Operations and Supply Chain Management The Core

LOCATION, LOGISTICS, AND DISTRIBUTION chapter 14 475
basis—CSX advertises it can move a ton of freight 468 miles on a gallon of fuel. Why
is it that rail does not have a greater share of the freight market in the United States?
4. What is required to make cross-docking a viable solution for a logistics provider?
LO14–3 5. What are the pros and cons of relocating a small or midsized manufacturing firm
(that makes mature products) from the United States to China?
6. How do facility location decisions differ for service facilities and manufacturing
plants?
7. If you could locate your new software development company anywhere in the
world, which place would you choose, and why?
OBJECTIVE QUESTIONS
LO14–1 1. Some manufacturing firms contract with an outside company to manage the firm’s
logistics functions. What is the general term for a firm that provides such services?
2. Logistics accounts for about what percent of the U.S. gross domestic product?
LO14–2 3. What mode of transportation is involved in the movement of the greatest number
of products?
4. What mode of transportation is limited to specialized products such as liquids and
gases?
LO14–3 5. A manufacturer has decided to locate a new factory in the northwestern United
States to serve the growing demand in that market. It has narrowed the potential
sites down to two finalists: city A and city B. It has developed a list of important
factors to consider in selecting a site, and rated each as shown in the following table:
FACTOR CITY A CITY B
Utility rates 100 115
Availability of skilled labor 78 75
Tax rates 40 35
Transportation 46 38
Proximity to suppliers 35 34
Quality of life 19 16
Based on these data, which city appears to be the better choice?
6. Logistics Consultants Inc. (LCI) provides various logistics analysis services to
other firms, including facility location decisions. It has just completed a project
for a major customer, but on the eve of its presentation it discovered a computer
malfunction had partially deleted some of its data. One file that was impacted
contains the final factor rating results. Following are the partial results it was able
to recover. As you’ll notice, some ratings are missing.
RATINGS
FACTOR MAX POINTS CITY X CITY Y
Availability of labor 150 130 123
Availability of utilities 130 122 110
Transportation infrastructure 80 73
Warehousing availability/costs 75 70 63
Proximity to customers 65 59
Business climate 40 30 24
Taxation structure 30 15
Quality of life 25 22 17
If you were the project manager for LCI, what would you do given that you are
missing some crucial data?