Question 1
A full-service restaurant is considering opening a new facility in a specific city. The table below shows its ratings of four factors at each of two potential sites.
| Factor | Weight | Gary Mall | Belt Line |
| Affluence of local population | .20 | 30 | 30 |
| Traffic flow | .40 | 50 | 20 |
| Parking availability | .20 | 30 | 40 |
| Growth potential | .20 | 10 | 30 |
The score for Gary Mall is ________ and the score for Belt Line is ________.
◦ 34; 28
◦ 20; 24
◦ 120; 120
◦ 18; 120
◦ 22; 24
Question 2
A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost?
◦ Plant A, because it is cheaper than Plant B for all volumes.
◦ Neither Plant A nor Plant B, because the crossover point is at 10 million units.
◦ Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.
◦ Plant B, because it has the lower variable cost per unit.
◦ Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units.
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