1. Illustrate why crude oil refineries are customarily located near home-heating and automotive fuel markets.
2. Conforge is one of the world's leading casual shoes producers. Its authorized dealership operating in Switzerland has recently decided to open a retail outlet in Zurich. Four existing potential commercial areas have been selected.
The location factors considered are: potential market, size of the area, variety of the products sold, estimated position in the area, presence of competing stores, proximity of complementary shops, presence of residential area and workplaces within one km, pedestrian and vehicular traffic and presence of free parking.
The potential market is expressed as the quantity of shoes sold to the resident population in the territory, during one year.
The position in the area has been evaluated both qualitatively and quantitatively by considering whether the retailer outlet is located in: (a) a primary area (i.e. the area with an amount of customers between 55% and 70% of the total),
(b) a secondary area (near the primary area but with a greater distance and amount of customers approximately equal to 15-20%) or
(c) a marginal area (the farthest from the store and such that the amount of customer is approximately 5-10% of the total).
A group of seven experts has assigned a weight to each of the eight location factors (see Table 1) and the scores to the four potential sites for each location factor (see Table 2).
By applying the weighted scoring method, determine the commercial area to be selected.
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Table 1: Weights associated to each location factor in the Conforge problem.
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ID
|
Location factor
|
Weight
|
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1
|
Potential market
|
0.20
|
|
2
|
Size of the area
|
0.20
|
|
3
|
Variety of the products sold
|
0.15
|
|
4
|
Estimated position in the area
|
0.14
|
|
5
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Presence of competing stores
|
0.11
|
|
6
|
Proximity of complementary shops
|
0.07
|
|
7
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Presence of houses and workplaces within 1 km
|
0.07
|
|
8
|
Pedestrian and vehicular traffic
|
0.03
|
|
9
|
Presence of free parking
|
0.03
|
|
|
|
1.00
|
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Table 2: Performance scores of the four potential commercial areas in the Conforge problem.
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Location factor
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Score
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Site I
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Site 2
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Site 3
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Site 4
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1
|
6
|
6
|
7
|
8
|
|
2
|
7
|
8
|
7
|
9
|
|
3
|
8
|
7
|
8
|
6
|
|
4
|
9
|
5
|
6
|
7
|
|
5
|
6
|
6
|
7
|
7
|
|
6
|
5
|
8
|
7
|
6
|
|
7
|
7
|
7
|
8
|
7
|
|
8
|
7
|
8
|
5
|
8
|
|
9
|
8
|
7
|
8
|
8
|