# Service Management

## Quiz 10 : Service Facility Location Study Flashcards  Looking for Marketing Homework Help?

## Quiz 10 :Service Facility Location

Question Type  locally owned department store samples two customers in each of five geographic areas to estimate consumer spending in its home appliances department. It is estimated that these customers are a good sample of the 10,000 customers the store serves. The number of customers in each area is C 1 = 1,500, C 2 = 2,500, C 3 = 1,000, C 4 = 3,000, and C 5 = 2,000. It is found that the two consumers have the following budgets in dollars for home appliances per year: B 11 = 100, B 12 = 150; B 21 = 75, B 22 = 100; B 31 = 125, B 32 = 125; B 41= 100, B 42 = 120; and B 51 = 120, B 52 = 125. a. Using the Huff retail location model, estimate annual home appliance sales for the store. b. Bull's-Eye, a chain department store, opens a branch in a shopping complex nearby. The Bull's-Eye branch is three times larger than the locally owned store. The travel times in minutes from the five areas to the two stores ( j = 1 for the locally owned store, j = 2 for Bull's-Eye) are T 11 = 20, T 12 = 15; T 21 = 35, T 22 = 20; T 31 = 30, T 32 = 25; T 41 = 20, T 42 = 25; and T 51 = 25, T 52 = 25. Use the Huff retail location model to estimate the annual consumer expenditures in the home appliance section of each store assuming that Free
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The Huff model helps to find a profitable location from various locations available to maximize profits. The Huff model states that consumers prefer to buy at a store regularly where the store is widespread and requires minimum time to reach the store.
(a)
Among five locally owned stores having a population of 10,000 customers, a sample of two customers each were taken to estimate consumer expenditure for home appliances. The number of customers and annual budget for the two customers in each store are given below: Calculate the estimate of annual home appliances sales for a locally owned store using the following formula: …… (1)
The number of consumers at a particular store is .
The average amount budgeted by consumer for a particular product is .
Calculate the average amount budgeted for each consumer at each store as shown below: Similarly, calculate the average budgeted amount for other stores and the following values are obtained: Calculate the estimate of annual home appliances sales using formula 1 as shown below: Similarly, calculate the estimate of annual home appliance sales for each store and the following values are obtained: Hence, annual home appliance sales for the store is .
(b)
Consider the following information of the BE departmental store and the locally owned store: The BE departmental store is three times larger than locally owned store.
Calculate the attractiveness for each facility using the following formula: …… (2) is attractiveness to facility for consumer . is size of the facility . is travel time from consumer location to facility . is a parameter to reflect the travel time that is equal to one.
Calculate the attraction to the locally owned store and BE departmental store using formula 2 as shown below: Calculate the probability of a customer travelling to a particular facility using the following formula: …… (3) is attraction to facility for consumer Calculate values for each location in Table 5 using formula 3 as shown below: Calculate the monthly total expenditures for each location in Table 4 using the following formula: …… (4) is the probability of a consumer from a given area travelling to a shopping facility .
The number of consumers at a particular area is The average amount budgeted by consumer for a particular product is Calculate the market share for each location in Table 1 using the following formula: …… (5)
Calculate the monthly expenditure and market share with the values in Table 3 and Table 6 for each location using the formulas 4 and 5 using excel spreadsheet as shown below: Obtained values are as follows: Hence, the H model for retail outlet helps to identify a profitable location for a store among various locations available.

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Choose question tag  Four hospitals located in one county are cooperating to establish a centralized bloodbank facility to serve them all. On an xy coordinate grid of the county, the hospitals are found at the following locations: H 1 = (5, 10), H 2 = (7, 6), H 3 = (4, 2), and H 4 = (16, 3). The expected number of deliveries per month from the blood bank to each hospital is estimated at 450, 1,200, 300, and 1,500, respectively. Using the cross-median approach, recommend a location for the blood bank that will minimize the total distance traveled.
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The locations of healthcare facilities in a county are given below:  Step-1: Calculate the cross-media by adding the expected number of deliveries and dividing it by 2, as shown below: Step-2: Identify the order of the four stores: If one has to move from east to west, west to east, north to south, and south to north.
East to west: d-c-b-a
West to east: a-b-c-d
North to south: b-c-d-a
South to north: a-d-c-b
Step-3: For each direction, add the demand values up until have reached or exceeded the cross-median value. In our problem, this value is 1725 (see step 1). Step-4: Identify the business in which cross-median demand is reached or exceeded for each direction:
X-Axis Directions
•West to East = c
•East to west = c
Y-Axis Directions
•South to North = d
•North to South = d
Step-5: Identify the X coordinate for each of the X Axis directions,
West to East = c ( x = 7 , y = 6)
East to West = c ( x = 7 , y = 6)
Step-6: Identify the Y coordinate for each of the Y Axis directions,
South to North = d (x = 16, y = 3 )
North to South = d (x = 16, y = 3 )
Step-7: Choose the x coordinate from the step-5 and Y coordinate from the step-6, .

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Choose question tag  How would you proceed to estimate empirically the parameter " " in the Huff retail location model for a branch bank ?
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From equation 12 we have the following function that describes the attraction of facility j for customers located in area i : Thus: Using logarithms solve for : The value of S j could represent the size of the facility in square feet. The value of is the time for customers in area i to travel to a bank located at site j.  The value of A ij could be measured as the percentage of potential consumers in area i who have accounts at bank j.  An expected value for is determined by applying the above function to areas that are served by the branch, weighted by the number of customers in each area.

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Choose question tag  Go to http://www.mapinfo.com/ and find the definition of "location intelligence." What use can be made of geographic information?

