Question

A company is looking to build a new factory. Hartford, CT and Akron, OH are two possible locations and local governments have made pitches to the company for their city. The company has decided to weight three factors in making the decision:

50% - location of raw materials

10% labor costs

40% transportation costs.

They have a scoring scale from 0-100 for each factor. They further decided that the winning location must have a score of at least 75.

Hartford scores 70 for raw materials, 50 for transportation and 90 for labor. Akron scores 60 for raw materials, 80 for transportation and 70 for labor.

Should the company chose Hartford, Akron or neither? [a]

Answer 1

Composite score for Hartford

= Weightage for raw material ( in franstion ) x Score on raw material + Weightage on transportation ( in fraction ) x Score on transportation + Weightage on labor ( in fraction ) x Score on labor

= 0.50 x 70 + 0.40 x 50 + 0.10 x 90

= 35 + 20 + 9

= 64

With similar formula for Akron.

Composite score for akron

= 0.50 x 60 + 0.40 x 80 + 0.10 x 70

= 30 + 32 + 7

= 69

Since neither , Hartford or akron has scored > = 75 , company should choose neither of them