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Location
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Stages in Facility Location Decisions Determining the need for a new facility Identifying the relevant factors in selecting a location Selecting a general location Selecting a site
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Determining the Need for a New Factory Change in demand, up or down New product Changes in the economics of the business, e.g. labour costs, material costs, material sources, supporting industries Government action, I.e. on environmental grounds
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Determining the Need for a New Factory Plant Size Cost Production Costs Transport Costs Total Costs Ideal Plant Size
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Stages in Facility Location Decisions Determining the need for a new facility Identifying the relevant factors in selecting a location Selecting a general location Selecting a site
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Strategic Considerations in Facility Location Access to markets, ie EU Nissan, Toyota & Honda invested $2.6 billion in UK Responsiveness to Customers Access to technology
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Location Decisions - Manufacturing Favorable Labour Climate Proximity to Markets Quality of Life Proximity to Suppliers Proximity to Parent Company Utilities, Taxes, and Real Estate Costs
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Location Decisions - Services Proximity to Customers Transportation Costs and Proximity to Markets Location of Competitors Site-specific Factors
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Locating a Single Facility On-site expansion +Keeps management together +Reduces construction time & costs +Avoids splitting up operations -Diseconomies of scale -Poor materials handling -Increasingly complex production control -Lack of space
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Locating a Single Facility Building a new plant +Reduced risk of complete loss of production due to accident +Escape unproductive labour +Modernise with new machinery +Reduce transport costs
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Locating a Single Facility Relocate ( move out of existing facility ) -Relocating firms tend to be small -They don’t move very far -Often single-plant companies needing more space and needing to redisign their production processes and layouts
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Location Health-Watch
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Location Health-Watch North
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Location Health-Watch Location FactorWeightScore Total Patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105
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Location Health-Watch North Location Factor WeightScore Total Patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 Weighted Score
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Location Health-Watch North Location Factor WeightScore Total Patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) Weighted Score
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Location Health-Watch North Location Factor WeightScore Total Patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) Weighted Score
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Location Health-Watch North Location FactorWeightScore Total Patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) + (20 x 3) Weighted Score
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Location Health-Watch North Location FactorWeightScore Total Patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=(25 x 4) + (20 x 3) + (20 x 3) + (15 x4) + (10 x 1) + (10 x 5) Weighted Score
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Location Health-Watch North Location FactorWeightScore Total Patient miles per month254 Facility utilization203 Average time per emergency trip203 Expressway accessibility154 Land and construction costs101 Employee preference105 WS=340 Weighted Score
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Location Health-Watch
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Location Health-Watch Erie A(50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100)
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Location
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Location
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Location
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Location
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Location
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LocationHealth-Watch Erie A(50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles
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LocationHealth-Watch Erie A(50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Rectilinear distance d AB = | x A - x B | + | y A - y B |
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LocationHealth-Watch Erie A(50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Rectilinear distance d AB = | 50 - 175 | + | 185 - 100 |
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LocationHealth-Watch Erie A(50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Rectilinear distance d AB = | 50 - 175 | + | 185 - 100 |
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LocationHealth-Watch Erie A(50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles Rectilinear distance d AB = 210 miles
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Location Health-Watch Erie A(50, 185) Pittsburgh Harrisburg Philadelphia Scranton Uniontown North 0 50 100 150 200 y (miles) x (miles) 50100150200250300 East State College B (175, 100) 151.2 miles 210 miles
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Location Health-Watch
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Location Health-Watch North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles)
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)2
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)2
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)2 5.5 - 2.5 = 3
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)2 5.5 - 2.5 = 3 4.5 - 4.5 = 0
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)23 + 0 = 3 5.5 - 2.5 = 3 4.5 - 4.5 = 0
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 2 * 3 = 6
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)10
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)10 2.5 + 0.5 = 3 8 - 5.5 = 2.5 5 - 4.5 = 0.5
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)102.5 + 0.5 = 330 10 * 3 = 30
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census PopulationDistance Tract(x,y)(l)(d)ld A(2.5, 4.5)23 + 0 = 36 E(8, 5)102.5 + 0.5 = 330
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Location Health-Watch (a) Locate at C (5.5, 4.5) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Tractld A6 B25 C0 D21 E30 F80 G77 Total239
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Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles)
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Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles)
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Location Health-Watch (b) Locate at F (7, 2) North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Tractld A14 B25 C40 D14 E40 F0 G35 Total168
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Location Health-Watch Alternative Locations North x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles)
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Location Health-Watch Alternative Locations North x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) 391 355 331 326 283 247 223 233 197 173 253 233 228 168 218
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles)
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)2 B(2.5, 2.5)5 C(5.5, 4.5)10 D(5, 2)7 E(8, 5)10 F(7, 2)20 G(9, 2.5)14
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)25 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5)
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5)
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5) C(5.5, 4.5) D(5, 2) E(8, 5) F(7, 2) G(9, 2.5)
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 x * = y * =
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 x* = y* = 453.5 68 205.5 68
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 x * = y * = 453.5 68 205.5 68
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) Census Population Tract(x,y)(l)lxly A(2.5, 4.5)259 B(2.5, 2.5)512.512.5 C(5.5, 4.5)105545 D(5, 2)73514 E(8, 5)108050 F(7, 2)2014040 G(9, 2.5)1412635 Totals68453.5205.5 Totals68453.5205.5 x* = 6.67 y* = 2.96
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Location Health-Watch Center of Gravity Approach North B A C E G F D (2.5, 4.5) [2] (2.5, 2.5) [5] (5, 2) [7] (7, 2) [20] (9, 2.5) [14] (8, 5) [10] (5.5, 4.5) [10] x (miles) East 12345678910 1 2 3 4 5 6 0 y (miles) x* = 6.67 y* = 2.96
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Location Break-Even Analysis
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Location Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30
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Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 For 20,000 units Total Variable Costs
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Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 For 20,000 units Total Variable Costs $62 (20,000)
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Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62 B$300,000$38 C$500,000$24 D$600,000$30 For 20,000 units Total Variable Costs $62 (20,000) = $1,240,000
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Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38 C$500,000$24 D$600,000$30 For 20,000 units Total Variable Costs $62 (20,000) = $1,240,000
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Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38 C$500,000$24 D$600,000$30 For 20,000 units Total Variable Costs $62 (20,000) = $1,240,000
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Location Break-Even Analysis Fixed CostsVariable CostsTotal Costs Communityper Yearper Unit(Fixed + Variable) A$150,000$62$1,390,000 B$300,000$38$1,060,000 C$500,000$24$ 980,000 D$600,000$30$1,200,000 For 20,000 units
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Location Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) Break-Even Analysis Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
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Location Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) Break-Even Analysis Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000 A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980)
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Location A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) A best Break-even point Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) Break-Even Analysis Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
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Location Break-Even Analysis B best Break-even point A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) A best 6.25 Break-even point Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000 14.3
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C best (20, 980) B best Break-even point Location A D B C (20, 1390) (20, 1200) (20, 1060) A best 6.25 Break-even point Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 Annual cost (thousands of dollars) Break-Even Analysis 14.3 Fixed CostsTotal Costs Communityper Year(Fixed + Variable) A$150,000$1,390,000 B$300,000$1,060,000 C$500,000$ 980,000 D$600,000$1,200,000
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Location Break-Even Analysis Q (thousands of units) 0 200 400 600 800 1000 1200 1400 1600 246810121416182022 A best B bestC best Break-even point 6.2514.3 A D B C (20, 1390) (20, 1200) (20, 1060) (20, 980) Annual cost (thousands of dollars) Break-even point
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