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Choose question tag  The volunteer fire department serving the communities in Figure 10.8 has just purchased two used fire engines auctioned off by a nearby city. a. Select all possible pairs of communities in which the fire engines could be located to ensure that all communities can be reached in 30 minutes or less. b. What additional consideration could be used to make the final site selection from the community pairs found in part a? Essay
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Choose question tag  Revisit the copying service Huff analysis in Example 10.2. Recalculate the monthly customer expenditures and the market share for the proposed copying center at location B if the new store will be three times the capacity of the existing store at location A and the new demand weights from Exercise 10.1 above are used.
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Choose question tag  Revisit the copying service in Example 10.1 and assume that over the years, the monthly demand from the four customers has increased to the following weights: w 1 =7, w 2 = 9, w 3 = 5, w 4 = 7. If we previously located the copying service at point A in Figure 10.6, should we now consider a relocation?
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Choose question tag  Health Maintenance Organization (C) Joan Taylor, the administrator of Life-Time Insurance Company, which is based in Buffalo, New York, was charged with establishing a health maintenance organization (HMO) satellite clinic in Austin, Texas. The HMO concept would offer Austin residents an alternative to the traditional fee-for-service medical care. Individuals could enroll in the HMO voluntarily and, for a fixed fee, be eligible for health services. The fee would be paid in advance. Ms. Taylor carefully planned the preliminary work that would be required to establish the new clinic in Austin, and when she arrived, most of the arrangements had been completed. The location of the ambulatory health center (clinic), however, had not been selected. Preliminary data on the estimated number of potential enrollees in the HMO had been determined by census tract, and these data are presented in Table 10.13. Using the cross-median approach and the census-tract map in Figure 10.9, recommend a location for the clinic. TABLE 10.13 Estimated Number of Potential Enrollees per Census Tract FIGURE 10.9 Census-Tract Map of Austin, Texas There is no answer for this question

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Choose question tag  Recall the rural medical clinics in Example 10.3 and suppose that each community were required to be 25 miles at most from the nearest clinic. How many clinics would be needed, and what would their locations be? Give all possible location solutions.
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Choose question tag  What is the expected annual net operating profit before taxes and market share for the outlet you have recommended ? Defend your recommendation.
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Choose question tag  Utilizing a ite Y w spreadsheet version of the Huff location model (with = 1.0), recommend a store size and location for AFI that will maximize expected net operating profit before taxes. Assuming that AFI does not wish to consider a store smaller than 10,000 square feet, assess the store sizes (based on increments of 5,000 square feet) up to the maximum allowable sales area for each potential site.
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Choose question tag  A community is currently being served by a single self-serve gas station with six pumps. A competitor is opening a new facility with 12 pumps across town. Table 10.12 shows the travel times in minutes from the four different areas in the community to the sites and the number of customers in each area. a. Using the Huff retail location model and assuming that , calculate the probability of a customer traveling from each area to each site. b. Estimate the proportion of the existing market lost to the new competitor. Essay
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Choose question tag  A temporary-help agency wants to open an office in a suburban section of a large city. It has identified five large corporate offices as potential customers. The locations of these offices in miles on an xy coordinate grid for the area are c 1 = (4, 4), c 2 = (4, 11), c 3 = (7, 2), c 4 = (11, 11), and c 5 _ (14, 7). The expected demand for temporary help from these customers is weighted as w 1 = 3, w 2 = 2, w 3 = 2, w 4 = 4, and w 5 = 1. The agency reimburses employees for travel expenses incurred by their assignments; therefore, recommend a location (i.e., xy coordinates) for the agency that will minimize the total weighted metropolitan distance for job-related travel.
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Choose question tag  A small city airport is served by four airlines. The terminal is rather spread out, with boarding areas located on an xy coordinate grid at A = (1, 4), B = (5, 5), C = (8, 3), and D = (8, 1). The number of flights per day, of approximately equal capacity, is A = 28, B = 22, C = 36, and D = 18. A new central baggage claim area is under construction. Using the cross-median approach, recommend a location for the new baggage claim area that will minimize the total weighted distance from the boarding areas.
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Choose question tag  Pick a particular service, and identify shortcomings of its site selection.
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Choose question tag  pizza delivery service has decided to open a branch near off-campus student housing. The project manager has identified five student apartment complexes in the northwest area of the city, the locations of which, on an xy coordinate grid in miles, are C 1 = (1, 2), C 2 = (2, 6), C 3 = (3, 3), C 4 = (4, 1), and C 5 = (5, 4). The expected demand is weighted as w 1 = 5, w 2 = 4, w 3 = 3, w 4 = 1, and w 5 = 5. Using the cross-median approach, recommend a location for the pizza branch that will minimize the total distance traveled.
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Choose question tag  You have been asked to help locate a catering service in the central business district of a city. The locations of potential customers on an xy coordinate grid are P 1 = (4, 4), P 2 = (12, 4), P 3 = (2, 7), P 4 = (11, 11), and P 5 = (7, 14). The expected demand is weighted as w 1 = 4, w 2 = 3, w 3 = 2, w 4 = 4, and w 5 = 1. Using the cross-median approach, recommend a location for the catering service that will minimize the total weighted distance traveled to serve the customers.
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Choose question tag  A bank is planning to serve the rural communities shown in Figure 10.8 with automated teller machines (ATMs). The travel time in minutes between communities in the service area is shown on the network in Figure 10.8. The bank is interested in determining the number and location of ATMs necessary to serve the communities so that a machine will be within 20 minutes' travel time of any community. Essay
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Choose question tag  What are the characteristics of a service that would make communication a good substitute for transportation ?
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