A major drug store chain wishes to build a new warehouse to serve the whole Midwest . At the moment, it is looking at three possible locations.
The factors, weights, and ratings being considered are given below:
|
Choosing a location for a warehouse
|
|
|
Ratings
|
|
Factor
|
Weights
|
Peoria
|
Des Moines
|
Chicago
|
|
Nearness to markets
|
25
|
4
|
7
|
5
|
|
Labor cost
|
35
|
8
|
8
|
4
|
|
Taxes
|
30
|
8
|
9
|
7
|
|
Nearness to suppliers
|
10
|
10
|
6
|
10
|
Conduct a location factor weighting analysis for the drug chain above.
How would your answer change if you expected a property tax increase, improving your weight for taxes to 45% and allocating that increase equally among the remaining factors?
What are the limitations of this particular type of analysis? Explain.