Which would be the best location by the center-of-gravity method? 2 15 y-Coordinate 2 14 8.48 Data Fixed costs Direct material cost/unit Direct labor cost/unit Overhead/unit Transportation cost/unit Cunningham Products Location Analysis: Location 1 $80,000.00 Volume

Problem 2: 10 points For the Davis drugstore chain in problem 1, suppose that aller five years, half the customers from segment 1 are expected to move to segment 2. Where should the drugstore shift, assuming the same criteria are adopted, and the chain still use center of gravity method?

Problem 3: 10 points Cunningham Products is evaluating five possible locations to build a distribution center. Data estimated from the accounting department are provided below. The annual production is estimated to be 30,000 units. $4.22 $12.40 $2.50 $0.40 Page Location 2 $110,000.00 $4.65 $13.50 $2.20 $0.70 Location 4 Location 3 $109,000.00 $135,000.00 $5.05 $11.60 $2.20 $0.30 1 $4.80 $15.40 $2.70 $0.84 of 2 Location 5 $110,000.00 $4.80 $13.80 $2.00 $0.71 a) Which location provides the least cost? b) For what range of demand would each location be best? (Hint: Slides 25, 26 for Break-even analysis)

The Davis national drugstore chain prefers to operate one outlet in a town that has four major market segments. The number of potential customers in each segment along with the coordinates are as follows