$4Furil 3U0 $50,000 If demand is expected to be If demand is expected to be 2000
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$4Furil 3U0 $50,000 If demand is expected to be If demand is expected to be 2000 units, which location 1 18. The Quick Copy center for document copying is dec where to locate a new facility. The annual fixed and variable costs or each site it is considering have been estimated as follows: CASE: Data Tech, Inc.dble transfers hard copies of documents, such as Jeff frequently travels to customer locations to the are larger th hind ooffer which is a of ofira paces for both t arted by Jeff Styles. delivers the daily packages. Another is closenese Data Tech, Inc. is a small but growing company st Data Tech is a business that the future. Jeff had placing data on CDs is the wave of capacity. Two of the locations he is considering at s the the future. Jeff had started the company in A factor that is particularly troubling for Jeff is company in his two-car garage three currently needs and offer excess growth capacity necessary software and signing two tion would meet current capacity needs but would customers. Now he was about to sign room for expansion. He doesn't know whichi invoices, bills, or mailing lists, onto CDs. As more companies move to a paperless environment, on Suddenly what was a small In his list of factor weights Jeff has made spa bet options, giving himself some time to think about the i large corporations as his first customers. Now he was about to sign on two additional corporate customers. was a garage operation was umie garage operation was turning into a major business The information that Jeff has compiled is shown The Business Factor Score at Each Locatfor The operations function of Data Tech seems deceptively simple. Every day Data Tech receives packages of mail from corporate customers containing documents they want transferred to disc. Data Tech usually receives anywhere from 10,000 to 30,000 pieces of mail per day that need to be processed. The first step requires workers to unpack and sort the mail received. Next, workers scan each item through one of two scanning machines Weight #1 #2 Factor Proximity to airport usuay i that end sort wo scakih stageal for 4 30 4 Proximity to postal service that transfer content to disc. An accuracy check is t made Facility with hen to ensure that information was transferred correctly. This stage is particularly important as many of the documents contain important private information. Finally, the discs and the docu ments are packaged and sent back to the customer, with Data Facility with potential for expansion Tech keeping a backup disc for its records. to 10 5 4 The Need for Capacity and Relocation business community Pleasant Running a full-time business out of his two-car garage is a chal lenge for Jeff Styles. Jeff has spent a great deal of time ensuring that the operation of Data Tech runs smoothly without any bot tlenecks. He has been successful, and his two original customers have just signed long-term contracts with him. In addition, he environment has acquired two additional customers. This means that Data To Expand Large or Smat Tech needs to move to a larger facility that could accommodate Jeff is not sure how to evalua hether he should foou the larger size of the business. moving into a larger facility nov r moving into a smalla Jef has narrowed his search to three potential locations. He ity with potential for expansion 4has estimated the foll each location considering a number of criteria. Some factors ar has identified the factors that are important to him and rated chances for demand: especially important, such as proximity to the postal service that . The likelihood of demand be ug high is 0.70. . The likelihood of demand being low is 0.30Explanation / Answer
Jeff Styles should give a greater priority to a larger facility than a smaller facility with potential of expansion because of following reasons –
Improving brand perception
Enhance employee morale
Cost benefit
Larger facility -20
6
6
8
Smaller facility-10
4
3
3
Factor analysing different from Jeff for choosing Larger facility-
Factors responsible
Contribution in %
Rank
Cost benefit
30
1
Closeness to airport
15
2
Closeness to business community
15
3
Pleasant environment
10
4
Employees morale
10
5
Brand perception
10
6
Upgraded technology
10
7
Improving brand perception
Enhance employee morale
Cost benefit
Larger facility -20
6
6
8
Smaller facility-10
4
3
3
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