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Location of Retail Stores X-Coordinate (X) Y-Coordinate (Y) Monthly Demands (V) Vixi Viyi

This document contains an assignment submitted by Abhishek Shirke for their Service Operations Management course. The assignment contains two questions. The first question provides coordinates for three retail store locations and monthly demand data. It asks to determine the best location for a warehouse using the centroid method. The second question provides fixed and variable cost data for three potential factory locations and asks to determine the best location and the break-even capacity utilization. Detailed calculations and solutions are shown for both questions.

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Abhishek Shirke
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220 views

Location of Retail Stores X-Coordinate (X) Y-Coordinate (Y) Monthly Demands (V) Vixi Viyi

This document contains an assignment submitted by Abhishek Shirke for their Service Operations Management course. The assignment contains two questions. The first question provides coordinates for three retail store locations and monthly demand data. It asks to determine the best location for a warehouse using the centroid method. The second question provides fixed and variable cost data for three potential factory locations and asks to determine the best location and the break-even capacity utilization. Detailed calculations and solutions are shown for both questions.

Uploaded by

Abhishek Shirke
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Name: Abhishek Shirke

Roll no: 20
Sub: Service Operations Management
Assignment no: 01
Faculty: Prof. Amal Roy

Q1) As a planner for the Company, you are given co-ordinates for 3 retail site location s A, B
and C as (50, 60), (20, 35), (160, 50) respectively. Corresponding monthly demands for these
locations are 494000, 18000, 171000 units respectively. Determine the co-ordinates of best
location of a Warehouse to the above retail stores--- applying Centroid method. (Show
detailed Calculation & represent graphically) A Project has following list of Activities along
with their required.
Solution: Given- Coordinates for 3 Retail sites location.
A (50,60)
B (20,35)
C (160,50)

Location of X-coordinate Y- Monthly ViXi ViYi


retail stores (Xi) coordinate Demands (Vi)
(Yi)
A 50 60 494000 24700000 29640000
B 20 35 18000 360000 630000
C 160 50 171000 27360000 8550000

Σ (Vi) = 683000, Σ (ViXi) = 52420000, Σ (ViYi) = 38820000


Xc = 52420000/683000 Yc = 38820000/683000 Centre of Gravity: (76.75, 56.83)
Xc = 76.75 Yc = 56.83 Best location coordinates: (76.75, 56.83)

Centre of Gravity Method (Graph)


70
A (50,60)
60 C.G. (76.67,56.83)
C (160,50)
Y-distance (KM)

50
40 B (20,35)

30
20
10
0
0 20 40 60 80 100 120 140 160 180
X-distance (KM)
Q2) Sigma Steels is planning to start a new Factory for manufacturing of Steel Utensils at any of
three locations, namely, Bokaro, Jamshedpur & Bhilai. Fixed Costs are estimated at Rs 8.15,
7.377 & 7.903 in Rs million respectively. Variable Costs are estimated at Rs 500, 580 & 490 per
Unit respectively. Factory will have capacity of 10000 Steel Utensils per year & initially it will
work at 75% capacity utilisation. Selling Price is expected to be Rs 1800 per Unit of Steel
Utensil. Find the best location & at what capacity utilisation the best location will break even.
Solution: Break-Even Analysis
Formula for computation:
𝐅𝐢𝐱𝐞𝐝 𝐂𝐨𝐬𝐭
Break-Even Volume (VBE) =
(𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐂𝐨𝐬𝐭)−(𝐕𝐚𝐫𝐢𝐚𝐛𝐥𝐞 𝐂𝐨𝐬𝐭)

𝟖𝟏𝟓𝟎𝟎𝟎𝟎
1. VBE for Bokaro = = 6269 units
(𝟏𝟖𝟎𝟎)−(𝟓𝟎𝟎)
𝟕𝟑𝟕𝟕𝟎𝟎𝟎
2. VBE for Jamshedpur = = 5675 units
(𝟏𝟖𝟎𝟎)−(𝟓𝟎𝟎)
𝟕𝟗𝟎𝟑𝟎𝟎𝟎
3. VBE for Bhilai = = 6033 units
(𝟏𝟖𝟎𝟎)−(𝟓𝟎𝟎)

Expected demand of 10000 units with 75% capacity utilisation i.e. 75% of 10000 = 7500 units

Bokaro Jamshedpur Bhilai


Revenue 13500000 13500000 13500000
Variable Cost 3750000 4350000 3675000
Fixed Cost 8150000 7377000 7903000
Total Cost 11900000 11727000 11578000
Profit (₹) 1600000 1773000 1922000

From the calculations, the profit for Bhilai location is maximum compared to the other two
locations, Therefore Bhilai is the best location with break-even capacity of 6033 units.

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