Q2) A full-service restaurant is considering opening a new facility. They have f
ID: 368479 • Letter: Q
Question
Q2) A full-service restaurant is considering opening a new facility. They have four potential locations in-mind and four factors that are most important to them in their location decision - affluence of the local population, traffic flow (congestion), parking availability and estate price. Congestion/ traffic flow is the least important factor. Parking availability is 5 times more important than traffic flow, estate price is 10 times and affluence of local population is 20 times more important than the congestion. Based on their market research, they obtained some raw data on these factors. Perform a factor rating analysis and help the restaurant locate their new facility.
Factors
Chestnut Mills
Gary Mall
South Street
Belt Line
Affluence of local population (average income)
$80,000
$65,000
$68,000
$45,000
Traffic flow (cars/ hr)
250
180
220
120
Parking availability (# of slots)
5,000
3,000
1,500
1,200
Estate price (per sq.ft.)
158
107
82
95
Factors
Chestnut Mills
Gary Mall
South Street
Belt Line
Affluence of local population (average income)
$80,000
$65,000
$68,000
$45,000
Traffic flow (cars/ hr)
250
180
220
120
Parking availability (# of slots)
5,000
3,000
1,500
1,200
Estate price (per sq.ft.)
158
107
82
95
Explanation / Answer
Start with assigning priority factor (weight) of 1 to traffic flow, because the weightage of other three factors is relative to traffic flow, which is the least important factor.
Therefore weightage of Parking availability is 5, of estate price is 10 and of local population is 20.
The values of each factor are given in ratio scale, we need to convert the ordinal scale. We do so by assigning a value between 1 to 4. The most desirable is assigned a numerically higher value. For example value of 4 is assigned to affluence factor of Chestnut Mills, because its affluence of local population is the highest. (higher affluence is desirable)
Similarly, higher parking availability of Chestnut mills is assignd value of 4, because it has the maximum parking availability.
However higher traffic flow and higher estate price are assigned a lower value, because lesser traffic flow (less congestion) and lower estate price is desirable.
So Matrix of ordinal values is as follows
Multiply each of these values by the weightage of the corresponding factor and then add the resulting values to get the factor rating of respective location and divide it by the sum of weights to get the weighted factor rating.
Weighted factor rating of Chestnut Mills = (4*20+1*1+4*5+1*10)/(20+1+5+10) = 3.083
Weighted factor rating of Gary Mall = (2*20+3*1+3*5+2*10)/(20+1+5+10) = 2.167
Weighted factor rating of South Street = (3*20+2*1+2*5+4*10)/(20+1+5+10) = 3.111
Weighted factor rating of Belt Line = (1*20+4*1+1*5+3*10)/(20+1+5+10) = 1.639
Weighted factor rating of Chestnut mills is the highest. Therefore, Chestnut Mills should be selected as location of restaurant.
Factors Chestnut Mills Gary Mall South Street Belt Line Affluence of local population (average income) 4 2 3 1 Traffic flow (cars/ hr) 1 3 2 4 Parking availability (# of slots) 4 3 2 1 Estate price (per sq.ft.) 1 2 4 3Related Questions
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